Exhibit 4.4

McKESSON CORPORATION

and

THE FIRST NATIONAL BANK OF CHICAGO, as Trustee

Indenture

Dated as of March 11, 1997

SECTION OF THE ACT                                                                             SECTION OF INDENTURE
310(a)(1) and (2)...............................................................................................6.9
310(a)(3) and (4)......................................................................................Inapplicable
310(b).................................................................................6.8 and 6.10(a), (b) and (d)
310(c).................................................................................................Inapplicable
311(a).........................................................................................................6.14
311(b).........................................................................................................6.14
311(c).................................................................................................Inapplicable
312(a)..................................................................................................4.1 and 4.2
312(b)..........................................................................................................4.2
312(c)..........................................................................................................4.2
313(a)..........................................................................................................4.3
313(b)(1)..............................................................................................Inapplicable
313(b)(2).......................................................................................................4.3
313(c)...................................................................................4.3, 5.11, 6.10, 6.11, 8.2
                                                                                                           and 12.2
313(d)..........................................................................................................4.3
314(a)..................................................................................................3.5 and 4.2
314(b).................................................................................................Inapplicable
314(c)(1) and (2)..............................................................................................11.5
314(c)(3)..............................................................................................Inapplicable
314(d).................................................................................................Inapplicable
314(e).........................................................................................................11.5
314(f).................................................................................................Inapplicable
315(a), (c) and (d).............................................................................................6.1
315(b).........................................................................................................5.11
315(e).........................................................................................................5.12
316(a)(1)..............................................................................................5.9 and 5.10
316(a)(2)..............................................................................................Not required
316(a) (last sentence)..........................................................................................7.4
316(b)..........................................................................................................5.7
317(a)..........................................................................................................5.2
317(b)...............................................................................................3.4(a) and (b)
318(a).........................................................................................................11.7

*This Cross Reference Sheet is not part of the Indenture.

TABLE OF CONTENTS

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                                                                                                        ----
ARTICLE I            DEFINITIONS
         SECTION 1.1         CERTAIN TERMS DEFINED.......................................................  1

ARTICLE II           SECURITIES

         SECTION 2.1         FORMS GENERALLY.............................................................  7
         SECTION 2.2         FORM OF TRUSTEE'S CERTIFICATE OF
                                     AUTHENTICATION......................................................  7
         SECTION 2.3         AMOUNT UNLIMITED; ISSUABLE IN SERIES........................................  8
         SECTION 2.4         AUTHENTICATION AND DELIVERY OF
                                     SECURITIES.......................................................... 11
         SECTION 2.5         EXECUTION OF SECURITIES..................................................... 13
         SECTION 2.6         CERTIFICATE OF AUTHENTICATION............................................... 14
         SECTION 2.7         DENOMINATION AND DATE OF SECURITIES;
                                     PAYMENTS OF INTEREST................................................ 14
         SECTION 2.8         REGISTRATION, TRANSFER AND EXCHANGE......................................... 15
         SECTION 2.9         MUTILATED, DEFACED, DESTROYED, LOST AND
                                     STOLEN SECURITIES................................................... 21
         SECTION 2.10        CANCELLATION OF SECURITIES; DESTRUCTION
                                     THEREOF............................................................. 22
         SECTION 2.11        TEMPORARY SECURITIES........................................................ 22

ARTICLE III          COVENANTS OF THE ISSUER

         SECTION 3.1         PAYMENT OF PRINCIPAL AND INTEREST........................................... 23
         SECTION 3.2         OFFICES FOR PAYMENTS, ETC................................................... 23
         SECTION 3.3         APPOINTMENT TO FILL A VACANCY IN OFFICE
                                     OF TRUSTEE.......................................................... 24
         SECTION 3.4         PAYING AGENTS............................................................... 24
         SECTION 3.5         COMPLIANCE CERTIFICATES..................................................... 25
         SECTION 3.6         CORPORATE EXISTENCE......................................................... 26
         SECTION 3.7         MAINTENANCE OF PROPERTIES................................................... 26
         SECTION 3.8         PAYMENT OF TAXES AND OTHER CLAIMS........................................... 26
         SECTION 3.9         LUXEMBOURG PUBLICATIONS..................................................... 26

                                                                                                       PAGE
                                                                                                       ----
ARTICLE IV           SECURITYHOLDER LISTS AND REPORTS BY THE
                             ISSUER AND THE TRUSTEE
         SECTION 4.1         ISSUER TO FURNISH TRUSTEE INFORMATION AS
                                     TO NAMES AND ADDRESSES OF
                                     SECURITYHOLDERS..................................................... 27
         SECTION 4.2         REPORTS BY THE ISSUER....................................................... 27
         SECTION 4.3         REPORTS BY THE TRUSTEE...................................................... 27

ARTICLE V            REMEDIES OF THE TRUSTEE AND
                             SECURITYHOLDERS ON EVENT OF
                             DEFAULT

         SECTION 5.1         EVENT OF DEFAULT DEFINED, ACCELERATION
                                     OF MATURITY; WAIVER OF DEFAULT...................................... 29
         SECTION 5.2         COLLECTION OF INDEBTEDNESS BY TRUSTEE;
                                     TRUSTEE MAY PROVE DEBT.............................................. 32
         SECTION 5.3         APPLICATION OF PROCEEDS..................................................... 34
         SECTION 5.4         SUITS FOR ENFORCEMENT....................................................... 35
         SECTION 5.5         RESTORATION OF RIGHTS ON ABANDONMENT
                                     OF PROCEEDINGS...................................................... 35
         SECTION 5.6         LIMITATIONS ON SUITS BY SECURITY HOLDERS.................................... 35
         SECTION 5.7         UNCONDITIONAL RIGHT OF SECURITYHOLDERS
                                     TO INSTITUTE CERTAIN SUITS.......................................... 36
         SECTION 5.8         POWERS AND REMEDIES CUMULATIVE; DELAY
                                     OR OMISSION NOT WAIVER OF DEFAULT................................... 36
         SECTION 5.9         CONTROL BY HOLDERS OF SECURITIES............................................ 36
         SECTION 5.10        WAIVER OF PAST DEFAULTS..................................................... 37
         SECTION 5.11        TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT
                             MAY WITHHOLD IN CERTAIN
                                     CIRCUMSTANCES....................................................... 37
         SECTION 5.12        RIGHT OF COURT TO REQUIRE FILING OF
                                     UNDERTAKING TO PAY COSTS............................................ 37

ARTICLE VI           CONCERNING THE TRUSTEE

         SECTION 6.1         DUTIES AND RESPONSIBILITIES OF THE
                                     TRUSTEE; DURING DEFAULT; PRIOR TO
                                     DEFAULT............................................................. 38
         SECTION 6.2         CERTAIN RIGHTS OF THE TRUSTEE............................................... 39

                                                                                                        PAGE
                                                                                                        ----
         SECTION 6.3         TRUSTEE NOT RESPONSIBLE FOR RECITALS,
                                     DISPOSITION OF SECURITIES OR
                                     APPLICATION OF PROCEEDS THEREOF..................................... 40
         SECTION 6.4         TRUSTEE AND AGENTS MAY HOLD SECURITIES
                                     OR COUPONS; COLLECTIONS, ETC........................................ 41
         SECTION 6.5         MONEYS HELD BY TRUSTEE...................................................... 41
         SECTION 6.6         COMPENSATION AND INDEMNIFICATION OF
                                     TRUSTEE AND ITS PRIOR CLAIM......................................... 41
         SECTION 6.7         RIGHT OF TRUSTEE TO RELY ON OFFICER'S
                                     CERTIFICATE, ETC.................................................... 41
         SECTION 6.8         INDENTURES NOT CREATING POTENTIAL
                                     CONFLICTING INTERESTS FOR THE
                                     TRUSTEE............................................................. 42
         SECTION 6.9         QUALIFICATION OF TRUSTEE:  CONFLICTING
                                     INTERESTS........................................................... 42
         SECTION 6.10        PERSONS ELIGIBLE FOR APPOINTMENT AS
                                     TRUSTEE............................................................. 42
         SECTION 6.11        RESIGNATION AND REMOVAL; APPOINTMENT
                                     OF SUCCESSOR TRUSTEE................................................ 42
         SECTION 6.12        ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
                                     TRUSTEE............................................................. 44
         SECTION 6.13        MERGER, CONVERSION, CONSOLIDATION OR
                                     SUCCESSION TO BUSINESS OF TRUSTEE................................... 45
         SECTION 6.14        PREFERENTIAL COLLECTION OF CLAIMS
                                     AGAINST THE ISSUER.................................................. 45
         SECTION 6.15        APPOINTMENT OF AUTHENTICATING AGENT......................................... 46

ARTICLE VII          CONCERNING THE SECURITYHOLDERS

         SECTION 7.1         EVIDENCE OF ACTION TAKEN BY
                             SECURITYHOLDERS............................................................. 47
         SECTION 7.2         PROOF OF EXECUTION OF INSTRUMENTS AND
                                     OF HOLDING OF SECURITIES............................................ 47
         SECTION 7.3         HOLDERS TO BE TREATED AS OWNERS............................................. 47
         SECTION 7.4         SECURITIES OWNED BY ISSUER DEEMED NOT
                                     OUTSTANDING......................................................... 47
         SECTION 7.5         RIGHT OF REVOCATION OF ACTION TAKEN......................................... 48

                                                                                                        PAGE
                                                                                                        ----
ARTICLE VIII         SUPPLEMENTAL INDENTURES
         SECTION 8.1         SUPPLEMENTAL INDENTURES WITHOUT CON-
                                     SENT OF SECURITYHOLDERS............................................. 48
         SECTION 8.2         SUPPLEMENTAL INDENTURES WITH CONSENT
                                     OF SECURITYHOLDERS.................................................. 50
         SECTION 8.3         EFFECT OF SUPPLEMENTAL INDENTURE............................................ 51
         SECTION 8.4         DOCUMENTS TO BE GIVEN TO TRUSTEE............................................ 51
         SECTION 8.5         NOTATION ON SECURITIES IN RESPECT OF
                                     SUPPLEMENTAL INDENTURES............................................. 52

ARTICLE IX           CONSOLIDATION, MERGER, SALE OR
                             CONVEYANCE

         SECTION 9.1         ISSUER MAY CONSOLIDATE, ETC., ONLY ON
                                     CERTAIN TERMS....................................................... 52
         SECTION 9.2         SUCCESSOR CORPORATION SUBSTITUTED........................................... 52
         SECTION 9.3         OPINION OF COUNSEL TO BE GIVEN TRUSTEE...................................... 53

ARTICLE X            SATISFACTION AND DISCHARGE OF INDENTURE;
                             UNCLAIMED MONEYS

         SECTION 10.1        SATISFACTION AND DISCHARGE OF INDENTURE..................................... 53
         SECTION 10.2        APPLICATION BY TRUSTEE OF FUNDS
                                     DEPOSITED FOR PAYMENT OF
                                     SECURITIES.......................................................... 57
         SECTION 10.3        REPAYMENT OF MONEYS HELD BY PAYING
                                     AGENT............................................................... 57
         SECTION 10.4        RETURN OF MONEYS HELD BY TRUSTEE AND
                                     PAYING AGENT UNCLAIMED FOR TWO
                                     YEARS............................................................... 57
         SECTION 10.5        INDEMNITY FOR U.S. GOVERNMENT OF
                                     OBLIGATIONS......................................................... 58

ARTICLE XI           MISCELLANEOUS PROVISIONS

         SECTION 11.1        INCORPORATORS, STOCKHOLDERS, OFFICERS
                                     AND DIRECTORS OF ISSUER EXEMPT
                                     FROM INDIVIDUAL LIABILITY........................................... 58

                                                                                                         PAGE
                                                                                                         ----
         SECTION 11.2        PROVISIONS OF INDENTURE FOR THE SOLE
                                     BENEFIT OF PARTIES AND HOLDERS OF
                                     SECURITIES AND COUPONS.............................................. 58
         SECTION 11.3        SUCCESSORS AND ASSIGNS OF ISSUER BOUND
                                     BY INDENTURE........................................................ 58
         SECTION 11.4        NOTICES AND DEMANDS ON ISSUER, TRUSTEE
                                     AND HOLDERS OF SECURITIES AND
                                     COUPONS............................................................. 58
         SECTION 11.5        OFFICER'S CERTIFICATES AND OPINIONS OF
                                     COUNSEL; STATEMENTS TO BE
                                     CONTAINED THEREIN................................................... 59
         SECTION 11.6        PAYMENTS DUE ON SATURDAYS, SUNDAYS AND
                                     HOLIDAYS............................................................ 60
         SECTION 11.7        CONFLICT OF ANY PROVISION OF INDENTURE
                                     WITH TRUST INDENTURE ACT............................................ 60
         SECTION 11.8        NEW YORK LAW TO GOVERN...................................................... 60
         SECTION 11.9        COUNTERPARTS................................................................ 61
         SECTION 11.10       EFFECT OF HEADINGS.......................................................... 61
         SECTION 11.11       SECURITIES IN A FOREIGN CURRENCY OR IN
                                     ECU................................................................. 61
         SECTION 11.12       JUDGMENT CURRENCY........................................................... 61

ARTICLE XII                REDEMPTION OF SECURITIES AND SINKING FUNDS

         SECTION 12.1        APPLICABILITY OF ARTICLE.................................................... 62
         SECTION 12.2        NOTICE OF REDEMPTION; PARTIAL
                                     REDEMPTIONS......................................................... 62
         SECTION 12.3        PAYMENT OF SECURITIES CALLED FOR
                                     REDEMPTION.......................................................... 64
         SECTION 12.4        EXCLUSION OF CERTAIN SECURITIES FROM
                                     ELIGIBILITY FOR SELECTION FOR
                                     REDEMPTION.......................................................... 65
         SECTION 12.5        MANDATORY AND OPTIONAL SINKING FUNDS........................................ 65

THIS INDENTURE, dated as of March 11, 1997, by and between McKESSON CORPORATION, a Delaware corporation (the "Issuer"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, as trustee (the "Trustee"),

W I T N E S S E T H:

WHEREAS, the Issuer has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture;

WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of the Securities; and

WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done;

NOW, THEREFORE:

In consideration of the premises and the purchases of the Securities by the holders thereof, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities and of the coupons, if any, appertaining thereto as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 CERTAIN TERMS DEFINED. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or the definitions of which in the Securities Act of 1933, as amended (the "Securities Act"), are referred to in the Trust Indenture Act, including terms defined therein by reference to the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meaning assigned to such terms in the Trust Indenture Act and in the Securities Act as in effect from time to time. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means such accounting principles as are generally accepted at the time of any computation unless a different time shall be specified with respect to such series of Securities as provided for in Section 2.3. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not

to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor provision.

"Authenticating Agent" shall have the meaning set forth in Section 6.15.

"Authorized Newspaper" means a newspaper (which, in the case of The City of New York, will, if practicable, be The Wall Street Journal (Eastern Edition), in the case of the United Kingdom of Great Britain and Northern Ireland (the "United Kingdom"), will, if prac ticable, be The Financial Times (London Edition) and, in the case of the Grand Duchy of Luxembourg ("Luxembourg"), will, if practicable, be the Luxemburger Wort) published in an official or common language of the county of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in The City of New York, the United Kingdom or Luxembourg, as applicable. If it shall be impractical in the opinion of the Trustee to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof which is made or given with the approval of the Trustee shall constitute a sufficient publication of such notice.

"Board of Directors" means either the Board of Directors of the Issuer or any committee of such Board duly authorized to act on its behalf.

"Board Resolution" means a copy of one or more resolutions, certified by the secretary or an assistant secretary of the Issuer to have been duly adopted or consented to by the Board of Directors and to be in full force and effect, and delivered to the Trustee.

"Business Day" means, with respect to any Security, a day other than any day on which banking institutions in the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security, are authorized or required by any applicable law or regulation to be closed.

"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

"Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, as of the date of this Indenture, located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust Administration.

"Coupon" means any interest coupon appertaining to an Unregistered Security.

"Covenant Defeasance" shall have the meaning set forth in Section 10.1(C).

"Depositary" means, with respect to the Securities of any series issuable or issued in the form of one or more Registered Global Securities, the Person designated as Depositary by the Issuer pursuant to Section 2.3 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Registered Global Securities of that series.

"Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts.

"ECU" means the European Currency Unit as defined and revised from time to time by the European Monetary System of the European Community.

"Event of Default" means any event or condition specified as such in
Section 5.1.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Value" when used with respect to any Voting Stock means the fair value as determined in good faith by the Board of Directors of the Issuer.

"Foreign Currency" means a currency issued by the government of a country other than the United States of America.

"Holder," "Holder of Securities," "Securityholder" or other similar terms mean (a) in the case of any Registered Security, the person in whose name such Security is registered in the security register kept by the Issuer for that purpose in accordance with the terms hereof, and (b) in the case of any Unregistered Security, the bearer of such Security, or any Coupon appertaining thereto, as the case may be.

"Indenture" means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular series of Securities established as contemplated hereunder.

"IRS" means the Internal Revenue Service of the United States Department of the Treasury, or any successor entity.

"Issuer" means (except as otherwise provided in Article IX) McKesson Corporation, a Delaware corporation, and, subject to Article IX, its successors and assigns.

"Issuer Order" means a written statement, request or order of the Issuer signed in its name by the chairman of the Board of Directors, the president, any vice president or the treasurer of the Issuer.

"Judgment Currency" has the meaning set forth in Section 11.12.

"Non-U.S. Person" means any person that is not a "U.S. person" as such term is defined in Rule 902 of the Securities Act.

"Officer's Certificate" means a certificate signed by the chairman of the Board of Directors, the president or any vice president or the treasurer of the Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 11.5.

"144A Global Security" has the meaning set forth in Section 2.8(b)(i).

"Opinion of Counsel" means an opinion in writing signed by legal counsel who may be an employee of the Issuer or other counsel satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided for in Section 11.5.

"Original Issue Date" of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer, exchange or substitution.

"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1.

"Outstanding" (except as otherwise provided in Section 7.4), when used with reference to Securities, means, subject to the provisions of Section 7.4, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except

(a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b) Securities, or portions thereof, for the payment or redemption of which moneys or U.S. Government Obligations (as provided for in Section 10.1) in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the Holders of such Securities (if the Issuer shall act as its own paying agent), provided, that if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provisions satisfactory to the Trustee shall have been made for giving such notice; and

(c) Securities which shall have been paid or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.9 (except with respect to any such Security as to which proof satisfactory to the Trustee

is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Issuer).

In determining whether the Holders of the requisite principal amount of Outstanding Securities of any or all series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the maturity thereof pursuant to Section 5.1.

"Periodic Offering" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest, if any, thereon, the stated maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Issuer or its agents upon the issuance of such Securities.

"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

"PORTAL Market" means Private Offerings, Resales and Trading through Automatic Linkages Market.

"principal" whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include "and premium, if any," provided, however, that such inclusion of premium, if any, shall under no circumstances result in the double counting of such premium for the purpose of any calculation required hereunder.

"QIB" or "Qualified Institutional Buyer" means "Qualified Institutional Buyer" as such term is defined in Rule 144A under the Securities Act.

"record date" shall have the meaning set forth in Section 2.7.

"Registered Global Security" means a Security evidencing all or a part of a series of Registered Securities, issued to the Depositary for such series in accordance with Section 2.4, and bearing the legend prescribed in Section 2.4 and any other legend required by the Depositary for such series.

"Registered Security" means any Security registered on the Security register of the Issuer.

"Regulation S" means Regulation S under the Securities Act, or any successor provision.

"Regulation S Global Security" has the meaning set forth in Section 2.8(b).

"Required Currency" shall have the meaning set forth in Section 11.12.

"Responsible Officer" when used with respect to the Trustee means the chairman of the board of directors, any vice chairman of the board of directors, the chairman of the trust committee, the chairman of the executive committee, any vice chairman of the executive committee, the president, any vice president (whether or not designated by numbers or words added before or after the title "Vice President"), the cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject.

"Restricted Security" has the meaning set forth in Section 2.8(b).

"Rule 144" means Rule 144 under the Securities Act.

"Rule 144A" means Rule 144A under the Securities Act.

"Rule 144K" means Rule 144(k) under the Securities Act.

"Security" or "Securities" (except as otherwise provided in Section 7.4) has the meaning stated in the first recital of this Indenture, or, as the case may be, Securities that have been authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933, as amended.

"Subsidiary" means any corporation of which at least a majority of the outstanding stock having the voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time of determination directly or indirectly owned by the Issuer, or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

"Transfer Restriction Termination Date" means the earlier of the first date on which (i) the Securities of a series (other than such Securities acquired by the Issuer or any Affiliate thereof since the issue date of such Securities) may be sold pursuant to Rule 144K (or any successor provision) and
(ii) all such Securities have been exchanged or sold pursuant to an effective registration statement.

"Trustee" means the Person identified as "Trustee" in the first paragraph hereof and, subject to the provisions of Article VI, shall also include any successor trustee. "Trustee" shall also mean or include each Person who is then a trustee hereunder and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the trustee with respect to the Securities of such series.

"Unregistered Security" means any Security other than a Registered Security.

"U.S. Government Obligations" shall have the meaning set forth in
Section 10.1(A).

"Voting Stock" means stock of any class or classes having general voting power under ordinary circumstances to elect a majority of the board of directors, managers or trustees of the corporation in question, provided, that, for the purposes hereof, stock which carries only the right to vote conditionally on the happening of an event shall not be considered voting stock whether or not such event shall have happened.

"Yield to Maturity" means the yield to maturity on a series of securities, calculated at the time of issuance of such series, or, if applicable, at the most recent redetermination of interest on such series, and calculated in accordance with accepted financial practice.

ARTICLE II

SECURITIES

SECTION 2.1 FORMS GENERALLY. The Securities of each series and the Coupons, if any, to be attached thereto shall be substantially in such form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to but not set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons.

The definitive Securities and Coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities and Coupons, if any, as evidenced by their execution of such Securities and Coupons, if any.

SECTION 2.2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Securities shall be in substantially the following form:

"This is one of the Securities referred to in the within-mentioned Indenture.

