MCKESSON CORP (Form: 10-Q, Received: 07/26/2012 16:25:30)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13252

McKESSON CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		94-3207296
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Post Street, San Francisco, California		94104
(Address of principal executive offices)		(Zip Code)

(415) 983-8300

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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


Class		Outstanding as of June 30, 2012
Common stock, $0.01 par value		236,008,795 shares

McKESSON CORPORATION

TABLE OF CONTENTS


Item		Page

	PART I—FINANCIAL INFORMATION

1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Statements of Operations Quarters ended June 30, 2012 and 2011		3

	Condensed Consolidated Statements of Comprehensive Income Quarters ended June 30, 2012 and 2011		4

	Condensed Consolidated Balance Sheets June 30, 2012 and March 31, 2012		5

	Condensed Consolidated Statements of Cash Flows Quarters ended June 30, 2012 and 2011		6

	Financial Notes		7

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

3.	Quantitative and Qualitative Disclosures About Market Risk		25

4.	Controls and Procedures		25

	PART II—OTHER INFORMATION

1.	Legal Proceedings		25

1A.	Risk Factors		25

2.	Unregistered Sales of Equity Securities and Use of Proceeds		25

3.	Defaults Upon Senior Securities		26

4.	Mine Safety Disclosures		26

5.	Other Information		26

6.	Exhibits		27

	Signatures		28

McKESSON CORPORATION

PART I—FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)


	Quarter Ended June 30,
	2012		2011
Revenues	$	30,798	$ 29,980
Cost of Sales		(29,198)	(28,471)

Gross Profit		1,600	1,509
Operating Expenses		(1,086)	(1,037)
Litigation Charge		(16)	—
Gain on Business Combination		81	—

Total Operating Expenses		(1,021)	(1,037)

Operating Income		579	472
Other Income, Net		8	8
Interest Expense		(56)	(64)

Income Before Income Taxes		531	416
Income Tax Expense		(151)	(130)

Net Income	$	380	$ 286


Earnings Per Common Share
Diluted	$	1.58	$ 1.13

Basic	$	1.61	$ 1.15


Dividends Declared Per Common Share	$	0.20	$ 0.20


Weighted Average Common Shares
Diluted		240	254
Basic		236	249

See Financial Notes

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Quarter Ended June 30,
	2012		2011
Net Income	$	380	$ 286

Other Comprehensive Income (Loss), net of tax
Foreign currency translation adjustments, net of income tax expense of $4 and $7		(41)	11
Other, net of income tax expense of $3 and $3		6	5

Total Other Comprehensive Income (Loss)		(35)	16

Comprehensive Income	$	345	$ 302

See Financial Notes

McKESSON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(Unaudited)


	June 30, 2012		March 31, 2012
ASSETS
Current Assets
Cash and cash equivalents	$	2,013	$ 3,149
Receivables, net		9,564	9,977
Inventories, net		10,059	10,073
Prepaid expenses and other		418	404

Total Current Assets		22,054	23,603
Property, Plant and Equipment, Net		1,221	1,043
Goodwill		5,025	5,032
Intangible Assets, Net		1,678	1,750
Other Assets		1,770	1,665

Total Assets	$	31,748	$ 33,093


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Drafts and accounts payable	$	15,151	$ 16,114
Short-term borrowings		—	400
Deferred revenue		1,317	1,423
Deferred tax liabilities		1,534	1,092
Current portion of long-term debt		508	508
Other accrued liabilities		1,587	2,149

Total Current Liabilities		20,097	21,686

Long-Term Debt		3,072	3,072
Other Noncurrent Liabilities		1,376	1,504
Commitments and Contingent Liabilities (Note 8)
Stockholders’ Equity
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding		—	—
Common stock, $0.01 par value, 800 shares authorized at June 30, 2012 and March 31, 2012, 375 and 373 shares issued at June 30, 2012 and March 31, 2012		4	4
Additional Paid-in Capital		5,809	5,571
Retained Earnings		9,783	9,451
Accumulated Other Comprehensive Income (Loss)		(30)	5
Other		12	4
Treasury Shares, at Cost, 139 and 138 at June 30, 2012 and March 31, 2012		(8,375)	(8,204)

Total Stockholders’ Equity		7,203	6,831

Total Liabilities and Stockholders’ Equity	$	31,748	$ 33,093

See Financial Notes

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Quarter Ended June 30,
	2012		2011
Operating Activities
Net income	$	380	$ 286
Adjustments to reconcile to net cash provided by (used in) operating activities:
Gain on business combination		(81)	—
Depreciation and amortization		140	135
Other deferred taxes		170	31
Share-based compensation expense		42	39
Other non-cash items		(6)	8
Changes in operating assets and liabilities, net of acquisitions:
Receivables		444	(195)
Inventories		(4)	(303)
Drafts and accounts payable		(936)	445
Deferred revenue		(102)	(50)
Taxes		(142)	43
Litigation settlement payments		(273)	(6)
Deferred tax benefit on litigation charges		100	2
Other		(284)	(109)

Net cash provided by (used in) operating activities		(552)	326


Investing Activities
Property acquisitions		(46)	(58)
Capitalized software expenditures		(38)	(51)
Acquisitions, less cash and cash equivalents acquired		(108)	(106)
Other		42	61

Net cash used in investing activities		(150)	(154)


Financing Activities
Repayments of short-term borrowings		(400)	—
Repayments of long-term debt		—	(16)
Common stock transactions:
Issuances		43	51
Share repurchases, including shares surrendered for tax withholding		(53)	(672)
Dividends paid		(53)	(47)
Other		38	16

Net cash used in financing activities		(425)	(668)

Effect of exchange rate changes on cash and cash equivalents		(9)	—

Net decrease in cash and cash equivalents		(1,136)	(496)
Cash and cash equivalents at beginning of period		3,149	3,612

Cash and cash equivalents at end of period	$	2,013	$ 3,116

See Financial Notes

McKESSON CORPORATION

FINANCIAL NOTES

(UNAUDITED)

1.	Significant Accounting Policies

Basis of Presentation: The condensed consolidated financial statements of McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar pronouns) include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. We also evaluate our ownership, contractual and other interests in entities to determine if they are variable interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of those interests. These evaluations are highly complex and involve judgment and the use of estimates and assumptions based on available historical information and management’s judgment, among other factors. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. The consolidated VIEs are not material to our condensed consolidated financial statements. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements.

To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. In our opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented.

The results of operations for the quarter ended June 30, 2012 are not necessarily indicative of the results that may be expected for the entire year. These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies and financial notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012 previously filed with the SEC on May 2, 2012 (“2012 Annual Report”). Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year.

Recently Adopted Accounting Pronouncements

In the first quarter of 2013, we adopted amended guidance on a retrospective basis related to the presentation of other comprehensive income. The amended guidance requires that comprehensive income, the components of net income and the components of other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We elected to report other comprehensive income and its components in a separate statement of comprehensive income. While the new guidance changed the presentation of comprehensive income, there were no changes to the components that are recognized in net income or other comprehensive income as determined under previous accounting guidance. The amended guidance did not have a material effect on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2011, disclosure guidance related to the offsetting of assets and liabilities was issued. The guidance requires an entity to disclose information about offsetting and related arrangements for recognized financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for us on a retrospective basis commencing in the first quarter of 2014. We are currently evaluating the impact of this new guidance on our condensed consolidated financial statements.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

2.	Business Combinations

On April 6, 2012, we purchased the remaining 50% ownership interest in our corporate headquarters building located in San Francisco, California, for $90 million, which was funded from cash on hand. We previously held a 50% ownership interest and were the primary tenant in this building. This transaction was accounted for as a step acquisition, which requires that we re-measure our previously held 50% ownership interest to fair value and record the difference between the fair value and carrying value as a gain in the condensed consolidated statements of operations. The re-measurement to fair value resulted in a non-cash pre-tax gain of $81 million ($51 million after-tax), which was recorded as a gain on business combination within Corporate in the condensed consolidated statements of operations during the first quarter of 2013.

The total fair value of the net assets acquired was $180 million, which was allocated as follows: buildings and improvements of $113 million and land of $58 million with the remainder allocated for settlement of our pre-existing lease and lease intangible assets. The fair value of the buildings and improvements was determined based on current market replacement costs less depreciation and unamortized tenant improvement costs, as well as, other relevant market information, and has a weighted average useful life of 30 years. The fair value of the land was determined using comparable sales of land within the surrounding market.

On March 25, 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the independent banner business of the Katz Group Canada Inc. (“Katz Group”), and Medicine Shoppe Canada Inc., the franchise business of the Katz Group (collectively, “Katz Assets”) for approximately $919 million, which was funded from cash on hand. The acquisition of the assets from the Drug Trading Company Limited consists of a marketing and purchasing arm of more than 850 independently owned pharmacies in Canada. The acquisition of Medicine Shoppe Canada Inc. consists of the franchise business of providing services to more than 160 independent pharmacies in Canada.

The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date:


(In millions)	Amounts Previously Recognized as of Acquisition Date (Provisional) ⁽¹⁾
Current assets, net of cash acquired	$	33
Goodwill		506
Intangible assets		441
Other long-term assets		15
Current liabilities		(37	)
Long-term deferred tax liabilities		(39	)

Purchase price, less cash and cash equivalents	$	919

⁽¹⁾	As previously reported in our Form 10-K for the year ended March 31, 2012.

The excess of the purchase price over the net tangible and intangible assets of approximately $506 million was recorded as goodwill, which primarily reflects the expected future benefits to be realized upon integrating the business. The amount of goodwill expected to be deductible for tax purposes is $287 million.

During the first quarter of 2013, there were no material adjustments to the preliminary fair values recorded for the assets acquired and liabilities assumed of the Katz Assets as of the acquisition date and, therefore, we have not retrospectively adjusted our financial statements. These amounts are subject to change within the measurement period as our fair value assessments are finalized. We currently expect to finalize our fair value assessments by September 2012. Financial results for the acquired Katz Assets are included in the results of operations within our Canadian pharmaceutical distribution and services business, which is part of our Distribution Solutions segment, beginning in the first quarter of 2013.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

During the last two years, we also completed a number of smaller acquisitions within both of our operating segments. Financial results for our business acquisitions have been included in our consolidated financial statements since their respective acquisition dates. Purchase prices for our business acquisitions have been allocated based on estimated fair values at the date of acquisition.

Goodwill recognized for our business acquisitions is generally not expected to be deductible for tax purposes. However, if we acquire the assets of a company, the goodwill may be deductible for tax purposes. The pro forma results of operations for our business acquisitions and the results of operations for these acquisitions since the acquisition date have not been presented because the effects were not material to the consolidated financial statements on either an individual or an aggregate basis.

3.	Income Taxes

As of June 30, 2012, we had $519 million of unrecognized tax benefits, of which $393 million would reduce income tax expense and the effective tax rate, if recognized. During the first quarter of 2013, we recorded an $82 million reduction to our gross unrecognized tax benefits as a result of a change in accounting method for tax purposes, which had no impact to the effective tax rate. During the next twelve months, it is reasonably possible that audit resolutions and the expiration of statutes of limitations could potentially reduce our unrecognized tax benefits by up to $149 million. However, this amount may change because we continue to have ongoing negotiations with various taxing authorities throughout the year.

We have received tax assessments of $98 million from the U.S. Internal Revenue Service (“IRS”) relating to 2003 through 2006. We disagree with a substantial portion of the tax assessments, which primarily relate to transfer pricing. We are pursuing administrative relief through the appeals process. We have also received assessments from the Canada Revenue Agency (“CRA”) for a total of $169 million related to transfer pricing for 2003 through 2007. We have appealed the assessment for 2003 to the Tax Court of Canada and have filed a notice of objection for 2004 through 2007. The trial between McKesson Canada Corporation and the CRA, argued in the Tax Court of Canada, concluded in early February 2012, and we are waiting for the decision. We continue to believe in the merits of our tax positions and that we have adequately provided for any potential adverse results relating to these examinations in our financial statements. However, the final resolution of these issues could result in an increase or decrease to income tax expense.

In November 2011, the IRS began its examination of 2007 through 2009. In nearly all jurisdictions, the tax years prior to 2003 are no longer subject to examination. We believe that we have made adequate provision for all income tax uncertainties.

We report interest and penalties on tax deficiencies as income tax expense. At June 30, 2012, before any tax benefits, our accrued interest on unrecognized tax benefits amounted to $120 million. During the first quarter of 2013, we recognized an income tax benefit of $20 million in our condensed consolidated statements of operations, before any tax effect, which was primarily due to the reversal of accrued interest resulting from the reduction of our gross unrecognized tax benefits. We have no material amounts accrued for penalties.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

4.	Earnings Per Common Share

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share are computed similar to basic earnings per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

The computations for basic and diluted earnings per common share are as follows:


	Quarter Ended June 30,
(In millions, except per share amounts)	2012		2011

Net income	$	380	$	286


Weighted average common shares outstanding:
Basic		236		249
Effect of dilutive securities:
Options to purchase common stock		1		2
Restricted stock units		3		3

Diluted		240		254


Earnings Per common share: ⁽¹⁾
Diluted	$	1.58	$	1.13

Basic	$	1.61	$	1.15

⁽¹⁾	Certain computations may reflect rounding adjustments.

Potentially dilutive securities include outstanding stock options, restricted stock units and performance-based restricted stock units. Approximately 5 million and 4 million of potentially dilutive securities were excluded from the computations of diluted net earnings per common share for the quarters ended June 30, 2012 and 2011, as they were anti-dilutive.

5.	Goodwill and Intangible Assets, Net

Changes in the carrying amount of goodwill were as follows:


(In millions)	Distribution Solutions		Technology Solutions		Total
Balance, March 31, 2012	$	3,190	$	1,842	$	5,032
Goodwill acquired		—		7		7
Acquisition accounting and other adjustments		6		—		6
Foreign currency translation adjustments		(11)		(9)		(20)

Balance, June 30, 2012	$	3,185	$	1,840	$	5,025

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Information regarding intangible assets is as follows:


	June 30, 2012												March 31, 2012

(Dollars in millions)	Weighted Average Remaining Amortization Period (years)		Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount
Customer lists		7		$	1,082		$	(579	)		$	503		$	1,081		$	(554	)		$	527
Service agreements		18			994			(65	)			929			1,022			(52	)			970
Trademarks and trade names		18			191			(40	)			151			192			(38	)			154
Technology		3			243			(193	)			50			244			(190	)			54
Other		8			78			(33	)			45			76			(31	)			45

Total				$	2,588		$	(910	)		$	1,678		$	2,615		$	(865	)		$	1,750

Amortization expense of intangible assets was $51 million and $48 million for the quarters ended June 30, 2012 and 2011. Estimated annual amortization expense of these assets is as follows: $200 million, $185 million, $165 million, $142 million and $121 million for 2013 through 2017 and $916 million thereafter. All intangible assets were subject to amortization as of June 30, 2012 and March 31, 2012.

6.	Financing Activities

Accounts Receivable Sales Facility

In May 2012, we renewed our existing accounts receivable sales facility (the “Facility”) for a one year period under terms substantially similar to those previously in place. The committed balance of the Facility is $1.35 billion, although from time-to-time, the available amount of the Facility may be less than $1.35 billion based on accounts receivable concentration limits and other eligibility requirements. The renewed Facility will expire in May 2013.

During the first quarters of 2013 and 2012, there were no new borrowings under the Facility. At March 31, 2012, there were $400 million in secured borrowings and $400 million of related securitized accounts receivable outstanding under the Facility, which are included in short-term borrowings and receivables in the condensed consolidated balance sheets. During the first quarter of 2013, we repaid $400 million of short-term borrowings using cash on hand. At June 30, 2012, there were no secured borrowings or related securitized accounts receivables outstanding under the Facility.

The Facility contains requirements relating to the performance of the accounts receivable and covenants relating to the Company. If we do not comply with these covenants, our ability to use the Facility may be suspended and repayment of any outstanding balances under the Facility may be required. At June 30, 2012 and March 31, 2012, we were in compliance with all covenants.

Revolving Credit Facility

We have a syndicated $1.3 billion five-year senior unsecured revolving credit facility, which expires in September 2016. Borrowings under this facility bear interest based upon either the London Interbank Offered Rate or a prime rate. There were no borrowings under this facility during the first quarters of 2013 and 2012. As of June 30, 2012 and March 31, 2012 there were no amounts outstanding under this facility.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

7.	Financial Instruments and Hedging Activities

At June 30, 2012 and March 31, 2012, the carrying amounts of cash and cash equivalents, restricted cash, marketable securities, receivables, drafts and accounts payable, short-term borrowings and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments. All highly liquid debt instruments purchased with original maturity of three months or less at the date of acquisition are included in cash and cash equivalents. Included in cash and cash equivalents at June 30, 2012 and March 31, 2012 were money market fund investments of $0.9 billion and $0.8 billion, which are reported at fair value. The fair value of these investments was determined by using quoted prices for identical investments in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosure guidance. The carrying value of all other cash equivalents approximates their fair value due to their relatively short-term nature.

The carrying amounts and estimated fair values of our long-term debt and other financing were $3.6 billion and $4.2 billion at June 30, 2012, and $3.6 billion and $4.1 billion at March 31, 2012. The estimated fair value of our long-term debt and other financing was determined using quoted market prices and other inputs that were derived from available market information, which are considered to be Level 2 inputs under the fair value measurements and disclosure guidance, and may not be representative of actual values that could have been realized or that will be realized in the future.

In 2012, we entered into a number of forward contracts to hedge Canadian dollar and British pound denominated cash flows with gross notional values of $528 million and $151 million. The contracts to hedge Canadian dollar denominated cash flows mature over a period of eight years and have been designated for hedge accounting. Accordingly, changes in the fair value of these contracts are recorded to accumulated other comprehensive income and reclassified into earnings in the same period in which the hedged transaction affects earnings. The contracts to hedge British pound denominated cash flows matured and were settled in the first quarter of 2013 and were not designated for hedge accounting. Accordingly, changes in the fair value of these contracts were recorded directly in earnings. At June 30, 2012 and March 31, 2012, the fair value of the remaining contracts and any corresponding net gains or losses for the first quarters of 2013 and 2012 were not material and no amounts were reclassified to earnings. The fair values of all derivatives are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual values that could have been realized or that will be realized in the future.

8.	Commitments and Contingent Liabilities

In addition to commitments and obligations in the ordinary course of business, we are subject to various claims, other pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of our business. As described below, many of these proceedings are at preliminary stages and many seek an indeterminate amount of damages.

When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be reevaluated at least quarterly to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure of the proceeding is provided.

Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Significant developments in previously reported proceedings and in other litigation and claims since the filing of our 2012 Annual Report on Form 10-K are set out below. Unless otherwise stated, we are currently unable to estimate a range of reasonably possible losses for the unresolved proceedings described below. Should any one or a combination of more than one of these proceedings be successful, or should we determine to settle any or a combination of these matters, we may be required to pay substantial sums, become subject to the entry of an injunction or be forced to change the manner in which we operate our business, which could have a material adverse impact on our financial position or results of operations.