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

By ______________________________
Authorized Signatory"

If at any time there shall be an Authenticating Agent appointed with respect to any series of Securities, then the Trustee's Certificate of Authentication to be borne by the Securities of each such series shall be substantially as follows:

"This is one of the Securities referred to in the within-mentioned Indenture.

[_________________________________] as Authenticating Agent

By _______________________________ Authorized Signatory"

SECTION 2.3 AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series and each such series shall rank equally and pari passu with all other unsecured and unsubordinated debt of the Issuer. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to but not set forth in a Board Resolution, in an Officer's Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series,

(1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series, and which may be part of a series of Securities previously issued;

(2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities

authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to
Section 2.8, 2.9, 2.11, 8.5 or 12.3);

(3) if other than Dollars, the coin or currency in which the Securities of the series are denominated (including, but not limited to, any Foreign Currency or ECU);

(4) the date or dates on which the principal of the Securities of the series is payable;

(5) the rate or rates at which the Securities of the series shall bear interest, if any, the date or dates from which such interest shall accrue, on which such interest shall be payable and (in the case of Registered Securities) on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined;

(6) the place or places where the principal of and any interest on Securities of the series shall be payable, if other than as provided in
Section 3.2;

(7) the right, if any, of the Issuer to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of the series may be so redeemed, pursuant to any sinking fund or otherwise;

(8) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;

(9) if other than denominations of $1,000 and any integral multiple thereof in the case of Registered Securities, or $1,000 and $5,000 in the case of Unregistered Securities, the denominations in which Securities of the series shall be issuable;

(10) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof;

(11) if other than the coin or currency in which the Securities of the series are denominated, the coin or currency in which payment of the principal of or interest on the Securities of such series shall be payable;

(12) if the principal of or interest on the Securities of the series are to be payable, at the election of the Issuer or a Holder thereof, in a coin or currency other than

that in which the Securities are denominated, the period or periods within which, and the terms and conditions upon which, such election may be made;

(13) if the amount of payments of principal of and interest on the Securities of the series may be determined with reference to an index based on a coin or currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined;

(14) whether the Securities of the series will be issuable as Registered Securities (and if so, whether such Securities will be issuable as Registered Global Securities) or Unregistered Securities (with or without Coupons), or any combination of the foregoing, any restrictions applicable to the offer, sale or delivery of Unregistered Securities or the payment of interest thereon and, if other than as provided in Section 2.8, the terms upon which Unregistered Securities of any series may be exchanged for Registered Securities of such series and vice versa;

(15) whether and under what circumstances the Issuer will pay additional amounts on the Securities of the series held by a person who is not a U.S. person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Issuer will have the option to redeem the Securities of the series rather than pay such additional amounts;

(16) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;

(17) any trustees, depositaries, authenticating or paying agents, transfer agents or registrars of any other agents with respect to the Securities of such series;

(18) any other events of default or covenants with respect to the Securities of such series;

(19) if the Securities of the series are to be convertible into or exchangeable for any other security; and

(20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).

All Securities of any one series and Coupons, if any, appertaining thereto shall be substantially identical, except in the case of Registered Securities as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any indenture supplemental hereto. All Securities of any one series need not be issued at the same time and may be issued from time to time,

consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution, such Officer's Certificate or in any indenture supplemental hereto.

SECTION 2.4 AUTHENTICATION AND DELIVERY OF SECURITIES. The Issuer may deliver Securities of any series having attached thereto appropriate Coupons, if any, executed by the Issuer to the Trustee for authentication together with the applicable documents referred to below in this Section 2.4, and the Trustee shall thereupon authenticate and deliver such Securities and Coupons, if any, to or upon the order of the Issuer (contained in the Issuer Order referred to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such recipients as may be specified from time to time by an Issuer Order. The maturity date, original issue date, interest rate and any other terms of the Securities of such series and Coupons, if any, appertaining thereto shall be determined by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which instructions, if oral, shall be promptly confirmed in writing. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive (in the case of subparagraphs (2), (3) and (4) below only at or before the time of the first request of the Issuer to the Trustee to authenticate Securities of such series) and (subject to Section 6.1) shall be fully protected in relying upon, the following enumerated documents unless and until such documents have been superseded or revoked:

(1) an Issuer Order requesting such authentication and setting forth delivery instructions if the Securities and Coupons, if any, are not to be delivered to the Issuer, provided that, with respect to Securities of a series subject to a Periodic Offering, (a) such Issuer Order may be delivered by the Issuer to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (b) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, in an aggregate principal amount not exceeding the aggregate principal amount established for such series, pursuant to an Issuer Order or pursuant to procedures acceptable to the Trustee as may be specified from time to time by an Issuer Order, (c) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by an Issuer Order or pursuant to such procedures and (d) if provided for in such procedures, such Issuer Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Issuer or its duly authorized agent or agents, which instructions, if oral, shall be promptly confirmed in writing;

(2) any Board Resolution, Officer's Certificate and/or executed supplemental indenture referred to in Section 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities and Coupons, if any, were established;

(3) an Officer's Certificate setting forth the form or forms and terms of the Securities and Coupons, if any, stating that the form or forms and terms of the Securities

and Coupons, if any, have been established pursuant to Sections 2.1 and 2.3 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and

(4) At the option of the Issuer, either one or more Opinions of Counsel, or a letter addressed to the Trustee permitting it to rely on one or more Opinions of Counsel, substantially to the effect that:

(a) the form or forms of the Securities and Coupons, if any, have been duly authorized and established in conformity with the provisions of this Indenture;

(b) in the case of an underwritten offering, the terms of the Securities have been duly authorized and established in conformity with the provisions of this Indenture, and, in the case of an offering that is not underwritten, certain terms of the Securities have been established pursuant to a Board Resolution, an Officer's Certificate or a supplemental indenture in accordance with this Indenture, and when such other terms as are to be established pursuant to procedures set forth in an Issuer Order shall have been established, all such terms will have been duly authorized by the Issuer and will have been established in conformity with the provisions of this Indenture; and

(c) such Securities and Coupons, if any, when executed by the Issuer and authenticated by the Trustee in accordance with the provisions of this Indenture and delivered to and duly paid for by the purchasers thereof, and subject to any conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture, will be entitled to the benefits of this Indenture, and will be valid and binding obligations of the Issuer, enforceable in accordance with their respective terms except as the enforceability thereof may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors' rights generally, (ii) rights of acceleration, if any, and
(iii) the availability of equitable remedies may be limited by equitable principles of general applicability and such counsel need express no opinion with regard to the enforceability of Section 6.6 or of a judgment denominated in a currency other than Dollars.

In rendering such opinions, any counsel may qualify any opinions as to enforceability by stating that such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent transfer and other similar laws affecting the rights and remedies of creditors and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Such counsel may rely upon opinions of other counsel (copies of which shall be delivered to the Trustee) reasonably satisfactory to the Trustee, in which case the opinion shall state that such counsel believes he and the Trustee are entitled so to rely. Such counsel may also state that, insofar as

such opinion involves factual matters, he has relied, to the extent he deems proper, upon certificates of officers of the Issuer and its subsidiaries and certificates of public officials.

The Trustee shall have the right to decline to authenticate and deliver any Securities under this section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Issuer or if the Trustee in good faith by its board of directors or board of trustees, executive committee or a trust committee of directors or trustees shall determine that such action would expose the Trustee to personal liability to existing Holders or would affect the Trustee's own rights, duties or immunities under the Securities, this Indenture or otherwise.

If the Issuer shall establish pursuant to Section 2.3 that the Securities of a series are to be issued in the form of one or more Registered Global Securities, then the Issuer shall execute and the Trustee shall, in accordance with this Section and the Issuer Order with respect to such series, authenticate and deliver one or more Registered Global Securities that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Registered Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or delivered or held pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary."

Each Depositary designated pursuant to Section 2.3 must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation.

SECTION 2.5 EXECUTION OF SECURITIES. The Securities and each Coupon appertaining thereto, if any, shall be signed on behalf of the Issuer by the chairman or vice chairman of its Board of Directors or its president, or any executive (senior or other), a vice president or its treasurer, under its corporate seal (except in the case of Coupons) which may, but need not, be attested. Such signatures may be the manual or facsimile signatures of the present or any future such officers. The seal of the Issuer may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.

In case any officer of the Issuer who shall have signed any of the Securities or Coupons, if any, shall cease to be such officer before the Security or Coupon so signed (or the Security to which the Coupon so signed appertains) shall be authenticated and delivered by the

Trustee or disposed of by the Issuer, such Security or Coupon nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security or Coupon had not ceased to be such officer of the Issuer; and any Security or Coupon may be signed on behalf of the Issuer by such persons as, at the actual date of the execution of such Security or Coupon, shall be the proper officers of the Issuer, although at the date of the execution and delivery of this Indenture any such person was not such an officer.

SECTION 2.6 CERTIFICATE OF AUTHENTICATION. Only such Securities as shall bear thereon a certificate of authentication substantially in the form hereinbefore recited, executed by the Trustee by the manual signature of one of its authorized officers, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. No Coupon shall be entitled to the benefits of this Indenture or shall be valid and obligatory for any purpose until the certificate of authentication on the Security to which such Coupon appertains shall have been duly executed by the Trustee. The execution of such certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

SECTION 2.7 DENOMINATION AND DATE OF SECURITIES; PAYMENTS OF INTEREST. The Securities of each series shall be issuable as Registered Securities or Unregistered Securities in denominations established as contemplated by Section 2.3 or, with respect to the Registered Securities of any series, if not so established, in denominations of $1,000 and any integral multiple thereof. If denominations of Unregistered Securities of any series are not so established, such Securities shall be issuable in denominations of $1,000 and $5,000. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Issuer executing the same may determine with the approval of the Trustee, as evidenced by the execution and authentication thereof.

Each Registered Security shall be dated the date of its authentication. Each Unregistered Security shall be dated as provided in the Board Resolution referred to in Section 2.3. The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3.

The person in whose name any Registered Security of any series is registered at the close of business on any record date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Registered Security subsequent to the record date and prior to such interest payment date, except if and to the extent the Issuer shall default in the payment of the interest due on such interest payment date for such series, in which case such defaulted interest shall be paid to the persons in whose names Outstanding Registered Securities for such series are registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the

Issuer to the Holders of Registered Securities not less than 15 days preceding such subsequent record date. The term "record date" as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Registered Securities of such series established as contemplated by
Section 2.3, or, if no such date is so established, if such interest payment date is the first day of a calendar month, the fifteenth day of the preceding calendar month or, if such interest payment date is the fifteenth day of a calendar month, the first day of such calendar month, whether or not such record date is a Business Day.

SECTION 2.8 REGISTRATION, TRANSFER AND EXCHANGE. (a) The Issuer will keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which, subject to such reasonable regulations as the Issuer may prescribe, it will provide for the registration of Registered Securities of such series and the registration of transfer of Registered Securities of such series. Such register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. At all reasonable times such register or registers shall be open for inspection by the Trustee.

Upon due presentation for registration of transfer of any Registered Security of any series at any such office or agency to be maintained for the purpose as provided in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Registered Securities of the same series, maturity date, interest rate and original issue date in authorized denominations for a like aggregate principal amount.

Unregistered Securities (except for any temporary global Unregistered Securities) and Coupons (except for Coupons attached to any temporary global Unregistered Securities) shall be transferable by delivery.

At the option of the Holder thereof, Registered Securities of any series (other than a Registered Global Security, except as set forth below) may be exchanged for a Registered Security or Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Registered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 and upon payment, if the Issuer shall so require, of the charges hereinafter provided. If the Securities of any series are issued in both registered and unregistered form, at the option of the Holder thereof, except as otherwise specified pursuant to Section 2.3, Unregistered Securities of any series may be exchanged for Registered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. At the option of the Holder thereof, if Unregistered Securities of any series, maturity date, interest rate and

original issue date are issued in more than one authorized denomination, except as otherwise specified pursuant to Section 2.3, such Unregistered Securities may be exchanged for Unregistered Securities of such series having authorized denominations and an equal aggregate principal amount, upon surrender of such Unregistered Securities to be exchanged at the agency of the Issuer that shall be maintained for such purpose in accordance with Section 3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered Securities that have Coupons attached, all unmatured Coupons and all matured Coupons in default thereto appertaining, and upon payment, if the Issuer shall so require, of the charges hereinafter provided. Registered Securities of any series may not be exchanged for Unregistered Securities of such series unless (1) otherwise specified pursuant to Section 2.3 and (2) the Issuer has delivered to the Trustee an Opinion of Counsel that (x) the Issuer has received from the IRS a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that the inclusion of terms permitting Registered Securities to be exchanged for Unregistered Securities would result in no Federal income tax effect adverse to the Issuer or to any Holder. Whenever any Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities and Coupons, if any, surrendered upon any exchange or transfer provided for in this Indenture shall be promptly cancelled and disposed of by the Trustee, and the Trustee shall deliver a certificate of disposition thereof to the Issuer.

All Registered Securities presented for registration of transfer, exchange, redemption or payment shall (if so required by the Issuer or the Trustee) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed, by the Holder or his attorney duly authorized in writing.

The Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Securities. No service charge shall be made for any such transaction.

The Issuer shall not be required to exchange or register a transfer of
(a) any Securities of any series for a period of 15 days preceding the first mailing of notice of redemption of Securities of such series to be redeemed or
(b) any Securities selected, called or being called for redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not so to be redeemed.

Notwithstanding any other provision of this Section 2.8, unless and until it is exchanged in whole or in part for Securities in definitive registered form, a Registered Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.

If at any time the Depositary for any Registered Securities of a series represented by one or more Registered Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Registered Securities or if at any time the Depositary for such Registered Securities shall no longer be eligible under Section 2.4, the Issuer shall appoint a successor Depositary eligible under Section 2.4 with respect to such Registered Securities. If a successor Depositary eligible under Section 2.4 for such Registered Securities is not appointed by the Issuer within 90 days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer's election pursuant to Section 2.3 that such Registered Securities be represented by one or more Registered Global Securities shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of an Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities in exchange for such Registered Global Security or Securities.

The Issuer may at any time and in its sole discretion determine that the Registered Securities of any series issued in the form of one or more Registered Global Securities shall no longer be represented by a Registered Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon receipt of any Officer's Certificate for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Registered Global Security or Securities representing such Registered Securities, in exchange for such Registered Global Security or Securities.

If specified by the Issuer pursuant to Section 2.3 with respect to Securities represented by a Registered Global Security, the Depositary for such Registered Global Security may surrender such Registered Global Security in exchange in whole or in part for Securities of the same series in definitive registered form on such terms as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall authenticate and deliver, without service charge,

(i) to the Person specified by such Depositary a new Registered Security or Securities of the same series, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Registered Global Security; and

(ii) to such Depositary a new Registered Global Security in a denomination equal to the difference, if any, between the principal amount of the surrendered Registered Global Security and the aggregate principal amount of Registered Securities authenticated and delivered pursuant to clause (i) above.

Upon the exchange of a Registered Global Security for Securities in definitive registered form without coupons, in authorized denominations, such Registered Global Security shall be cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities in definitive registered form without coupons issued in exchange for a Registered Global Security pursuant to this Section 2.8 shall be registered in such names and in such authorized denominations as the Depositary for such Registered Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or such agent shall deliver such Securities to or as directed by the Persons in whose names such Securities are so registered.

All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

Notwithstanding anything herein or in the terms of any series of Securities to the contrary, none of the Issuer, the Trustee or any agent of the Issuer or the Trustee (any of which, other than the Issuer, shall rely on an Officer's Certificate and an Opinion of Counsel) shall be required to exchange any Unregistered Security for a Registered Security if such exchange would result in Federal income tax consequences adverse to the Issuer (such as, for example, the inability of the Issuer to deduct from its income, as computed for Federal income tax purposes, the interest payable on the Unregistered Securities) under then applicable United States Federal income tax laws.

(b)(i) Securities that are distributed to QIBs will be represented by a global Security (the "144A Global Security"). Securities that are distributed to Non-U.S. Persons will be represented by a global Security (the "Regulation S Global Security"). Each of the 144A Global Security and the Regulation S Global Security shall be referred to herein as a "Global Security." If Global Securities are issued, transfers of interests in the Securities between the 144A Global Security and the Regulation S Global Security will be made in accordance with the standing instructions and procedures of the Depositary and its participants and the Trustee shall make appropriate endorsements to reflect increases or decreases in the principal amounts of such Global Securities to reflect any such transfers.

Except as provided below, beneficial owners of a Security in global form shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered Holders of such Securities in global form.

(ii) So long as the Securities are eligible for book-entry settlement, and to the extent that Securities are held by QIBs or Non-U.S. Persons, as the case may be, in a Global Security, or unless otherwise required by law, upon any transfer of a definitive Security to a QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with Regulation S, unless otherwise requested by the transferor, and upon receipt of the definitive Security or Securities being so transferred, together with a certification from the transferor that the transfer is being

made in compliance with Rule 144A or Regulation S, as the case may be (or other evidence satisfactory to the Trustee), the Trustee shall make an endorsement on any 144A Global Security or any Regulation S Global Security, as the case may be, to reflect an increase in the aggregate principal amount of the Securities represented by such Global Security, and the Trustee shall cancel such definitive Security or Securities in accordance with the standing instructions and procedures of the Depositary, the aggregate principal amount of Securities represented by such Global Security to be increased accordingly; provided that no definitive Security, or portion thereof, in respect of which the Issuer or an Affiliate of the Issuer held any beneficial interest shall be included in such Global Security until such definitive Security is freely tradable in accordance with Rule 144K; provided further that the Trustee shall, at the written request of the Issuer, issue Securities in definitive form upon any transfer of a beneficial interest in the Global Security to the Issuer or any Affiliate of the Issuer.

Any Global Security may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Depositary, by the New York Stock Exchange or by the National Association of Securities Dealers, Inc. in order for the Securities to be tradeable on the PORTAL Market or as may be required for the Securities to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange upon which the Securities may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Securities are subject.

(iii) Each Security that bears or is required to bear the legend set forth in this Section 2.8(b) (a "Restricted Security") shall be subject to the restrictions on transfer provided in the legend set forth in this
Section 2.8(b), unless such restrictions on transfer shall be waived by the written consent of the Issuer, and the Holder of each Restricted Security, by such Holder's acceptance thereof, agrees to be bound by such restrictions on transfer. As used in this Section 2.8(b), the term "transfer" encompasses any sale, pledge, transfer or other disposition of any Restricted Security.

Prior to the Transfer Restriction Termination Date, any certificate evidencing a Security shall bear a legend in substantially the following form, unless otherwise agreed by the Issuer (with written notice thereof to the Trustee):

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS

DEFINED IN RULE 50l(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO McKESSON CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE SECURITIES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE SECURITIES. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR THE SECURITIES SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

Following the Transfer Restriction Termination Date, any Security or security issued in exchange or substitution therefor (other than Securities acquired by the Issuer or any Affiliate thereof since the issue date of the Securities) may upon surrender of such Security for exchange to the registrar in accordance with the provisions of this Section 2.8, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.8(b).

SECTION 2.9 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN SECURITIES. In case any temporary or definitive Security or any Coupon appertaining to any Security shall be mutilated, defaced, destroyed, lost or stolen, the Issuer in its discretion may execute and, upon the written request of any officer of the Issuer, the Trustee shall authenticate and deliver, a new Security of the same series, maturity date, interest rate and original issue date, bearing a number or other distinguishing symbol not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen with Coupons corresponding to the Coupons appertaining to the Securities so mutilated, defaced, destroyed, lost or stolen, or in exchange or substitution for the Security to which such mutilated, defaced, destroyed, lost or stolen Coupon appertained, with Coupons appertaining thereto corresponding to the Coupons so mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a substitute Security or Coupon shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security or Coupon and of the ownership thereof, and in the case of mutilation or defacement shall surrender the Security and related Coupons to the Trustee or such agent.

Upon the issuance of any substitute Security or Coupon, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) or its agent connected therewith. In case any Security or Coupon which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead of issuing a substitute Security, pay or authorize the payment of the same or the relevant Coupon (without surrender thereof except in the case of a mutilated or defaced Security or Coupon), if the applicant for such payment shall furnish to the Issuer and to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them may require to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security or Coupons and of the ownership thereof.

Every substitute Security or Coupon of any series issued pursuant to the provisions of this Section by virtue of the fact that any such Security or Coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Security or Coupon shall be at any time enforceable by anyone and

shall be entitled to all the benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Securities or Coupons of such series duly authenticated and delivered hereunder. All Securities and Coupons shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced or destroyed, lost or stolen Securities and Coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

SECTION 2.10 CANCELLATION OF SECURITIES; DESTRUCTION THEREOF. All Securities and Coupons surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if any, if surrendered to the Issuer or any agent of the Issuer or the Trustee or any agent of the Trustee, shall be delivered to the Trustee or its agent for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities or Coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee or its agent shall dispose of cancelled Securities and Coupons held by it and deliver a certificate of disposition to the Issuer. If the Issuer or its agent shall acquire any of the Securities or Coupons, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities or Coupons unless and until the same are delivered to the Trustee or its agent for cancellation.

SECTION 2.11 TEMPORARY SECURITIES. Pending the preparation of definitive Securities for any series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Trustee). Temporary Securities of any series shall be issuable as Registered Securities without coupons, or as Unregistered Securities with or without coupons attached thereto, of any authorized denomination, and substantially in the form of the definitive Securities of such series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the execution and authentication thereof. Temporary Securities may contain such references to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary Registered Securities of such series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Issuer for that purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at any agency maintained by the Issuer for such purpose as specified pursuant to
Section 2.3, and the Trustee shall authenticate and deliver in exchange for such temporary Securities of such series an equal aggregate principal amount of definitive Securities of the same series having authorized denominations and, in the case of Unregistered Securities, having attached thereto any appropriate Coupons. Until so exchanged, the temporary

Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series, unless otherwise established pursuant to Section 2.3. The provisions of this Section are subject to any restrictions or limitations on the issue and delivery of temporary Unregistered Securities of any series that may be established pursuant to Section 2.3 (including any provision that Unregistered Securities of such series initially be issued in the form of a single global Unregistered Security to be delivered to a depositary or agency located outside the United States and the procedures pursuant to which definitive or global Unregistered Securities of such series would be issued in exchange for such temporary global Unregistered Security).