I. Average Wholesale Price Litigation and Claims

The following matters involve a benchmark referred to as “AWP,” which is utilized by some public and private payers to calculate a portion of the amount that pharmacies and other providers are reimbursed for dispensing certain covered prescription drugs.

On April 3, 2012, the Company entered into a settlement agreement with the United States Department of Justice to resolve the federal share of Medicaid claims related to AWP. The total settlement amount of $191 million, which includes interest, was paid on April 9, 2012. Pursuant to the settlement agreement, the United States Department of Justice filed a notice seeking the dismissal with prejudice of the claims on behalf of the United States asserted by the relator in the qui tam action pending in New Jersey federal court to the extent those claims are encompassed by the settlement release in the parties’ agreement.

The Alaska Action

On May 16, 2012, in the previously reported action filed in Alaska state court by the State of Alaska against the Company and First Databank, Inc. (“FDB”), State of Alaska v. McKesson Corporation, et al., (No. 3AN-10-11348-CI), the court entered an order granting the parties’ joint motion to continue the February 4, 2013 trial date to September 23, 2013. Discovery is ongoing.

The Douglas County, Kansas Nationwide Class Action

On June 6, 2012, the Company paid into settlement escrow the outstanding $50 million balance of the previously reported $82 million settlement in the public payer class action filed against the Company in the United States District Court for Massachusetts relating to alleged misstatements and manipulations of AWP, Board of County Commissioners of Douglas County, Kansas et al. v. McKesson Corporation , (No. 1:08-CV-11349-PBS). The Douglas County, Kansas Action has been concluded, and the settlement releases have become final and binding on the classes and the settlement consideration has been paid and is no longer subject to return to the Company. Accordingly, in the first quarter of 2013, the Company applied the $82 million settlement consideration against the related litigation reserve previously established as all criteria for the extinguishment of this liability were met.

The New Jersey Qui Tam AWP Action

On June 11, 2012, in the previously reported qui tam action filed in the United States District Court for the District of New Jersey against the Company and seven other defendants, United States et al. ex rel. Morgan v. Express Scripts et al. , (No. 05-1714), the court entered an order which became effective on July 11, 2012, dismissing with prejudice the claims asserted on behalf of the United States to the extent those claims were encompassed by the settlement release in the written settlement agreement between the Company and the United States.

The Mississippi Action

On June 12, 2012, the court entered an order continuing the November 26, 2012 trial date to March 18, 2013, in the previously reported action filed in Mississippi state court by the State of Mississippi against the Company, State of Mississippi v. McKesson Corporation, et al. , (No. 251-10-862CIV). Discovery is ongoing.

The Arizona Administrative Proceeding

On June 14, 2012, the Arizona court of appeals held a hearing on the appeal of the Arizona Health Care Cost Containment System (“AHCCCS”) from the trial court’s order enjoining AHCCCS from prosecuting or reinitiating any penalty proceeding against the Company in the previously reported action filed in Arizona state court by the Company against AHCCCS and its Director, McKesson Corporation v. AHCCCS, (No. CV-2011-004446). The appellate court has not yet ruled on AHCCCS’s appeal.

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

State AWP Medicaid Settlements

On July 26, 2012, the Company executed written settlement agreements with various states to resolve state Medicaid claims relating to AWP pursuant to the previously announced agreement reached with a coalition of State Attorneys General. The Company will pay the amount, which is sufficiently covered by the related litigation reserve as of June 30, 2012, pursuant to those settlement agreements, to the settling States in the second quarter of 2013. The settling States on whose behalf claims were filed against the Company in the previously reported qui tam action filed in the United States District Court for the District of New Jersey, will seek dismissal with prejudice of those claims. In addition, two of the settling States had separate, pending lawsuits against the Company as reported in our 2012 Annual Report on Form 10-K. Pursuant to their settlement agreements, the State of Michigan will seek dismissal with prejudice of the claims it asserted against the Company in the previously reported action it filed in Michigan state court, Bill Schuette ex rel. State of Michigan v. McKesson Corporation, et al ., (No.11-629-CZ), and the State of Indiana will seek dismissal with prejudice of the claims it asserted against the Company in the previously reported action it filed in Indiana state court, State of Indiana v. McKesson Corp. et al., (No. 49D11-1106-PL-021595).

The Company has a reserve relating to AWP public entity claims, which is reviewed at least quarterly and whenever events or circumstances indicate changes, including consideration of the pace and progress of discussions relating to potentially resolving other public entity claims. Following our most recent review of the reserve for estimated probable losses from current and possible future public entity AWP claims, the Company recorded a $16 million charge during the first quarter of 2013. Pre-tax charges relating to changes in the Company’s AWP litigation reserve, including accrued interest, are recorded in the Distribution Solutions segment. The Company’s AWP litigation reserve is included in other current liabilities in the consolidated balance sheets. In view of the number of outstanding cases and expected future claims, and the uncertainties of the timing and outcome of this type of litigation, it is possible that the ultimate costs of these matters may exceed or be less than the reserve.

The following is the activity related to the AWP litigation reserve for the quarters ended June 30, 2012 and 2011:


	Quarter Ended June 30,
(In millions)	2012		2011
AWP litigation reserve at beginning of period	$	453	$	330
Charges incurred		16		—
Payments made		(273)		(6)

AWP litigation reserve at end of period	$	196	$	324

9.	Stockholders’ Equity

Each share of the Company’s outstanding common stock is permitted one vote on proposals presented to stockholders and is entitled to share equally in any dividends declared by the Company’s Board of Directors (the “Board”).

In March 2012, we entered into an accelerated share repurchase program with a third party financial institution to repurchase $1.2 billion of the Company’s common stock. The program was funded with cash on hand. As of March 31, 2012, we had received 12 million shares representing the minimum number of shares due under this program. This program was completed in multiple tranches, and we received 0.9 million additional shares during the first quarter of 2013. In July 2012, we received 0.6 million additional shares upon completion of this program. The total number of shares repurchased under this program was 13.5 million shares at an average price per share of $89.10.

In April 2012, the Board authorized the repurchase of an additional $700 million of the Company’s common stock, bringing the total authorization outstanding to $1.0 billion at June 30, 2012.

McKESSON CORPORATION

FINANCIAL NOTES (CONCLUDED)

(UNAUDITED)

10.

Segment Information

We report our operations in two operating segments: McKesson Distribution Solutions and McKesson Technology Solutions. The factors for determining the reportable segments included the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. We evaluate the performance of our operating segments on a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations.

Financial information relating to our reportable operating segments and reconciliations to the condensed consolidated totals is as follows:


	Quarter Ended June 30,
(In millions)	2012		2011
Revenues
Distribution Solutions ⁽¹⁾
Direct distribution & services	$	21,301	$	20,827
Sales to customers’ warehouses		5,347		4,891

Total U.S. pharmaceutical distribution & services		26,648		25,718
Canada pharmaceutical distribution & services		2,517		2,729
Medical-Surgical distribution & services		795		731

Total Distribution Solutions		29,960		29,178

Technology Solutions
Services		666		630
Software & software systems		145		144
Hardware		27		28

Total Technology Solutions		838		802

Total Revenues	$	30,798	$	29,980


Operating profit
Distribution Solutions ⁽²⁾	$	500	$	475
Technology Solutions		93		100

Total		593		575
Corporate Expenses, Net ⁽³⁾		(6)		(95)
Interest Expense		(56)		(64)

Income Before Income Taxes	$	531	$	416

⁽¹⁾	Revenues derived from services represent less than 2% of this segment’s total revenues.

⁽²⁾	Operating profit for the first quarter of 2013 includes an AWP litigation charge of $16 million, which was recorded in operating expenses.

⁽³⁾	Corporate expenses for the first quarter of 2013 are net of an $81 million gain on business combination.

McKESSON CORPORATION

FINANCIAL REVIEW

(UNAUDITED)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

GENERAL

Management’s discussion and analysis of financial condition and results of operations, referred to as the Financial Review, is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiaries. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and accompanying financial notes in Item 1 of Part I of this Quarterly Report on Form 10-Q and in Item 8 of Part II of our 2012 Annual Report on Form 10-K.

Certain statements in this report constitute forward-looking statements. See “Factors Affecting Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.

Results of Operations

Financial Overview:


	Quarter Ended June 30,
(In millions, except per share amounts)	2012		2011		Change

Revenues	$	30,798	$	29,980		3	%


Litigation Charge	$	(16)	$	—		NM


Gain on Business Combination	$	81	$	—		NM


Income Before Income Taxes	$	531	$	416		28	%
Income Tax Expense		(151)		(130)		16

Net Income	$	380	$	286		33


Diluted Earnings Per Common Share	$	1.58	$	1.13		40	%

Weighted Average Diluted Common Shares		240		254		(6)	%

NM – not meaningful

Revenues for the first quarter of 2013 increased 3% to $30.8 billion compared to the same period a year ago. The increase in revenues primarily reflects market growth in our Distribution Solutions segment, which accounted for approximately 97% of our consolidated revenues.

On April 6, 2012, we purchased the remaining 50% ownership interest in our corporate headquarters building located in San Francisco, California for $90 million, which was funded from cash on hand. We previously held a 50% ownership interest and were the primary tenant in this building. This transaction was accounted for as a step acquisition, which requires that we re-measure our previously held 50% ownership interest to fair value and record the difference between the fair value and carrying value as a gain in the condensed consolidated statements of operations. The re-measurement to fair value resulted in a non-cash pre-tax gain of $81 million ($51 million after-tax), which was recorded as a gain on business combination within Corporate in the condensed consolidated statements of operations during the first quarter of 2013.

Income before income taxes for the first quarter of 2013 increased 28% to $531 million compared to the same period a year ago primarily due to the gain on business combination and growth in our Distribution Solutions segment. These increases were partially offset by a $16 million pre-tax charge to increase an existing reserve for our Average Wholesale Price (“AWP”) litigation.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Net income for the first quarter of 2013 increased 33% to $380 million and diluted earnings per common share for the first quarter of 2013 increased 40% to $1.58 compared to the same period a year ago. Diluted earnings per common share for 2013 also benefited from our repurchase of common stock.

Revenues:


	Quarter Ended June 30,
(Dollars in millions)	2012		2011		Change

Distribution Solutions
Direct distribution & services	$	21,301	$	20,827		2	%
Sales to customers’ warehouses		5,347		4,891		9

Total U.S. pharmaceutical distribution & services		26,648		25,718		4
Canada pharmaceutical distribution & services		2,517		2,729		(8)
Medical-Surgical distribution & services		795		731		9

Total Distribution Solutions		29,960		29,178		3

Technology Solutions

Services		666		630		6
Software & software systems		145		144		1
Hardware		27		28		(4)

Total Technology Solutions		838		802		4

Total Revenues	$	30,798	$	29,980		3

Total revenues increased for the first quarter of 2013 compared to the same period a year ago primarily due to our Distribution Solutions segment, which accounted for approximately 97% of our consolidated revenues.

Direct distribution and services revenues increased primarily due to market growth, which includes growing drug utilization and price increases, increased volume with existing customers and new customers. The increase was partially offset by loss of customers and price deflation associated with brand to generic drug conversions. Sales to customers’ warehouses increased primarily due to increased volume from existing customers and a new customer.

Canadian pharmaceutical distribution and services revenues decreased during the first quarter of 2013. Excluding an unfavorable foreign currency exchange rate fluctuation of 4%, revenues decreased due to four less sales days and government-imposed price reduction for generic pharmaceuticals in certain provinces, partially offset by market growth and an increase in revenues associated with our acquisition of the Katz Assets, as discussed below.

Medical-Surgical distribution and services revenues increased primarily due to market growth and new customers.

Technology Solutions revenues increased primarily due to higher revenues for claims processing and an increase in maintenance revenues from new and existing customers.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Gross Profit:


	Quarter Ended June 30,
(Dollars in millions)	2012			2011			Change

Gross Profit

Distribution Solutions	$	1,215		$	1,131			7	%
Technology Solutions		385			378			2

Total	$	1,600		$	1,509			6

Gross Profit Margin
Distribution Solutions		4.06	%		3.88	%		18	bp
Technology Solutions		45.94			47.13			(119)
Total		5.20			5.03			17

bp—basis points

Gross profit and gross profit margin for the first quarter of 2013 increased compared to the same period a year ago primarily as a result of growth in our Distribution Solutions segment.

Distribution Solutions segment’s gross profit margin increased primarily due to an increase in buy margin, increased sales of higher margin generic drugs and our acquisition of the Katz Assets, partially offset by a decrease in sell margin. Buy margin primarily reflects volume and timing of compensation from branded pharmaceutical manufacturers.

Technology Solutions segment’s gross profit margin decreased primarily due to an unfavorable change in revenue mix.

Operating Expenses and Other Income, Net:


	Quarter Ended June 30,
(Dollars in millions)	2012			2011			Change

Operating Expenses

Distribution Solutions ⁽¹⁾	$	719		$	661			9	%
Technology Solutions		293			279			5
Corporate ⁽²⁾		9			97			(91)

Total	$	1,021		$	1,037			(2)

Operating Expenses as a Percentage of Revenues
Distribution Solutions		2.40	%		2.27	%		13	bp
Technology Solutions		34.96			34.79			17
Total		3.32			3.46			(14)

Other Income, Net
Distribution Solutions	$	4		$	5			(20)	%
Technology Solutions		1			1			—
Corporate		3			2			50

Total	$	8		$	8			—

⁽¹⁾	Operating expenses for the first quarter of 2013 include an AWP litigation charge of $16 million.

⁽²⁾	Corporate expenses for the first quarter of 2013 are net of an $81 million pre-tax gain on business combination.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Operating expenses and operating expenses as a percentage of revenues for the first quarter of 2013 decreased compared to the same period a year ago primarily due to the gain on business combination, partially offset by increases due to the addition of the Katz Assets, higher employee compensation and benefit costs and an AWP litigation charge of $16 million.

Within our operating expenses in the first quarters of 2013 and 2012, we recorded a net credit of $79 million and a charge of $10 million for acquisition expenses and related adjustments. The net credit in the first quarter of 2013 was primarily due to the gain on business combination, and the charge in the first quarter of 2012 was primarily incurred to integrate our acquisition of US Oncology Holdings, Inc.

Acquisition expenses and related adjustments include transaction and integration expenses that are directly related to acquisitions by the Company and gains and losses related to business combinations. These expenses by segment were as follows:


	Quarter Ended June 30,
(In millions)	2012		2011
Operating Expenses
Distribution Solutions	$	1	$	8
Technology Solutions		1		2
Corporate		(81)		—

Total Acquisition Expenses and Related Adjustments	$	(79)	$	10

Amortization expense of acquired intangible assets purchased in connection with acquisitions by the Company by segment was as follows:


	Quarter Ended June 30,
(In millions)	2012		2011
Cost of Sales:
Distribution Solutions	$	1	$	—
Technology Solutions		3		5

Total	$	4	$	5


Operating Expenses:
Distribution Solutions	$	35	$	31
Technology Solutions		12		12

Total		47		43

Total Acquisition-related Amortization	$	51	$	48

Distribution Solutions segment’s operating expenses and operating expenses as a percentage of revenues increased primarily due to the addition of the Katz Assets, an AWP litigation charge of $16 million, higher employee compensation and benefits costs and an increase in expenses associated with supporting higher revenues.

Technology Solutions segment’s operating expenses and operating expenses as a percentage of revenues increased primarily due to higher employee compensation and benefits costs and our continued investment in research and development activities.

Corporate expenses decreased primarily due to the gain on business combination and lower employee compensation and benefits costs.

Other income, net for the first quarter of 2013 approximated the same period a year ago.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Segment Operating Profit and Corporate Expenses, Net:


	Quarter Ended June 30,
(Dollars in millions)	2012			2011			Change
Segment Operating Profit ⁽¹⁾
Distribution Solutions ⁽²⁾	$	500		$	475			5	%
Technology Solutions		93			100			(7)

Subtotal		593			575			3
Corporate Expenses, Net ⁽³⁾		(6)			(95)			(94)
Interest Expense		(56)			(64)			(13)

Income Before Income Taxes	$	531		$	416			28

Segment Operating Profit Margin
Distribution Solutions		1.67	%		1.63	%		4	bp
Technology Solutions		11.10			12.47			(137)

⁽¹⁾	Segment operating profit includes gross profit, net of operating expenses, plus other income for our two operating segments.

⁽²⁾	Operating profit for the first quarter of 2013 includes an AWP litigation charge of $16 million, which was recorded in operating expenses.

⁽³⁾	Corporate expenses for the first quarter of 2013 are net of an $81 million pre-tax gain on business combination.

Operating profit margin for our Distribution Solutions segment increased primarily due to an increase in gross profit margin, partially offset by higher operating expenses as a percentage of revenues.

Operating profit margin for our Technology Solutions segment decreased primarily due to a decrease in gross profit margin and higher operating expenses as a percentage of revenues.

Corporate expenses, net of other income decreased primarily due to the gain on business combination and lower operating expenses.

Interest Expense: Interest expense for the first quarter of 2013 decreased compared to the same period a year ago primarily due to the repayment of $400 million of the current portion of our long-term debt in February 2012.

Income Taxes: Our reported income tax rates for the first quarters of 2013 and 2012 were 28.4% and 31.3%. Fluctuations in our reported income tax rates are primarily due to changes within our estimated business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates and discrete tax items. During the first quarters of 2013 and 2012, income tax expense included $17 million and $3 million of net income tax benefits for discrete items. Discrete tax benefits for 2013 primarily related to the reversal of accrued interest resulting from the reduction of gross unrecognized tax benefits.

Net Income : Net income was $380 million and $286 million for the first quarters of 2013 and 2012, or $1.58 and $1.13 per diluted common share. Net income and diluted earnings per common share for the first quarter of 2013 include an after-tax credit of $51 million, or $0.21 per diluted share, due to the gain on business combination.

Weighted Average Diluted Common Shares Outstanding : Diluted earnings per common share were calculated based on a weighted average number of shares outstanding of 240 million and 254 million for the first quarters of 2013 and 2012. The decrease in the number of weighted average diluted common shares outstanding primarily reflects the effect of share repurchases during the last twelve months, partially offset by exercises of share-based awards.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Business Combinations

In addition to the acquisition of our corporate headquarters building and the Katz Assets, we also completed a number of smaller acquisitions within both of our operating segments over the last two years. Financial results for our business acquisitions have been included in our consolidated financial statements since their respective acquisition dates. Purchase prices for our business acquisitions have been allocated based on estimated fair values at the date of acquisition.

Refer to Financial Note 2, “Business Combinations,” to the accompanying condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q for further information.

New Accounting Pronouncements

New accounting pronouncements that we have recently adopted as well as those that have been recently issued but not yet adopted by us are included in Financial Note 1, “Significant Accounting Policies,” to the accompanying condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.

Financial Condition, Liquidity and Capital Resources

We expect our available cash generated from operations, together with our existing sources of liquidity from our accounts receivable sales facility and short-term borrowings under the revolving credit facility and commercial paper, will be sufficient to fund our long-term and short-term capital expenditures, working capital and other cash requirements. In addition, from time-to-time, we may access the long-term debt capital markets to discharge our other liabilities.

Operating activities used cash of $552 million and provided cash of $326 million during the first quarters of 2013 and 2012. Operating activities for the first quarter of 2013 include $273 million of payments made for AWP litigation settlements. Cash flows from operations can be significantly impacted by factors such as the timing of receipts from customers, inventory receipts and payments to vendors. Additionally, working capital is a function of sales activity and inventory requirements.

Investing activities utilized cash of $150 million and $154 million during the first quarters of 2013 and 2012. Investing activities primarily reflect cash paid for business and property acquisitions and capitalized software.

Financing activities utilized cash of $425 million and $668 million during the first quarters of 2013 and 2012. Financing activities for the first quarter of 2013 include $400 million of cash paid for repayment of short-term borrowings and, for the first quarter of 2012, include $650 million of cash paid for stock repurchases.

In March 2012, we entered into an accelerated share repurchase program with a third party financial institution to repurchase $1.2 billion of the Company’s common stock. This program was funded with cash on hand. As of March 31, 2012, we had received 12.0 million shares representing the minimum number of shares due under this program. This program was completed in multiple tranches, and we received 0.9 million additional shares during the first quarter of 2013. In July 2012, we received 0.6 million additional shares upon completion of this program. The total number of shares repurchased under this program was 13.5 million shares at an average price per share of $89.10.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

In April 2012, the Board of Directors authorized the repurchase of an additional $700 million of the Company’s common stock, bringing the total authorization outstanding to $1.0 billion at June 30, 2012. Stock repurchases may be made from time-to-time in open market transactions, privately negotiated transactions, through accelerated share repurchase programs, or by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations and other market and economic conditions.

We believe that our operating cash flow, financial assets and current access to capital and credit markets, including our existing credit facilities, will give us the ability to meet our financing needs for the foreseeable future. However, there can be no assurance that continued or increased volatility and disruption in the global capital and credit markets will not impair our liquidity or increase our costs of borrowing.

Selected Measures of Liquidity and Capital Resources


(Dollars in millions)	June 30, 2012			March 31, 2012
Cash and cash equivalents	$	2,013		$	3,149
Working capital		1,957			1,917
Debt, net of cash and cash equivalents		1,567			831
Debt to capital ratio ⁽¹⁾		33.2	%		36.8	%
Net debt to net capital employed ⁽²⁾		17.9			10.8
Return on stockholders’ equity ⁽³⁾		21.1			19.7

⁽¹⁾	Ratio is computed as total debt divided by the sum of total debt and stockholders’ equity.

⁽²⁾	Ratio is computed as total debt, net of cash and cash equivalents (“net debt”), divided by the sum of net debt and stockholders’ equity (“net capital employed”).

⁽³⁾	Ratio is computed as net income for the last four quarters, divided by a five-quarter average of stockholders’ equity.

Cash is primarily held in non-interest bearing accounts and is fully insured by the Federal Deposit Insurance Corporation regardless of the dollar amount. Cash equivalents are primarily invested in AAA rated prime money market funds denominated in US dollars, Canadian government securities and a AAA rated prime money market fund denominated in British pound sterling.

The remaining cash and cash equivalents are deposited with several financial institutions. We mitigate the risk of our short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk profiles and investment strategies of money market funds.

Our cash and cash equivalents balance as of June 30, 2012, included approximately $1.4 billion of cash held by our subsidiaries outside of the United States. Our primary intent is to utilize this cash in the foreign operations as well as to fund certain research and development activities for an indefinite period of time. Although the vast majority of cash held outside the United States is available for repatriation, doing so could subject us to U.S. federal, state and local income tax.

Working capital primarily includes cash and cash equivalents, receivables and inventories net of drafts and accounts payable, deferred revenue and other current liabilities. Our Distribution Solutions segment requires a substantial investment in working capital that is susceptible to large variations during the year as a result of inventory purchase patterns and seasonal demands. Inventory purchase activity is a function of sales activity and other requirements. Consolidated working capital increased slightly primarily due to a decrease in drafts and accounts payable and the repayment of short-term borrowings, partially offset by a decrease in cash and cash equivalents.

Our ratio of net debt to net capital employed increased in 2013 primarily due to lower cash and cash equivalents balances, partially offset by a decrease to total debt resulting from the $400 million of cash repayment of short-term borrowings.

McKESSON CORPORATION

FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Credit Resources

We fund our working capital requirements primarily with cash and cash equivalents, as well as, short-term borrowings under the accounts receivable sales facility, revolving credit facility and from commercial paper issuances.

Accounts Receivable Sales Facility

Revolving Credit Facility

We have a syndicated $1.3 billion five-year senior unsecured revolving credit facility, which expires in September 2016. Borrowings under this facility bear interest based upon either the London Interbank Offered Rate or a prime rate. There were no borrowings under this facility for the first quarters of 2013 and 2012. As of June 30, 2012 and March 31, 2012, there were no amounts outstanding under this facility.

Debt Covenants

Our various borrowing facilities and long-term debt are subject to certain covenants. Our principal debt covenant is our debt to capital ratio under our unsecured revolving credit facility, which cannot exceed 56.5%. For the purpose of calculating this ratio, borrowings under the accounts receivable sales facility are excluded. If we exceed this ratio, repayment of debt outstanding under the revolving credit facility could be accelerated. As of June 30, 2012, we were in compliance with our financial covenants.

Funds necessary for future debt maturities and our other cash requirements are expected to be met by existing cash balances, cash flow from operations, existing credit sources and other capital market transactions.

McKESSON CORPORATION

FINANCIAL REVIEW (CONCLUDED)

(UNAUDITED)

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of these statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or the negative of these words and other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, the following factors. The reader should not consider this list to be a complete statement of all potential risks and uncertainties:

§	material adverse resolution of pending legal proceedings;

§	changes in the U.S. healthcare industry and regulatory environment;

§	changes in the Canadian healthcare industry and regulatory environment;

§	competition;

§	substantial defaults in payments or a material reduction in purchases by, or the loss of, a large customer or group purchasing organization;

§	the loss of government contracts as a result of compliance or funding challenges;

§	public health issues in the United States or abroad;

§	implementation delay, malfunction, failure or breach of internal information systems;

§	the adequacy of insurance to cover property loss or liability claims;

§	the Company’s failure to attract and retain customers for its software products and solutions due to integration and implementation challenges, or due to an inability to keep pace with technological advances;

§	the Company’s proprietary products and services may not be adequately protected, and its products and solutions may be found to infringe on the rights of others;

§	system errors or failure of our technology products and solutions to conform to specifications;

§	disaster or other event causing interruption of customer access to the data residing in our service centers;

§	the delay or extension of our sales or implementation cycles for external software products;

§	changes in circumstances that could impair our goodwill or intangible assets;

§	foreign currency fluctuations or disruptions to our foreign operations;

§	new or revised tax legislation or challenges to our tax positions;

§	the Company’s ability to successfully identify, consummate and integrate strategic acquisitions;

§	general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to the Company, its customers or suppliers; and

§	changes in accounting principles generally accepted in the United States of America.

These and other risks and uncertainties are described herein and in other information contained in our publicly available Securities and Exchange Commission filings and press releases. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date such statements were first made. Except to the extent required by law, we undertake no obligation to publicly release the result of any revisions to our forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

McKESSON CORPORATION

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

We believe there has been no material change in our exposure to risks associated with fluctuations in interest and foreign currency exchange rates as disclosed in our 2012 Annual Report on Form 10-K.

Item 4.

Controls and Procedures.

Our Chief Executive Officer and our Chief Financial Officer, with the participation of other members of the Company’s management, have evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this quarterly report, and our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

There were no changes in our “internal control over financial reporting” (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that occurred during our first quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings.

The information set forth in Financial Note 8, “Commitments and Contingent Liabilities,” to the accompanying condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A.

Risk Factors.

There have been no material changes during the period covered by this Quarterly Report on Form 10-Q to the risk factors disclosed in Part I, Item 1A, of our 2012 Annual Report on Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

In March 2012, we entered into an accelerated share repurchase (“ASR”) program with a third party financial institution to repurchase $1.2 billion of the Company’s common stock. The program was funded with cash on hand. As of March 31, 2012, we had received 12.0 million shares representing the minimum number of shares due under this program. This program was completed in multiple tranches, and we received 0.9 million additional shares during the first quarter of 2013. In July 2012, we received 0.6 million additional shares upon completion of this program. The total number of shares repurchased under this program was 13.5 million shares at an average price per share of $89.10.

In April 2012, the Board of Directors authorized the repurchase of an additional $700 million of the Company’s common stock, bringing the total authorization outstanding to $1.0 billion. Stock repurchases may be made from time-to-time in open market transactions, privately negotiated transactions, through accelerated share repurchase programs, or by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions under our debt obligations and other market and economic conditions.

McKESSON CORPORATION

The following table provides information on the Company’s share repurchases during the first quarter of 2013.


	Share Repurchases ⁽¹⁾
(In millions, except price per share)	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
April 1, 2012 – April 30, 2012	—	$	—	—	$	1,000
May 1, 2012 – May 31, 2012	0.9		89.10	0.9		1,000
June 1, 2012 – June 30, 2012	—		—	—		1,000

Total	0.9		89.10	0.9		1,000

⁽¹⁾	This table does not include shares tendered to satisfy the exercise price in connection with cashless exercises of employee stock options or shares tendered to satisfy tax withholding obligations in connection with employee equity awards.

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Mine Safety Disclosures

Not Applicable

Item 5.

Other Information.

In the first quarter of 2013, we adopted amended guidance on a retrospective basis related to the presentation of other comprehensive income. The amended guidance requires that comprehensive income, the components of net income and the components of other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We elected to report other comprehensive income and its components in a separate statement of comprehensive income. The table below reflects the retrospective application of this guidance for the fiscal years ended March 31, 2012, 2011 and 2010. The retrospective application did not have a material impact on our consolidated financial statements.


	Year Ended March 31,
(In millions)	2012		2011		2010
Net income	$	1,403	$	1,202	$	1,263

Other Comprehensive Income (Loss), net of tax
Foreign currency translation adjustments, net of income tax benefit (expense) of ($2), ($3) and ($1)		(56)		76		238
Other, net of income tax benefit (expense) of $9, ($3) and $32		(26)		5		(53)

Total Other Comprehensive Income (Loss)		(82)		81		185

Comprehensive Income	$	1,321	$	1,283	$	1,448

McKESSON CORPORATION

Item 6.

Exhibits.


Exhibit Number		Description

10.1		Amendment No. 1, dated as of May 16, 2012, to Fourth Amended and Restated Receivables Purchase Agreement and Fourth Amended and Restated Receivables Purchase Agreement, dated as of May 18, 2011, among the Company, as Servicer, CGSF Funding Corporation, as Seller, the several conduit purchasers from time to time party to the Agreement, the several committed purchasers from time to time party to the Agreement, the several managing agents from time to time party to the Agreement, and JPMorgan Chase Bank, N.A., as Collateral Agent.

10.2*		Form of (i) Statement of Terms and Conditions, (ii) Stock Option Grant Notice and (iii) Restricted Stock Unit Agreement, each as applicable to Awards under the McKesson Corporation 2005 Stock Plan.

10.3*		Form of Statement of Terms and Conditions applicable to Awards under the McKesson Corporation 2005 Management Incentive Plan.

10.4*		Form of Statement of Terms and Conditions applicable to Awards under the McKesson Corporation Long-Term Incentive Plan.

31.1		Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32†		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the McKesson Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, and (v) related Financial Notes.



*		Management contract or compensation plan or arrangement in which directors and/or executive officers are eligible to participate.

†		Furnished herewith.

McKESSON CORPORATION

SIGNATURES

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


				M C K ESSON C ORPORATION

Date: July 26, 2012				/s/ Jeffrey C. Campbell
				Jeffrey C. Campbell
				Executive Vice President and Chief Financial Officer



Date: July 26, 2012				/s/ Nigel A. Rees
				Nigel A. Rees
				Vice President and Controller

Exhibit 10.1

Execution Version

AMENDMENT NO. 1 TO

FOURTH AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

This AMENDMENT NO. 1 to FOURTH AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “ Amendment ”) dated as of May 16, 2012, to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of May 18, 2011 (as amended supplemented or otherwise modified from time to time prior to the date hereof, the “ Agreement ”), is made by and among CGSF Funding Corporation (the “ Seller ”), McKesson Corporation, as initial Servicer (the “ Servicer ”), the Conduit Purchasers hereto, the Committed Purchasers party hereto, the Managing Agents party hereto, Bryant Park Funding LLC (the “ Departing Conduit Purchaser ”), HSBC Bank PLC (the “ Departing Committed Purchaser ” and, together with the Departing Conduit Purchaser, the “ Departing Purchasers ”), HSBC Securities (USA), Inc. (the “ Departing Managing Agent ”), and JPMorgan Chase Bank, N.A. (“ JPMorgan ”) (successor by merger to Bank One, NA (Main Office Chicago)), as Collateral Agent. Capitalized terms used herein but not defined herein shall have the meanings given to such terms in the Agreement.

PRELIMINARY STATEMENTS:

(1) The parties hereto are parties to the Agreement.

(2) Each of the Departing Purchasers and the Departing Managing Agent desires to cease being a party to the Agreement.

(3) Subject to the terms set forth herein, the parties hereto have agreed to amend the Agreement as set forth herein.

NOW THEREFORE, in consideration of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

SECTION 1. Termination of Departing Purchasers and Departing Agent .

1.1. On the date hereof, the Seller shall remit to the Departing Managing Agent, by wire transfer of immediately available funds to such account as may be specified by the Departing Managing Agent, in the amount set forth in the final invoice dated as of May 16, 2012 and delivered by the Departing Managing Agent to the Seller on May 14, 2012 (such amount, the “ Termination Amount ”) in payment of all accrued and unpaid Obligations owing to the Departing Conduit Purchaser, the Departing Committed Purchaser and the Departing Managing Agent as of the date hereof.

1.2. Upon receipt of the Termination Amount, each of the Departing Conduit Purchaser, the Departing Committed Purchaser and the Departing Managing Agent shall relinquish its respective rights and be released from its obligations under the Agreement and cease to be a party thereto (except for those rights and obligations which by the express terms of the Agreement or the other Transaction Documents would survive the termination thereof).

1.3. Each of the Departing Conduit Purchaser, the Departing Committed Purchaser and the Departing Managing Agent acknowledge and agree that notwithstanding the terms of that certain Tenth Amended and Restated Fee Letter, dated as of May 18, 2011 (the “ Existing Fee Letter ”), by and

among the Borrower, the Departing Managing Agent and the other Managing Agents party thereto, the consent of the Departing Managing Agent shall not be required in order to amend, restate, supplement or otherwise modify, or waive any provision of or provide any consent under, the Existing Fee Letter.

SECTION 2. Amendments . Effective as of the date hereof and subject to the payment of the Termination Amount and the satisfaction of the conditions precedent set forth in Section 3 hereof, the Agreement is hereby amended as follows:

2.1. Section 1.2(a) is hereby amended by replacing the phrase “each Managing Agent”, where it appears in the first line thereof, with the phrase “the Collateral Agent (which shall provide a copy to each Managing Agent)”.

2.2. Section 1.3 is hereby amended by replacing the phrase “each Managing Agent”, where it appears in the first line thereof, with the phrase “the Collateral Agent (which shall provide a copy to each Managing Agent)”.

2.3. Section 1.4 is hereby amended by replacing the phrase “to the related Managing Agent, for the account of such Purchaser, at its account and in accordance with its payment instructions set forth on Schedule A to the Fee Letter (as such account and instructions may be amended from time to time by written notice from such Managing Agent to each Seller Party)”, where it appears beginning in the fifth line thereof, with the phrase “to the Collateral Agent who shall promptly forward such amount to the related Managing Agent, for the account of such Purchaser, at its account and in accordance with its payment instructions set forth on Schedule A to the Fee Letter (as such account and instructions may be amended from time to time by written notice from such Managing Agent to each Seller Party and the Collateral Agent)”.

2.4. Section 2.1 is hereby amended by replacing the phrase “each Managing Agent”, where it appears in the second line thereof, with the phrase “the Collateral Agent (which shall promptly forward such amount to the applicable Managing Agent)”.

2.5. Section 2.2(b) is hereby amended as follows:

(i) by replacing the phrase “Managing Agents’ respective accounts”, where it appears in the second line thereof, with the phrase “Collateral Agent (which shall promptly forward to the Managing Agents)”;

(ii) by replacing the phrase “Managing Agents’ respective accounts”, where it appears in the ninth line thereof, with the phrase “Collateral Agent (which shall promptly forward to the Managing Agents)”; and

(iii) by replacing the phrase “Managing Agents’ respective accounts”, where it appears beginning in the fourteenth line thereof, with the phrase “Collateral Agent, which shall promptly forward to the Managing Agents,”.

2.6. Section 2.3 is hereby amended by replacing the phrase “Managing Agents’ respective accounts”, where it appears in the fourth line thereof, with the phrase “Collateral Agent (which shall promptly forward to the Managing Agents)”.

2.7. Section 2.6 is hereby amended by replacing the phrase “Managing Agents”, where it appears in the fourth line thereof, with the phrase “Collateral Agent (which shall promptly forward to the Managing Agents)”.

2.8. Section 3.2 is hereby amended by replacing the phrase “each Managing Agent (for the benefit of the applicable Purchasers)”, where it appears beginning in the first line thereof, with the phrase “Collateral Agent (which shall promptly forward to each Managing Agent, for the benefit of the applicable Purchasers)”.

2.9. The definition of “CP Rate” appearing in Exhibit I to the Agreement is amended and restated in its entirety as follows:

“ CP Rate ” means, (x) with respect to any Conduit Purchaser administered or managed by JPMorgan Chase for any Tranche Period, the Daily/30 Day LIBOR Rate in respect of each day during such Tranche Period; and (y) with respect to any other Conduit Purchaser for any Tranche Period, the per annum rate equivalent to the weighted average cost (as determined by the related Managing Agent and which shall include commissions of placement agents and dealers, incremental carrying costs incurred with respect to Pooled Commercial Paper maturing on dates other than those on which corresponding funds are received by such Conduit Purchaser, other borrowings by such Conduit Purchaser (other than under any commercial paper program support agreement) and any other costs associated with the issuance of Pooled Commercial Paper) of or related to the issuance of Pooled Commercial Paper that are allocated, in whole or in part, by such Conduit Purchaser or its Managing Agent to fund or maintain its Purchaser Interests during such Tranche Period; provided, however, that if any component of such rate is a discount rate, in calculating the “CP Rate” for such Conduit Purchaser for such Purchaser Interest for such Tranche Period, such Conduit Purchaser shall for such component use the rate resulting from converting such discount rate to an interest-bearing equivalent rate per annum.

2.10. The definition of “Facility Termination Date” appearing in Exhibit I to the Agreement is amended by deleting the reference to “May 16, 2012” therein and substituting the date “May 15, 2013” therefor.