ARTICLE III

COVENANTS OF THE ISSUER

SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, if any, each of the Securities of such series (together with any additional amounts payable pursuant to the terms of such Securities) at the place or places, at the respective time or times and in the manner provided in such Securities and in the Coupons, if any, appertaining thereto and in this Indenture. The interest on Securities with Coupons attached (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only upon presentation and surrender of the several Coupons for such interest installments as are evidenced thereby as they severally mature. If any temporary Unregistered Security provides that interest thereon may be paid while such Security is in temporary form, the interest on any such temporary Unregistered Security (together with any additional amounts payable pursuant to the terms of such Security) shall be paid, as to the installments of interest evidenced by Coupons attached thereto, if any, only upon presentation and surrender thereof, and, as to the other installments of interest, if any, only upon presentation of such Securities for notation thereon of the payment of such interest, in each case subject to any restrictions that may be established pursuant to Section
2.3. The interest, if any, on Registered Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to or upon the written order of the Holders thereof and, at the option of the Issuer, may be paid by wire transfer or by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Securities register of the Issuer.

SECTION 3.2 OFFICES FOR PAYMENTS, ETC. So long as any Registered Securities are authorized for issuance pursuant to this Indenture or are outstanding hereunder, the Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where the Registered Securities of each series may be presented for payment, where the Securities of each series may be presented for exchange as is provided in this Indenture and, if applicable, pursuant to Section 2.3 and where the Registered Securities of each series may be presented for registration of transfer as in this Indenture provided.

The Issuer will maintain one or more offices or agencies in a city or cities located outside the United States (including any city in which such an agency is required to be maintained under the rules of any stock exchange on which the Securities of such series are listed) where the Unregistered Securities, if any, of each series and Coupons, if any, appertaining thereto may be presented for payment. No payment on any Unregistered Security or Coupon will be made upon presentation of such Unregistered Security or Coupon at an agency of the Issuer within the United States nor will any payment be made by transfer to an account in, or by mail to an address in, the United States unless pursuant to applicable United States laws and regulations then in effect such payment can be made without tax consequences adverse to the Issuer.
Notwithstanding the foregoing, payments in Dollars of Unregistered Securities of any series and Coupons appertaining thereto which are payable in Dollars may be made at an agency of the Issuer maintained in the Borough of Manhattan, The City of New York if such payment in Dollars at each agency maintained by the Issuer outside the United States for payment on such Unregistered Securities is illegal or effectively precluded by exchange controls or other similar restrictions.

The Issuer will maintain in the Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Issuer in respect of the Securities of any series, the Coupons appertaining thereto or this Indenture may be served.

The Issuer will give to the Trustee written notice of the location of each such office or agency and of any change of location thereof. In case the Issuer shall fail to maintain any agency required by this Section to be located in the Borough of Manhattan, The City of New York, or shall fail to give such notice of the location or for any change in the location of any of the above agencies, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee.

The Issuer may from time to time designate one or more additional offices or agencies where the Securities of a series and any Coupons appertaining thereto may be presented for payment, where the Securities of that series may be presented for exchange as provided in this Indenture and pursuant to Section 2.3 and where the Registered Securities of that series may be presented for registration of transfer as in this Indenture provided, and the Issuer may from time to time rescind any such designation, as the Issuer may deem desirable or expedient; provided, that no such designation or rescission shall in any manner relieve the Issuer of its obligations to maintain the agencies provided for in this Section. The Issuer shall give to the Trustee prompt written notice of any such designation or rescission thereof.

SECTION 3.3 APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each series of Securities hereunder.

SECTION 3.4 PAYING AGENTS. Whenever the Issuer shall appoint a paying agent other than the Trustee with respect to the Securities of any series, it will cause such paying

agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section,

(a) that it will hold all sums received by it as such agent for the payment of the principal of or interest on the Securities of such series (whether such sums have been paid to it by the Issuer or by any other obligor on the Securities of such series) in trust for the benefit of the Holders of the Securities of such series, or Coupons appertaining thereto, if any, or of the Trustee;

(b) that it will give the Trustee notice of any failure by the Issuer (or by any other obligor on the Securities of such series) to make any payment of the principal of or interest on the Securities of such series when the same shall be due and payable; and

(c) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee's written request at any time during the continuance of the failure referred to in the foregoing clause (b).

The Issuer will, on or prior to each due date of the principal of or interest on the Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly notify the Trustee of any failure to take such action.

If the Issuer shall act as its own paying agent with respect to the Securities of any series, it will, on or before each due date of the principal of or interest on the Securities of such series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such series or the Coupons appertaining thereto a sum sufficient to pay such principal or interest so becoming due. The Issuer will promptly notify the Trustee of any failure to take such action.

Anything in this Section to the contrary notwithstanding, but subject to Section 10.1, the Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for any such series by the Issuer or any paying agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained.

Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to the provisions of Sections 10.3 and 10.4.

SECTION 3.5 COMPLIANCE CERTIFICATES. The Issuer will furnish to the Trustee on or before January 31 in each year (beginning with January 31, 1998) a brief certificate (which need not comply with Section 11.5) from the principal executive, financial or accounting officer of the Issuer stating that in the course of the performance by the signer of his or her duties as an officer of the Issuer he or she would normally have knowledge of any default or non- compliance by the Issuer in the performance of any covenants or conditions contained

in this Indenture, stating whether or not he or she has knowledge of any such default or non-compliance and, if so, describing each such default or non- compliance of which the signer has knowledge and the nature thereof.

SECTION 3.6 CORPORATE EXISTENCE. Subject to Article IX, the Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory), licenses and franchises of the Issuer and its Subsidiaries; provided, that the Issuer shall not be required to preserve any such right, license or franchise, if, in the judgment of the Issuer, the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Subsidiaries taken as a whole and the loss thereof is not disadvantageous in any material respect to the Securityholders.

SECTION 3.7 MAINTENANCE OF PROPERTIES. The Issuer will cause all properties used in or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Issuer may be necessary, so that the business carried on in connection therewith may be properly and advantageously conducted at all time except to the extent that the Issuer may be prevented from so doing by circumstances beyond its control; provided, that nothing in this Section shall prevent the Issuer from discontinuing the operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Issuer desirable in the conduct of the business of the Issuer or any Subsidiary and not disadvantageous in any material respect to the Securityholders.

SECTION 3.8 PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer will pay or discharge or cause to be paid or discharged, before the same shall become delinquent: (a) all taxes, assessments and governmental charges levied or imposed upon the Issuer or any Subsidiary or upon the income, profits or property of the Issuer or any Subsidiary; and (b) all lawful claims for labor, materials, and supplies, which, if unpaid, might by law become a lien upon the property of the Issuer or any Subsidiary; provided, that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and provided further that the Issuer shall not be required to cause to be paid or discharged any such tax, assessment, charge or claim if the Issuer shall determine that such payment is not advantageous to the conduct of the business of the Issuer and its Subsidiaries taken as a whole and that the failure so to pay or discharge is not disadvantageous in any material respect to the Securityholders.

SECTION 3.9 LUXEMBOURG PUBLICATIONS. In the event of the publication of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2, 10.4 or 12.2, the party making such publication in the Borough of Manhattan, The City of New York and London shall also, to the extent that notice is required to be given to Holders of Securities of any series by

applicable Luxembourg law or stock exchange regulation, as evidenced by an Officer's Certificate delivered to such party, make a similar publication in Luxembourg.

ARTICLE IV

SECURITYHOLDER LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE

SECTION 4.1 ISSUER TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES OF SECURITYHOLDERS. If and so long as the Trustee shall not be the Security registrar for the Securities of any series, the Issuer and any other obligor on the Securities will furnish or cause to be furnished to the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of the Holders of the Registered Securities of such series pursuant to
Section 312 of the Trust Indenture Act:

(a) semi-annually not more than 5 days after each record date for the payment of interest on such Registered Securities, as hereinabove specified, as of such record date and on dates to be determined pursuant to
Section 2.3 for non-interest bearing Registered Securities in each year; and

(b) at such other times as the Trustee may reasonably request in writing, within thirty days after receipt by the Issuer of any such request as of a date not more than 15 days prior to the time such information is furnished.

SECTION 4.2 REPORTS BY THE ISSUER. The Issuer covenants to file with the Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports that the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act or pursuant to
Section 314 of the Trust Indenture Act.

SECTION 4.3 REPORTS BY THE TRUSTEE.

(a) On or before the first July 15 which occurs not less than 60 days after the earliest date of issuance of any Securities and on or before July 15 in each year thereafter, so long as any Securities are Outstanding hereunder, the Trustee shall transmit by mail as provided below to the Securityholders of each series of outstanding Securities, as hereinafter in this Section provided, a brief report dated as of the preceding May 15 with respect to:

(i) its eligibility under Section 6.10 and its qualification under Section 6.9, or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under such Sections, a written statement to such effect;

(ii) the character and amount of any advances (and if the Trustee elects to so state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities of such series, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than 0.5% of the principal of the Securities of such series outstanding on the date of such report;

(iii) the amount, interest rate and maturity date of all other indebtedness owing by the Issuer (or any other obligor on the Securities of such series) to the Trustee in its individual capacity on the date of such report, with a brief description of any property held as collateral security therefor, except any indebtedness based upon a creditor relationship;

(iv) the property and funds, if any, physically in the possession of the Trustee (as such) in respect of the Securities of such series on the date of such report;

(v) any additional issue of Securities of such series which the Trustee has not previously reported; and

(vi) any action taken by the Trustee in the performance of its duties under this Indenture which the Trustee has not previously reported and which in the Trustee's opinion materially affects the Securities of such series, except action in respect of a default, notice of which has been or is to be withheld by it in accordance with the provisions of Section 5.11.

(b) The Trustee shall transmit to the Securityholders of each series, as provided in subsection (c) of this Section, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) in respect of the Securities of such series since the date of the last report transmitted pursuant to the provisions of subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of this Indenture) for the reimbursement of which it claims or may claim a lien or charge prior to that of the Securities of such series on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of Securities of such series outstanding at such time, such report to be transmitted within 90 days after such time.

(c) Reports pursuant to this Section shall be transmitted by mail to all Holders of Securities of such series, as the names and addresses of such Holders appear upon the Securities register as of a date not more than 15 days prior to the mailing thereof.

(d) A copy of each such report shall, at the time of such transmission to Securityholders, be furnished to the Issuer and be filed by the Trustee with each stock exchange upon which the Securities of such series are listed and also with the Commission. The Issuer agrees to notify the Trustee when and as Securities of any series become listed on any national securities exchange.

ARTICLE V

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 5.1 EVENT OF DEFAULT DEFINED, ACCELERATION OF MATURITY; WAIVER OF DEFAULT. "Event of Default" with respect to Securities of any series, wherever used herein, means each one of the following events which shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any installment of interest upon any of the Securities of such series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or

(b) default in the payment of all or any part of the principal on any of the Securities of such series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise; or

(c) default in the payment of any sinking fund installment as and when the same shall become due and payable by the terms of the Securities of such series; or

(d) failure on the part of the Issuer duly to observe or perform any other of the covenants or agreements on the part of the Issuer in the Securities of such series or contained in this Indenture (other than a covenant or agreement included in this Indenture solely for the benefit of a series of Securities other than such series) for a period of 60 days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that the Issuer remedy the same, shall have been given by registered or certified mail, return receipt requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Securities of the series to which such covenant or agreement relates; or

(e) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Issuer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer for any substantial part of its or their property or ordering the winding up or liquidation of its or their affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or

(f) the Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Issuer or for any substantial part of its or their property, or make any general assignment for the benefit of creditors; or

(g) any other Event of Default provided in the supplemental indenture or Board Resolution under which such series of Securities is issued or in the form of Security for such series.

If an Event of Default described in clause (a), (b), (c), (d) or (g) (if the Event of Default under clause (d) or (g), as the case may be, is with respect to less than all series of Securities then Outstanding) occurs and is continuing, then, and in each and every such case, except for any series of Securities the principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Securities of each such affected series then Outstanding hereunder (each such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any such affected series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration, the same shall become immediately due and payable.

If an Event of Default described in clause (d) or (g) above with respect to all series of Securities then Outstanding, or an Event of Default described in clause (e) or (f) above occurs and is continuing, then, and in each and every such case, unless the Principal of all of the Securities shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of all of the Securities then Outstanding hereunder (treated as one class) by notice in writing to the Issuer (and to the Trustee if given by Securityholders), may declare the entire principal (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) of all of the Securities then Outstanding, and the interest accrued thereon, if any, to be due and payable immediately, and upon such declaration, the same shall become immediately due and payable.

The foregoing provisions are subject to the condition that if, at any time after the principal (or, if the Securities are Original Issue Discount Securities, such portion of the principal as may be specified in the terms thereof) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided,

(A) the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay

(i) all matured installments of interest upon all the Securities of each such series (or all the Securities, as the case may be); and

(ii) the principal of any and all Securities of each such series (or of all the Securities, as the case may be) which shall have become due otherwise than by acceleration; and

(iii) interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series (or at the respective rates of interest or Yields to Maturity of all the Securities, as the case may be) to the date of such payment or deposit; and

(iv) all amounts payable to the Trustee pursuant to Section 6.6; and

(B) all Events of Default under the Indenture, other than the non- payment of the principal of Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein,

then and in every such case the Holders of a majority in aggregate principal amount of all the Securities of each such series, each such series voting as a separate class (or of all the Securities, as the case may be, voting as a single class), then Outstanding, by written notice to the Issuer and to the Trustee, may waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

For all purposes under this Indenture, if a portion of the principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any,

thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities.

SECTION 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY PROVE DEBT. The Issuer covenants that (a) in case default shall be made in the payment of any installment of interest on any of the Securities of any series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days, or (b) in case default shall be made in the payment of all or any part of the principal of any of the Securities of any series when the same shall have become due and payable, whether upon maturity of the Securities of such series or upon any redemption or by declaration or otherwise, then upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of the Securities of such series the whole amount that then shall have become due and payable on all Securities of such series, and such Coupons, for principal and interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series); and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and such other amount due the Trustee under Section 6.6 in respect of Securities of such series.

Until such demand is made by the Trustee, the Issuer may pay the principal of and interest on the Securities of any series to the registered Holders, whether or not the Securities of such series be overdue.

In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Issuer or other obligor upon the Securities and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Securities, wherever situated, all the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings relative to the Issuer or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor, or in case of any other comparable judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

(a) to file and prove a claim or claims for the whole amount of principal and interest (or, if the Securities of any series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of such series) owing and unpaid in respect of the Securities of any series, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts payable to the Trustee under Section 6.6) and of the Securityholders allowed in any judicial proceedings relative to the Issuer or other obligor upon the Securities, or to the creditors or property of the Issuer or such other obligor; and

(b) unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Securities of any series in any election of a receiver, assignee, trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings, custodian or other person performing similar functions in respect of any such proceedings; and

(c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official performing similar functions in respect of any such proceedings is hereby authorized by each of the Securityholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to the Securityholders, to pay to the Trustee its costs and expenses of collection and all other amounts due to it pursuant to Section 6.6.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any series or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding, except as aforesaid in clause (b).

All rights of action and of asserting claims under this Indenture, or under any of the Securities of any series or Coupons appertaining to such Securities, may be enforced by the Trustee without the possession of any of the Securities of such series or Coupons appertaining to such Securities or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall awarded to the Trustee for ratable distribution to the Holders of the Securities or Coupons appertaining to such Securities in respect of which such action was taken, after payment of all sums due to the Trustee under Section 6.6 in respect of such Securities.

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Securities or Coupons appertaining to

such Securities in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities or Coupons appertaining to such Securities parties to any such proceedings.

SECTION 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the Trustee pursuant to this Article in respect of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the several Securities and Coupons appertaining to such Securities in respect of which monies have been collected and stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced principal amounts in exchange for the presented Securities of like series if only partially paid, or upon surrender thereof if fully paid:

FIRST: To the payment of costs and expenses applicable to such series of Securities in respect of which monies have been collected, including all amounts due to the Trustee and each predecessor Trustee pursuant to Section 6.6 in respect to such series of Securities;

SECOND: In case the principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on the Securities of such series in default in the order of the maturity of the installments on such interest, with interest (to the extent that such interest has been collected by the Trustee and is permitted by applicable law) upon the overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;

THIRD: In case the principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for principal and interest, with interest upon the overdue principal, and (to the extent that such interest has been collected by the Trustee and is permitted by applicable law) upon the overdue installations of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such principal and interest or Yield to Maturity, without preference or priority of principal over interest or Yield to Maturity, or of interest or Yield to Maturity over principal, or of any installment of interest over any other installment of interest or of any Security of such series over any other Security of such series, ratably to the aggregate of such principal and accrued and unpaid interest or Yield to Maturity; and

FOURTH: To the payment of the remainder, if any, to the Issuer or any other person lawfully entitled thereto.

SECTION 5.4 SUITS FOR ENFORCEMENT. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

SECTION 5.5 RESTORATION OF RIGHTS ON ABANDONMENT OF PROCEEDINGS. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Issuer and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.

SECTION 5.6 LIMITATIONS ON SUITS BY SECURITY HOLDERS. No Holder of any Security of any series or of any Coupon appertaining thereto shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture or such Security, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder or thereunder, unless (a) such Holder previously shall have given to the Trustee written notice of an Event of Default with respect to Securities of such series and of the continuance thereof, as hereinbefore provided, and (b) the Holders of not less than 25% in aggregate principal amount of the Securities of such affected series then Outstanding (treated as a single class) shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and (c) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding, and (d) no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 5.9; it being understood and intended, and being expressly covenanted by the taker and Holder of every Security or Coupon with every other taker and Holder and the Trustee, that no one or more Holders of Securities of any series or Coupons appertaining to such Securities shall have any right in any manner whatever by virtue or by availing of any provision of this Indenture or any Security to affect, disturb or prejudice the rights of any other such taker or Holder of Securities or Coupons appertaining to such Securities, or to obtain or seek to obtain priority over or preference to any other such taker or Holder or to enforce any right under this Indenture or any Security, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the appli-

cable series and Coupons appertaining to such Securities. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

SECTION 5.7 UNCONDITIONAL RIGHT OF SECURITYHOLDERS TO INSTITUTE CERTAIN SUITS. Notwithstanding any other provision in this Indenture and any provision of any Security, the right of any Holder of any Security or Coupon to receive payment of the principal of and interest on such Security or Coupon on or after the respective due dates expressed in such Security or Coupon or the applicable redemption dates provided for in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 5.8 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER OF DEFAULT. Except as provided in Section 5.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities or Coupons is intended to be exclusive of any other right or remedy and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Holder of Securities or Coupons to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein. Every power and remedy given by this Indenture, any Security or law to the Trustee or to the Holders of Securities or Coupons may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or, subject to Section 5.6, by the Holders of Securities or Coupons.

SECTION 5.9 CONTROL BY HOLDERS OF SECURITIES. The Holders of a majority in aggregate principal amount of the Securities of each series affected (with each such series voting as a separate class) at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such series by this Indenture; provided, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and provided, further, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if (a) the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken; or (b) if the Trustee by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine in good faith that the action or proceedings so directed would involve the Trustee in personal liability; or (c) if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all affected series not joining in the giving of said

direction, it being understood that (subject to Section 6.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders.

Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders.

SECTION 5.10 WAIVER OF PAST DEFAULTS. Prior to the declaration of acceleration of the maturity of any Securities as provided in Section 5.1, the Holders of a majority in aggregate principal amount of the Securities of such series (each series voting as a separate class) at the time Outstanding with respect to which an Event of Default shall have occurred and be continuing (voting as a single class) may on behalf of the Holders of all such Securities waive any past default or Event of Default described in Section 5.1 and its consequences, except a default in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Security affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of all such Securities shall be restored to their former positions and rights hereunder, respectively, and such default shall cease to exist and be deemed to have been cured and not to have occurred for purposes of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 5.11 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN CERTAIN CIRCUMSTANCES. The Trustee shall, within ninety days after the occurrence of a default with respect to the Securities of any series, give notice of all defaults with respect to that series known to the Trustee (i) if any Unregistered Securities of that series are then Outstanding, to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg) and (ii) to all Holders of Securities of such series in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, unless in each case such defaults shall have been cured before the mailing or publication of such notice (the term "default" for the purpose of this
Section being hereby defined to mean any event or condition which is, or with notice or lapse of time or both would become, an Event of Default); provided, that, except in the case of default in the payment of the principal of or interest on any of the Securities of such series, or in the payment of any sinking fund installment on such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders of such series.

SECTION 5.12 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each Holder of any Security or Coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered or omitted by it as

Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such series, or, in the case of any suit relating to or arising under clause (d) or (g) of Section 5.1 (if the suit relates to Securities of more than one but less than all series), 10% in aggregate principal amount of Securities then Outstanding and affected thereby, or in the case of any suit relating to or arising under clause (d) or (g) (if the suit under clause (d) or
(g) relates to all the Securities then Outstanding), (e) or (f) of Section 5.1, 10% in aggregate principal amount of all Securities then Outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security or any date fixed for redemption.

ARTICLE VI

CONCERNING THE TRUSTEE

SECTION 6.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT; PRIOR TO DEFAULT. Prior to the occurrence of an Event of Default with respect to the Securities of a particular series and after the curing or waiving of all Events of Default which may have occurred with respect to such series, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture with respect to such series of Securities. In case an Event of Default with respect to the Securities of a series has occurred and has not been cured or waived, the Trustee shall exercise with respect to such series of Securities such of the rights and powers vested in it by this Indenture with respect to such series of Securities, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that

(a) prior to the occurrence of an Event of Default with respect to the Securities of any series and after the curing or waiving of all such Events of Default with respect to such series which may have occurred:

(i) the duties and obligations of the Trustee with respect to the Securities of any series shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no

implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.9 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it.

The provisions of this Section 6.1 are in furtherance of and subject to Section 315 of the Trust Indenture Act.

SECTION 6.2 CERTAIN RIGHTS OF THE TRUSTEE. In furtherance of and subject to the Trust Indenture Act, and subject to Section 6.1:

(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Issuer mentioned herein shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof is specifically prescribed herein or in the terms established in respect of any

series); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Issuer;

(c) the Trustee may consult with counsel and any written advice or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel;

(d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby;

(e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then Outstanding; provided, that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer upon demand; and

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder.

SECTION 6.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF SECURITIES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency

of this Indenture or of the Securities or Coupons. The Trustee shall not be accountable for the use or application by the Issuer of any of the Securities or of the proceeds thereof.

SECTION 6.4 TRUSTEE AND AGENTS MAY HOLD SECURITIES OR COUPONS; COLLECTIONS, ETC. The Trustee or any agent of the Issuer or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities or Coupons with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from the Issuer with the same rights it would have if it were not the Trustee or such agent.

SECTION 6.5 MONEYS HELD BY TRUSTEE. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or the Trustee shall be under any liability for interest on any moneys received by it hereunder.

SECTION 6.6 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. The Issuer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all reasonable expense, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee and each predecessor trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Issuer under this Section to compensate and indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each predecessor trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities or Coupons, and the Securities are hereby subordinated to such senior claim.

SECTION 6.7 RIGHT OF TRUSTEE TO RELY ON OFFICER'S CERTIFICATE, ETC. Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless

other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 6.8 INDENTURES NOT CREATING POTENTIAL CONFLICTING INTERESTS FOR THE TRUSTEE. The following indentures are hereby specifically described for the purposes of Section 310(b)(1) of the Trust Indenture Act: this Indenture with respect to the Securities of any other series.

SECTION 6.9 QUALIFICATION OF TRUSTEE: CONFLICTING INTERESTS. The Trustee shall comply with Section 310(b) of the Trust Indenture Act.

SECTION 6.10 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee for each series of Securities hereunder shall at all times be a corporation or banking association organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, having a combined capital and surplus of at least $50,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal, state or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.11.

The provisions of this Section 6.10 are in furtherance of and subject to Section 310(a) of the Trust Indenture Act.

SECTION 6.11 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Securities by giving written notice of resignation to the Issuer and (i) if any Unregistered Securities of a series affected are then Outstanding, by giving notice of such resignation to the Holders thereof, by publication at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York, and at least once in an Authorized Newspaper in London (and, if required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg), (ii) if any Unregistered Securities of a series affected are then Outstanding, by mailing notice of such resignation to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as were so furnished to the Trustee and (iii) by mailing notice of such resignation to the Holders of then Outstanding Registered Securities of each series

affected at their addresses as they shall appear on the registry books. Upon receiving such notice of resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the applicable series by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to any series and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of a Security or Securities of the applicable series for at least six months may, subject to the provisions of Section 5.12, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act with respect to any series of Securities after written request therefor by the Issuer or by any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months; or

(ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.10 and Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Issuer or by any Securityholder; or

(iii) the Trustee shall become incapable of acting with respect to any series of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, the Issuer may remove the Trustee with respect to the applicable series of Securities and appoint a successor trustee for such series by written instrument, in duplicate, executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of
Section 315(e) of the Trust Indenture Act, any Securityholder who has been a bona fide Holder of a Security or Securities of such series for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such series. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

(c) The Holders of a majority in aggregate principal amount of the Securities of each series at the time outstanding may at any time remove the Trustee with respect to Securities of such series and appoint a successor trustee with respect to the Securities of

such series by delivering to the Trustee so removed, to the successor trustee so appointed and to the Issuer the evidence provided for in Section 7.1 of the action in that regard taken by the Securityholders.

(d) Any resignation or removal of the Trustee with respect to any series and any appointment of a successor trustee with respect to such series pursuant to any of the provisions of this Section 6.11 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 6.12.

SECTION 6.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor trustee appointed as provided in Section 6.11 shall execute and deliver to the Issuer and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to all or any applicable series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to such series of its predecessor hereunder, with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on the written request of the Issuer or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.6.

If a successor trustee is appointed with respect to the Securities of one or more (but not all) series, the Issuer, the predecessor trustee and each successor trustee with respect to the Securities of any applicable series shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor trustee with respect to the Securities of any series as to which the predecessor trustee is not retiring shall continue to be vested in the predecessor trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust or trusts under separate indentures.

No successor trustee with respect to any series of Securities shall accept appointment as provided in this Section 6.12 unless at the time of such acceptance such successor trustee shall be qualified under Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.10.

Upon acceptance of appointment by any successor trustee as provided in this Section 6.12, the Issuer shall give notice thereof (a) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof, by publication of such notice at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg), (b) if any Unregistered Securities of a series affected are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing such notice to such Holders at such addresses as were so furnished to the Trustee (and the Trustee shall make such information available to the Issuer for such purpose) and (c) to the Holders of Registered Securities of each series affected, by mailing such notice to such Holders at their addresses as they shall appear on the registry books. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.11. If the Issuer fails to give such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of the Issuer.

SECTION 6.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided, that such corporation shall be qualified under Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.10, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities of any series shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities of any series shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Securities of such series or in this Indenture provided that the certificate of the Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Securities of any series in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.

SECTION 6.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated.

SECTION 6.15 APPOINTMENT OF AUTHENTICATING AGENT. As long as any Securities of a series remain Outstanding, the Trustee may, by an instrument in writing, appoint with the approval of the Issuer an authenticating agent (the "Authenticating Agent") which shall be authorized to act on behalf of the Trustee to authenticate Securities, including Securities issued upon exchange, registration of transfer, partial redemption or pursuant to Section 2.9. Securities of each such series authenticated by such Authenticating Agent shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee. Whenever reference is made in this Indenture to the authentication and delivery of Securities of any series by the Trustee or to the Trustee's Certificate of Authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent for such series and a Certificate of Authentication executed on behalf of the Trustee by such Authenticating Agent. Such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $45,000,000 (determined as provided in Section 6.10 with respect to the Trustee) and subject to supervision or examination by Federal or State authority.

Any corporation into which any Authenticating Agent may be merged or converted, or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency business of any Authenticating Agent, shall continue to be the authenticating Agent with respect to all series of Securities for which it served as Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. Any Authenticating Agent may at any time, and if it shall cease to be eligible shall, resign by giving written notice of resignation to the Trustee and to the Issuer.

Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.15 with respect to one or more series of Securities, the Trustee shall upon receipt of an Issuer Order appoint a successor Authenticating Agent and the Issuer shall provide notice of such appointment to all Holders of Securities of such series in the manner and to the extent provided in Section 11.4. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for such series from time to time reasonable compensation. The Authenticating Agent for the Securities of any series shall have no responsibility or liability for any action taken by it as such at the direction of the Trustee.

Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any Authenticating Agent.

ARTICLE VII

CONCERNING THE SECURITYHOLDERS

SECTION 7.1 EVIDENCE OF ACTION TAKEN BY SECURITYHOLDERS. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Article.

SECTION 7.2 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF SECURITIES. Subject to Sections 6.1 and 6.2, the execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding or Securities shall be proved by the Security register or by a certificate of the registrar thereof.

SECTION 7.3 HOLDERS TO BE TREATED AS OWNERS. The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. The Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Holder of any Unregistered Security and the Holder of any Coupon as the absolute owner of such Unregistered Security or Coupon (whether or not such Unregistered Security or Coupon shall be overdue) for the purpose of receiving payment thereof or on account thereof and for all other purposes and neither the Issuer, the Trustee, nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Unregistered Security or Coupon.

SECTION 7.4 SECURITIES OWNED BY ISSUER DEEMED NOT OUTSTANDING. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series have concurred in any request, demand, authorization, direction, notice, consent, waiver or other action by Securityholders under this

Indenture, Securities which are owned by the Issuer or any other obligor on the Securities with respect to which such determination is being made or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such action only Securities which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Issuer or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer or any other obligor on the Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officer's Certificate listing and identifying all Securities, if any, known by the Issuer to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination.

SECTION 7.5 RIGHT OF REVOCATION OF ACTION TAKEN. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any or all series, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action.

ARTICLE VIII

SUPPLEMENTAL INDENTURES

SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS. The Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that

the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:

(a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the Securities of one or more series any property or assets;

(b) to evidence the succession of another corporation to the Issuer, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Issuer pursuant to Article IX;

(c) to add to the covenants of the Issuer such further covenants, restrictions, conditions or provisions as the Issuer and the Trustee shall consider to be for the protection of the Holders of Securities or Coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default;

(d) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make any other provisions as the Issuer may deem necessary or desirable, provided, that no such action shall adversely affect the interests of the Holders of the Securities or Coupons;

(e) to establish the forms or terms of Securities of any series or of the Coupons appertaining to such Securities as permitted by Sections 2.1 and 2.3; and

(f) to evidence and provide for the acceptance of appointment hereunder by a successor trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Section 6.12.

The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such

supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of
Section 8.2.

SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Article VII) of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected by such supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its Board of Directors (which resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force and effect at the date of execution thereof) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such series or of the Coupons appertaining to such Securities; provided, that no such supplemental indenture shall (a) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof, or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities and Coupons or in accordance with the terms thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy pursuant to
Section 5.2, or alter the provisions of Section 11.11 or 11.12 or impair or affect the right of any Securityholder to institute suit for the payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder, in each case without the consent of the Holder of each Security so affected, or (b) reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected.

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of Holders of Securities of such series, or of Coupons appertaining to such Securities, with respect to such covenant or provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series or of the Coupons appertaining to such Securities.

Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of Directors (which resolution may provide general terms or parameters for such action

and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order) certified by the secretary or an assistant secretary of the Issuer authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders of the Securities as aforesaid and other documents, if any, required by Section 7.1, the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall give notice thereof (i) to the Holders of then Outstanding Registered Securities of each series affected thereby, by mailing a notice thereof by first-class mail to such Holders at their addresses as they shall appear on the Security register, (ii) if any Unregistered Securities of a series affected thereby are then Outstanding, to the Holders thereof who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing a notice thereof by first-class mail to such Holders at such addresses as were so furnished to the Trustee and (iii) if any Unregistered Securities of a series affected thereby are then Outstanding, to all Holders thereof, by publication of a notice thereof at least once in an Authorized Newspaper in the Borough of Manhattan, The City of New York and at least once in an Authorized Newspaper in London (and, if required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg), and in each case such notice shall set forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

SECTION 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities of each series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Officer's Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture.

SECTION 8.5 NOTATION ON SECURITIES IN RESPECT OF SUPPLEMENTAL INDENTURES. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Trustee for such series as to any matter provided for by such supplemental indenture or as to any action taken by Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such series then Outstanding.

ARTICLE IX

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 9.1 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Issuer shall not consolidate with or merge into any other Person or transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer shall not permit any other Person to consolidate with or merge into the Issuer, unless:

(a) either the Issuer shall be the continuing corporation, or the successor corporation (if other than the Issuer) formed by such consolidation or into which the Issuer is merged or to which the properties and assets of the Issuer substantially as an entity are transferred or leased shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Issuer under the Securities and this Indenture; and

(b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer or a Subsidiary as a result of such transaction as having been incurred by the Issuer or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing.

SECTION 9.2 SUCCESSOR CORPORATION SUBSTITUTED. The successor corporation formed by such consolidation or into which the Issuer is merged or to which such transfer or lease is made shall succeed to and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such successor corporation had been named as the Issuer herein, and thereafter (except in the case of a lease to another Person) the predecessor corporation shall be relieved of all obligations and covenants under the Indenture and the Securities and, in the event of such conveyance or transfer, any such predecessor corporation may be dissolved and liquidated.

SECTION 9.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Article IX.

ARTICLE X

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS

SECTION 10.1 SATISFACTION AND DISCHARGE OF INDENTURE.

(A) If at any time (i) the Issuer shall have paid or caused to be paid the principal of and interest on all the Securities of any series Outstanding hereunder and all unmatured Coupons appertaining thereto (other than Securities of such series and Coupons appertaining thereto which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.9) as and when the same shall have become due and payable, or (ii) the Issuer shall have delivered to the Trustee for cancellation all Securities of any series theretofore authenticated and all unmatured Coupons appertaining thereto (other than any Securities of such series and Coupons appertaining thereto which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.9) or (iii) in the case of any series of Securities where the exact amount (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (b) below, (a) all the Securities of such series and all unmatured Coupons appertaining thereto not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (b) the Issuer shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust the entire amount in (i) cash (other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with Section 10.4), (ii) in the case of any series of Securities the payments on which may only be made in Dollars, direct obligations of the United States of America, backed by its full faith and credit ("U.S. Government Obligations"), maturing as to principal and interest at such times and in such amounts as will insure the availability of cash sufficient to pay at such maturity or upon such redemption, as the case may be, or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (a) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and (b) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; (x) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and (y) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series; and if, in any such case, the Issuer shall

also pay or cause to be paid all other sums payable hereunder by the Issuer, then this Indenture shall cease to be of further effect (except as to (i) rights of registration of transfer and exchange of Securities of such Series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) any optional redemption rights of such series of Securities to the extent to be exercised to make such call for redemption within one year, (v) the rights, obligations, duties and immunities of the Trustee hereunder, including those under Section 6.6, (vi) the rights of the Holders of securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them, and (vii) the obligations of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided, that the rights of Holders of the Securities and Coupons to receive amounts in respect of principal of and interest on the Securities and Coupons held by them shall not be delayed longer than required by then- applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities of such series.

(B) The following provisions shall apply to the Securities of each series unless specifically otherwise provided in a Board Resolution, Officer's Certificate or indenture supplemental hereto provided pursuant to Section 2.3. In addition to discharge of the Indenture pursuant to the next preceding paragraph, in the case of any series of Securities the exact amounts (including the currency of payment) of principal of and interest due on which can be determined at the time of making the deposit referred to in clause (a) below, the Issuer shall be deemed to have paid and discharged the entire indebtedness on all the Securities of such a series and the Coupons appertaining thereto on the date of the deposit referred to in subparagraph (a) below, and the provisions of this Indenture with respect to the Securities of such series and Coupons appertaining thereto shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities of such series and of Coupons appertaining thereto and the Issuer's right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities or Coupons, (iii) rights of Holders of Securities and Coupons appertaining thereto to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) any optional redemption rights of such series of Securities to the extent to be exercised to make such call for redemption within one year, (v) the rights, obligations, duties and immunities of the Trustee hereunder, (vi) the rights of the Holders of Securities of such series and Coupons appertaining thereto as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any

of them and (vii) the obligations of the Issuer under Section 3.2) and the Trustee, at the expense of the Issuer, shall at the Issuer's request, execute proper instruments acknowledging the same, if

(a) with reference to this provision the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of such series and Coupons appertaining thereto (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations, maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereto on each date that such principal or interest is due and payable and
(b) any mandatory sinking fund payments on the dates on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series;

(b) such deposit will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Issuer is a party or by which it is bound;

(c) the Issuer has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Issuer has received from, or there has been published by, the IRS a ruling or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for United States Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to United States Federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; and

(d) the Issuer has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this provision have been complied with.

(C) The Issuer shall be released from its obligations under Sections 3.6 and 9.1 and unless otherwise provided for in the Board Resolution, Officer's Certificate or Indenture supplemental hereto establishing such series of Securities, from all covenants and other obligations referred to in Section 2.3(18) or 2.3(19) with respect to such series of Securities, and any Coupons appertaining thereto, outstanding on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of any series, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation

set forth in such Section, whether directly or indirectly by reason of any reference elsewhere herein to such Section or by reason of any reference in such
Section to any other provision herein or in any other document and such omission to comply shall not constitute an Event of Default under Section 5.1, but the remainder of this Indenture and such Securities and Coupons shall be unaffected thereby. The following shall be the conditions to application of this subsection C of this Section 10.1:

(a) The Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Securities of such series and coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of any series of Securities the payments on which may only be made in Dollars, U.S. Government Obligations maturing as to principal and interest at such times and in such amounts as will insure the availability of cash or (iii) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay (A) the principal and interest on all Securities of such series and Coupons appertaining thereof and (B) any mandatory sinking fund payments on the day on which such payments are due and payable in accordance with the terms of the Indenture and the Securities of such series;

(b) No Event of Default or event which with notice or lapse of time or both would become an Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit;

(c) Such covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 6.9 and for purposes of the Trust Indenture Act with respect to any securities of the Issuer;

(d) Such covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound;

(e) Such covenant defeasance shall not cause any Securities then listed on any registered national securities exchange under the Exchange Act to be delisted;

(f) The Issuer shall have delivered to the Trustee an Officer's Certificate and Opinion of Counsel to the effect that the Holders of the Securities of such series and Coupons appertaining thereto will not recognize income, gain or loss for United States Federal income tax purposes as a result of such covenant defeasance and will be subject to United States Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and

(g) The Issuer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the covenant defeasance contemplated by this provision have been complied with.

SECTION 10.2 APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF SECURITIES. Subject to Section 10.4, all moneys deposited with the Trustee (for other trustee) pursuant to Section 10.1 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Issuer acting as its own paying agent), to the Holders of the particular Securities of such series and of Coupons appertaining thereto for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest; but such money need not be segregated from other funds except to the extent required by law.

SECTION 10.3 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with the satisfaction and discharge of this Indenture with respect to Securities of any series, all moneys then held by any paying agent under the provisions of this Indenture with respect to such series of Securities shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys.

SECTION 10.4 RETURN OF MONEYS HELD BY TRUSTEE AND PAYING AGENT UNCLAIMED FOR TWO YEARS. Any moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal of or interest on any Security of any series of Coupons attached thereto and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, shall, upon the written request of the Issuer and unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the Securities of such series and of any Coupons appertaining thereto shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Issuer for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any paying agent with respect to such moneys shall thereupon cease; provided, that the Trustee or such paying agent, before being required to make any such repayment with respect to moneys deposited with it for any payment (a) in respect of Registered Securities of any series, shall at the expense of the Issuer, mail by first- class mail to Holders of such Securities at their addresses as they shall appear on the Security register, and (b) in respect of Unregistered Securities of any series, shall at the expense of the Issuer cause to the published once, in an Authorized Newspaper in the Borough of Manhattan, The City of New York and once in an Authorized Newspaper in London (and if required by Section 3.9, once in an Authorized Newspaper in Luxembourg), notice, that such moneys remain and that, after a date specified therein, which shall not be less than thirty days from the date of such mailing or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.

SECTION 10.5 INDEMNITY FOR U.S. GOVERNMENT OF OBLIGATIONS. The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 10.1 or the principal or interest received in respect of such obligations.

ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF ISSUER EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such or against any past, present or future stockholder, officer or director, as such, of the Issuer or of any successor, either directly or through the Issuer or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the Coupons, if any, appertaining thereto by the Holders thereof and as part of the consideration for the issue of the Securities and the Coupons appertaining thereto.

SECTION 11.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF PARTIES AND HOLDERS OF SECURITIES AND COUPONS. Nothing in this Indenture, in the Securities or in the Coupons appertaining thereto, expressed or implied, shall give or be construed to give to any person, firm or corporation, other than the parties thereto and their successors and the Holders of the Securities or Coupons, if any, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities or Coupons, if any.

SECTION 11.3 SUCCESSORS AND ASSIGNS OF ISSUER BOUND BY INDENTURE. All the covenants, stipulations, promises and agreements in this Indenture contained by or in behalf of the Issuer shall bind its successors and assigns, whether so expressed or not.

SECTION 11.4 NOTICES AND DEMANDS ON ISSUER, TRUSTEE AND HOLDERS OF SECURITIES AND COUPONS. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities or Coupons, if any, to or on the Issuer may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to McKesson Corporation, McKesson Plaza, One Post Street, San Francisco, California 94104, Attention:
Secretary. Any notice, direction, request or demand by the Issuer or any Holder of Securities or Coupons, if any, to or upon the Trustee shall be deemed to have been sufficiently

given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Trustee is filed by the Trustee with the Issuer) to The First National Bank of Chicago, One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust Services Division.

Where this Indenture provides for notice to Holders of Registered Securities, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class mail, postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security register. In any case where notice to such Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Issuer when such notice is required to the given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.

SECTION 11.5 OFFICER'S CERTIFICATES AND OPINIONS OF COUNSEL; STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters or information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by an officer of officers of the Issuer, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel, as the case may be, knows that the certificate or opinion of or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

Any certificate or opinion of any independent firm of public accountants filed with and directed to the Trustee shall contain a statement that such firm is independent.

SECTION 11.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. If the date of maturity of interest on or principal of the Securities of any series or any Coupons appertaining thereto or the date fixed for redemption or repayment of any such Security or Coupon shall not be a Business Day, then payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.

SECTION 11.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST INDENTURE ACT. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of Sections 310 to 318, inclusive, of the Trust Indenture Act, such imposed duties or incorporated provision shall control.

SECTION 11.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND EACH SECURITY AND COUPON SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

SECTION 11.9 COUNTERPARTS. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

SECTION 11.10 EFFECT OF HEADINGS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 11.11 SECURITIES IN A FOREIGN CURRENCY OR IN ECU. Unless otherwise specified in an Officer's Certificate delivered pursuant to Section 2.3 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are denominated in a coin or currency other than Dollars (including ECUs), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying rate in The New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; provided, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities (such publication or any successor publication, the "Journal"). If such Market Ex change Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of the ECU shall be Brussels, Belgium, or such other quotations or, in the case of ECU, rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.

All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Issuer and all Holders.

SECTION 11.12 JUDGMENT CURRENCY. The Issuer agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the

rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or required by law or executive order to close.

ARTICLE XII

REDEMPTION OF SECURITIES AND SINKING FUNDS

SECTION 12.1 APPLICABILITY OF ARTICLE. The provisions of this Article shall be applicable to the Securities of any series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.3 for Securities of such series.