2.11. The definition of “Net Worth” appearing in Exhibit I to the Agreement is amended and restated in its entirety as follows:

“ Net Worth ” means (a) the sum of (i) capital stock, (ii) additional paid in capital, (iii) retained earnings (or minus accumulated deficits) and (iv) accumulated other comprehensive income, minus (b) treasury stock, in each case, of the Originator and its Subsidiaries determined on a consolidated basis in conformity with generally accepted accounting principles on such date.

2.12. Exhibit I to the Agreement is amended by adding the following new defined term in the appropriate alphabetical order therein:

“ Daily/30 Day LIBOR Rate ” shall mean, for any day, a rate per annum equal to the thirty (30) day London-Interbank Offered Rate appearing on the Bloomberg BBAM (British Bankers Association) Page (or on any successor or substitute page of such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by JPMorgan Chase, as Managing Agent, from time to time in accordance with its customary practices for purposes of providing quotations of interest rates applicable to U.S. Dollar deposits in the London interbank market) at approximately 11:00 a.m. (London time) on such day or, if such day is not a LIBO Business Day, the immediately preceding LIBO Business Day. In the event that such rate is not available on any day at such time for any reason, then the “Daily/30 Day LIBOR Rate” for such day shall be the rate at which thirty (30) day U.S. Dollar deposits of $5,000,000 are offered by the principal London office of JPMorgan Chase in immediately available funds in the London interbank market at approximately 11:00 a.m. (London time) on

such day; and if JPMorgan Chase, as Managing Agent, is for any reason unable to determine the Daily/30 Day LIBOR Rate in the foregoing manner or has determined in good faith that the Daily/ 30 Day LIBOR Rate determined in such manner does not accurately reflect the cost of acquiring, funding or maintaining a Purchaser Interest, the Daily/30 Day LIBOR Rate for such day shall be the Base Rate.

2.13. Schedule A to the Agreement is amended and restated in its entirety as set forth on Annex I to this Amendment.

SECTION 3. Conditions of Effectiveness . This Amendment shall become effective as of the date hereof when, and only when, (a) the Collateral Agent shall have received executed counterparts of this Amendment from the parties hereto, and (b) each Managing Agent (or, with respect to PNC Bank, National Association, to PNC Capital Markets LLC), shall have received payment, by wire transfer of immediately available funds to the account specified on Schedule A to the Fee Letter, a one-time, nonrefundable fully earned upfront fee in an amount equal to the product of (i) 0.05% and (ii) the Purchaser Group Limit of its related Purchaser Group on the date hereof for the account of the Purchasers in its related Purchaser Group.

SECTION 4. Representations and Warranties of the Seller and the Servicer . Each of the Seller and the Servicer represents and warrants as to itself as follows:

4.1. The execution and delivery by such Person of this Amendment are within its corporate or limited liability company powers, as applicable, and authority and have been duly authorized by all necessary corporate or limited liability company action, as applicable, on its part.

4.2. This Amendment has been duly executed and delivered by such Person.

4.3. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by such Person of this Amendment.

4.4. This Amendment and the Agreement, as amended by this Amendment, constitute legal, valid and binding obligations of such Person enforceable against such Person in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

4.5. Both before and after the effectiveness of this Amendment, the covenants, representations and warranties of such Person set forth in the Agreement and each other Transaction Document to which it is a party, are true and correct in all material respects as of the date hereof.

4.6. Both before and after the effectiveness of this Amendment, no event or circumstance has occurred and is continuing which constitutes an Amortization Event or a Potential Amortization Event.

SECTION 5. Reference to and the Effect on the Agreement .

5.1. On and after the effective date of this Amendment, each reference in the Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Agreement and each reference to the Agreement in any certificate delivered in connection therewith, shall mean and be a reference to the Agreement as amended hereby.

5.2. Each of the Seller and the Servicer hereby agrees that, except as expressly amended above, the Agreement is hereby ratified and confirmed and shall continue to be in full force and effect and enforceable, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally.

SECTION 6. Costs and Expenses . The Seller agrees to pay on demand all reasonable costs and expenses of the Collateral Agent, the Managing Agents and the Purchasers in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered in connection herewith, including, without limitation, the reasonable fees and out-of-pocket expenses of Sidley Austin LLP, counsel for the Collateral Agent, the Managing Agents and the Purchasers with respect thereto and with respect to advising the Collateral Agent, the Managing Agents and the Purchasers as to their respective rights and responsibilities hereunder and thereunder.

SECTION 7. Execution in Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

SECTION 8. Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws (and not the law of conflicts other than Sections 5-1401 and 5-1402 of the General Obligations Law) of the State of New York.

Remainder of Page Intentionally Left Blank

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date hereof.


CGSF FUNDING CORPORATION, as the Seller

By:		/s/ N. Loiacono
Name: N. Loiacono
Title: President


McKESSON CORPORATION, as the Servicer

By:		/s/ Willie C. Bogan
Name: Willie C. Bogan
Title: Secretary

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


JUPITER SECURITIZATION COMPANY LLC (as successor in interest to JS SILOED TRUST), as a Conduit Purchaser By: JPMorgan Chase Bank, N.A., not in its individual capacity but solely as administrative trustee

By:		/s/ Corina Mills
Name: Corina Mills
Title: Executive Director


JPMORGAN CHASE BANK, N.A., as a Committed Purchaser, a Managing Agent and as Collateral Agent

By:		/s/ Corina Mills
Name: Corina Mills
Title: Executive Director

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


BANK OF AMERICA, N.A., as a Committed Purchaser and a Managing Agent

By:		/s/ Nina Austin
Name: Nina Austin
Title: Vice President

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


LIBERTY STREET FUNDING LLC, as a Conduit Purchaser

By:		/s/ Jill A. Russo
Name: Jill A. Russo
Title: Vice President


THE BANK OF NOVA SCOTIA, as a Committed Purchaser and as Managing Agent

By:		/s/ Norman Last
Name: Norman Last
Title: Managing Director

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


GOTHAM FUNDING CORPORATION, as a Conduit Purchaser

By:		/s/ David V. DeAngelis
Name: David V. DeAngelis
Title: Vice President


THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as a Managing Agent

By:		/s/ Aditya Reddy
Name: Aditya Reddy
Title: Managing Director


THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as a Committed Purchaser

By:		/s/ M. Antioco
Name: M. Antioco
Title: Associate

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


NIEUW AMSTERDAM RECEIVABLES CORPORATION, as a Conduit Purchaser

By:		/s/ Kevin Burns
Name: Kevin Burns
Title: Vice President


COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., “RABOBANK INTERNATIONAL”, NEW YORK BRANCH, as a Committed Purchaser and a Managing Agent

By:		/s/ Christopher Lew
Name: Christopher Lew
Title: Vice President

By:		/s/ Izumi Fukushima
Name: Izumi Fukushima
Title: Executive Director

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


MARKET STREET FUNDING LLC, as a Conduit Purchaser

By:		/s/ Karla L. Boyd
Name: Karla L. Boyd
Title: Vice President


PNC BANK, NATIONAL ASSOCIATION as a Committed Purchaser and as Managing Agent

By:		/s/ William P. Falcon
Name: William P. Falcon
Title: Vice President

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


FIFTH THIRD BANK, as a Committed Purchaser and as Managing Agent

By:		/s/ Andrew D. Jones
Name: Andrew D. Jones
Title: Vice President

Signature Page to Amendment No. 1 to

Fourth Amended and Restated Receivables Purchase Agreement


BRYANT PARK FUNDING LLC, as Departing Conduit Purchaser

By:		/s/ Damian Perez
Name: Damian Perez
Title: Vice President


HSBC SECURITIES (USA), INC., as a Departing Managing Agent

By:		/s/ Laurie Lawler
Name: Laurie Lawler
Title: Vice President


HSBC BANK PLC, as Departing Committed Purchaser

By:		/s/ Victoria Lindsell
Name: Victoria Lindsell
Title: Managing Director

SCHEDULE A

PURCHASER GROUPS AND COMMITMENTS


Purchaser Group	Conduit Purchaser(s)	Purchaser Group Type	Committed Purchaser(s)	Commitment	Purchaser Group Limit
JPMorgan Purchaser Group	Jupiter Securitization Company LLC	CP Funding Purchaser Group	JPMorgan Chase Bank, N.A.	$275,000,000	$275,000,000
BTMU Purchaser Group	Gotham Funding Corporation	CP Funding Purchaser Group	The Bank of Tokyo-Mitsubishi UFJ Ltd., New York Branch	$250,000,000	$250,000,000
Scotia Purchaser Group	Liberty Street Funding LLC	CP Funding Purchaser Group	The Bank of Nova Scotia	$200,000,000	$200,000,000
PNC Purchaser Group	Market Street Funding LLC	CP Funding Purchaser Group	PNC Bank, National Association	$175,000,000	$175,000,000
Bank of America Purchaser Group	N/A	Bank Funding Purchaser Group	Bank of America, N.A.	$150,000,000	$150,000,000
Fifth Third Purchaser Group	N/A	Bank Funding Purchaser Group	Fifth Third Bank	$150,000,000	$150,000,000
Rabobank Purchaser Group	Nieuw Amsterdam Receivables Corporation	CP Funding Purchaser Group	Cooperatieve Centrale Raiffeisen- Boerenleenbank B.A., “Rabobank International”, New York Branch	$150,000,000	$150,000,000
TOTAL				$1,350,000,000	$1,350,000,000

FOURTH AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

Dated as of May 18, 2011

among

CGSF FUNDING CORPORATION,

as Seller,

McKESSON CORPORATION,

as Servicer,

THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO,

THE COMMITTED PURCHASERS FROM TIME TO TIME PARTY HERETO,

THE MANAGING AGENTS FROM TIME TO TIME PARTY HERETO,

and

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

TABLE OF CONTENTS


	Page
ARTICLE I PURCHASE ARRANGEMENTS		2
Section 1.1 Purchase Facility		2
Section 1.2 Increases		3
Section 1.3 Decreases		3
Section 1.4 Payment Requirements		3
ARTICLE II PAYMENTS AND COLLECTIONS		3
Section 2.1 Payments		3
Section 2.2 Collections Prior to Amortization		4
Section 2.3 Collections Following Amortization		4
Section 2.4 Application of Collections		4
Section 2.5 Payment Rescission		5
Section 2.6 Seller Interest		5
Section 2.7 Clean Up Call		5
ARTICLE III FUNDING		6
Section 3.1 General Funding Provisions		6
Section 3.2 Yield Payments		6
Section 3.3 Selection and Continuation of Tranche Periods for Committed Purchasers in CP Funding Purchaser Groups		6
Section 3.4 Discount Rates of Committed Purchasers in CP Funding Purchaser Groups		6
Section 3.5 Suspension of the LIBO Rate		7
ARTICLE IV REPRESENTATIONS AND WARRANTIES		7
Section 4.1 Representations and Warranties of Seller Parties		7
Section 4.2 Committed Purchaser Representations and Warranties		11
ARTICLE V CONDITIONS OF PURCHASES		12
Section 5.1 Conditions Precedent to the Effectiveness of this Agreement		12
Section 5.2 Conditions Precedent to All Purchases and Reinvestment		12
ARTICLE VI COVENANTS		13
Section 6.1 Affirmative Covenants of the Seller Parties		13
Section 6.2 Negative Covenants of the Seller Parties		19
ARTICLE VII ADMINISTRATION AND COLLECTION		20
Section 7.1 Designation of Servicer		20
Section 7.2 Duties of Servicer		21
Section 7.3 Collection Notices		22
Section 7.4 Responsibilities of Seller		22
Section 7.5 Reports		23
Section 7.6 Servicing Fees		23
Section 7.7 Financial Covenant		23
ARTICLE VIII AMORTIZATION EVENTS		23
Section 8.1 Amortization Events		23
Section 8.2 Remedies		24
ARTICLE IX INDEMNIFICATION		25
Section 9.1 Indemnities by the Seller Parties		25
Section 9.2 Increased Cost and Reduced Return		27
Section 9.3 Other Costs and Expenses		29
Section 9.4 Withholding Tax Exemption		29
ARTICLE X THE AGENTS		30
Section 10.1 Authorization and Action		30

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TABLE OF CONTENTS

(continued)


	Page
Section 10.2 Delegation of Duties		30
Section 10.3 Exculpatory Provisions		31
Section 10.4 Reliance by Agents		31
Section 10.5 Non-Reliance on Agents and Other Purchasers		31
Section 10.6 Reimbursement and Indemnification		32
Section 10.7 Agents in their Individual Capacities		32
Section 10.8 Successor Agent		32
ARTICLE XI ASSIGNMENTS; PARTICIPATIONS		33
Section 11.1 Assignments		33
Section 11.2 Participations		34
Section 11.3 Additional Purchaser Groups; Joinder by Conduit Purchaser		34
Section 11.4 Extension of Facility Termination Date		35
Section 11.5 Terminating Committed Purchasers		35
ARTICLE XII MISCELLANEOUS		36
Section 12.1 Waivers and Amendments		36
Section 12.2 Notices		37
Section 12.3 Ratable Payments		38
Section 12.4 Protection of Ownership Interests of the Purchasers		38
Section 12.5 Confidentiality		39
Section 12.6 Bankruptcy Petition		40
Section 12.7 Limitation of Liability; Limitation of Payment; No Recourse		40
Section 12.8 CHOICE OF LAW		40
Section 12.9 CONSENT TO JURISDICTION		40
Section 12.10 WAIVER OF JURY TRIAL		41
Section 12.11 Integration; Binding Effect; Survival of Terms		41
Section 12.12 Counterparts; Severability; Section References		41
Section 12.13 Agent Roles		42
Section 12.14 Characterization		42
Section 12.15 Amendment and Restatement; Consent to Amendment of Receivables Sale Agreement		43
Section 12.16 Federal Reserve		43
Section 12.17 USA PATRIOT Act		43

-ii-

TABLE OF CONTENTS

(continued)


			Page
EXHIBITS

Exhibit I	-	Definitions		I-1
Exhibit II	-	Form of Purchase Notice		II-1
Exhibit II-A	-	Form of Reduction Notice		II-A-1
Exhibit III	-	Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s)		III-1
Exhibit IV	-	[Reserved.]		IV-1
Exhibit V	-	Form of Compliance Certificate		V-1
Exhibit VI	-	Form of Assignment Agreement		VI-1
Exhibit VII	-	Form of Joinder Agreement		VII-1

SCHEDULES
Schedule A	-	Purchaser Groups and Commitments		A-1
Schedule B	-	Purchaser Group Notice		B-1

-iii-

FOURTH AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

This Fourth Amended and Restated Receivables Purchase Agreement dated as of May 18, 2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time, this “ Agreement ”) is among CGSF Funding Corporation, a Delaware corporation (“ Seller ”), McKesson Corporation, a Delaware corporation, as initial Servicer (“ McKesson ”; McKesson, together with the Seller, the “ Seller Parties ” and each a “ Seller Party ”), the entities from time to time party hereto as Conduit Purchasers (together with their respective successors and assigns hereunder, the “ Conduit Purchasers ”), the entities from time to time party hereto as Committed Purchasers (together with their respective successors and assigns hereunder, the “ Committed Purchasers ”), the entities from time to time party hereto as Managing Agents (together with their respective successors and assigns hereunder, the “ Managing Agents ”), and JPMorgan Chase Bank, N.A. (successor by merger to Bank One, NA (Main Office Chicago)) (“ JPMorgan Chase ”), as collateral agent for the Purchasers hereunder or any successor collateral agent hereunder (together with its successors and assigns hereunder, the “ Collateral Agent ”). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I .

PRELIMINARY STATEMENTS

WHEREAS , Seller, McKesson, the Conduit Purchasers, the Committed Purchasers, the Managing Agents and the Collateral Agent are parties to that certain Third Amended and Restated Receivables Purchase Agreement dated as of May 19, 2010 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “ Original RPA ”);

WHEREAS , subject to the terms and conditions set forth herein, the parties hereto have agreed to amend and restate the Original RPA in its entirety;

WHEREAS , Seller desires to transfer and assign Purchaser Interests to the Purchasers from time to time;

WHEREAS , the Conduit Purchasers may, in their absolute and sole discretion, purchase Purchaser Interests from Seller from time to time, and in the event that (i) a Conduit Purchaser declines to make any purchase or (ii) a Purchaser Group does not have a Conduit Purchaser member, the Committed Purchasers that are part of the applicable Purchaser Group shall purchase Purchaser Interests from time to time;

WHEREAS , JPMorgan Chase has been requested and is willing to act as Collateral Agent on behalf of the Conduit Purchasers, the Committed Purchasers and the Managing Agents in accordance with the terms hereof;

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

ARTICLE I

PURCHASE ARRANGEMENTS

Section 1.1 Purchase Facility .

(a) Upon the terms and subject to the conditions hereof, Seller may, at its option, sell and assign Purchaser Interests to the Collateral Agent for the benefit of the Purchasers. In accordance with the terms and conditions set forth herein, each Conduit Purchaser may, at its option, instruct the related Managing Agent (which will instruct the Collateral Agent) to purchase on its behalf through the Collateral Agent, or if (i) such Conduit Purchaser shall decline to purchase or (ii) a Purchaser Group does not have a Conduit Purchaser member, the Collateral Agent shall purchase, on behalf of the applicable Committed Purchasers, Purchaser Interests from time to time in an aggregate amount not to exceed the Purchase Limit, and for each Purchaser Group in an aggregate amount not to exceed the Purchaser Group Limit for such Purchaser Group, during the period from the date hereof to but not including the Amortization Date.

(b) Seller may, upon at least ten (10) Business Days’ prior written notice to the Collateral Agent and each Managing Agent, terminate in whole or reduce in part, ratably among the Purchaser Groups, the unused portion of the Purchase Limit and the Purchaser Group Limits; provided , that each partial reduction of the Purchase Limit shall be in an amount equal to $5,000,000 or an integral multiple thereof.

Section 1.2 Increases .

(a) Seller shall provide each Managing Agent with prior notice in a form set forth as Exhibit II hereto (a “ Purchase Notice ”) of each Incremental Purchase in conformity with the Required Notice Period. Each Purchase Notice shall be subject to Section 5.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested Purchase Price (which shall not be less than $15,000,000 in the aggregate for all Purchasers), date of purchase (which date shall give effect to the applicable Required Notice Period), the type of Discount Rate (determined in accordance with, and subject to the limitations set forth in, Article III hereof) and Tranche Period; provided , that the Seller may not send more than two (2) Purchase Notices in any one-week period.

(b) Following receipt of a Purchase Notice, (i) for each Purchaser Group which has a Conduit Purchaser member, the related Managing Agent shall notify such Conduit Purchaser of its receipt of same and determine whether such Conduit Purchaser agrees to make the purchase, and if the applicable Conduit Purchaser declines to make such purchase, the Managing Agent shall notify the Committed Purchasers in such Purchaser Group of its receipt of such Purchase Notice and of the Conduit Purchaser declining to make such purchase and the Incremental Purchase of the Purchaser Interest will be made by such Committed Purchasers and (ii) for each Purchaser Group which does not have a Conduit Purchaser member, the related Managing Agent shall notify the Committed Purchasers in such Purchaser Group of its receipt of such Purchase Notice and the Incremental Purchase of the Purchaser Interest will be made by such Committed Purchasers.

(c) Each Incremental Purchase to be made hereunder shall be made ratably among the Purchaser Groups in accordance with their respective Purchaser Group Limits.

(d) On the date of each Incremental Purchase, upon satisfaction of the applicable conditions precedent set forth in Article V , each applicable Purchaser shall make available to its related Managing Agent at its address listed beneath its signature on its signature page to this Agreement, for deposit to such account as the Seller designates from time to time, in immediately available funds, no later than 12:00 noon (Chicago time), an amount equal to such Purchaser’s Pro Rata Share of the Purchaser Interests then being purchased.

Section 1.3 Decreases . Seller shall provide each Managing Agent with prior written notice in the form set forth as Exhibit II-A hereto (a “ Reduction Notice ”) of any reduction of Aggregate Capital from Collections in conformity with the Required Notice Period. Such Reduction Notice shall designate (i) the date (the “ Proposed Reduction Date ”) upon which any such reduction of Aggregate Capital shall occur (which date shall give effect to the applicable Required Notice Period), and (ii) the amount of Aggregate Capital to be reduced (the “ Aggregate Reduction ”) which shall be applied ratably to reduce the Capital of each Purchaser Group and further applied by each Managing Agent to the Purchaser Interests of the Conduit Purchasers and the Committed Purchasers in the related Purchaser Group in such proportions as may be agreed by such Managing Agent and such Purchasers. Only one (1) Reduction Notice shall be outstanding at any time.

Section 1.4 Payment Requirements . All amounts to be paid or deposited by any Seller Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, and if not received before 12:00 noon (New York City time) shall be deemed to be received on the next succeeding Business Day. If such amounts are payable to a Purchaser they shall be paid to the related Managing Agent, for the account of such Purchaser, at its account and in accordance with its payment instructions set forth on Schedule A to the Fee Letter (as such account and instructions may be amended from time to time by written notice from such Managing Agent to each Seller Party). All computations of Yield (other than Yield calculated using the Base Rate) and per annum fees hereunder and under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. All computations of Yield calculated using the Base Rate shall be made on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.

ARTICLE II

PAYMENTS AND COLLECTIONS

Section 2.1 Payments . Notwithstanding any limitation on recourse contained in this Agreement, Seller shall immediately pay to each Managing Agent when due, for the account of the related Purchaser or Purchasers (i) such fees as set forth in the Fee Letter, (ii) all amounts payable as Yield, (iii) all amounts payable as Deemed Collections (which, subject to the servicing procedures set forth in Article VII , shall be applied to reduce Aggregate Capital hereunder in accordance with Sections 2.2 and 2.3 hereof), (iv) all amounts payable to reduce the Purchaser Interest, if required, pursuant to Section 2.6 , (v) all amounts payable pursuant to Article IX , if any, (vi) all Broken Funding Costs and (vii) all Default Fees (collectively, the “ Obligations ”). The Seller shall pay to the Servicer in accordance with Sections 2.2 and 2.4 hereof all Servicer costs and expenses in connection with servicing, administering and collecting the Receivables, including, without limitation, the Servicing Fee. If any Person fails to pay any of the Obligations when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid. Notwithstanding the foregoing, no provision of this Agreement or the Fee Letter shall require the payment or permit the collection of any amounts hereunder in excess of the maximum permitted by applicable law. If at any time Seller receives any Collections or is deemed to receive any Collections, Seller shall immediately pay such Collections or Deemed Collections to the Servicer and, at all times prior to such payment, such Collections shall be held in trust by Seller for the exclusive benefit of the Purchasers, the Managing Agents and the Collateral Agent.

Section 2.2 Collections Prior to Amortization .

(a) Prior to the Amortization Date, any Collections and/or Deemed Collections received by the Servicer shall be held in trust by the Servicer for the payment of any accrued and unpaid Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2 . If at any time any Collections are received by the Servicer prior to the Amortization Date, (i) the Servicer shall set aside and hold in trust for the benefit of (x) the Purchasers: (A) the Termination Percentage of Collections and Deemed Collections evidenced by the Purchaser Interests of each Terminating Committed Purchaser, (B) an amount equal to the accrued and unpaid Obligations, (C) an amount equal to the Aggregate Reduction, if any, to be effected pursuant to Section 1.3 and (y) the Servicer, amounts owing to the Servicer under Section 2.1 and (ii) Seller hereby requests and the Purchasers (other than any Terminating Committed Purchasers) hereby agree to make, simultaneously with such receipt, a reinvestment (each a “ Reinvestment ”) with that portion of the balance of each and every Collection received by the Servicer that is part of any Purchaser Interest (other than any Purchaser Interests of Terminating Committed Purchasers), such that after giving effect to such Reinvestment, the amount of Capital of such Purchaser Interest immediately after such receipt and corresponding Reinvestment shall be equal to the amount of Capital immediately prior to such receipt.

(b) On each Settlement Date prior to the occurrence of the Amortization Date, the Servicer shall remit to the Managing Agents’ respective accounts the amounts set aside since the immediately preceding Settlement Date that have not been applied to pay Yield or subject to a Reinvestment and apply such amounts (if not previously paid in accordance with Section 2.1 ) first, to reduce due but unpaid Obligations in the order specified in Section 2.4 and second, to reduce the Capital of all Purchaser Interests of Terminating Committed Purchasers, applied ratably to each Terminating Committed Purchaser according to the respective Capital of such Terminating Committed Purchasers. If such Capital and other Obligations shall be reduced to zero, any additional Collections received by the Servicer (i) if applicable, shall be remitted to the Managing Agents’ respective accounts no later than 12:00 noon (Chicago time) to the extent required to fund any Aggregate Reduction on such Settlement Date, applied ratably in accordance with the Pro Rata Share of each such Managing Agent’s Purchaser Group and (ii) any balance remaining thereafter shall be remitted from the Servicer to Seller on such Settlement Date. In the event that, pursuant to Section 1.3 , an Aggregate Reduction is to take place on a date other than a Settlement Date, on the date of such Aggregate Reduction, the Servicer shall remit to the Managing Agents’ respective accounts (ratably in accordance with the Pro Rata Share of the related Purchaser Group), out of amounts set aside pursuant to Section 2.2(a) , an amount equal to such Aggregate Reduction to be applied in accordance with Section 1.3 .

Section 2.3 Collections Following Amortization . On the Amortization Date and on each day thereafter, the Servicer shall set aside and hold in trust, for the holder of each Purchaser Interest, all Collections and Deemed Collections received on such day. On the Amortization Date and each date thereafter, (i) the Servicer shall remit to the Managing Agents’ respective accounts, in accordance with the applicable Pro Rata Shares, the amounts set aside pursuant to the preceding sentence, and (ii) each Managing Agent shall apply such amounts to reduce the Aggregate Capital and any other Aggregate Unpaids due and payable to the related Purchaser Group.

Section 2.4 Application of Collections . If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in full of the aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the Servicer shall distribute funds:

(i) first , to the payment of the Servicer’s reasonable out of pocket costs and expenses in connection with servicing, administering and collecting the Receivables, including the Servicing Fee, if Seller or one of its Affiliates is then acting as Servicer and no Servicer Default has occurred and is continuing, or if Seller or one of its Affiliates is not then acting as the Servicer;

(ii) second, to the reimbursement of the Collateral Agent’s and each Managing Agent’s costs of collection and enforcement of this Agreement;

(iii) third , ratably to the payment of all accrued and unpaid fees under the Fee Letter and all accrued and unpaid Yield;

(iv) fourth , (to the extent applicable) to the ratable reduction of the Aggregate Capital (without regard to any Termination Percentage);

(v) fifth , for the ratable payment of all other unpaid Obligations and Servicer costs and expenses, including the Servicing Fee; provided that when the Seller or one of its Affiliates is acting as the Servicer, such Servicer costs and expenses, including the Servicing Fee, will not be paid until after the payment in full of all other Obligations; and

(vi) sixth , after the Aggregate Unpaids have been indefeasibly reduced to zero, to the Seller.

Collections applied to the payment of Aggregate Unpaids shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth in Section 2.4 above, shall be shared ratably (within each priority) among the Collateral Agent, the Managing Agents and the Purchasers in accordance with the amount of such Aggregate Unpaids owing to each of them in respect of each such priority.

Section 2.5 Payment Rescission . No payment of any of the Aggregate Unpaids shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Seller shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the Collateral Agent (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus the Default Fee from the date of any such rescission, return or refunding.

Section 2.6 Seller Interest . Seller shall ensure that the Purchaser Interests of the Purchasers shall at no time exceed in the aggregate 100%. If the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller shall pay to the Managing Agents, within one Business Day, an amount to be applied to reduce the Aggregate Capital, such that after giving effect to such payment the aggregate of the Purchaser Interests equals or is less than 100%.

Section 2.7 Clean Up Call . In addition to Seller’s rights pursuant to Section 1.3 , Seller shall have the right (after providing written notice to the Managing Agents in accordance with the Required Notice Period), at any time following the reduction of the Capital to a level that is less than 10.0% of the original Purchase Limit, to repurchase from the Purchasers all, but not less than all, of the then outstanding Purchaser Interests. The purchase price in respect thereof shall be an amount equal to the Aggregate Unpaids through the date of such repurchase, payable in immediately available funds. Such repurchase shall be without representation, warranty or recourse of any kind by, on the part of, or against any Purchaser, any Managing Agent or the Collateral Agent.

ARTICLE III

FUNDING

Section 3.1 General Funding Provisions . Subject to Section 3.5 hereof, (a) each Purchaser Interest of the Committed Purchasers in a CP Funding Purchaser Group shall accrue Yield for each day during its Tranche Period at either the LIBO Rate or the Base Rate, (b) each Purchaser Interest of the Committed Purchasers in a Bank Funding Purchaser Group shall accrue Yield for each day during its Tranche Period at the LIBO Rate and (c) each Purchaser Interest directly or indirectly funded substantially with Pooled Commercial Paper shall accrue Yield for each day that any Capital in respect of such Purchaser Interest is outstanding at the CP Rate, in each case, in accordance with the terms and conditions hereof. Until Seller gives notice to the Managing Agents of another Discount Rate in accordance with Section 3.4 , the initial Discount Rate for any Purchaser Interest transferred to the Committed Purchasers in a CP Funding Purchaser Group pursuant to the terms and conditions hereof shall be the Base Rate. If any Committed Purchaser in a CP Funding Purchaser Group acquires by assignment from any Conduit Purchaser any Purchaser Interest pursuant to such Conduit Purchaser’s respective Liquidity Agreement, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment.

Section 3.2 Yield Payments . On each Monthly Settlement Date, Seller shall pay to each Managing Agent (for the benefit of the applicable Purchasers), an aggregate amount equal to (i) the accrued and unpaid Yield with respect to each Purchaser Interest for the immediately preceding Accrual Period, if Yield for such Purchaser Interest is calculated on the basis of the CP Rate, and (ii) the accrued and unpaid Yield with respect to each Purchaser Interest for the most recently ended Tranche Period for such Purchaser Interest, if Yield for such Purchaser Interest is calculated on the basis of any Discount Rate other than the CP Rate, in each case, in accordance with Article III .

Section 3.3 Selection and Continuation of Tranche Periods for Committed Purchasers in CP Funding Purchaser Groups .

(a) With consultation from (and approval by) each related Managing Agent, Seller shall from time to time request Tranche Periods for the Purchaser Interests of the Committed Purchasers in CP Funding Purchaser Groups; provided , however , that no more than fifteen (15) Tranche Periods shall be outstanding at any one time and Seller shall always request Tranche Periods such that at least one Tranche Period shall end on the date specified in clause (A) of the definition of Settlement Date.

(b) Seller or a Managing Agent, upon notice to and consent by the other received at least three (3) Business Days prior to the end of a Tranche Period (the “ Terminating Tranche ”) for any Purchaser Interest, may, effective on the last day of the Terminating Tranche of a Committed Purchaser in a CP Funding Purchaser Group: (i) divide any such Purchaser Interest into multiple Purchaser Interests, (ii) combine any such Purchaser Interest with one or more other Purchaser Interests which have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Purchaser Interest with one or more other Purchaser Interests which either have a Terminating Tranche ending on such day or are newly created on such day, provided , in no event may a Purchaser Interest of a Conduit Purchaser be combined with a Purchaser Interest of a Committed Purchaser.

Section 3.4 Discount Rates of Committed Purchasers in CP Funding Purchaser Groups. Seller may select the LIBO Rate or the Base Rate for each Purchaser Interest of the Committed Purchasers in CP Funding Purchaser Groups. Seller shall by 12:00 noon (Chicago time): (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as a new Discount Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Base Rate is being requested as a new Discount Rate, give each related Managing Agent irrevocable notice of the new Discount Rate for the Purchaser Interest associated with such Terminating Tranche.

Section 3.5 Suspension of the LIBO Rate .

(a) If any Committed Purchaser notifies its related Managing Agent that it has determined that funding its Pro Rata Share of the Purchaser Interests at a LIBO Rate would violate any applicable law, rule, regulation, or directive of any governmental or regulatory authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match fund its Purchaser Interests at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately reflect the cost of acquiring or maintaining a Purchaser Interest at such LIBO Rate, then such Managing Agent shall notify the Collateral Agent and shall suspend the availability of such LIBO Rate and require Seller to select the Base Rate for any Purchaser Interest accruing Yield at such LIBO Rate.

(b) If less than all of the Committed Purchasers give a notice to the Managing Agents pursuant to Section 3.5(a) , each Committed Purchaser which gave such a notice shall be obligated, at the request of Seller or such Committed Purchaser’s Managing Agent (on behalf of the related Conduit Purchaser or Conduit Purchasers), to assign all of its rights and obligations hereunder to (i) another Committed Purchaser that is acceptable to such related Conduit Purchaser or Conduit Purchasers or (ii) another funding entity nominated by Seller that is acceptable to such Conduit Purchaser or Conduit Purchasers and willing to participate in this Agreement through the Facility Termination Date in the place of such notifying Committed Purchaser; provided that (i) the notifying Committed Purchaser receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such notifying Committed Purchaser’s Pro Rata Share of the Capital and Yield owing to all of the Committed Purchasers and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Committed Purchasers, and (ii) the replacement Committed Purchaser otherwise satisfies the requirements of Section 11.1(b) .

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Representations and Warranties of Seller Parties . Each Seller Party hereby represents and warrants to the Collateral Agent, the Managing Agents and the Purchasers, as to itself, that:

(a) Corporate Existence and Power . Such Seller Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its state of incorporation or formation, as the case may be, and is duly qualified to do business and is in good standing as a foreign corporation or limited liability company, and has and holds all corporate or limited liability company power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization Execution and Delivery . The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Seller, Seller’s use of the proceeds of purchases made hereunder, are within its corporate or limited liability company powers and authority and have been duly authorized by all necessary corporate or limited liability company action on its part. This Agreement and each other Transaction Document to which such Seller Party is a party has been duly executed and delivered by such Seller Party.

(c) No Conflict . The execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws or certificate of formation or operating agreement, as the case may be, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Seller Party or its Material Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization . Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Seller Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits . There are no actions, suits or proceedings pending, or to the best of such Seller Party’s knowledge, threatened, against or affecting such Seller Party, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Seller Party is not in default with respect to any order of any court, arbitrator or governmental body.

(f) Binding Effect . This Agreement and each other Transaction Document to which such Seller Party is a party constitute the legal, valid and binding obligations of such Seller Party enforceable against such Seller Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information . All information heretofore furnished by such Seller Party or any of its Affiliates to the Collateral Agent, the Managing Agents or the Purchasers for purposes of or in connection with this Agreement, any Monthly Report, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Seller Party or any of its Affiliates to the Collateral Agent, the Managing Agents or the Purchasers will be, true and accurate in every material respect on the date such information is stated or certified (or, if such information specifies another date, such other date) and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

(h) Use of Proceeds . No purchase hereunder will violate, or be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time. No proceeds of any purchase hereunder will be directly secured or “indirectly secured” by any “margin stock,” as such terms are defined in Regulation U promulgated by the Board of Governors of the Federal Reserve System from time to time.

(i) Good Title . Immediately prior to each purchase hereunder, Seller shall be the legal and beneficial owner of the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s ownership interest in each Receivable, its Collections and the Related Security.

(j) Perfection .

(i) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and Related Security and Collections with respect thereto in favor of the Collateral Agent (for the benefit of the Purchasers), which security interest is prior to all other Adverse Claims, and is enforceable as such as against creditors of and purchasers from Seller.

(ii) The Receivables constitute “accounts” within the meaning of the applicable UCC.

(iii) Seller owns and has good and marketable title to the Receivables, Related Security and Collections, free and clear of any Adverse Claim, claim or encumbrance of any Person.

(iv) Seller has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables, Related Security and Collections granted to the Collateral Agent (on behalf of the Purchasers) hereunder.

(v) Other than the security interest granted to the Collateral Agent (for the benefit of the Purchasers) pursuant to this Agreement, Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables, Related Security or Collections. Seller has not authorized the filing of and is not aware of any financing statements against Seller that include a description of collateral covering the Receivables, Related Security or Collections other than any financing statement relating to the security interest granted to the Collateral Agent (for the benefit of the Purchasers) hereunder or that has been terminated. Seller is not aware of any judgment or tax lien filings against Seller.

The parties hereto shall not waive a breach of any of the foregoing perfection representations, warranties or covenants without the prior written consent of the Collateral Agent (acting at the direction of the Required Committed Purchasers upon confirmation that such waiver will not result in a withdrawal or downgrade of the rating of the Commercial Paper of any Conduit Purchaser).

(k) Places of Business . The principal places of business and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the addresses listed on Exhibit III or such other locations of which the Collateral Agent has been notified in accordance with Section 6.2(a) in jurisdictions where all action required by Section 12.4(a) has been taken and completed. Each Seller Party’s Federal Employer Identification Number is correctly set forth on Exhibit III . Each Seller Party is organized solely under the laws of the State of Delaware.

(l) Collections . The conditions and requirements set forth in Section 6.1(j) and Section 7.2 have at all times been satisfied and duly performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Seller at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit I to the Fee Letter (as such Exhibit I to the Fee Letter may be amended or supplemented from time to time by either Seller Party by delivery of a new Exhibit I thereto to the Collateral Agent and the Managing Agents). The Seller has not granted or delegated to any Person, other than the Collateral Agent as contemplated by this Agreement or pursuant

to a Collection Account Agreement, dominion or “control” (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of or the right to give instructions with respect to the disposition of funds without the consent of any other Person with respect to any Lock-Box or Collection Account, or the right to take dominion or “control” (within the meaning of Section 9-104 of the UCC of all applicable jurisdictions) of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.