SECTION 12.2 NOTICE OF REDEMPTION; PARTIAL REDEMPTIONS. Notice of redemption to the Holders of Registered Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the registry books. Notice of redemption to the Holders of Unregistered Securities to be redeemed as a whole or in part, who have filed their names and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture Act shall be given by mailing notice of such redemption, by first class mail, postage prepaid, at least 30 days and not more than 60 prior to the date fixed for redemption, to such Holders at such addresses as were so furnished to the Trustee (and, in the case of any such notice given by the Issuer, the Trustee shall make such information available to the Issuer for such purpose). Notice of redemption to all other Holders of Unregistered Securities shall be published in an Authorized Newspaper in the Borough of Manhattan, The City of New York and in an Authorized Newspaper in London (and, if required by Section 3.9, in an Authorized Newspaper in

Luxembourg), in each case, once in each of three successive calendar weeks, the first publication to be not less than 30 nor more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of such Security of such series.

The notice of redemption to each such Holder shall specify the principal amount of each Security of such series held by such Holder to be redeemed, the date fixed for redemp tion, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of such Securities and, in the case of Securities with Coupons attached thereto, of all Coupons appertaining thereto maturing after the date fixed for redemption, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. In case any Security of a series is to be redeemed in part only the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued.

The notice of redemption of Securities of any series to be redeemed at the option of the Issuer shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer.

On or before the redemption date specified in the notice of redemption given as provided in this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if the Issuer is acting as its own paying agent, set aside, segregate and holder in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. The Issuer will deliver to the Trustee at least 70 days prior to the date fixed for redemption, or such shorter period as shall be acceptable to the Trustee, an Officer's Certificate stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at the election of the Issuer prior to the expiration of any restriction on such redemption, the Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders pursuant to this Section, an Officer's Certificate stating that such restriction has been complied with.

If less than all the Securities of a series are to be redeemed, the Trustee shall select, in such manner as it shall deemed appropriate and fair, in its sole discretion, Securities of such series to be redeemed in whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof. The Trustee shall promptly notify the Issuer in writing of the Securities of

such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.

SECTION 12.3 PAYMENT OF SECURITIES CALLED FOR REDEMPTION. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Issuer shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a place of payment specified in said notice, together with all Coupons, if any, appertaining thereto maturing after the date fixed for redemption, said Securities or the specified portions thereof shall be paid and redeemed by the Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption; provided, that payment of interest becoming due on or prior to the date fixed for redemption shall be payable in the case of Securities with Coupons attached thereto, to the Holders of the Coupons for such interest upon surrender thereof, and in the case of Registered Securities, to the Holder of such Registered Securities registered as such on the relevant record date, subject to the terms and provisions of
Section 2.3 and 2.7 hereof.

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security.

If any Security with Coupons attached thereto is surrendered for redemption and is not accompanied by all appurtenant Coupons maturing after the date fixed for redemption, the surrender of such missing Coupon or Coupons may be waived by the Issuer and the Trustee, if there be furnished to each of them such security or indemnity as they may require to save each of them harmless.

Upon presentation of any Security redeemed in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of the Issuer, a new Security or Securities of such series, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

SECTION 12.4 EXCLUSION OF CERTAIN SECURITIES FROM ELIGIBILITY FOR SELECTION FOR REDEMPTION. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 40 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer.

SECTION 12.5 MANDATORY AND OPTIONAL SINKING FUNDS. The minimum amount of any sinking fund payment provided for by the terms of the Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of the Securities of any series is herein referred to as an "optional sinking fund payment." The date on which a sinking fund payment is to be made is herein referred to as the "sinking fund payment date."

In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Issuer through any optional redemption provision contained in the terms of such series. Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities.

On or before the 60th day next preceding each sinking fund payment date for any series, the Issuer will deliver to the Trustee an Officer's Certificate (which need not contain the statements required by Section 11.5) (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series and the basis for such credit, (b) stating that none of the Securities of such series has theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Issuer intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Issuer intends to pay on or before the next succeeding sinking fund payment date. Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid which have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such Officer's Certificate (or reasonably promptly thereafter if acceptable to the Trustee). Such Officer's Certificate shall be irrevocable and upon its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash

payments or payments therein referred to, if any, on or before the next succeeding sinking fund payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer's Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Issuer (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Issuer will make no optional sinking fund payment with respect to such series as provided in this Section.

If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or a lesser sum in Dollars (or the equivalent thereof in any Foreign Currency or ECU) if the Issuer shall so request with respect to the Securities of any particular series, such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $50,000 (or the equivalent thereof in any Foreign Currency or ECU) or less and the Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the equivalent thereof in any Foreign Currency or ECU) is available. The Trustee shall select, in the manner provided in Section 12.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of such series (or portions thereof) so selected. Securities shall be excluded from eligibility for redemption under this Section if they are identified by registration and certificate number in an Officer's Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Issuer or (b) an entity specifically identified in such Officer's Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer. The Trustee, in the name and at the expense of the Issuer (or the Issuer, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 12.2 (and with the effect provided in Section 12.3) for the redemption of Securities of such series in part at the option of the Issuer. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such series at maturity.

On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date.

The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or give any notice of redemption of Securities for such series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the giving of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Issuer a sum sufficient for such redemption. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default be deemed to have been collected under Article Five and held for the payment of all such Securities. In case such Event of Default shall have been waived as provided in Section 5.10 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section to the redemption of such Securities.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested as of the date first written above.

McKESSON CORPORATION

                              By: /s/ Richard H. Hawkins
                                  ---------------------------------
                                  Name:  Richard H. Hawkins
                                  Title: Vice President and
                                           Chief Financial Officer



Attest:



By:  /s/ Lorraine Peetz
     ------------------

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

                              By: /s/ Richard D. Manella
                                  -----------------------------
                                  Name:  Richard D. Manella
                                  Title: Vice President



Attest:


By:  /s/ Janice Ott Rotunno
     ---------------------------
     Assistant Vice President

     Assistant Secretary

provisions hereof shall be construed in a manner to so comply.

Income Objective
                  (60% x $250,000)                         $150,000

LESS:             Early Retirement Reduction
                  (0.003 per month x 36 months = 10.8%)     (16,200)

Adjusted Objective                                         $133,800

LESS:             Single Life Value of Retirement
                  Plan Benefit and Annuitized Value of
                  Retirement Share Plan                     (38,000)
                                                           --------

Death age 57

Final Average Compensation:                                    $175,000

Percentage of Average Final Compensation
specified under the Plan:  60%

Income Objective
                          (60% x $175,000)                     $105,000

LESS:                     Early Retirement Reduction
                          (0.003 per month x 60 months = 18%)   (18,900)
                                                               --------

Subtotal                                                       $ 86,100

Application of 100% J&S Factor                                       80%
                                                               --------
Adjusted Objective                                             $ 68,880

LESS:                     Retirement Plan Spouse Allowance
                          and Annuitized Value of Retirement
                          Share Plan                            (25,000)
                                                               --------

Annual EBRP Survivor Benefit                                   $ 43,880

Final Average Compensation:                                 $ 250,000

Percentage of Average Final Compensation
specified under the Plan:                                   65%

Income Objective
                      (65% x $250,000)                      $ 162,500

LESS:             Early Retirement Reduction
                  (0.003 per month x 36 months = 10.8%)       (17,550)
                                                            ---------

Adjusted Objective                                          $ 144,950

LESS:             Single Life Value of Retirement
                  Plan Benefit and Annuitized Value of
                  Retirement Share Plan                       (38,000)
                                                            ---------

                  Single Life Annuity from Company
                  contributed funds in PSIP                   (45,000)
                                                            ---------

Annual Single Life EBRP Benefit                             $  61,950

entitled to the higher of the two, his benefit under the Plan would be $95,800.

________________________                         _________________________
Secretary                                        Executive

By the Authority of the
Compensation Committee
of the Board of Directors
of McKesson Corporation


on April 24, 1996.

TITLE                         DOCUMENT AND DATE THEREOF
                              DESCRIBING THE DISCOVERY, IDEA
                              OR INVENTION


                              _________________________________

               To              at his home address shown in the records of
Company.

               To Company at:       McKesson Corporation

                                    McKesson Corporation

                                    A Delaware Corporation

                                    by _____________________

Attest:                                      Vice President

____________________________
Secretary                           _________________________

A.  Tranche A Banks
    ---------------

                                                           Tranche A          Tranche A
Bank                    Commitment    Pro Rata Share      Commitment       Pro Rata Share
----                   ------------   --------------      ----------       --------------
Bank of America        $ 55,000,000     22.000000000%     $ 33,846,155     19.340660000%
 National Trust
 and Savings
 Association

The Chase              $ 50,000,000     20.000000000%     $ 30,769,231     17.582417714%
 Manhattan Bank
 N.A.

Morgan Guaranty        $ 30,000,000     12.000000000%     $ 18,461,538     10.549450286%
 Trust Company of
 New York

First Interstate       $ 25,000,000     10.000000000%     $ 25,000,000     14.285714286%
 Bank of
 California

ABN AMRO Bank          $ 30,000,000     12.000000000%     $ 18,461,538     10.549450286%
 N.V.

The First              $ 30,000,000     12.000000000%     $ 30,000,000     17.142857143%
 National Bank of

 Chicago
Toronto Dominion       $ 30,000,000     12.000000000%     $ 18,461,538     10.549450286%
 (Texas), Inc.

Total:                 $250,000,000              100%     $175,000,000              100%

B.  Tranche B Banks
    ---------------
                                                                       Tranche B
                                                                      Commitment of
                                                                       Bank and      Tranche B
                      Affiliate        Domestic        Canadian        Affiliate       Pro
Bank                    Bank             Bank            Bank        Bank Combined    Rata Share
----                -----------     -----------      ----------      -------------    ----------
Bank of             Bank of         Bank of          Bank of            $21,153,845   28.205126667%
 America            America         America          America
 National           Canada          National         Canada
 Trust &                            Trust &
 Savings                            Savings
 Association                        Association

The Chase           The Chase       The Chase        The Chase          $19,230,769   25.641025333%
 Manhattan          Manhattan       Manhattan        Manhattan
 Bank N.A.          Bank of         Bank N.A.        Bank of
                    Canada                           Canada

Morgan              Morgan Bank     Morgan           Morgan Bank        $11,538,462   15.384616000%
 Guaranty           of Canada       Guaranty         of Canada
 Trust Company                      Trust Company
 of New York                        of New York

ABN AMRO Bank       ABN AMRO        ABN AMRO Bank    ABN AMRO           $11,538,462   15.384616000%
 N.V.               Bank            N.V.             Bank
                    Canada                           Canada

Toronto             The Toronto-    Toronto          The Toronto-       $11,538,462   15.384616000%
 Dominion           Dominion Bank   Dominion         Dominion Bank
 Texas, (Inc.)                      Texas, (Inc.)

Total:                                                                  $75,000,000            100%

 Applicable
Rating Level         Margin
------------         ------

Level I              0.0700%
Level II             0.1250%
Level III            0.1750%

 Applicable         Offshore Rate    CD Rate      Bankers'
 Rating Level          Loans         Loans     Acceptances
--------------     --------------   --------   ------------
   Level I           0.1300%        0.2550%       0.1300%
   Level II          0.2000%        0.3250%       0.2000%
   Level III         0.2750%        0.4000%       0.2750%

If to the Bank:     Bank of America NT&SA
                    1455 Market Street, 16th Floor
                    San Francisco, CA 94103
                    Attn: Rick Hawkins
                    Phone No: (415) 622-1224
                    Fax No: (415) 622-5167


If to the Customer: MACFOR International Finance Company
                    One Post Street
                    San Francisco, CA 94104
                    Attn: ____________________
                    Phone No: ________________
                    Fax No: __________________

BANK OF AMERICA NATIONAL            MACFOR INTERNATIONAL
TRUST AND SAVINGS ASSOCIATION       FINANCE COMPANY



By:___________________________      By:___________________________

Print Name: __________________      Print Name: __________________

Title:________________________      Title:________________________


By:___________________________      By:___________________________

Print Name: __________________      Print Name: __________________

Title:________________________      Title:________________________

               Security                   Income Credited
               --------                   ---------------

All instruments held on deposit at        Payable date
a Federal Reserve Bank (T-Bonds, T-
Notes, FNMA, FHLMC, agencies, etc.)

GNMA II's held on deposit at PTC          Payable date

Equities, corporate bonds,                Payable date + 1
municipal bonds, GNMA I, registered
CD's

Floating, variable and adjustable         Upon receipt
rates, private placements, CMO,
early redemptions, called bonds,
euro-bonds

Attention:    Ivo Bakovic
          Vice President
          Agency Management Services #5596

The Company:             MACFOR INTERNATIONAL FINANCE COMPANY


                         By:________________________________
                         Its:_______________________________


The Agent:               BANK OF AMERICA NATIONAL TRUST
                         AND SAVINGS ASSOCIATION,
                         as Agent

Section                                                                           Page
                                   ARTICLE I
                                 DEFINITIONS....................................    1

  1.01  Certain Defined Terms...................................................    1
  1.02  Other Interpretive Provisions...........................................   16
  1.03  Accounting Principles...................................................   17

                                   ARTICLE II
                                  THE CREDITS...................................   17

  2.01  Amounts and Terms of Commitments........................................   17
  2.02  Loan Accounts...........................................................   18
  2.03  Procedure for Borrowing.................................................   18
  2.04  Conversion and Continuation Elections...................................   19
  2.05  Voluntary Termination or Reduction of Commitments.......................   20
  2.06  Optional Prepayments....................................................   21
  2.07  Repayment...............................................................   21
  2.08  Interest................................................................   21
  2.09  Fees....................................................................   22
        (a)  Arrangement, Agency Fees...........................................   22
        (b)  Facility Fees......................................................   22
  2.10  Computation of Fees and Interest........................................   22
  2.11  Payments by the Company.................................................   23
  2.12  Payments by the Banks to the Agent......................................   24
  2.13  Sharing of Payments, Etc................................................   24

                                  ARTICLE III
                   TAXES, YIELD PROTECTION AND ILLEGALITY.......................   25

  3.01  Taxes...................................................................   25
  3.02  Illegality..............................................................   26
  3.03  Increased Costs and Reduction of Return.................................   27
  3.04  Funding Losses..........................................................   28
  3.05  Inability to Determine Rates............................................   29
  3.06  Certificates of Banks...................................................   29
  3.07  Survival................................................................   29

                                   ARTICLE IV
                            CONDITIONS PRECEDENT ...............................   29

  4.01  Conditions of Initial Loans.............................................   29
        (a)  Credit Agreement...................................................   30
        (b)  Resolutions; Incumbency............................................   30
        (c)  Organization Documents; Good Standing..............................   30
        (d)  Legal Opinion......................................................   30
        (e)  Payment of Fees....................................................   30
        (f)  Company Certificates...............................................   30
        (g)  Other Documents....................................................   31
  4.02  Conditions to All Borrowings............................................   31
        (a)  Notice of Borrowing or Conversion/Continuation.....................   31
        (b)  Continuation of Representations and Warranties.....................   31

Section                                                                           Page

        (c)      No Existing Default............................................   31

                                   ARTICLE V
                       REPRESENTATIONS AND WARRANTIES...........................   31

  5.01  Corporate Existence and Power...........................................   32
  5.02  Corporate Authorization; No Contravention...............................   32
  5.03  Governmental Authorization..............................................   32
  5.04  Binding Effect..........................................................   32
  5.05  Litigation..............................................................   33
  5.06  No Default..............................................................   33
  5.07  Use of Proceeds; Margin Regulations.....................................   33
  5.08  Financial Condition.....................................................   33
  5.09  Regulated Entities......................................................   34
  5.10  No Burdensome Restrictions..............................................   34
  5.11  Subsidiaries and Certain Liens As of the Closing Date...................   34

                                 ARTICLE VI
                            AFFIRMATIVE COVENANTS...............................   34

  6.01  Financial Statements....................................................   34
  6.02  Certificates; Other Information.........................................   35
  6.03  Notices.................................................................   36
  6.04  Preservation of Corporate Existence, Etc................................   36
  6.05  Insurance...............................................................   36
  6.06  Payment of Taxes........................................................   37
  6.07  Compliance with Laws....................................................   37
  6.08  Inspection of Property and Books and Records............................   37
  6.09  Use of Proceeds.........................................................   37

                                  ARTICLE VII
                             NEGATIVE COVENANTS.................................   38

  7.01  Limitation on Liens.....................................................   38
  7.02  Consolidations and Mergers..............................................   39
  7.03  Use of Proceeds.........................................................   39
  7.04  Maximum Debt to Capitalization Ratio....................................   40

                                  ARTICLE VIII
                              EVENTS OF DEFAULT.................................   40

  8.01  Event of Default........................................................   40
        (a)      Non-Payment....................................................   40
        (b)      Representation or Warranty.....................................   40
        (c)      Specific Defaults..............................................   40
        (d)      Other Defaults.................................................   40
        (e)      Cross-Default..................................................   41
        (f)      Insolvency; Voluntary Proceedings..............................   41
        (g)      Involuntary Proceedings........................................   41
        (h)      ERISA..........................................................   42
  8.02  Remedies................................................................   42

Section                                                                           Page

  8.03  Rights Not Exclusive....................................................   42

                                 ARTICLE IX
                                  THE AGENT.....................................   43

  9.01  Appointment and Authorization...........................................   43
  9.02  Delegation of Duties....................................................   43
  9.03  Liability of Agent......................................................   43
  9.04  Reliance by the Agent...................................................   43
  9.05  Notice of Default.......................................................   44
  9.06  Credit Decision.........................................................   44
  9.07  Indemnification of Agent................................................   45
  9.08  Agent in Individual Capacity............................................   45
  9.09  Successor Agent.........................................................   46
  9.10  Withholding Tax.........................................................   46
  9.11  Co-Agent................................................................   48

                                   ARTICLE X
                                MISCELLANEOUS...................................   48

  10.01  Amendments and Waivers.................................................   48
  10.02  Notices................................................................   49
  10.03  No Waiver; Cumulative Remedies.........................................   49
  10.04  Costs and Expenses.....................................................   50
  10.05  Company Indemnification................................................   50
  10.06  Payments Set Aside.....................................................   51
  10.07  Successors and Assigns.................................................   51
  10.08  Assignments, Participations, etc.......................................   51
  10.09  Confidentiality........................................................   53
  10.10  Set-off................................................................   54
  10.11  Notification of Addresses, Lending Offices, Etc........................   54
  10.12  Counterparts...........................................................   55
  10.13  Severability...........................................................   55
  10.14  No Third Parties Benefited.............................................   55
  10.15  Governing Law and Jurisdiction; Language...............................   55
  10.16  Waiver of Jury Trial...................................................   55
  10.17  Entire Agreement.......................................................   56

Schedule 2.01       Commitments
Schedule 5.11       Subsidiaries and Liens Securing Indebtedness for Borrowed
                    Money
Schedule 10.02      Lending Offices; Addresses for Notices

EXHIBITS

Exhibit A      Form of Notice of Borrowing
Exhibit B      Form of Notice of Conversion/Continuation
Exhibit C      Form of Compliance Certificate
Exhibit D      Form of Legal Opinion of Company's Counsel
Exhibit E      Form of Assignment and Acceptance
Exhibit F      Form of Promissory Note

E. (i)   The Bank may at any time and from time to time, with the prior
         written consent of the Company, at all times other than during the
         existence of an Event of Default, which consent shall not be
         unreasonably withheld (provided, that no consent of the Company
                                --------
         shall be required in connection with any assignment and delegation
         by the Bank to an affiliate of the Bank), assign and delegate to
         one or more commercial banks (each an "Assignee") all, or any part
                                                --------
         of all, of the Loans, the Commitment and the other rights and
         obligations of the Bank hereunder, in a minimum amount of
         $10,000,000; provided, however, that the Company may continue to
                      --------  -------
         deal solely and directly with the Bank in connection with the
         interest so assigned to an Assignee until written notice of such
         assignment, together with payment instructions, addresses and
         related information with respect to the Assignee, shall have been
         given to the Company by the Bank and the Assignee.

   (ii)  The Bank may at any time and from time to time, with the prior
         written consent of the Company, at all times other than during the
         existence of an Event of Default, which consent shall not be
         unreasonably withheld (provided, that no consent of the Company
                                --------
         shall be required in connection with any sale of a participating
         interest by the Bank to an affiliate of the Bank) sell to one or
         more financial institutions (a "Participant") participating
                                         -----------
         interests in any Loans, the Commitment and the other interests of
         the Bank hereunder and under the other loan documents.

Agreement:    means this letter loan agreement, as it may be modified, amended,
---------     or supplemented from time to time.

Applicable
----------
Margin:       means (i) with respect to Offshore Rate Loans, 0.11% per annum,
------        and (ii) with respect to Base Rate Loans, 0.00% per annum.

Attorney
--------
Costs:        means and includes all fees and disbursements of any law firm or
-----         other external counsel, the allocated cost of internal legal
              services and all disbursements of internal counsel.

Base
----
Rate:         means, for any day, the higher of: (a) 0.50% per annum above the
----          latest Federal Funds Rate, which means, for any day, the rate set
              forth in the weekly statistical release designated as H.15(519),
              or any successor publication, published by the Federal Reserve
              Bank of New York (including any such successor, "H.15(519)") on
              the preceding Business Day opposite the caption "Federal Funds
              (Effective)"; or, if for any relevant day such rate is not so
              published on any such preceding Business Day, the rate for such
              day will be the arithmetic mean as determined by the Bank of the
              rates for the last transaction in overnight Federal funds arranged
              prior to 9:00 a.m. (New York City time) on that day by each of
              three leading brokers of Federal funds transactions in New York
              City selected by the Bank; and (b) the rate of interest in effect
              for such day as publicly announced from time to time by the Bank
              in San Francisco, California, as its "reference rate." (The
              "reference rate" is a rate set by the Bank based upon various
              factors including the Bank's costs and desired return, general
              economic conditions and other factors, and is used as a reference
              point for pricing some loans, which may be priced at, above, or
              below such announced rate.) Any change in the reference rate
              announced by the Bank shall take effect at the opening of business
              on the day specified in the public announcement of such change.