(m) Material Adverse Effect . (i) The initial Servicer represents and warrants that, since March 31, 2011, no event has occurred with respect to the initial Servicer that would have a material adverse effect on its financial condition or operations or its ability to perform its obligations under this Agreement and (ii) Seller represents and warrants that since March 31, 2011, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Seller, (B) the ability of Seller to perform its obligations under this Agreement or (C) the collectibility of the Receivables generally or any material portion of the Receivables; provided , that with respect to each of clause (i) and clause (ii) , the insolvency of, or any other event with respect to, any Obligor or Obligors which results in the Eligible Receivables from such Obligor or Obligors ceasing to be Eligible Receivables shall not be deemed to have a Material Adverse Effect so long as (x) immediately after giving effect to such insolvency or event, as applicable, the Net Receivables Balance less the Aggregate Reserves equals or exceeds the Aggregate Capital, and (y) such insolvency or event, as applicable, does not materially adversely affect the ability of the initial Servicer to perform its obligations and duties under this Agreement.

(n) Names . In the past five (5) years, Seller has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.

(o) Ownership of Seller . McKesson directly owns 100% of the issued and outstanding capital stock of Seller, free and clear of any Adverse Claim. Such capital stock is validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Seller.

(p) Not an Investment Company . Such Seller Party is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

(q) Compliance with Law . Such Seller Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.

(r) Compliance with Credit and Collection Policy . Such Seller Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which the Collateral Agent has been notified in accordance with Section 6.1(a)(vii) .

(s) Reasonably Equivalent Value . The Seller has given reasonably equivalent value in consideration of the transfer of each Receivable, and no such transfer has been made for or on account of an antecedent debt.

(t) Enforceability of Contracts . Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables . Each Receivable included in the Net Receivables Balance as an Eligible Receivable on the date of its purchase by the Seller was an Eligible Receivable on such purchase date.

(v) Net Receivables Balance . Each Seller Party has determined that, immediately after giving effect to each Incremental Purchase and Reinvestment hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the Aggregate Reserves.

(w) Accounting . Such Seller Party treats the transactions contemplated by the Receivables Sale Agreement as sales and/or capital contributions, for all purposes, including, without limitation, accounting purposes, notwithstanding the fact that the consolidated financial statements of McKesson and the Seller are prepared in accordance with GAAP and, as a result of the consolidation required by GAAP, the transfers shall be reflected as a financing by McKesson in its consolidated financial statements, and such Seller Party (i) has made appropriate notations in any such consolidated financial statements (or in the accompanying notes) to indicate that the Seller is a separate legal entity from McKesson and to indicate that the assets and credit of the Seller is not available to satisfy the debts and obligations of McKesson and (ii) the assets of Seller are listed separately on any balance sheet of such Seller Party prepared on a standalone basis.

(x) Compliance with Representations . On and as of the date of each purchase of a Purchaser Interest hereunder and the date of each Reinvestment hereunder, each Seller Party hereby represents and warrants that all of the other representations and warranties made by it set forth in this Section 4.1 are true and correct on and as of the date of such purchase or Reinvestment (and after giving effect to such purchase or Reinvestment) as though made on and as of each such date (except where such representation or warranty relates to an earlier date, in which case as of such earlier date).

Section 4.2 Committed Purchaser Representations and Warranties . Each Committed Purchaser hereby represents and warrants to the Collateral Agent, the Managing Agents and the Conduit Purchasers that:

(a) Existence and Power . Such Committed Purchaser is a corporation, limited liability company or a banking association duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all company power to perform its obligations hereunder.

(b) No Conflict . The execution and delivery by such Committed Purchaser of this Agreement and the performance of its obligations hereunder are within its company powers, have been duly authorized by all necessary company action, do not contravene or violate (i) its certificate or articles of incorporation, formation or association or by-laws or limited liability company agreement, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets. This Agreement has been duly authorized, executed and delivered by such Committed Purchaser.

(c) Governmental Authorization . No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Committed Purchaser of this Agreement and the performance of its obligations hereunder.

(d) Binding Effect . This Agreement constitutes the legal, valid and binding obligation of such Committed Purchaser enforceable against such Committed Purchaser in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).

ARTICLE V

CONDITIONS OF PURCHASES

Section 5.1 Conditions Precedent to the Effectiveness of this Agreement . This Agreement shall become effective as of the date hereof upon satisfaction of each of the following conditions precedent on or prior to the Effective Date:

(a) The Collateral Agent shall have received fully executed copies of each of the documents and other items reasonably requested by the Collateral Agent, in form and substance acceptable to the Collateral Agent and each Managing Agent;

(b) Each of the representations and warranties set forth in Section 4.1 shall be true and correct on and as of the Effective Date as though made on and as of such date (except where such representation or warranty relates to an earlier date, in which case as of such earlier date);

(c) Each of the representations and warranties set forth in the Receivables Sale Agreement shall be true and correct on and as of the Effective Date as though made on and as of such date (except where such representation or warranty relates to an earlier date, in which case as of such earlier date);

(d) No Amortization Event or Potential Amortization Event shall have occurred and be continuing and the Amortization Date shall not have occurred;

(e) The Collateral Agent and each Managing Agent shall have received all fees and expenses required to be paid on the Effective Date pursuant to the terms of this Agreement and the Fee Letter; and

(f) Each of the Collateral Agent and each Managing Agent and each Purchaser shall have received such other approvals and documents as it has reasonably requested from the Seller or McKesson.

Section 5.2 Conditions Precedent to All Purchases and Reinvestment. Each purchase of a Purchaser Interest and each Reinvestment shall be subject to the conditions precedent that (a) in the case of each such purchase or Reinvestment, the Servicer shall have delivered to the Managing Agents on or prior to the date of such purchase, in form and substance satisfactory to the Managing Agents, all Monthly Reports, Weekly Reports and/or Daily Reports as and when due under Section 7.5 and (ii) upon the Collateral Agent’s or any Managing Agent’s request, the Servicer shall have delivered to the Managing Agents at least three (3) days prior to such purchase or Reinvestment an interim Monthly Report showing the amount of Eligible Receivables or such other form of report in form and substance reasonably satisfactory to the Managing Agents showing adequate information relating to the amount of

Eligible Receivables; (b) the Facility Termination Date shall not have occurred; (c) no Amortization Event or, with respect to any Incremental Purchase, no Potential Amortization Event shall have occurred; (d) the Originator shall have marked its records evidencing the Receivables in a manner satisfactory to the Collateral Agent; and (e) the Collateral Agent shall have received such other approvals, opinions or documents as it may reasonably request. With respect to each Incremental Purchase and Reinvestment, as a condition to such Incremental Purchase or Reinvestment, on the date of such purchase the Seller represents and warrants that the representations and warranties set forth in Section 4.1 are true and correct on and as of the date of such Incremental Purchase or Reinvestment (and after giving effect thereto) as though made on and as of such date (except where such representation or warranty relates to an earlier date, in which case as of such earlier date).

ARTICLE VI

COVENANTS

Section 6.1 Affirmative Covenants of the Seller Parties . Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, as set forth below:

(a) Financial Reporting . Such Seller Party will maintain, for itself and each of its Material Subsidiaries, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Collateral Agent and the Managing Agents:

(i) Annual Reporting . Within ninety (90) days after the close of each of its respective fiscal years, audited, unqualified financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for the Seller Parties on a consolidated basis for such fiscal year certified in a manner acceptable to the Collateral Agent and the Managing Agents by independent public accountants acceptable to the Collateral Agent and the Managing Agents together with unaudited consolidating financial statements for the Seller; provided , that such information need not be furnished directly to the Collateral Agent and the Managing Agents if it is publicly available at no charge on the EDGAR system of the United States Securities and Exchange Commission (“ EDGAR ”) within such period; provided , further , that the Seller shall only to be required to deliver financial statements for the Seller to the extent such statements are prepared.

(ii) Quarterly Reporting . Within sixty (60) days after the close of the first three (3) quarterly periods of each of its respective fiscal years, balance sheets of each of the Originator and the Servicer (if different from the Originator), and, to the extent such financial statements are prepared, for the Seller, in each such case as at the close of each such period, together with statements of income and retained earnings and, with respect to the Originator only, a statement of cash flows for each such Person for the period from the beginning of such fiscal year to the end of such quarter, in each case, certified by an Authorized Officer; provided , that such information need not be furnished directly to the Collateral Agent and the Managing Agents if it is publicly available at no charge on EDGAR within such period.

(iii) Compliance Certificate . Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit V signed by such Seller Party’s Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.

(iv) Shareholders Statements and Reports . Promptly upon the furnishing thereof to the shareholders of such Seller Party copies of all financial statements, reports and proxy statements so furnished; provided , that a copy of any such statement or report need not be furnished directly to the Collateral Agent and the Managing Agents if the same is publicly available at no charge on EDGAR within such period.

(v) Securities Exchange Commission Filings . Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which such Seller Party or any of its Material Subsidiaries files with the Securities and Exchange Commission; provided , that a copy of any such statement or report need not be furnished directly to the Collateral Agent and the Managing Agents if the same is publicly available at no charge on EDGAR promptly upon the filing thereof.

(vi) Copies of Notices . Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Collateral Agent, any Managing Agent or any Conduit, copies of the same.

(vii) Change in Credit and Collection Policy . At least thirty (30) days prior to the effectiveness of any material change in or amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice indicating such change or amendment.

(viii) Other Information . Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Seller Party as the Collateral Agent or any Managing Agent may from time to time reasonably request in order to protect the interests of the Collateral Agent, the Managing Agents, and the Purchasers under or as contemplated by this Agreement. Any report, statement or other material required to be delivered pursuant to this clause (a) shall be deemed to have been furnished to the Collateral Agent and the Managing Agents on the date that such report, statement or other material is posted on the EDGAR system of the Securities and Exchange Commission or the website of the Originator at www.mckesson.com .

(b) Notices . Such Seller Party will notify the Collateral Agent and each Managing Agent in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

(i) Amortization Events or Potential Amortization Events . The occurrence of each Amortization Event and each Potential Amortization Event, by a statement of an Authorized Officer of such Seller Party.

(ii) Judgment and Proceedings . (A) The entry of any judgment or decree against (1) the Servicer or any of its Material Subsidiaries if the amount of any such judgment or decree against the Servicer or one of its Material Subsidiaries exceeds $25,000,000 after deducting (a) the amount with respect to which the Servicer or any such Material Subsidiary is insured and with respect to which the insurer has assumed responsibility in writing, and (b) the amount for which the Servicer or any such Material Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to the Collateral Agent and the Managing Agents, or (2) Seller; or (B) the institution of any litigation, arbitration proceeding or governmental proceeding against the Seller.

(iii) Material Adverse Effect . The occurrence of any event or condition that has, or could reasonably be expected to have, a Material Adverse Effect.

(iv) Receivables Sale Agreement Amortization Date . The occurrence of the “Amortization Date” under the Receivables Sale Agreement.

(v) Defaults Under Other Agreements . The occurrence of an event of default, or event that, with the giving of notice or passage of time or both, would result in an event of default, under any other financing arrangement pursuant to which such Seller Party is a debtor or an obligor that is reasonably likely to result in a Material Adverse Effect.

(vi) Downgrade of the Originator . Any downgrade in the rating of any Indebtedness of the Originator by S&P, Fitch or Moody’s, setting forth the Indebtedness affected and the nature of such change.

(c) Compliance with Laws and Preservation of Corporate Existence . Such Seller Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Seller Party will preserve and maintain its corporate or limited liability company existence, rights, franchises and privileges in the jurisdiction of its incorporation or formation, as the case may be, and qualify and remain qualified in good standing as a foreign corporation or limited liability company, as the case may be, in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify could not reasonably be expected to have a Material Adverse Effect.

(d) Audits . Such Seller Party will furnish to the Collateral Agent and each Managing Agent from time to time such information with respect to it and the Receivables as the Collateral Agent or such Managing Agent may reasonably request. Such Seller Party will, from time to time during regular business hours as requested by the Collateral Agent or such Managing Agent upon reasonable notice and at the sole cost of such Seller Party, permit the Collateral Agent or such Managing Agent, or its agents or representatives, (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Receivables and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Receivables and the Related Security or any Person’s performance under any of the Transaction Documents or any Person’s performance under the Contracts (subject to confidentiality restrictions in the relevant Contracts) and, in each case, with any of the officers or employees of Seller or the Servicer having knowledge of such matters; provided , however , that prior to the Amortization Date, so long as no Amortization Event has occurred and is continuing, the Collateral Agent, the Managing Agents and their respective agents or representatives shall not, on a collective basis, conduct the activities described in clauses (i) and (ii) above more frequently than one time per year.

(e) Keeping and Marking of Records and Books .

(i) The Servicer will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the identification of each new Receivable and all Collections of and adjustments to each existing Receivable).

(ii) Such Seller Party will on or prior to the date hereof, mark its records and other books and records relating to the Purchaser Interests with a legend, acceptable to the Collateral Agent, describing the Purchaser Interests.

(f) Compliance with Contracts and Credit and Collection Policy . Such Seller Party will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be

observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract, except, in each case, where the failure to so comply would not result in a Material Adverse Effect. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of the Purchasers, the Collateral Agent, or the Managing Agents.

(g) Performance and Enforcement of Receivables Sale Agreement . Seller shall, and shall require the Originator to, perform each of its obligations and undertakings under and pursuant to the Receivables Sale Agreement, shall purchase Receivables thereunder in strict compliance with the terms thereof and shall take all action necessary or reasonably appropriate to enforce the rights and remedies accorded to Seller under the Receivables Sale Agreement. Seller shall take all actions reasonably necessary to perfect and enforce its rights and interests (and the rights and interests of the Collateral Agent and the Purchasers as assignees of Seller) under the Receivables Sale Agreement as the Collateral Agent may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.

(h) Ownership . Seller shall take all necessary action to (i) vest legal and equitable title to the Receivables, the Related Security and the Collections purchased under the Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Collateral Agent and the Purchasers ( including , without limitation , the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller’s interest in such Receivables, Related Security (to the extent covered by Article 9 of the UCC) and Collections and such other action to perfect, protect or more fully evidence the interest of Seller therein as the Collateral Agent may reasonably request), and (ii) establish and maintain, in favor of the Collateral Agent, for the benefit of the Purchasers, a valid and perfected first priority undivided percentage ownership interest (and/or a valid and perfected first priority security interest) in all Receivables, Related Security (to the extent covered by Article 9 of the UCC) and Collections to the full extent contemplated herein, free and clear of any Adverse Claims other than Adverse Claims in favor of the Collateral Agent for the benefit of the Purchasers (including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Collateral Agent’s (for the benefit of the Purchasers) interest in such Receivables, Related Security (to the extent covered by Article 9 of the UCC) and Collections and such other action to perfect, protect or more fully evidence the interest of the Collateral Agent for the benefit of the Purchasers as the Collateral Agent may reasonably request).

(i) Purchasers’ Reliance . Seller acknowledges that the Purchasers are entering into the transactions contemplated by this Agreement in reliance upon Seller’s identity as a legal entity that is separate from the Originator. Therefore, from and after the date of execution and delivery of this Agreement, Seller shall take all reasonable steps, including, without limitation, all steps that the Collateral Agent, any Managing Agent or any Purchaser may from time to time reasonably request, to maintain Seller’s identity as a separate legal entity and to make it manifest to third parties that Seller is an entity with assets and liabilities distinct from those of the Originator and any Affiliates thereof and not just a division of the Originator. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller shall:

(A) conduct its own business in its own name and require that all full-time employees of Seller, if any, identify themselves as such and not as employees of the Originator;

(B) if applicable, compensate all employees, consultants and agents directly, from Seller’s bank accounts, for services provided to Seller by such employees, consultants and agents and, to the extent any employee, consultant or agent of Seller is also an employee, consultant or agent of the Originator, allocate the compensation of such employee, consultant or agent between Seller and the Originator on a basis that reflects the services rendered to Seller and the Originator;

(C) clearly identify its offices (by signage or otherwise) as its offices, if any, and, if any such office is located in the offices of the Originator, Seller shall lease such office at a fair market rent;

(D) if applicable, have separate stationery, invoices and checks in its own name;

(E) conduct all transactions with the Originator and the Servicer (including, without limitation, any delegation of its obligations hereunder as Servicer) strictly on an arm’s-length basis, allocate all overhead expenses (including, without limitation, telephone and other utility charges), if any, for items shared between Seller and the Originator on the basis of actual use to the extent practicable, if any, and, to the extent such allocation is not practicable, on a basis reasonably related to actual use;

(F) at all times have a Board of Directors consisting of at least three members, at least one member of which is an Independent Director;

(G) observe all organizational formalities as a distinct entity, and ensure that all corporate or limited liability company actions relating to (A) the selection, maintenance or replacement of the Independent Director, (B) the dissolution or liquidation of Seller or (C) the initiation of, participation in, acquiescence in or consent to any bankruptcy, insolvency, reorganization or similar proceeding involving Seller, are duly authorized by unanimous vote of its Board of Directors (including the Independent Director);

(H) maintain Seller’s books and records separate from those of the Originator and otherwise readily identifiable as its own assets rather than assets of the Originator;

(I) prepare its financial statements, if any, separately from those of the Originator and ensure that any consolidated financial statements of the Originator or any Affiliate thereof that include Seller and that are filed with the Securities and Exchange Commission or any other governmental agency have notes stating to the effect that Seller is a separate corporate entity and that its assets will be available to satisfy the claims of the creditors of Seller and of no other Person;

(J) except as herein specifically otherwise provided, maintain the funds or other assets of Seller separate from, and not commingled with, those of the Originator and only maintain bank accounts or other depository accounts to which the Seller alone is the account party, into which the Seller alone makes deposits and from which the Seller alone (or the Collateral Agent or Managing Agents hereunder) has the power to make withdrawals;

(K) pay all of Seller’s operating expenses, if any, from the Seller’s own assets (except for certain payments by the Originator or other Persons pursuant to allocation arrangements that comply with the requirements of this Section 6.1(i) );

(L) operate its business and activities such that: it does not engage in any business or activity of any kind, or enter into any transaction or indenture, mortgage, instrument, agreement, contract, lease or other undertaking, other than the transactions contemplated and authorized by this Agreement and the Receivables Sale Agreement; and does not create, incur, guarantee, assume or suffer to exist any indebtedness or other liabilities, whether direct or contingent, other than (1) as a result of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, (2) the incurrence of obligations under this Agreement, (3) the incurrence of obligations, as expressly contemplated in the Receivables Sale Agreement, to make payment to the Originator for the purchase of Receivables from the Originator under the Receivables Sale Agreement, and (4) the incurrence of operating expenses in the ordinary course of business of the type otherwise contemplated by this Agreement;

(M) maintain its organizational documents in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its organizational documents in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 6.1(i) of this Agreement;

(N) maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Collateral Agent and each Managing Agent;

(O) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary;

(P) maintain at all times the Required Capital Amount and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained; and

(Q) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued on the date hereof by Morrison & Foerster LLP as counsel for Seller and the Originator relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.