Business Day: means any day other than a Saturday, Sunday or other day on which
------------  commercial banks in San Francisco are authorized or required by
              law to close and, if the applicable such Business Day relates to
              an Offshore Rate Loan, also means such a day on which dealings are
              carried on in the applicable offshore dollar interbank market.

Closing
-------
Date:         means the date on which all conditions precedent set forth in
----          Section IV(A) are satisfied or waived by the Bank.

Interest
--------
Period:       means, (a) as to any Offshore Rate Loan, the period commencing on
------        the borrowing date of such Loan or on the date on which the Loan
              is converted into or continued as an Offshore Rate Loan, and
              ending on the date one, two

              or three months thereafter as selected by the Company in its
              notice of borrowing or notice of conversion/continuation and (b)
              as to any Offshore Rate Loan, the period commencing on the
              borrowing date of such Loan or on the date on which the Loan is
              converted into or continued as such type of Loan, such period
              shorter than one month or longer than three months as the Company
              may request and the Bank may agree to in a particular instance in
              its sole discretion; provided, that:
                                   --------------

              (i)   if any Interest Period would otherwise end on a day that is
                    not a Business Day, that Interest Period shall be extended
                    to the following Business Day unless, in the case of an
                    Offshore Rate Loan, the result of such extension would be to
                    carry such Interest Period into another calendar month, in
                    which event such Interest Period shall end on the preceding
                    Business Day;

              (ii)  any Interest Period pertaining to an Offshore Rate Loan that
                    begins on the last Business Day of a calendar month (or on a
                    day for which there is no numerically corresponding day in
                    the calendar month at the end of such Interest Period) shall
                    end on the last Business Day of the calendar month at the
                    end of such Interest Period; and

              (iii) no Interest Period for any loan shall extend beyond the
                    Revolving Termination Date as determined by subsection (a)
                    of the definition of that term.

Material
--------
Adverse
-------
Effect:       means (a) a material adverse change in, or a material adverse
------        effect upon, the operations, business, properties, condition
              (financial or otherwise) or prospects of the Company and its
              Subsidiaries taken as a whole or any Material Subsidiary; (b) a
              material impairment of the ability of the Company to perform under
              this Agreement or any document related hereto and to avoid any
              Event of Default; or (c) a material adverse effect upon the
              legality, validity, binding effect or enforceability against the
              Company of this Agreement or any document or agreement given in
              connection herewith.

Offshore
--------
Rate:         means, for any Interest Period, with respect to an Offshore Rate
----          Loan, the rate of interest per annum (rounded upward to the next
              1/16th of 1%) determined by the Bank as follows:

              Offshore Rate=                 LIBOR
                               ------------------------------------
                               1.00 - Eurodollar Reserve Percentage

              Where,

                   "Eurodollar Reserve Percentage" means for any day for any
                    -----------------------------
              Interest Period the maximum reserve percentage (expressed as a
              decimal, rounded upward to the next 1/100th of 1%) in effect on
              such day (whether or not applicable to the Bank) under regulations
              issued from time to time by the Board of Governors of the Federal
              Reserve System for determining the maximum reserve requirement
              (including any emergency, supplemental or other marginal

                                      -2-

              reserve requirement) with respect to Eurocurrency funding
              (currently referred to as "Eurocurrency liabilities"); and

                   "LIBOR" means the rate of interest per annum determined by
                    -----
               the Bank as the rate of interest at which dollar deposits in the
               approximate amount of the Loan to be made or continued as, or
               converted into, an Offshore Rate Loan and having a maturity
               comparable to such Interest Period would be offered by the Bank
               to major banks in the London interbank market at their request at
               approximately 11:00 a.m. (London time) two Business Days prior to
               the commencement of such Interest Period.

                   The Offshore Rate shall be adjusted automatically as to all
               Offshore Rate Loans then outstanding as of the effective date of
               any change in the Eurodollar Reserve Percentage.

Revolving
---------
Termination
-----------
Date:          means the earlier to occur of (a) the date which is 180 days
----           after Closing Date, and (b) the date on which the Commitment
               terminates in accordance with the provisions of this Agreement.


364-day
-------
Syndicated
----------
Credit
------
Agreement:    means the Credit Agreement dated as of November 4, 1996 among the
---------     Company, the financial institutions party thereto, The Chase
              Manhattan Bank, as Co-Agent, and Bank of America National Trust
              and Savings Association, as Agent, as the same may be amended,
              modified, supplemented, extended, or restated, or as the terms
              thereof may be modified or waived by any amendment, modification,
              supplement, extension, restatement or waiver.

                                                             1997      1996       1995       1994       1993
                                                           --------  --------  ----------  ---------  ---------
FULLY DILUTED EARNINGS PER SHARE
Income (loss) after taxes from continuing operations       $  5,149  $120,695  $(150,068)  $ 69,229   $ 66,771
Dividends requirements - convertible preferred
  securities of subsidiary trust                                665         -          -          -          -
Interest charges on convertible debentures - net of tax           -         -          -         18      1,352
Contribution adjustment - Series B ESOP convertible
   preferred stock/(1)/                                           -         -     (1,836)    (3,706)    (3,758)
                                                           --------  --------  ---------   --------   --------
                                                              5,814   120,695   (151,904)    65,541     64,365
Discontinued operations                                       8,583    14,738    (23,074)    55,161     47,964
Discontinued operations -
   Gain on sale/donation of Armor All stock                 120,178         -        996     32,666          -
   Gain on sale of PCS                                            -         -    576,656          -          -
Extraordinary item                                                -         -          -     (4,186)         -
Cumulative effects of accounting changes                          -         -          -    (16,660)         -
                                                           --------  --------  ---------   --------   --------
   Total                                                   $134,575  $135,433  $ 402,674   $132,522   $112,329
                                                           ========  ========  =========   ========   ========
Fully diluted shares
      Common shares outstanding/(2)/                         44,827    46,740     43,568     40,943     40,025
      Convertible securities - dilutive                         283         -      1,882      3,160      4,783
                                                           --------  --------  ---------   --------   --------
          Total                                              45,110    46,740     45,450     44,103     44,808
                                                           ========  ========  =========   ========   ========
Fully diluted earnings per share
      Continuing operations                                $   0.13  $   2.59  $   (3.34)  $   1.49   $   1.44
      Discontinued operations                                  0.19      0.31      (0.51)      1.25       1.07
      Discontinued operations -
         Gain on sale/donation of Armor All stock              2.66         -       0.02       0.74          -
         Gain on sale of PCS                                      -         -      12.69          -          -
      Extraordinary item                                          -         -          -      (0.10)         -
      Cumulative effects of accounting changes                    -         -          -      (0.38)         -
                                                           --------  --------  ---------   --------   --------
          Total                                            $   2.98  $   2.90  $    8.86   $   3.00   $   2.51
                                                           ========  ========  =========   ========   ========
PRIMARY EARNINGS PER SHARE
Income (loss) after taxes from continuing operations       $  5,149  $120,695  $(150,068)  $ 69,229   $ 66,771
Dividend requirements - convertible preferred stock               -         -     (3,501)    (7,052)    (7,010)
                                                           --------  --------  ---------   --------   --------
                                                              5,149   120,695   (153,569)    62,177     59,761
Discontinued operations                                       8,583    14,738    (23,074)    55,161     47,964
Discontinued operations -
   Gain on sale/donation of Armor All stock                 120,178         -        996     32,666          -
   Gain on sale of PCS                                            -         -    576,656          -          -
Extraordinary item                                                -         -          -     (4,186)         -
Cumulative effects of accounting changes                          -         -          -    (16,660)         -
                                                           --------  --------  ---------   --------   --------
   Total                                                   $133,910  $135,433  $ 401,009   $129,158   $107,725
                                                           ========  ========  =========   ========   ========
Common shares outstanding                                    44,544    46,646     43,568     40,789     40,025
                                                           ========  ========  =========   ========   ========

Primary earnings per share
      Continuing operations                                $   0.12  $   2.59  $   (3.52)  $   1.53   $   1.49
      Discontinued operations                                  0.19      0.31      (0.53)      1.35       1.20
      Discontinued operations -
         Gain on sale/donation of Armor All stock              2.70         -       0.02       0.80          -
         Gain on sale of PCS                                      -         -      13.23          -          -
      Extraordinary item                                          -         -          -      (0.10)         -
      Cumulative effects of accounting changes                    -         -          -      (0.41)         -
                                                           --------  --------  ---------   --------   --------
          Total                                            $   3.01  $   2.90  $    9.20   $   3.17   $   2.69
                                                           ========  ========  =========   ========   ========

Years ended March 31                                1997       1996       1995
--------------------------------------------------------------------------------
OPERATIONS
Revenues                                         $12,886.7   $9,953.7   $9,438.7
Health Care Services Operating Profit/(1)/           232.8      206.1      183.4
Water Products Operating Profit/(1)/                  41.6       39.6       31.8
Net Income                                           133.9      135.4      404.5

FINANCIAL STRENGTH
Working Capital                                  $ 1,123.9   $  820.5   $  879.0
Total Assets                                       5,172.8    3,360.2    3,260.2
Stockholders' Equity                               1,260.8    1,064.6    1,013.5
Capital Employed                                   2,440.8    1,462.9    1,438.6

PERFORMANCE MEASURES
Return on Average Equity                                14%        13%        50%
Fully Diluted Earnings per Share
  Continuing operations
    Before unusual items                         $      2.56 $   2.59   $   1.89
    Unusual items                                      (2.43)      -       (5.23)
                                                 ----------- ---------  --------
      Total                                             0.13     2.59      (3.34)
  Discontinued operations                               0.19     0.31      (0.51)
  Discontinued operations -
    Gain on sale/donation of Armor All stock            2.66       -        0.02
    Gain on sale of PCS                                   -        -       12.69
                                                 ----------- ---------  --------
      Total                                      $      2.98 $    2.90  $   8.86
                                                 =========== =========  ========
Dividends per Common Share                       $      1.00 $    1.00  $   1.34
Shares Outstanding (fully diluted)                      45.1      46.7      45.5

                              Dollars in millions

                           [BAR GRAPH APPEARS HERE]

                           95                $183.4
                           96                $206.1
                           97                $232.8

                                   --------
                                   REVENUES
                                   --------
                              Dollars in billions

                           [BAR GRAPH APPEARS HERE]

                           95                 $9.4
                           96                $10.0
                           97                $12.9

                               ----------------
                               CAPITAL EMPLOYED
                               ----------------
                              Dollars in billions

                           [BAR GRAPH APPEARS HERE]

                           95                 $1.4
                           96                 $1.5
                           97                 $2.4


/(1)/Excluding unusual items.

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

                               1992     1993     1994     1995     1996     1997
                               ----     ----     ----     ----     ----     ----
McKesson Corporation           $100     $143     $196     $482     $624     $795
S&P Index                       100      115      117      136      179      215
Value Line Health Care
  Sector Index                  100       84       81      112      160      197

/s/ Alan Seelenfreund
Alan Seelenfreund
Chairman of the Board


/s/ Mark A. Pulido
Mark A. Pulido
President and Chief Executive Officer

                                 FY96      FY97    Run-Rate*
                                 ----      ----    --------
U.S. Pharmaceutical
  Distribution & Services       $ 8.2     $10.9      $13.5
McKesson General Medical         none       0.2        1.7
International Health Care         1.5       1.5        1.5
McKesson Water Products           0.3       0.3        0.3
                                -----     -----      -----
    Total                       $10.0     $12.9      $17.0
                                =====     =====      =====

                100%=$2.2 billion     100%=$3.4 billion

                      FY96 4Q               FY97 4Q
                      -------               -------
Institutions            26%                   32%
Chains                  34%                   31%
Independents            40%                   37%

FY97      FY97          FY98
 Q1        Q4        Estimated
800       1800          2600

                                                           FY96       FY97    Run-Rate*
McKesson Health Systems (pharmaceuticals)                  $1.7       $2.5      $3.7
McKesson General Medical (medical-sugical supplies)        none       $0.2      $1.7
Total                                                      $1.7       $2.7      $5.4

     General Medical

       In percent*

[BAR GRAPH APPEARS HERE]

      12/95 -- 3.1%
      3/96  -- 3.4%
      6/96  -- 3.4%
      9/96  -- 4.3%
      12/96 -- 4.9%

Years ended March 31                         1997/(1)/        1996         1995             1994        1993         1992
--------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS/(2)/
Revenues/(3)/                               $12,886.7      $9,953.7   $ 9,438.7         $8,520.8      $7,991.8   $7,219.1
 Percent change                                  29.5%          5.5%       10.8%             6.6%         10.7%      27.9%
Gross profit/(4)/                             1,037.3         915.5       808.2/(4)/       783.6         777.2      723.3
 Percent of revenues                              8.0%          9.2%        8.6%             9.2%          9.7%      10.0%
Operating profit                                127.4/(5)/    245.7        90.6/(6)/       202.6         200.3      129.2/(7)/
 Percent change                                 (48.1)%       171.2%      (55.3)%            1.1%         55.0%     (30.6)%
 Percent of revenues                              1.0%          2.5%        1.0%             2.4%          2.5%       1.8%
Operating margin (deficit)/(8)/                  92.8/(5)/    241.3        (9.0)/(9)/      153.6/(10)/   156.5       79.3/(11)/
 Percent of revenues                              0.7%          2.4%       (0.1)%            1.8%          2.0%       1.1%
Interest expense                                 55.7          44.4        44.5             39.3          47.5       52.9
Income (loss) before taxes on income and
 dividends on preferred securities of
 subsidiary trust                                37.1/(5)/    196.9       (53.5)/(9)/      114.3/(10)/   109.0       26.4/(11)/
Taxes on income                                  31.3          76.2        96.6/(12)/       45.0          42.2       10.9
 Effective tax rate                              84.4%         38.7%          -             39.4%         38.7%      41.3%
Dividends on preferred securities of
 subsidiary trust                                 0.7             -           -                -             -          -
Income (loss) after taxes
 Continuing operations                            5.1/(5)/    120.7      (150.1)/(9,12)/    69.3/(10)/    66.8       15.5/(11)/
 Discontinued operations                        128.8/(13)/    14.7       554.6/(14)/       87.8/(15)/    47.9       16.8/(16)/
 Extraordinary item -- debt extinguishment          -             -           -             (4.2)            -          -
 Cumulative effects of accounting changes           -             -           -            (16.7)            -     (110.5)
Net income (loss)                               133.9         135.4       404.5            136.2         114.7      (78.2)
Average stockholders' equity                    990.6       1,043.3       808.3            623.1         581.5      593.3
 Return on equity/(17)/                          13.5%         13.0%       50.0%            21.9%         19.7%    (13.2)%
Common dividends declared                        43.3          44.7        56.5             66.9          64.0       61.8
Fully diluted earnings (loss) per
 common share
 Continuing operations                      $    0.13      $   2.59   $   (3.34)        $   1.49      $   1.44   $   0.22
 Discontinued operations                         2.85          0.31       12.20             1.99          1.07       0.43
 Extraordinary item                                 -             -           -            (0.10)            -          -
 Cumulative effects of accounting changes           -             -           -            (0.38)            -      (2.85)
 Total                                           2.98          2.90        8.86             3.00          2.51      (2.20)

FINANCIAL POSITION/(2)/
Customer receivables                        $ 1,180.4      $  631.7   $   635.6         $  615.3      $  605.3   $  566.4
 Days of sales/(18)/                             25.8          22.9        24.2             26.0          27.3       28.2
Inventories -- LIFO cost                      2,259.5       1,317.0     1,081.9            900.5         777.1      746.2
Inventories -- FIFO cost                      2,538.6       1,602.5     1,376.2          1,204.3       1,090.9    1,042.1
 Days of sales/(18)/                             60.7          63.8        57.4             56.0          54.4       57.8
Drafts and accounts payable                   2,065.4       1,343.2     1,229.8          1,061.5         999.9      910.2
 Days of sales/(18)/                             49.4          53.5        51.3             49.4          49.9       50.4
Current assets                                3,761.1       2,463.0     2,464.2          1,627.9       1,490.0    1,487.4
Current liabilities                           2,637.2       1,642.5     1,585.2          1,326.5       1,298.6    1,196.4
Working capital                               1,123.9         820.5       879.0            301.4         191.4      291.0
 Percent of revenues/(18)/                        6.8%          8.2%        9.3%             3.6%          2.4%       4.0%
Property, plant and equipment -- net            373.6         356.0       341.6            345.7         334.2      333.8
 Percent of revenues/(18)/                        2.3%          3.6%        3.6%             4.1%          4.2%       4.6%
Capital expenditures                             76.9          73.6        76.4             68.1          49.0       67.1
Total assets                                  5,172.8       3,360.2     3,260.2          2,676.6       2,458.4    2,439.1
Total debt/(19)/                                985.2         398.3       425.1            499.0         397.6      543.9
Stockholders' equity                          1,260.8       1,064.6     1,013.5            678.6         619.4      554.5
Capital employed/(20)/                        2,440.8       1,462.9     1,438.6          1,177.6       1,017.0    1,098.4
 Ratio of net debt to capital
  employed/(21)/                                 34.2%            -           -             39.1%         34.1%      42.1%
Average capital employed/(20)/                1,903.1       1,527.6     1,326.1          1,081.8       1,056.9    1,148.7
 Turnover/(22)/                                   6.8           6.5         7.1              7.9           7.6        6.3
Fully diluted shares                             45.1          46.7        45.5             44.1          44.8       38.8/(23)/
Common shares outstanding at 3/31                45.8          44.8        44.4             40.6          40.6       38.9
Dividends per common share                       1.00          1.00        1.34             1.66          1.60       1.60
Cash distribution from PCS
 Transaction per common share                       -             -       76.00/(24)/          -             -          -
Book value per common share/(25)/               27.53         23.76       22.83            16.38         14.99      13.97
Market price
 High                                          68 1/4        55 5/8     109 1/4           68 1/2        47 1/8     40 1/8
 Low                                           41 1/8        37 1/4      30 1/8           38 5/8        30 1/4     32
 At year end                                   64            51 1/4      40 3/8           59 1/2        44 3/4     32 5/8

Years ended March 31                   1997/(1)/        1996         1995           1994         1993         1992
--------------------------------------------------------------------------------------------------------------------------------
 HEALTH CARE SERVICES
 Revenues/(3)/                        $12,591.8       $9,656.7   $9,177.7       $8,274.7       $7,753.4   $6,976.9
  Percent change                           30.4%           5.2%      10.9%           6.7%          11.1%      29.2%
 Operating profit                          92.8/(26)/    206.1       76.1/(27)/    165.6          169.9      105.1/(28)/
  Percent of revenues                       0.7%/(26)/     2.1%       0.8%/(27)/     2.0%           2.2%       1.5%/(28)/
 Average capital employed/(29)/         1,527.8        1,043.5      989.5          836.9          663.3      722.7
  Turnover/(22)/                            8.2            9.3        9.3            9.9           11.7        9.7
  Return/(30)/                              6.1%          19.8%       7.7%          19.8%          25.6%      14.5%
 Segment assets                         4,648.2        2,525.3    2,148.6        1,951.6        1,759.5    1,699.2
 Capital expenditures                      41.9           43.5       44.4           34.4           24.5       38.3
 Depreciation                              40.3           33.9       30.2           23.1           20.2       20.4
 Amortization of intangibles                6.3            6.9        7.0            6.9            6.1        7.0

 WATER PRODUCTS
 Revenues                             $   275.1       $  259.3   $  246.0       $  240.3       $  229.6   $  232.8
  Percent change                            6.1%           5.4%       2.4%           4.7%          (1.4)%     (1.6)%
 Operating profit                          34.6/(31)/     39.6       14.5/(32)/     37.0           30.4       24.1
  Percent of revenues                      12.6%/(31)/    15.3%       5.9%/(32)/    15.4%          13.2%      10.4%
 Average capital employed/(29)/           118.9          114.2      122.7          119.4          107.9      104.4
  Turnover/(22)/                            2.3            2.3        2.0            2.0            2.1        2.2
  Return/(30)/                             29.1%          34.7%      11.8%          31.0%          28.2%      23.1%
 Segment assets                           144.6          142.0      142.3          150.4          135.7      132.6
 Capital expenditures                      32.3           24.8       26.3           28.7           20.6       25.9
 Depreciation                              22.7           21.4       20.3           18.3           16.8       15.9
 Amortization of intangibles                0.1            0.1        0.2              -              -          -

 CORPORATE
 Revenues                             $    19.8       $   37.7   $   15.0       $    5.8       $    8.8   $    9.4
 Expenses                                 (42.8)         (35.5)    (112.7)/(33)/   (50.0)/(34)/   (49.4)     (56.8)
 Average capital employed/(29)/           256.4          369.9      213.9          125.5          285.7      321.6
 Total assets*                            380.0          692.9      969.3          574.6          563.2      607.3
 Capital expenditures                       2.7            5.3        5.7            5.0            3.9        2.9
 Depreciation                               2.4            1.9        1.4            6.2            9.9       10.1
*Total assets include:
  Cash and cash equivalents
   and marketable securities              229.8/(35)/    456.2      670.4           62.7           77.5      140.0
 Net assets of discontinued
   operations in other assets/(36)/           -          125.7       88.2          353.9          333.3      287.2

                                                                      Years Ended March 31
                                                  --------------------------------------------------------------
                                                         1997                  1996                  1995
                                                  -------------------   ------------------    -------------------
In millions                                       Pre-tax   After-tax   Pre-tax  After-tax    Pre-tax   After-tax
-----------------------------------------------------------------------------------------------------------------
Income from Continuing Operations
 Before unusual items and dividends
   on preferred securities of subsidiary trust    $ 184.1     $ 115.3    $196.9     $120.7    $ 145.4     $  87.5
 Dividends on preferred securities of
  subsidiary trust                                               (0.7)
                                                  -------     -------    ------     ------    -------     -------
 Before unusual items                               184.1       114.6     196.9      120.7      145.4        87.5
 Unusual items(1)
  Compensation costs related to the
   PCS Transaction                                                                              (59.4)      (45.3)
  Income tax expense related to the
   PCS Transaction                                                                                         (107.0)
  Charges for restructuring, asset impairment,
   purchased in-process technology, and
    other operating items                          (147.0)     (109.5)                         (139.5)      (85.3)
                                                  -------     -------    ------     ------    -------     -------
Income (Loss) from Continuing Operations          $  37.1     $   5.1    $196.9     $120.7    $ (53.5)    $(150.1)
                                                  =======     =======    ======     ======    =======     =======

                                       Years Ended March 31
                                   --------------------------
                                      1997       1996    1995
-------------------------------------------------------------
Existing business                      14%         5%     11%
Growth from acquired businesses        15          -       -
                                       --         --      --
 Total revenue growth                  29%         5%     11%
                                       ==         ==      ==

                                               As a Percent of Revenue
                                           -------------------------------
                                           1997           1996        1995
--------------------------------------------------------------------------
Health Care Services                        0.7%/(1)/      2.1%       0.8%/(3)/
Water Products                             12.6/(2)/      15.3        5.9/(4)/

                                           1997           1996        1995
--------------------------------------------------------------------------

Gross profit margin(1)                      8.0%           9.2%       8.6%/(3)/
Operating expenses                          7.3/(2)/       6.8        8.7/(3)/
                                            ---            ---        ---
Operating margin (deficit)                  0.7%/(2)/      2.4%      (0.1)%/(3)/
                                            ===            ===        ===

                                               Years Ended March 31
                                         -------------------------------
Dollars in millions                        1997       1996       1995
------------------------------------------------------------------------
Net cash provided (used) by
continuing operations
  Income (loss) after taxes from
    continuing operations                   $   5     $ 121     $(150)
  Depreciation                                 65        57        52
  Amortization of intangibles                   6         7         7
  Gain on sale of subsidiary                    -       (11)        -
  Other noncash charges                       148        49       190
  Working capital changes                       3      (212)       57
                                            -----     -----     -----
    Total                                     227        11       156
  Capital expenditures                        (77)      (74)      (76)
                                            -----     -----     -----
    Excess (deficit)                          150       (63)       80
Net cash provided (used) by
  discontinued operations                      11        (7)       43
Dividends paid                                (43)      (44)      (70)
                                            -----     -----     -----
  Net excess (deficit)                      $ 118     $(114)    $  53
                                            =====     =====     =====

                                                   March 31
                                         ---------------------------
Dollars in millions                        1997      1996      1995
--------------------------------------------------------------------
Short-term borrowings                     $  100    $    7   $   22
Term debt                                    725       211      223
Exchangeable debt                            160       180      180
                                          ------    ------   ------
  Total debt                                 985       398      425
Convertible preferred securities
  of subsidiary trust                        195         -        -
Stockholders' equity                       1,261     1,065    1,014
                                          ------    ------   ------
  Total capitalization                    $2,441    $1,463   $1,439
                                          ======    ======   ======
Debt-to-capital ratio at March 31           40.4%     27.2%    29.5%
Average interest rate during year
 Total debt                                  5.9%      6.2%     6.2%
 Short-term borrowings                       5.7%      7.3%     6.2%
 Other debt                                  6.1%      6.0%     6.2%

                                             Years Ended March 31
                                         -----------------------------
Dollars in millions                        1997      1996       1995
----------------------------------------------------------------------
 Health Care Services                    $2,439     $1,149    $  898
 Water Products                             108        110       110
                                         ------     ------    ------
  Total Operations                        2,547      1,259     1,008
 Corporate
  Cash, cash equivalents and
     marketable securities                  230        456       670
  Discontinued operations                     -        126        88
  Other                                    (336)      (378)     (327)
                                         ------     ------    ------
   Total capital employed                $2,441     $1,463    $1,439
                                         ======     ======    ======
 Return on average
  capital employed(1)
    Health Care Services                    6.1%(2)   19.8%      7.7%(3)
    Water Products                         29.1(2)    34.7      11.8(3)
 Total consolidated operations(4)           4.9(5)    15.8      (0.7)(5)
 Return on average
  stockholders' equity                     13.5%(6)   13.0%     50.0%(6)

Years ended March 31                             1997         1996      1995
--------------------------------------------------------------------------------
REVENUES (NOTE 1)                              $12,886.7   $9,953.7   $9,438.7
                                               ---------   --------   --------
COSTS AND EXPENSES (NOTE 4)
Cost of sales                                   11,849.4    9,038.2    8,630.5
Selling                                            139.8      114.0      116.5
Distribution                                       354.7      327.4      316.4
Administrative                                     450.0      232.8      384.3
Interest                                            55.7       44.4       44.5
                                               ---------   --------   --------
 Total                                          12,849.6    9,756.8    9,492.2
                                               ---------   --------   --------
INCOME (LOSS) BEFORE TAXES ON INCOME
AND DIVIDENDS ON PREFERRED SECURITIES
OF SUBSIDIARY TRUST                                 37.1      196.9      (53.5)
Taxes on income (Note 14)                           31.3       76.2       96.6
                                               ---------   --------   --------
Income (loss) before dividends on
 preferred securities of subsidiary trust            5.8      120.7     (150.1)
Dividends on preferred securities
 of subsidiary trust, net of $0.4 tax
  benefit (Note 10)                                 (0.7)         -          -
                                               ---------   --------   --------
INCOME (LOSS) AFTER TAXES
Continuing operations                                5.1      120.7     (150.1)
Discontinued operations (Notes 2 and 8)              8.6       14.7      (23.1)
Discontinued operations (Notes 2, 8 and 17) -
 Gain on sale/donation of Armor All stock          120.2          -        1.0
 Gain on sale of PCS                                   -          -      576.7
                                               ---------   --------   --------
Net Income                                     $   133.9   $  135.4   $  404.5
                                               =========   ========   ========
EARNINGS (LOSS) PER COMMON SHARE
Fully diluted
 Continuing operations                         $    0.13   $   2.59   $  (3.34)
 Discontinued operations                            0.19       0.31       (.51)
 Discontinued operations -
  Gain on sale/donation of Armor All stock          2.66          -       0.02
  Gain on sale of PCS                                  -          -      12.69
                                               ---------   --------   --------
 Total                                         $    2.98   $   2.90   $   8.86
                                               =========   ========   ========
Primary
 Continuing operations                         $    0.12   $   2.59   $  (3.52)
 Discontinued operations                            0.19       0.31      (0.53)
 Discontinued operations -
  Gain on sale/donation of Armor All stock          2.70          -       0.02
  Gain on sale of PCS                                  -          -      13.23
                                               ---------   --------   --------
 Total                                         $    3.01   $   2.90   $   9.20
                                               =========   ========   ========
SHARES ON WHICH EARNINGS (LOSS)
PER COMMON SHARE WERE BASED
Fully diluted                                       45.1       46.7       45.5
Primary                                             44.5       46.6       43.6

March 31                                             1997       1996       1995
-----------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents                          $  124.8   $  260.8   $  363.1
Marketable securities available for sale
 (Note 1)                                             105.0      195.4      307.3
Receivables (Note 6)                                1,224.5      672.8      651.7
Inventories (Note 7)                                2,259.5    1,317.0    1,081.9
Prepaid expenses (Note 14)                             47.3       17.0       60.2
                                                   --------   --------   --------
  Total current assets                              3,761.1    2,463.0    2,464.2
                                                   --------   --------   --------
Land                                                   38.0       36.1       38.0
Buildings                                             208.5      205.8      199.9
Machinery and equipment                               532.8      471.8      435.4
                                                   --------   --------   --------
  Total property, plant, and equipment                779.3      713.7      673.3
Accumulated depreciation                             (405.7)    (357.7)    (331.7)
                                                   --------   --------   --------
  Net property, plant, and equipment                  373.6      356.0      341.6
Goodwill and other intangibles                        736.2      183.7      172.4
Net assets of discontinued operations
 (Notes 8 and 17)                                         -      125.7       88.2
Other assets (Notes 14 and 15)                        301.9      231.8      193.8
                                                   --------   --------   --------
  Total assets                                     $5,172.8   $3,360.2   $3,260.2
                                                   ========   ========   ========
LIABILITIES
Drafts payable                                     $  210.7   $  194.0   $  160.1
Accounts payable - trade                            1,854.7    1,149.2    1,069.7
Short-term borrowings                                 100.0        6.6       21.7
Current portion of long-term debt (Note 9)             60.3       21.1       11.7
Salaries and wages                                     52.9       26.3       33.5
Taxes                                                  80.0       92.2      138.9
Interest and dividends                                 21.3       19.0       19.3
Other                                                 257.3      134.1      130.3
                                                   --------   --------   --------
  Total current liabilities                         2,637.2    1,642.5    1,585.2
                                                   --------   --------   --------
Postretirement obligations and other
 noncurrent liabilities (Note 15)                     255.1      282.5      269.8
                                                   --------   --------   --------
Long-term debt (Note 9)                               824.9      370.6      391.7
                                                   --------   --------   --------
McKesson - obligated mandatorily redeemable
 preferred securities of subsidiary grantor
 trust whose sole assets are junior
 subordinated debentures of McKesson (Note 10)        194.8          -          -
                                                   --------   --------   --------
STOCKHOLDERS' EQUITY
Common stock (200.0 shares authorized, 46.4, 45.5
 and 44.4 issued as of March 31, 1997, 1996
 and 1995, respectively; par value of $.01)             0.4        0.4        0.4
Additional paid-in capital                            408.2      332.0      319.8
Other capital                                         (19.2)     (36.2)      (4.1)
Retained earnings                                   1,062.6      968.9      875.9
Accumulated translation adjustment                    (44.6)     (49.7)     (51.6)
ESOP notes and guarantee                             (118.3)    (122.5)    (126.4)
Treasury shares, at cost                              (28.3)     (28.3)      (0.5)
                                                   --------   --------   --------
 Stockholders' equity (Note 13)                     1,260.8    1,064.6    1,013.5
                                                   --------   --------   --------
  Total liabilities and stockholders' equity       $5,172.8   $3,360.2   $3,260.2
                                                   ========   ========   ========

Years ended March 31                                  1997       1996      1995
---------------------------------------------------------------------------------
OPERATING ACTIVITIES

Income (loss) after taxes from continuing
 operations                                       $     5.1    $ 120.7   $ (150.1)
Adjustments to reconcile to net cash provided by
 operating activities:
 Depreciation                                          65.4       57.2       51.9
 Amortization of intangibles                            6.4        7.0        7.2
 Provision for bad debts                               23.0       13.7       49.0
 Deferred taxes on income                              (1.6)      42.9      (80.4)
 Gain on sale of subsidiary                               -      (11.2)         -
 Other noncash (Notes 2 and 4)                        125.0       (7.4)     220.9
                                                  ---------   --------   --------
   Total                                              223.3      222.9       98.5
                                                  ---------   --------   --------
  Effects of changes in
   Receivables                                       (129.5)         -      (76.1)
   Inventories                                       (332.6)    (239.6)    (213.7)
   Accounts and drafts payable                        521.0      103.9      167.2
   Taxes                                              (39.0)     (13.1)     115.3
   Other                                              (16.6)     (62.9)      64.5
                                                  ---------   --------   --------
   Total                                                3.3     (211.7)      57.2
                                                  ---------   --------   --------
  Net cash provided by continuing operations          226.6       11.2      155.7
Discontinued operations (Notes 2, 3 and 8)             11.5       (7.4)      43.4
                                                  ---------   --------   --------
  Net cash provided by operating activities           238.1        3.8      199.1
                                                  ---------   --------   --------
INVESTING ACTIVITIES
Purchases of marketable securities                   (103.1)    (130.6)    (324.0)
Maturities of marketable securities                   198.2      244.8       19.9
Property acquisitions                                 (76.9)     (73.6)     (76.4)
Properties sold                                         3.6        6.7        4.3
Proceeds from sale of subsidiaries (Notes 2 and 3)    300.7       36.1      568.5
Acquisitions of businesses, less cash and
 short-term investments acquired (Note 2)          (1,209.5)     (33.5)      (0.7)
Investing activities of discontinued operations        (4.2)      (4.4)     (24.5)
Other (Note 15)                                       (73.0)     (49.5)      (2.9)
                                                  ---------   --------   --------
  Net cash provided (used) by investing
   activities                                        (964.2)      (4.0)     164.2
                                                  ---------   --------   --------
FINANCING ACTIVITIES (Notes 9, 10 and 13)
Proceeds from issuance of debt                      1,118.2        0.6       29.8
Proceeds from issuance of preferred
 trust securities, net of issuance costs              195.1          -          -
Repayment of debt                                    (551.9)     (19.1)     (50.9)
Capital stock transactions
 Issuances                                             27.4       19.2       13.5
 Share repurchases                                   (155.7)     (62.7)      (3.1)
 ESOP note payments                                     4.2        3.9       13.6
 Dividends paid                                       (43.3)     (44.2)     (69.9)
Financing activities of discontinued operations         0.1        0.2        4.1
Other                                                  (4.0)         -          -
                                                  ---------   --------   --------
  Net cash provided (used) by financing
   activities                                         590.1     (102.1)     (62.9)
                                                  ---------   --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                         (136.0)    (102.3)     300.4
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR        260.8      363.1       62.7
                                                  ---------   --------   --------
CASH AND CASH EQUIVALENTS AT END OF YEAR          $   124.8   $  260.8   $  363.1
                                                  =========   ========   ========

                                                         Preferred Stocks        Common Stock
                                                       -------------------    ------------------
Years ended March 31, 1997, 1996, and 1995             Shares       Amount    Shares      Amount
-------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1994                                2,883     $  125.3    44,583     $  89.2
Issuances of shares under employee plans (Note 13)                               538         0.1
Purchase of shares (Note 13)                           (2,883)      (125.3)     (733)       (1.5)
Change in par value of common stock from
    $2.00 to $.01 per share (Note 13)                                                      (87.4)
ESOP note payments
Distribution of net assets of PCS
Other
Translation adjustment
Unrealized gains on marketable securities
Net income
Cash dividends declared
    Preferred stock (Series A, $.90 per share)
    Preferred stock (Series B ESOP, $1.8098 per share)
    Common, $1.34 per share

-------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1995                                    -            -    44,388         0.4
Issuances of shares under employee plans (Note 13)                             1,062
Purchase of shares (Note 13)
ESOP note payments
Other (Note 15)
Translation adjustment
Unrealized gains on marketable securities
Net income
Cash dividends declared
    Common, $1.00 per share

-------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1996                                    -            -    45,450         0.4
Issuances of shares under employee plans (Note 13)                               102
Purchase of shares (Note 13)
ESOP note payments
Other (Note 15)
Translation adjustment
Unrealized gains on marketable securities
Net income
Acquisition of General Medical (Note 2)                                          845
Cash dividends declared
    Common, $1.00 per share
-------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1997                                    -     $      -    46,397     $  0.4
                                                       ======     ========    ======     =======

Additional                            Accumulated          ESOP            Treasury
   Paid-in     Other     Retained     Translation     Notes and     -----------------------   Stockholders'
   Capital   Capital     Earnings      Adjustment     Guarantee     Common Shares    Amount         Equity
----------------------------------------------------------------------------------------------------------
  $  174.4   $  (9.5)   $    610.3        $ (22.3)     $ (165.1)       (3,978)      $ (123.7)     $  678.6
      11.1       1.4                                                      118            4.5          17.1
       5.1                                                              3,846          118.7          (3.0)

      87.4                                                                                               -
      26.9                                                 38.7                                       65.6
                             (80.1)                                                                  (80.1)
      14.9       2.1           2.7                                                                    19.7
                                            (29.3)                                                   (29.3)
                 1.9                                                                                   1.9
                             404.5                                                                   404.5

                              (0.1)                                                                   (0.1)
                              (4.9)                                                                   (4.9)
                             (56.5)                                                                  (56.5)

----------------------------------------------------------------------------------------------------------
     319.8      (4.1)        875.9          (51.6)       (126.4)          (14)          (0.5)     $1,013.5
     (10.6)     (4.0)                                                     761           34.9          20.3
                                                                       (1,349)         (62.7)        (62.7)
                                                            3.9                                        3.9
      22.8     (27.3)          2.3                                                                    (2.2)
                                              1.9                                                      1.9
                (0.8)                                                                                 (0.8)
                             135.4                                                                   135.4

                             (44.7)                                                                  (44.7)

----------------------------------------------------------------------------------------------------------
     332.0     (36.2)        968.9          (49.7)       (122.5)         (602)         (28.3)     $1,064.6
     (25.2)     (7.5)                                                   1,434           66.0          33.3
                                                                       (3,390)        (155.7)       (155.7)
                                                            4.2                                        4.2
      18.4      25.6           3.1                                                                    47.1
                                              5.1                                                      5.1
                (1.1)                                                                                 (1.1)
                             133.9                                                                   133.9
      83.0                                                              1,946           89.7         172.7

                             (43.3)                                                                  (43.3)
----------------------------------------------------------------------------------------------------------
  $  408.2   $ (19.2)   $  1,062.6        $ (44.6)     $ (118.3)         (612)      $  (28.3)     $1,260.8
  ========   =======    ==========        =======      ========        ======       ========      ========

                                                   Years ended March 31
                                           ------------------------------------
                                              1997          1996         1995
--------------------------------------------------------------------------------
Net Income Per Share
     Basic                                   $3.13         $3.05        $9.55
     Diluted                                  3.01          2.91         8.86

                                                           March 31
                                                  -------------------------
In millions, except per share amounts                   1997           1996
---------------------------------------------------------------------------
Revenues                                           $17,398.8      $16,992.8
Net income (loss)                                     (269.3)          79.3
Earnings (loss) per share
     Fully diluted                                     (5.92)          1.60
     Primary                                           (5.92)          1.61

Development costs and investments associated
     with program offerings which will no longer
     be pursued as originally contemplated                       $28.0
Computer software which will no longer be
     utilized or for which the development program
     has ceased                                                   29.3
Cost of facilities closures - primarily write-down
     of assets which will no longer be utilized and will
     be disposed of                                               10.1
Receivables reserves                                              15.1
Other operating items                                             16.3
                                                                 -----
                                                                 $98.8
                                                                 =====

In millions
--------------------------------------------------------------------------------
Costs associated with facility closures and surplus
     properties - primarily write-downs of assets
     to be disposed of                                             $ 27.6
Severance costs for announced workforce reductions                   11.5
Asset write-downs resulting from changed business conditions:
     Facilities and equipment                                         2.4
     Software                                                        24.7
Discontinuation of product lines                                     20.5
Receivable reserves                                                  32.2
Other operating items                                                20.6
                                                                   ------
     Total                                                         $139.5
                                                                   ======

                                                            March 31
                                                       ------------------
In millions                                              1997        1996
-------------------------------------------------------------------------


Costs of facilities closures and surplus
     properties - primarily write-down
     of assets which will be disposed of               $ 27.8       $13.1
Severance costs for announced
     workforce reductions                                   -         2.0
Discontinuation of product lines                          6.1        14.3
Receivable reserves                                       7.7         0.6
Other operating items                                     6.5         2.2
                                                       ------       -----
     Total                                             $ 48.1       $32.2
                                                       ======       =====

NOTE 6: RECEIVABLES

                                                             March 31
                                                    --------------------------
In millions                                         1997       1996       1995
------------------------------------------------------------------------------
Customer accounts                               $1,180.4   $  631.7   $  635.6
Other                                               88.0       79.2       65.4
                                                --------   --------   --------
   Total                                         1,268.4      710.9      701.0
Allowances                                         (43.9)     (38.1)     (49.3)
                                                --------   --------   --------
   Net                                          $1,224.5   $  672.8   $  651.7
                                                ========   ========   ========

     The allowances are for uncollectible accounts, discounts, returns, and
other adjustments.