(j) Collections . Such Seller Party shall cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection

Account to be, at all times, subject to a Collection Account Agreement that is in full force and effect. In the event any payments relating to Receivables are remitted directly to Seller or any Affiliate of Seller, Seller shall remit (or shall cause all such payments to be remitted) directly to a Collection Bank and deposited into a Collection Account within two (2) Business Days following receipt thereof and, at all times prior to such remittance, Seller shall itself hold or, if applicable, shall cause such payments to be held in trust for the exclusive benefit of the Collateral Agent, the Managing Agents and the Purchasers. Seller shall maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Collateral Agent as contemplated by this Agreement.

(k) Taxes . Such Seller Party shall file all tax returns and reports required by law to be filed by it and shall promptly pay all taxes and governmental charges at any time owing, except any such taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with generally accepted accounting principles shall have been set aside on its books.

(l) Corporate Ownership . The Seller shall remain a wholly-owned, direct Subsidiary of McKesson.

Section 6.2 Negative Covenants of the Seller Parties . Until the date on which the Aggregate Unpaids have been indefeasibly paid in full and this Agreement terminates in accordance with its terms, each Seller Party hereby covenants, as to itself, that:

(a) Name Change, Offices and Records . Such Seller Party will not make any change to its name (within the meaning of Section 9-507(c) of any applicable enactment of the UCC), type or jurisdiction of organization or location of books and records unless, with respect to any such name change, change in type or jurisdiction of organization, or change in location of its books and records, such Seller Party (x) at least thirty (30) days prior to the effective date thereof, notifies the Collateral Agent and each Managing Agent thereof, (y) prior to the effectiveness thereof, takes all other steps to ensure that the Collateral Agent, for the benefit of itself and the Purchasers, continues to have a first priority, perfected ownership or security interest in the Receivables, the Related Security related thereto and any Collections thereon and (z) except with respect to a change in location of books and records, prior to the effectiveness thereof, delivers to the Collateral Agent (i) such financing statements (Forms UCC-1 and UCC-3) as the Collateral Agent or any Managing Agent may reasonably request to reflect such name change, change in type or jurisdiction of organization, (ii) if the Collateral Agent, any Managing Agent or any Purchaser shall so request, an opinion of counsel, in form and substance reasonably satisfactory to such Person, as to such Seller Party’s valid existence and good standing, enforceability of the Transaction Documents and the perfection and priority of the Collateral Agent’s ownership or security interest in the Receivables, the Related Security and Collections and (iii) such other documents and instruments as the Collateral Agent or any Managing Agent may reasonably request in connection therewith, including, without limitation, information which the Collateral Agent or any Managing Agent may request in connection with its compliance with “know your customer” regulations, the Patriot Act and any other rules or regulations applicable to such Person and, in the case of a change to the Seller’s type of organization, copies of the organizational documents of the Seller which shall contain provisions customary for bankruptcy-remote entities of such type participating in asset-backed financings and consistent with the provisions of Section 6.1(i) and otherwise be in form and substance reasonably acceptable to the Collateral Agent.

(b) Change in Payment Instructions to Obligors . Except as may be required by Collateral Agent pursuant to Section 7.2(b) , such Seller Party will not add or terminate any bank as a Collection

Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Collateral Agent shall have received (i) at least ten (10) days before the proposed effective date therefor, written notice of such addition, termination or change; provided , however , that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account, and (ii) at least ten (10) days before the proposed effective date therefor (or such shorter prior period as may be agreed to by the Collateral Agent in its sole discretion), with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box. In the event of any change in any Lock-Box, Collection Bank or Collection Account in accordance with this Section 6.2(b) , such Seller Party shall deliver an updated Exhibit I to the Fee Letter to the Collateral Agent.

(c) Modifications to Contracts and Credit and Collection Policy . Such Seller Party will not make any change to the Credit and Collection Policy that could adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables. Except as provided in Section 7.2(d) , the Servicer will not, and will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.

(d) Sales, Liens . Seller shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of the Collateral Agent and the Purchasers provided for herein), and Seller shall defend the right, title and interest of the Collateral Agent and the Purchasers in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller or the Originator. Seller shall not create or suffer to exist any mortgage, pledge, security interest, encumbrance, lien, charge or other similar arrangement on any inventory the sale of which would give rise to a Receivable.

(e) Net Receivables Balance . At no time prior to the Amortization Date shall Seller permit the Net Receivables Balance to be less than an amount equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves for any period of time greater than one (1) Business Day.

(f) Amortization Date Determination . Seller shall not designate an Amortization Date (as defined in the Receivables Sale Agreement), or send any written notice to Originator in respect thereof, without the prior written consent of the Collateral Agent, except with respect to the occurrence of such Amortization Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.

ARTICLE VII

ADMINISTRATION AND COLLECTION

Section 7.1 Designation of Servicer .

(a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the “ Servicer ”) so designated from time to time in accordance with this Section 7.1 . McKesson is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. After the occurrence and during the continuance of an Amortization Event, the Collateral Agent may at any time designate as Servicer any Person to succeed McKesson or any successor Servicer.

(b) Without the prior written consent of the Collateral Agent and the Required Committed Purchasers, McKesson shall not be permitted to delegate any of its duties or responsibilities as Servicer to any Person other than (i) Seller or another Affiliate of McKesson and (ii) with respect to certain Defaulted Receivables, outside collection agencies in accordance with its customary practices. Seller shall not be permitted to further delegate to any other Person any of the duties or responsibilities of the Servicer delegated to it by McKesson. If at any time after the occurrence of an Amortization Event, the Collateral Agent shall designate as Servicer any Person other than McKesson or an Affiliate of McKesson, all duties and responsibilities theretofore delegated by McKesson or another Affiliate of McKesson to Seller may, at the discretion of the Collateral Agent, be terminated forthwith on notice given by the Collateral Agent to McKesson and to Seller.

(c) So long as the Servicer is McKesson or an Affiliate of McKesson, (i) McKesson shall be and remain primarily liable to the Collateral Agent and the Purchasers for the full and prompt performance of all duties and responsibilities of the Servicer hereunder; (ii) the Collateral Agent and the Purchasers shall be entitled to deal exclusively with McKesson in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder; and (iii) the Collateral Agent and the Purchasers shall not be required to give notice, demand or other communication to any Person other than McKesson in order for communication to the Servicer and its sub-servicer or other delegate with respect thereto to be accomplished. McKesson, at all times that it is the Servicer, shall be responsible for providing any sub-servicer or other delegate of the Servicer with any notice given to the Servicer under this Agreement.

Section 7.2 Duties of Servicer .

(a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.

(b) The Servicer will instruct all Obligors to pay all Collections directly to a Lock-Box or Collection Account. The Servicer shall cause a Collection Account Agreement to be in effect at all times with respect to each Collection Account. In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Collateral Agent delivers to any Collection Bank a Collection Notice pursuant to Section 7.3 , the Collateral Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Collateral Agent and, at all times thereafter, Seller and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.

(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II . The Servicer shall set aside and hold in trust for the account of Seller and the Purchasers their respective shares of the Collections of Receivables in accordance with Article II ; provided , that nothing in this sentence shall require the Servicer to segregate Collections on a daily basis from its other funds. The Servicer shall, upon the request of the Collateral Agent after the occurrence and during the continuance of an Amortization Event, segregate, in a manner acceptable to the Collateral Agent, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Seller prior to the remittance thereof in accordance with Article II . If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Collateral Agent such allocable share of Collections of Receivables set aside for the Purchasers on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.

(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided , however , that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit the rights of the Collateral Agent or the Purchasers under this Agreement. Notwithstanding anything to the contrary contained herein, the Collateral Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.

(e) The Servicer shall hold in trust for Seller and the Purchasers all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Collateral Agent after the occurrence and during the continuance of an Amortization Event deliver or make available to the Collateral Agent all such Records, at a place selected by the Collateral Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Seller any cash collections or other cash proceeds received with respect to Indebtedness not constituting Receivables. After the occurrence and during the continuance of an Amortization Event, the Servicer shall, from time to time at the request of any Purchaser, furnish to the Purchasers (promptly after any such request) a calculation of the amounts set aside for the Purchasers pursuant to Article II .

(f) Any payment by an Obligor in respect of any indebtedness owed by it to the Originator or Seller shall, except as reasonably identified by the Servicer as not constituting a Collection, as otherwise specified by such Obligor, as otherwise required by contract or law or unless otherwise instructed by the Collateral Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.

Section 7.3 Collection Notices . The Collateral Agent is authorized at any time after the occurrence and during the continuance of an Amortization Event to date and to deliver to the Collection Banks the Collection Notices. Seller hereby transfers to the Collateral Agent for the benefit of the Purchasers, effective when the Collateral Agent delivers such notice, the exclusive ownership and control of each Lock-Box and the Collection Accounts. In case any authorized signatory of Seller whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force. After the occurrence and during the continuance of an Amortization Event, Seller hereby authorizes the Collateral Agent, and agrees that the Collateral Agent shall be entitled, to (i) endorse Seller’s name on checks and other instruments representing Collections and (ii) take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Collateral Agent rather than Seller. Following the Amortization Date, Seller hereby authorizes the Collateral Agent, and agrees that the Collateral Agent shall be entitled, to enforce the Receivables, the related Contracts and the Related Security.

Section 7.4 Responsibilities of Seller . Anything herein to the contrary notwithstanding, the exercise by the Collateral Agent and the Purchasers of their rights hereunder shall not release the Servicer, the Originator or Seller from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Purchasers shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Seller.

Section 7.5 Reports . The Servicer shall prepare and forward to each Managing Agent (a) during a Level 1 Ratings Period, a Monthly Report on each Monthly Reporting Date; (b) during a Level 2 Ratings Period, a Monthly Report on each Monthly Reporting Date and a Weekly Report on each Weekly Reporting Date and (c) during a Level 3 Ratings Period, a Monthly Report on each Monthly Reporting Date and a Daily Report on each Business Day, in each case, accompanied by, if the Collateral Agent or any Managing Agent shall request, a listing by Obligor of all Receivables together with an aging of such Receivables; provided , that if an Amortization Event has occurred and is continuing, the Servicer shall prepare and forward Monthly Reports, Weekly Reports and Daily Reports to each Managing Agent at such times as each Managing Agent shall request.

Section 7.6 Servicing Fees . In consideration of McKesson’s agreement to act as Servicer hereunder, the Purchasers hereby agree that, so long as McKesson shall continue to perform as Servicer hereunder, the Seller shall pay over to McKesson on each Monthly Settlement Date, in accordance with the priority of payments set forth in Article II , a fee (the “ Servicing Fee ”) equal to (i) one percent (1%) of the average daily Net Receivables Balance during the preceding Collection Period, times (ii) 1/12, as compensation for its servicing activities.

Section 7.7 Financial Covenant . McKesson agrees that it will, as of the end of each calendar month, maintain a ratio of Total Debt to Total Capitalization of not greater than 0.565 to 1.00.

ARTICLE VIII

AMORTIZATION EVENTS

Section 8.1 Amortization Events . The occurrence of any one or more of the following events shall constitute an Amortization Event:

(a) Any Seller Party shall fail (i) to make any payment or deposit required hereunder when due and, for any such payment or deposit which is not in respect of Capital, such failure continues for one (1) Business Day, or (ii) to perform or observe any term, covenant or agreement hereunder (other than as referred to in clause (i) of this paragraph (a)) and such failure shall continue for five (5) consecutive Business Days after the earlier of written notice from the Collateral Agent or any Managing Agent or Purchaser or actual knowledge on the part of such Seller Party of such failure.

(b) Any representation or warranty made by any Seller Party in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made.

(c) (i) Failure of Seller to pay any Indebtedness when due; (ii) failure of any other Seller Party or any Material Subsidiary thereof to pay Indebtedness (other than any intercompany Indebtedness) when due in excess of $100,000,000 (“ Relevant Indebtedness ”) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document evidencing or governing such Indebtedness on the date of such failure; or (iii) the default by any Seller Party or any Material Subsidiary thereof in the performance of any term, provision or condition contained in any agreement under which any Relevant Indebtedness was created or is governed (other than a default resulting solely from a change of control of a Subsidiary in connection with the acquisition thereof by McKesson or a Subsidiary thereof (other than the Seller)), the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or (iv) any Relevant Indebtedness of any Seller Party shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.

(d) (i) Any Seller Party or any of its Material Subsidiaries shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Seller Party or any of its Material Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property, and, with respect to a Seller Party or any of its Material Subsidiaries other than the Seller, such proceeding instituted against any Seller Party or any of its Material Subsidiaries shall not be stayed, released, vacated or fully bonded within sixty (60) days after commencement, filing or levy or (ii) any Seller Party or any of its Material Subsidiaries shall take any corporate action to authorize any of the actions set forth in clause (i) above in this subsection (d) .

(e) The aggregate Purchaser Interests shall exceed 100% and shall continue as such until the earlier of (i) one Business Day following the date any Seller Party has actual knowledge thereof and (ii) the next Settlement Date.

(f) As at the end of any calendar month, the Delinquency Ratio shall exceed 1.75%, or the Loss-to-Balance Ratio shall exceed 1.50%, or the Receivables Dilution Ratio shall exceed 10.00%.

(g) A Change of Control shall occur with respect to any Seller Party.

(h) One or more final judgments for the payment of money shall be entered against Seller or one or more final judgments for the payment of money in excess of $25,000,000 shall be entered against any other Seller Party on claims not covered by insurance or as to which the insurance carrier has denied its responsibility, and such judgment shall continue unsatisfied and in effect for fifteen (15) consecutive days without a stay of execution.

(i) (1) Any “Amortization Event” or the “Amortization Date” shall occur under the Receivables Sale Agreement or (2) the Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to the Seller under the Receivables Sale Agreement.

(j) This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Seller, or any Obligor on Receivables constituting a material portion of the Receivables shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Collateral Agent for the benefit of the Purchasers shall cease to have a valid and perfected first priority security interest in the Receivables, the Related Security and the Collections with respect thereto and the Collection Accounts.

Section 8.2 Remedies .

(a) Upon the occurrence and during the continuation of an Amortization Event, the Collateral Agent may with the consent of, and shall, upon the direction of, any Managing Agent, take any of the following actions (with written notice to the Seller): (i) declare the Amortization Date to have occurred, whereupon the Amortization Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Seller Party; provided , however , that upon the occurrence of an Amortization Event described in Section 8.1(d) , or of an actual or deemed entry of an order for relief with respect to any Seller Party under the Federal Bankruptcy Code, the Amortization Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby

expressly waived by each Seller Party, (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any of the Aggregate Unpaids outstanding at such time, (iii) replace the Person then acting as Servicer and (iv) deliver the Collection Notices to the Collection Banks.

(b) Upon the occurrence of the Amortization Date, the Collateral Agent may with the consent of, and shall, upon the direction of, any Managing Agent (with written notice to the Seller) notify Obligors of the Purchasers’ interest in the Receivables.

The aforementioned rights and remedies shall be in addition to all other rights and remedies of the Collateral Agent and the Purchasers available under this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnities by the Seller Parties . (a) Without limiting any other rights that the Collateral Agent, any Managing Agent or any Purchaser may have hereunder or under applicable law, (A) Seller hereby agrees to indemnify the Collateral Agent, the Managing Agents and each Purchaser and their respective assigns, officers, directors, agents and employees (each an “ Indemnified Party ”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of the Collateral Agent, the Managing Agents or such Purchaser) and disbursements (all of the foregoing being collectively referred to as “ Indemnified Amounts ”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by a Purchaser of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of any breach by the Servicer (whether in its capacity as Servicer or in its capacity as Originator) of a representation, warranty, covenant or obligation made by the Servicer hereunder or under any other Transaction Document excluding, however, in all of the foregoing instances under the preceding clauses (A) and (B) :

(w) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;

(x) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or financial inability to pay of the related Obligor;

(y) taxes imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Indemnified Party to the extent that the computation of such taxes is consistent with the characterization for income tax purposes of the acquisition by the Purchasers of Purchaser Interests as a loan or loans by the Purchasers to Seller secured by the Receivables, the Related Security, the Collection Accounts and the Collections; or

(z) any claim by any Indemnified Party against another Indemnified Party;

provided , however , that nothing contained in this sentence shall limit the liability of any Seller Party or limit the recourse of the Purchasers to any Seller Party for amounts otherwise specifically provided to be paid by such Seller Party under the terms of this Agreement.

Without limiting the generality of the foregoing indemnification, Seller shall indemnify the Collateral Agent, the Managing Agent and the Purchasers for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, subject to clause (x) in the preceding paragraph, but otherwise regardless of whether reimbursement therefor would constitute recourse to Seller or the Servicer) relating to or resulting from:

(i) any representation or warranty made by any Seller Party or the Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;

(ii) the failure by any Seller, the Servicer or the Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of the Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;

(iii) any failure of Seller, the Servicer or the Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;

(iv) any products liability, personal injury, damage or similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract;

(v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services;

(vi) the commingling of Collections of Receivables at any time with other funds;

(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of a purchase, the ownership of the Purchaser Interests or any other investigation, litigation or proceeding relating to Seller, the Servicer or the Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;

(viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;

(ix) any Amortization Event described in Section 8.1(d) ;

(x) any failure of Seller to acquire and maintain legal and equitable title to, and ownership of any Receivable and the Related Security and Collections with respect thereto from the Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Seller to give reasonably equivalent value in consideration of the transfer of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;

(xi) any failure to vest and maintain vested in the Collateral Agent and the Purchasers, or to transfer to the Collateral Agent and the Purchasers, legal and equitable title to, and ownership of, a first priority undivided percentage ownership interest (to the extent of the Purchaser Interests contemplated hereunder) or security interest in the Receivables, the Related Security and the Collections, free and clear of any Adverse Claim;

(xii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase or Reinvestment or at any subsequent time;

(xiii) any action or omission by any Seller Party which reduces or impairs the rights of the Collateral Agent or the Purchasers with respect to any Receivable or the value of any such Receivable; and

(xiv) any attempt by any Person to void any Incremental Purchase or Reinvestment hereunder under statutory provisions or common law or equitable action.

(b) Notwithstanding anything to the contrary in this Agreement, solely for the purposes of determining Indemnified Amounts owing under this Section 9.1 , any representation, warranty or covenant qualified by materiality or the occurrence of a Material Adverse Effect shall not be so qualified.

Section 9.2 Increased Cost and Reduced Return .