NOTE 7: INVENTORIES

                                                             March 31
                                                    --------------------------
In millions                                         1997       1996       1995
------------------------------------------------------------------------------
Inventories before LIFO cost adjustment
   (approximates replacement cost)              $2,538.6   $1,602.5   $1,376.2
LIFO cost adjustment                              (279.1)    (285.5)    (294.3)
                                                --------   --------   --------
     Total                                      $2,259.5   $1,317.0   $1,081.9
                                                ========   ========   ========

In millions                                         1997       1996       1995
------------------------------------------------------------------------------


Total assets                                       $2.5       $275.5    $309.6
Total liabilities                                  (5.8)      (149.8)   (221.4)
                                                  -----      -------    ------
    Net assets (liabilities)                      $(3.3)     $ 125.7    $ 88.2
                                                  =====      =======    ======

In millions                                         1997       1996       1995
------------------------------------------------------------------------------

Revenues                                          $592.1     $749.6     $999.9
                                                  ======     ======     ======
Discontinued operations before taxes              $ 17.2     $ 31.7     $ 20.2
Provision for taxes on income                       (5.6)     (13.7)     (32.3)
Minority interest in Armor All                      (3.0)      (3.3)     (11.0)
                                                  ------     ------     ------
     Discontinued operations                         8.6       14.7      (23.1)
                                                  ------     ------     ------
Gain on sale/donation of
     Armor All stock                               154.5          -       (2.0)
Tax benefit (expense)                              (34.3)         -        3.0
                                                  ------     ------     ------
     Net gain on sale/donation
         of Armor All stock                        120.2          -        1.0
                                                  ------     ------     ------
Gain on sale of PCS                                    -          -      571.8
Tax benefit                                            -          -        4.9
                                                  ------     ------     ------
     Net gain on sale of PCS                           -          -      576.7
                                                  ------     ------     ------
              Total                               $128.8     $ 14.7     $554.6
                                                  ======     ======     ======

NOTE 9: LONG-TERM DEBT

                                                             March 31
                                                    --------------------------
In millions                                         1997       1996       1995
------------------------------------------------------------------------------

ESOP related debt                                 $118.3      $122.5    $126.4
4.50% exchangeable subordinated
     debentures due 2004                           160.4       180.0     180.0
8.625% Notes due 1998                               49.0        49.0      49.0
8.75% Notes due 1997                                   -        10.0      10.0
6.60% Notes due 2000                               175.0           -         -
6.875% Notes due 2002                              175.0           -         -
7.65% Debentures due 2027                          175.0           -         -
3.45% to 7.47% IDRBs due
     through 2012                                   21.4        20.0      25.6
Capital lease obligations
     (averaging 8.5%)                                4.2         4.4       4.7
Other, 6.5% to 12.125%, due
     through 2021                                    6.9         5.8       7.7
                                                  ------      ------    ------
     Total                                         885.2       391.7     403.4
Less current portion                                60.3        21.1      11.7
                                                  ------      ------    ------
     Total                                        $824.9      $370.6    $391.7
                                                  ======      ======    ======

                                     Long-Term       Capital
In millions                               Debt        Leases          Total
------------------------------------------------------------------------------
1998                                    $ 60.0          $0.3         $ 60.3
1999                                      10.1           0.3           10.4
2000                                     185.4           0.3          185.7
2001                                      11.0           0.4           11.4
2002                                     186.8           0.4          187.2
Later years                              427.7           2.5          430.2
                                        ------          ----         ------
     Total                              $881.0          $4.2         $885.2
                                        ======          ====         ======

                                           Non-           Non-
                                     cancelable     cancelable
                                      Operating       Sublease     Capital
In millions                              Leases        Rentals      Leases
--------------------------------------------------------------------------
1998                                     $ 35.0         $ (3.0)       $0.6
1999                                       29.3           (2.3)        0.6
2000                                       23.1           (1.8)        0.6
2001                                       19.7           (1.3)        0.6
2002                                       15.4           (1.2)        0.6
Later years                                43.4           (2.0)        3.5
                                         ------         -------       ----
Total minimum lease payments             $165.9         $(11.6)        6.5
                                         ======         =======
Less amounts representing interest                                     2.3
                                                                      ----
Present value of minimum
     lease payments                                                   $4.2
                                                                      ====

                                                        Carrying     Estimated
In millions                                               Amount    Fair Value
------------------------------------------------------------------------------
Cash and cash equivalents                                 $124.8        $124.8
Marketable securities                                      105.0         105.0
Short-term borrowings                                      100.0         100.0
Long-term debt, including current portion                  885.2         866.3

                                                              Options Outstanding                      Options Exercisable
                                         ----------------------------------------------------     -----------------------------
                                                                  Weighted-
                                               Number               Average                           Number
                                           of Options             Remaining         Weighted-     of Options          Weighted-
       Range of                           Outstanding      Contractual Life           Average    Exercisable            Average
Exercise Prices                          at Year End              (in Years)         Exercise    at Year End     Exercise Price
-------------------------------------------------------------------------------------------------------------------------------
 $2.16 to $10.38                             472,316                   4.89            $ 9.11        432,066             $ 9.75
$10.64 to $12.88                           1,002,144                   5.71             12.83        995,777              12.83
$13.17 to $16.67                             847,747                   6.78             16.63        545,402              16.64
$21.12 to $35.00                             617,834                   7.69             33.92        263,019              34.38
$36.88 to $50.00                           1,006,367                   8.65             48.35        198,151              48.83
$50.50 to $63.88                           1,484,150                   9.83             56.43          5,625              51.35
                                           ---------                                               ---------
                                           5,430,558                   7.70             34.00      2,440,040              18.47
                                           =========                                               =========

                                                            1997                   1996                     1995
                                                   ----------------------    --------------------    --------------------
                                                                Weighted-               Weighted-               Weighted-
                                                                  Average                 Average                 Average
                                                                 Exercise                Exercise                Exercise
                                                     Shares        Price        Shares      Price       Shares      Price
-------------------------------------------------------------------------------------------------------------------------
Outstanding at beginning of year                  4,970,403       $22.61     6,127,161   $  15.96    3,205,025     $41.92
Assumed through acquisition                          62,549         2.16             -          -            -          -
Granted                                           1,732,974        54.72       884,200      49.53      828,150      37.12
Exercised                                        (1,159,646)       14.98    (1,762,447)     12.67     (651,651)     19.20
Canceled                                           (175,722)       30.52      (278,511)     23.29     (229,072)     27.61
PCS options/(1)/                                          -            -             -          -     (497,650)     48.30
Repricing of options due to PCS Transaction/(2)/          -            -             -          -    3,472,359      41.74
                                                  ---------                   --------               ---------
Outstanding at year end                           5,430,558        34.00     4,970,403      22.61    6,127,161      15.96
                                                  =========                  =========               =========
Exercisable at year end                           2,440,040       $18.47     2,209,460   $  14.55    2,188,196     $11.94
                                                  =========                  =========               =========

                                                         Years Ended March 31
                                                         --------------------
In millions, except per share amount                        1997        1996
-----------------------------------------------------------------------------
Net income
     As reported                                           $133.9      $135.4
     Pro forma                                              130.0       134.9
Earnings per common share - fully diluted
     As reported                                             2.98        2.90
     Pro forma                                               2.91        2.90
Earnings per common share - primary
     As reported                                             3.01        2.90
     Pro forma                                               2.94        2.90

                                                                 March 31
                                                              --------------
                                                              1997     1996
----------------------------------------------------------------------------
Expected stock price volatility                               25.6%    25.6%
Expected dividend yield                                        1.5%     1.5%
Risk-free interest rate                                        6.2%     5.2%
Expected life (in years)                                         5        5

In millions                                 1997    1996    1995
----------------------------------------------------------------
Current
   Federal                                 $26.6   $23.3  $137.3
   State and local                           2.9     5.0    30.4
   Foreign                                   3.4     5.0     9.3
                                           -----   -----  ------
     Total current                          32.9    33.3   177.0
                                           -----   -----  ------
Deferred
   Federal                                  (3.2)   27.2   (65.6)
   State                                     2.2     7.5   (13.5)
   Foreign                                  (0.6)    8.2    (1.3)
                                           -----   -----  ------
   Total deferred                           (1.6)   42.9   (80.4)
                                           -----   -----  ------
   Total provision                         $31.3   $76.2  $ 96.6
                                           =====   =====  ======

                                           1997   1996      1995
----------------------------------------------------------------
Statutory federal income tax rate          35.0%  35.0%     35.0%
State and local income taxes net
     of federal tax benefit                 9.1    4.1     (20.4)
Nondeductible charge for the
     write-off of in-process technology    45.5      -         -
Nontaxable income - life insurance         (7.0)  (0.9)      1.3
Nondeductible amortization                  5.3    1.1      (5.5)
Dividends paid deduction -
     ESOP allocated shares                 (2.5)  (0.5)      3.3
Basis difference on debentures                             (65.7)
Tax expense on corporate
     restructuring to effect the
     PCS Transaction                                      (111.4)
Nondeductible compensation
     costs related to the
     PCS Transaction                                       (15.4)
Nondeductible restructuring charges                         (1.0)
Other - net                                (1.0)  (0.1)     (0.8)
                                           ----   ----    ------
Effective tax rate                         84.4%  38.7%   (180.6)%
                                           ====   ====    ======

In millions                              1997      1996     1995
----------------------------------------------------------------
Assets
Nondeductible accruals for
     environmental obligations        $  10.6   $  11.9   $ 15.9
Receivable reserves                      17.6      13.8     12.2
Compensation and benefit-
     related accruals                    16.5      16.1     15.8
Loss and credit carryforwards             9.4         -        -
Costs associated with duplicate
     facility closures and
     workforce reductions
     related to acquired businesses      11.7         -        -
Other                                    17.6       5.8     10.6
                                      -------     -----    -----
     Current                             83.4      47.6     54.5
                                      -------     -----    -----
Nondeductible accruals for:
     Postretirement and post-
     employment plans                    76.2      76.6     81.6
     Deferred compensation               33.0      29.0     26.4
     Costs associated with facility
     closures, surplus, properties
     and asset write-downs               11.1      10.4      8.6
Retirement plan                             -       6.0        -
Systems development costs                11.8         -        -
Loss and credit carryforwards             1.7       9.7        -
Other                                    15.3      17.0     13.0
                                      -------    ------   ------
     Noncurrent                         149.1     148.7    129.6
                                      -------   -------   ------
        Total                         $ 232.5   $ 196.3   $184.1
                                      =======   =======   ======
Liabilities
Basis differences for inventory
     valuation                        $ (70.1)  $ (38.8)  $ (5.0)
Other                                    (5.2)     (5.9)    (2.8)
                                      -------    ------    -----
     Current                            (75.3)    (44.7)    (7.8)
                                      -------    ------    -----
Accelerated depreciation                (38.2)    (43.6)   (35.9)
Systems development costs                   -     (14.5)    (5.2)
Retirement plan                          (8.5)        -    (12.2)
Other                                   (10.7)     (9.9)    (5.8)
                                      -------   -------   ------
     Noncurrent                         (57.4)    (68.0)   (59.1)
                                      -------   -------   ------
        Total                         $(132.7)  $(112.7)  $(66.9)
                                      =======   =======   ======
Total net current (included in
     prepaid expenses)                $   8.1   $   2.9   $ 46.7
                                      =======   =======   ======
Total net noncurrent (included
     in other assets)                 $  91.7   $  80.7   $ 70.5
                                      =======   =======   ======

In millions                                1997     1996     1995
-----------------------------------------------------------------
Service cost - benefits earned
     during the year                     $  5.4   $  5.3   $  6.7
Interest cost on projected
     benefit obligation                    23.6     23.7     22.4
Return on assets
     Actual (income) loss                 (35.5)   (51.6)     3.2
     Deferred gain (loss)                  12.1     31.2    (25.9)
Amortization of unrecognized
     gain and prior service costs           5.9      4.5      5.0
Amortization of unrecognized
     net transition asset                  (2.5)    (2.5)    (2.5)
Curtailment loss                            0.4        -        -
                                         ------   ------   ------
     Net pension expense                 $  9.4   $ 10.6   $  8.9
                                         ======   ======   ======

In millions                                1996     1995     1994
-----------------------------------------------------------------
Actuarial present value of
     benefit obligations -
     Vested benefits                     $246.0   $249.8   $204.0
     Nonvested benefits                    13.9     14.1     11.0
                                         ------   ------   ------
     Accumulated benefit obligation       259.9    263.9    215.0
     Effect of assumed increase in
        future compensation levels            -     20.7     20.9
                                         ------   ------   ------
     Projected benefit obligation for
        services rendered to date         259.9    284.6    235.9
Assets of plan at fair value              262.3    248.9    218.8
                                         ------   ------   ------
Excess (shortfall) of assets over
     projected benefit obligation           2.4    (35.7)   (17.1)
Unrecognized prior service cost
     and net loss from experience
     different from that assumed           22.1     67.1     56.7
Unrecognized net transition asset,
     recognized straight-line
     through 1998                          (3.1)    (6.0)    (8.8)
Adjustment required to recognize
     minimum liability                        -    (40.4)       -
                                         ------   ------   ------
Pension asset (liability) included in
     other assets (noncurrent
     liabilities)                        $ 21.4   $(15.0)  $ 30.8
                                         ======   ======   ======

In millions                                     1997   1996   1995
------------------------------------------------------------------
Service cost - benefits earned
     during the period                         $ 1.1  $ 1.1  $ 1.2
Interest cost on projected
     benefit obligation                          9.4   11.4   10.5
Amortization of unrecognized
     gain and prior service costs               (5.5)  (9.3)  (7.6)
                                               -----  -----  -----
        Total                                  $ 5.0  $ 3.2  $ 4.1
                                               =====  =====  =====

In millions                                   1997    1996    1995
------------------------------------------------------------------
Accumulated postretirement
benefit obligations:
     Retirees                               $110.6  $122.2  $118.6
     Active plan participants                 12.3    17.9    16.7
                                            ------  ------  ------
        Total                                122.9   140.1   135.3
Unrecognized prior service cost
     and accumulated net gain                 24.2    14.8    27.3
                                            ------  ------  ------
Accrued postretirement
     benefit obligation                     $147.1  $154.9  $162.6
                                            ======  ======  ======

In millions                             1997           1996         1995
------------------------------------------------------------------------
Revenues
     Health Care Services/(1)/     $12,591.8       $9,656.7     $9,177.7
     Water Products                    275.1          259.3        246.0
     Corporate                          19.8           37.7         15.0
                                   ---------       --------     --------
        Total                      $12,886.7       $9,953.7     $9,438.7
                                   =========       ========     ========
Operating Profit
     Health Care Services/(2)/     $    92.8/(3)/  $  206.1     $   76.1/(4)/
     Water Products                     34.6/(3)/      39.6         14.5/(4)/
                                   ---------       --------     --------
        Total                          127.4          245.7         90.6
     Interest - net/(5)/               (47.5)         (13.3)       (31.4)
     Corporate                         (42.8)         (35.5)      (112.7)/(4)/
                                   ---------       --------     --------
        Income (loss) before
        taxes on income            $    37.1       $  196.9     $  (53.5)
                                   =========       ========     ========
Segment Assets - at year end
     Health Care Services          $ 4,648.2       $2,525.3     $2,148.6
     Water Products                    144.6          142.0        142.3
                                   ---------       --------     --------
        Total                        4,792.8        2,667.3      2,290.9
     Corporate
        Cash, cash equivalents and
           marketable securities       229.8          456.2        670.4
        Net assets of discontinued
           operations                      -          125.7         88.2
     Other                             150.2          111.0        210.7
                                   ---------       --------     --------
        Total                      $ 5,172.8       $3,360.2     $3,260.2
                                   =========       ========     ========
Depreciation and Amortization
     Health Care Services          $    46.6       $   40.8     $   37.2
     Water Products                     22.8           21.5         20.5
     Corporate                           2.4            1.9          1.4
                                   ---------       --------     --------
        Total                      $    71.8       $   64.2     $   59.1
                                   =========       ========     ========
Capital Expenditures
     Health Care Services          $    41.9       $   43.5     $   44.4
     Water Products                     32.3           24.8         26.3
     Corporate                           2.7            5.3          5.7
                                   ---------       --------     --------
        Total                      $    76.9       $   73.6     $   76.4
                                   =========       ========     ========

In millions                 1997           1996         1995
------------------------------------------------------------
Revenues/(1)/
     U.S.              $11,374.2       $8,429.5     $8,080.4
     International       1,512.5        1,524.2      1,358.3
                       ---------       --------     --------
        Total          $12,886.7       $9,953.7     $9,438.7
                       =========       ========     ========
Operating Profit
     U.S.                  102.3       $  207.5     $   64.8
     International          25.1           38.2         25.8
                       ---------       --------     --------
        Total              127.4/(2)/  $  245.7     $   90.6/(3)/
                       =========       ========     ========
Assets, at year end
     U.S.              $ 4,935.4       $3,130.9     $3,024.2
     International         237.4          229.3        236.0
                       ---------       --------     --------
        Total          $ 5,172.8       $3,360.2     $3,260.2
                       =========       ========     ========

                                                           First          Second        Third         Fourth         Fiscal
In millions except per share amounts                     Quarter         Quarter      Quarter        Quarter           Year
---------------------------------------------------------------------------------------------------------------------------
FISCAL 1997
     Revenues/(1)/                                      $2,670.6       $2,730.9      $3,486.6       $3,998.6      $12,886.7
     Gross profit                                          231.9          231.0         243.8          330.6        1,037.3
     Income (loss) after taxes
        Continuing operations                              (21.4)/(2)/     25.8         (36.1)/(3)/     36.8            5.1
        Discontinued operations                              3.3            2.3           2.1            0.9            8.6
        Discontinued operations -
           Gain on sale of Armor All                           -              -         120.2              -          120.2
                                                        --------       --------      --------       --------      ---------
           Total                                        $  (18.1)      $   28.1      $   86.2       $   37.7      $   133.9
                                                        ========       ========      ========       ========      =========
Earnings (loss) per common share
     Fully diluted
        Continuing operations                           $  (0.49)      $   0.59      $  (0.82)      $   0.81      $    0.13
        Discontinued operations                             0.08           0.05          0.05           0.02           0.19
        Discontinued operations -
           Gain on sale of Armor All                           -              -          2.70              -           2.66
                                                        --------       --------      --------       --------      ---------
           Total                                        $  (0.41)      $   0.64      $   1.93       $   0.83      $    2.98
                                                        ========       ========      ========       ========      =========
     Primary
        Continuing operations                           $  (0.49)      $   0.59      $  (0.83)      $   0.81      $    0.12
        Discontinued operations                             0.08           0.05          0.06           0.02           0.19
        Discontinued operations -
           Gain on sale of Armor All                           -              -          2.71              -           2.70
                                                        --------       --------      --------       --------      ---------
           Total                                        $  (0.41)      $   0.64      $   1.94       $   0.83      $    3.01
                                                        ========       ========      ========       ========      =========
Cash dividends per share                                $   0.25       $   0.25      $   0.25       $   0.25      $    1.00
                                                        ========       ========      ========       ========      =========
Market prices per common share
     High                                               $ 51 1/4       $ 48 1/8      $ 56 3/4       $ 68 1/4      $  68 1/4
     Low                                                  44 1/8         41 1/8        45 3/4         52 1/8         41 1/8

FISCAL 1996
     Revenues/(1)/                                      $2,388.3       $2,402.6      $2,581.1       $2,581.7      $ 9,953.7
     Gross profit                                          221.2          229.3         226.2          238.8          915.5
     Income after taxes
        Continuing operations                               28.0           28.2          28.7           35.8          120.7
        Discontinued operations                              4.8            3.5           4.2            2.2           14.7
                                                        --------       --------      --------       --------      ---------
           Total                                        $   32.8       $   31.7      $   32.9       $   38.0      $   135.4
                                                        ========       ========      ========       ========      =========

Earnings per common share
     Fully diluted
        Continuing operations                           $   0.60       $   0.61      $   0.61       $   0.77      $    2.59
        Discontinued operations                             0.10           0.07          0.09           0.05           0.31
                                                        --------       --------      --------       --------      ---------
           Total                                        $   0.70       $   0.68      $   0.70       $   0.82      $    2.90
                                                        ========       ========      ========       ========      =========
     Primary
        Continuing operations                           $   0.60       $   0.61      $   0.61       $   0.77      $    2.59
        Discontinued operations                             0.10           0.07          0.09           0.05           0.31
                                                        --------       --------      --------       --------      ---------
           Total                                        $   0.70       $   0.68      $   0.70       $   0.82      $    2.90
                                                        ========       ========      ========       ========      =========
Cash dividends per share                                $   0.25       $   0.25      $   0.25       $   0.25      $    1.00
                                                        ========       ========      ========       ========      =========
Market prices per common share
     High                                               $ 47 3/8       $ 46 5/8      $ 53 1/4       $ 55 5/8      $  55 5/8
     Low                                                  37 1/4         42 5/8        44 7/8         46 1/2         37 1/4

/s/ Mark A. Pulido

Mark A. Pulido
President and Chief Executive Officer


/s/ Richard H. Hawkins

Richard H. Hawkins
Vice President and Chief Financial Officer

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
San Francisco, California
May 16, 1997

                  BOARD OF DIRECTORS                                                 PRINCIPAL EXECUTIVES
Alan Seelenfreund, 60             Mark A. Pulido, 44                 Alan Seelenfreund, 60           Mark A. Pulido, 44
Chairman of the Board,            President and                      Chairman of the Board/1/        President and
McKesson Corporation              Chief Executive Officer,                                           Chief Executive Officer/1/
                                  McKesson Corporation
Mary G. F. Bitterman, 53                                                            CORPORATE OFFICERS
President and                     Carl E. Reichardt, 65
Chief Executive Officer,          Chairman of the Board,             William A. Armstrong, 56        Nancy A. Miller, 53
KQED, Inc.                        Retired,                           Vice President                  Vice President and
                                  Wells Fargo & Company              Human Resources and             Corporate Secretary
Tully M. Friedman, 55                                                Administration
Chairman and                      Jane E. Shaw, 58                                                   Steven B. Nielsen, 49
Chief Executive Officer,          Founder, The Stable                Michael T. Dalby, 51            Vice President and
Tully M. Friedman &               Network;                           Vice President                  Chairman and
Company, LLC                      Former President and               Strategic Planning              Chief Executive Officer,
                                  Chief Operating Officer,                                           McKesson General
John M. Pietruski, 64             ALZA Corporation                   John H. Hammergren, 38          Medical Corp.
Chairman of the Board,                                               Vice President and
Texas Biotechnology               Robert H. Waterman, Jr., 60        President, McKesson             Charles A. Norris, 51
Corporation;                      Chairman, The Waterman             Health Systems                  Vice President and
Chairman and Chief                Group, Inc.                                                        President, McKesson Water
Executive Officer, Retired,                                          Richard H. Hawkins, 47          Products Company
Sterling Drug, Inc.               /1/ Elected May 30, 1997.          Vice President and
                                                                     Chief Financial Officer         Alan M. Pearce, 48
David S. Pottruck, 48                                                                                Treasurer/2/
President and                                                        David L. Mahoney, 42
Chief Operating Officer,                                             Vice President and              Carmine J. Villani, 54
The Charles Schwab                                                   President, Pharmaceutical       Vice President and
Corporation/1/                                                       and Retail Services             Chief Information Officer

                                                                     Mark T. Majeske, 39             Heidi E. Yodowitz, 43
                                                                     Vice President and              Controller
                                                                     President, Customer
                                                                     Operations                  /1/ From April 1, 1997, Alan
                                                                                                     Seelenfreund will serve
                                                                     Ivan D. Meyerson, 52            as Chairman of the Board
                                                                     Vice President and              of Directors of McKesson,
                                                                     General Counsel                 while Mark A. Pulido
                                                                                                     becomes Chief Executive
                                                                                                     Officer as well as
                                                                                                     President.

                                                                                                 /2/ Elected May 30, 1997.

              McKesson Investor Base*
                    In percent

             [PIE GRAPH APPEARS HERE]

Growth - 26%                     Classic Value - 32%
Aggressive Growth - 4%           Balanced - 2%
Income - 2%                      Growth at Any
Value/Income -11%                Reasonable Price - 23%

                                                        Jurisdiction of
                                                          Organization
                                                        ---------------

McKesson Water Products Company......................     California
Medis Health and Pharmaceutical Services Inc.........      Canada
General Medical Inc..................................     Delaware
  GM Holdings, Inc...................................     Delaware
    McKesson General Medical Corp....................      Virginia

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP
San Francisco, California
June 16, 1997