(a) If any Regulatory Change, except for changes in the rate of tax on the overall net income of a Funding Source or taxes excluded by Section 9.1 , (i) subjects any Funding Source to any charge or withholding on or with respect to this Agreement or any other Funding Agreement or a Funding Source’s obligations under this Agreement or any other Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to any Funding Source of any amounts payable under this Agreement or any other Funding Agreement or (ii) imposes, modifies or deems applicable any reserve, assessment, fee, tax, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or liabilities of a Funding Source, or credit extended by a Funding Source pursuant to this Agreement or any other Funding Agreement (except the reserve requirement reflected in the LIBO Rate) or (iii) imposes any other condition affecting this Agreement or any Funding Agreement and the result of any of the foregoing is to increase the cost to a Funding Source of performing its obligations under this Agreement or any other Funding Agreement, or to reduce the rate of return on a Funding Source’s capital as a consequence of its obligations under this Agreement or any other Funding Agreement, or to reduce the amount of any sum received or receivable by a Funding Source under this Agreement or any other Funding Agreement, or to require any payment calculated by reference to the amount of interests or loans held or interest received by it then, within forty five (45) days following demand therefor by the Collateral Agent or the relevant Managing Agent, Seller shall pay, as set forth in Section 9.2(b) , such amounts charged to such Funding Source or such amounts to otherwise compensate such Funding Source for such increased cost or such reduction; provided, that (x) Seller shall only be liable for amounts in respect of increased costs or reduced returns for the period of up to ninety (90) days prior to the date on which such demand was made, (y) such Funding Source shall have applied consistent return metrics to other similarly situated borrowers or obligors (after consideration of facility pricing, structure, usage patterns, capital treatment and relationship) with respect to such increased costs or reduced returns and (z) to the extent that any Funding Agreement described in this Section 9.2(a) covers facilities in addition to this Agreement, each Conduit Purchaser or Funding Source, as the case may be, shall allocate the liability for any such increased costs or reductions among Seller and other Persons with

whom such Conduit Purchaser or Funding Source, as the case may be, has entered into agreements to purchase interests in or finance receivables and other financial assets (“ Other Customers ”), and Seller shall not be liable for any such increased costs or reductions that are attributable to any Other Customer. The term “ Regulatory Change ” shall mean (i) the adoption after the date hereof of any applicable law, rule or regulation (including any applicable law, rule or regulation regarding capital adequacy), or any change therein, by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof (each, a “ Regulatory Authority ”), after the date hereof, (ii) any change after the date hereof in the interpretation or administration thereof by any Regulatory Authority, or compliance with any request or directive (whether or not having the force of law) issued after the date hereof by any such Regulatory Authority, or (iii) the compliance, application or implementation, whether commenced prior to or after the date hereof, by any Funding Source with: (a) the final rule titled Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues , adopted by the United States bank regulatory agencies on December 15, 2009 (the “ FAS 166/167 Capital Guidelines ”); (b) the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “ Dodd Frank Act ”); (c) the revised Basel Accord prepared by the Basel Committee on Banking Supervision as set out in the publication titled: “International Convergence of Capital Measurements and Capital Standards: a Revised Framework,” as updated from time to time (“ Basel II ”); or (d) or any existing or future rules, regulations, guidance, interpretations, requests or directives from any Regulatory Authority relating to the FAS 166/167 Capital Guidelines, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Basel II (whether or not having the force of law).

(b) A certificate of the applicable Funding Source (or its related Managing Agent on its behalf) claiming compensation under Section 9.2(a) shall be sent to Seller and shall be conclusive absent manifest error; provided that such certificate (i) sets forth in reasonable detail the amount or amounts payable to such Funding Source pursuant to paragraph (a) of this Section 9.2 , (ii) explains the methodology used to determine such amount and (iii) states that such amount is consistent with return metrics applied in determining amounts that such Funding Source has required other similarly situated borrowers or obligors (after consideration of facility pricing, structure, usage patterns, capital treatment and relationship) to pay with respect to such increased costs or reduced returns. The Seller shall pay such Funding Source (or its related Managing Agent on its behalf) the amount as due on any such certificate on the next Settlement Date following receipt of such notice.

(c) Each Funding Source subject to any Regulatory Change giving rise to a demand pursuant to Section 9.2(a) , at the request of Seller, shall assign pursuant to Section 11.1(b) all of its rights and obligations under this Agreement to (i) another Funding Source in such Funding Source’s Purchaser Group, which is not subject to a Regulatory Change or Consolidation Event, and the Conduit Purchasers in such Purchaser Group shall consent to such assignment (provided that such assignee meets the requirements of Section 11.1(b) ), or (ii) another financial institution selected by Seller and reasonably acceptable to Collateral Agent.

(d) If any Funding Source (A) has or anticipates having any claim for compensation from the Seller pursuant to clause (iii) of the definition of Regulatory Change appearing in paragraph (a) of this Section 9.2 , and (B) such Funding Source reasonably determines, following consultation with Seller, that having the facility evidenced by this Agreement publicly rated by two credit rating agencies (or, if the applicable Funding Source or its related Managing Agent reasonably determines, following consultation with Seller, that the rating of a single credit rating agency is sufficient to achieve the same effect, by one credit rating agency) would reduce the amount of such compensation by an amount deemed by such Funding Source to be material, then, unless the facility evidenced by this Agreement already has been publicly rated by one or more credit rating agencies, such Funding Source (or its related Managing Agent)

shall provide written notice to the Seller and the Servicer that such Funding Source intends to request such public rating(s) of this facility from two credit rating agencies (or one credit rating agency, as applicable) selected by such Funding Source and acceptable to the Seller in its sole discretion (the “ Required Rating(s) ”). The Seller and the Servicer agree that they shall cooperate with such Funding Source’s efforts to obtain the Required Rating(s), and shall use commercially reasonable efforts to provide the applicable credit rating agencies (or credit rating agency, as applicable), either directly or through distribution to the Collateral Agent or such Funding Source (or its related Managing Agent), any information (subject to the agreement of each applicable credit rating agency to maintain the confidentiality of any information so provided which relates to any Obligor) requested by such credit rating agencies (or credit rating agency, as applicable) for purposes of providing and monitoring the Required Rating(s); provided that neither failure to obtain the Required Rating(s) nor failure to have the facility rated (to the extent that Seller has acted in good faith to attempt to obtain such rating) shall constitute an Event of Default or early amortization event. The requesting Funding Source shall pay the initial fees payable to the credit rating agencies (or credit rating agency, as applicable) for providing the rating(s) and Seller shall pay all ongoing fees payable to the credit rating agencies (or credit rating agency, as applicable) for their continued monitoring of the rating(s). Nothing in this Section 9.2(d) shall preclude any Funding Source from demanding compensation from the Seller pursuant to Section 9.2(a) hereof at any time and without regard to whether the Required Rating(s) shall have been obtained, or shall require any Funding Source to obtain any ratings on the facility evidenced by this Agreement prior to demanding any such compensation from the Seller; provided, however, in demanding such compensation the applicable Funding Source shall take into account and give effect to any reduction in amounts payable under Section 9.2(a) due to the Required Rating(s) having been obtained.

Section 9.3 Other Costs and Expenses . Seller shall pay to the Collateral Agent, the Managing Agents and the Conduit Purchasers on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, all rating agency fees, costs and expenses incurred by any Conduit Purchaser or Managing Agent, the cost of the Conduit Purchasers’ auditors auditing the books, records and procedures of Seller, reasonable fees and out-of-pocket expenses of legal counsel for the Conduit Purchasers, the Managing Agents and the Collateral Agent (which such counsel may be employees of the Conduit Purchasers, the Managing Agents or the Collateral Agent) with respect thereto and with respect to advising the Conduit Purchasers, the Managing Agents and the Collateral Agent as to their respective rights and remedies under this Agreement. Seller shall pay to the Collateral Agent or the relevant Managing Agent, within ten (10) days following demand therefor, any and all costs and expenses of the Collateral Agent, the Managing Agents and the Purchasers, if any, including reasonable counsel fees and expenses in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Amortization Event.

Section 9.4 Withholding Tax Exemption .

(a) At least five (5) Business Days prior to the first date on which any amount is payable hereunder for the account of any Purchaser, each Purchaser that is not a “United States person” for United States federal income tax purposes agrees that it will deliver to each of Seller and the related Purchaser Group Managing Agent two duly completed and originally executed copies of United States Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY with all necessary attachments or applicable successor forms, certifying in each case that such Purchaser is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Each such Purchaser further undertakes to deliver to each of Seller and the related Managing Agent two additional copies of such form (or a successor form) on or before the date that such form expires or becomes

obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Seller or the related Managing Agent, in each case certifying that such Purchaser is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless any change in any treaty, law or regulation has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which prevents such Purchaser from duly completing and delivering any such form with respect to it and such Purchaser advises Seller and the related Managing Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

(b) Each Purchaser that is not a “United States person” for U.S. federal income tax purposes agrees to indemnify and hold Seller, the Managing Agents and the Collateral Agent harmless in respect of any loss, cost or expense incurred by Seller, any Managing Agent or the Collateral Agent as a result of, and agrees that, notwithstanding any other provision hereof, payments hereunder to such Purchaser may be subject to deduction or withholding without indemnification by Seller for any United States federal income taxes, penalties, interest and other costs and losses incurred or payable by Seller, any Managing Agent or the Collateral Agent as a result of, (i) such Purchaser’s failure to submit any form that is required pursuant to this Section 9.4 or (ii) Seller’s, any Managing Agent’s or the Collateral Agent’s reliance on any form that such Purchaser has provided pursuant to this Section 9.4 that is determined to be inaccurate in any material respect.

ARTICLE X

THE AGENTS

Section 10.1 Authorization and Action . Each Purchaser hereby designates and appoints JPMorgan Chase to act as its agent hereunder and under each other Transaction Document, and authorizes the Collateral Agent and its related Managing Agent to take such actions as agent on its behalf and to exercise such powers as are delegated to the Collateral Agent or such Managing Agent by the terms of this Agreement and the other Transaction Documents together with such powers as are reasonably incidental thereto. Neither the Collateral Agent nor any Managing Agent shall have any duties or responsibilities, except those expressly set forth herein or in any other Transaction Document, or any fiduciary relationship with any Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Collateral Agent or the Managing Agents shall be read into this Agreement or any other Transaction Document or otherwise exist for the Collateral Agent or the Managing Agents. In performing their respective functions and duties hereunder and under the other Transaction Documents, (i) the Collateral Agent shall act solely as agent for the Purchasers, (ii) each Managing Agent shall act solely as agent for the Conduit Purchasers and Committed Purchasers in the related Purchaser Group and (iii) neither the Collateral Agent nor any Managing Agent shall be deemed to have assumed any obligation or relationship of trust or agency with or for any Seller Party or any of such Seller Party’s successors or assigns. Neither the Collateral Agent nor any Managing Agent shall be required to take any action that exposes the Collateral Agent or the Managing Agents to personal liability or that is contrary to this Agreement, any other Transaction Document or applicable law. The appointment and authority of the Collateral Agent and the Managing Agents hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each Purchaser hereby authorizes the Collateral Agent and each Managing Agent, as applicable, to execute each of the Uniform Commercial Code financing statements, this Agreement and such other Transaction Documents as may require the Collateral Agent’s or a Managing Agent’s signature on behalf of such Purchaser (the terms of which shall be binding on such Purchaser).

Section 10.2 Delegation of Duties . The Collateral Agent and the Managing Agents may execute any of their respective duties under this Agreement and each other Transaction Document by or

through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Neither the Collateral Agent nor any Managing Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

Section 10.3 Exculpatory Provisions . None of the Collateral Agent, the Managing Agents or any of their respective directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Purchasers for any recitals, statements, representations or warranties made by any Seller Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Seller Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article V , or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. Neither the Collateral Agent nor any Managing Agent shall be under any obligation to any Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller Parties. Neither the Collateral Agent nor any Managing Agent shall be deemed to have knowledge of any Amortization Event or Potential Amortization Event unless the Collateral Agent or such Managing Agent, as applicable, has received notice from Seller or a Purchaser.

Section 10.4 Reliance by Agent s. The Collateral Agent and the Managing Agents shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Seller), independent accountants and other experts selected by the Collateral Agent or any Managing Agent. The Collateral Agent and the Managing Agents shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of the Conduit Purchasers or the Required Committed Purchasers or all of the Purchasers, as applicable, as they deem appropriate and they shall first be indemnified to their satisfaction by the Purchasers, provided that unless and until the Collateral Agent or any Managing Agent shall have received such advice, the Collateral Agent or such Managing Agent may take or refrain from taking any action, as the Collateral Agent or such Managing Agent shall deem advisable and in the best interests of the Purchasers. The Collateral Agent and the Managing Agents shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the related Conduit Purchasers or the Required Committed Purchasers or all of the Purchasers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Purchasers.

Section 10.5 Non-Reliance on Agents and Other Purchasers . Each Purchaser expressly acknowledges that none of the Collateral Agent, the Managing Agents or any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Collateral Agent or any Managing Agent hereafter taken, including, without limitation, any review of the affairs of any Seller Party, shall be deemed to constitute any representation or warranty by the Collateral Agent or such Managing Agent. Each Purchaser represents and warrants to the Collateral Agent and the Managing Agents that it has and will, independently and without reliance upon the Collateral Agent, any Managing Agent or any other Purchaser and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Seller and made its own decision to enter into this Agreement, the other Transaction Documents and all other documents related hereto or thereto.

Section 10.6 Reimbursement and Indemnification . The Committed Purchasers agree to reimburse and indemnify the Collateral Agent and its respective officers, directors, employees, representatives and agents ratably according to their Pro Rata Shares, to the extent not paid or reimbursed by the Seller Parties (i) for any amounts for which the Collateral Agent, acting in its capacity as Collateral Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by the Collateral Agent, in its capacity as Collateral Agent, in connection with the administration and enforcement of this Agreement and the other Transaction Documents. The Committed Purchasers in each Purchaser Group agree to reimburse and indemnify the related Managing Agent and its respective officers, directors, employees, representatives and agents ratably according to their Commitments, to the extent not paid or reimbursed by the Seller Parties (i) for any amounts for which such Managing Agent, acting in its capacity as Managing Agent, is entitled to reimbursement by the Seller Parties hereunder and (ii) for any other expenses incurred by such Managing Agent, in its capacity as Managing Agent, in connection with the administration and enforcement of this Agreement and the other Transaction Documents.

Section 10.7 Agents in their Individual Capacities . The Collateral Agent, each Managing Agent and each of its respective Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Seller or any Affiliate of Seller as though it were not the Collateral Agent or a Managing Agent hereunder. With respect to the acquisition of Purchaser Interests pursuant to this Agreement, the Collateral Agent and each Managing Agent shall have the same rights and powers under this Agreement in its individual capacity as any Purchaser and may exercise the same as though it were not the Collateral Agent or a Managing Agent, and the terms “ Committed Purchaser ,” “ Purchaser ,” “ Committed Purchasers ” and “ Purchasers ” shall include the Collateral Agent and each Managing Agent in its individual capacity.

Section 10.8 Successor Agent . The Collateral Agent and each Managing Agent may, upon five (5) days’ notice to Seller and the Purchasers, and the Collateral Agent or any Managing Agent will, upon the direction of all of the Purchasers (other than such Collateral Agent or Managing Agent, in its individual capacity, as applicable) resign as Collateral Agent or Managing Agent, as applicable. If the Collateral Agent or a Managing Agent shall resign, then the Required Committed Purchasers, in the case of the Collateral Agent, or the Committed Purchasers of the related Purchaser Group, in the case of a Managing Agent during such five-day period shall appoint from among the Committed Purchasers, in the case of the Collateral Agent, or the Committed Purchasers of the related Purchaser Group, in the case of a Managing Agent, a successor agent. If for any reason no successor agent is appointed by the Required Committed Purchasers, in the case of the Collateral Agent, or the Committed Purchasers of the related Purchaser Group, in the case of a Managing Agent, during such five-day period, then effective upon the termination of such five-day period, the Committed Purchasers, in the case of the Collateral Agent, and the Committed Purchasers of the related Purchaser Group, in the case of a Managing Agent, shall perform all of the duties of the Collateral Agent or the applicable Managing Agent hereunder and under the other Transaction Documents and Seller and the Servicer (as applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal directly with the Purchasers. After the effectiveness of any retiring Collateral Agent’s or Managing Agent’s resignation hereunder as Collateral Agent or Managing Agent, as applicable, the retiring Collateral Agent or Managing Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents and the provisions of this Article X and Article IX shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was Collateral Agent or Managing Agent under this Agreement and under the other Transaction Documents.

Section 10.9 Collateral Agent as Secured Party Representative . The parties hereto acknowledge that the Collateral Agent has been granted a collateral assignment of, and security interest in, all of Seller’s rights under the Receivables Sale Agreement, including without limitation its rights as secured party or buyer with respect to assets transferred or pledged thereunder. In connection with such assignment, Seller hereby authorizes the Collateral Agent to be named as secured party of record, on Seller’s behalf and as Seller’s secured party representative, with respect to all UCC financing statements filed in connection with the Receivables Sale Agreement. Collateral Agent hereby acknowledges and agrees that it is acting as Seller’s secured party representative for purposes of perfection in being named as secured party of record on such financing statements.

ARTICLE XI

ASSIGNMENTS; PARTICIPATIONS

Section 11.1 Assignments .

(a) Seller and each Committed Purchaser hereby agree and consent to the complete or partial assignment by each Conduit Purchaser of all or any portion of its rights under, interest in, title to and obligations under this Agreement (i) to the related Committed Purchasers pursuant to this Agreement or pursuant to a Liquidity Agreement, (ii) to any other issuer of commercial paper notes sponsored or administered by the Managing Agent of such Conduit’s Purchaser Group and with a rating of at least A-1/P-1 or (iii) to any other Person; provided that, prior to the occurrence of an Amortization Event, such Conduit Purchaser may not make any such assignment pursuant to this clause (iii), except in the event that the circumstances described in Section 11.1(c) occur, without the consent of Seller (which consent shall not be unreasonably withheld or delayed), and upon such assignment, such Conduit Purchaser shall be released from its obligations so assigned. Further, Seller and each Committed Purchaser hereby agree that any assignee of any Conduit Purchaser of this Agreement or all or any of the Purchaser Interests of such Conduit Purchaser shall have all of the rights and benefits under this Agreement as if the term “ Conduit Purchaser ” explicitly referred to such party, and no such assignment shall in any way impair the rights and benefits of such Conduit Purchaser hereunder. Neither Seller nor the Servicer shall have the right to assign its rights or obligations under this Agreement.

(b) Any Committed Purchaser may, at any time and from time to time, assign to one or more Persons (“ Purchasing Committed Purchasers ”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement, substantially in the form set forth in Exhibit VI hereto (the “ Assignment Agreement ”) executed by such Purchasing Committed Purchaser and such selling Committed Purchaser. The consent of the Conduit Purchaser or Conduit Purchasers in such Committed Purchaser’s Purchaser Group, if any, shall be required prior to the effectiveness of any such assignment. The selling Committed Purchaser will consult with the Seller regarding the suitability of the Purchasing Committed Purchaser prior to the effectiveness of any assignment pursuant to this Section 11.1(b) and, so long as the Seller’s response is not unreasonably withheld or delayed, such Committed Purchaser will use commercially reasonable efforts to accommodate the Seller’s preferences and, if the Seller timely solicits a commitment from an eligible assignee on terms that are not disadvantageous to the assigning Committed Purchaser, such Committed Purchaser will accommodate the Seller’s request. Each assignee of a Committed Purchaser which is a member of a Purchaser Group which has a Conduit Purchaser as a member must have a short-term debt rating from S&P and Moody’s equal to or greater than the ratings required in order to maintain the rating of the commercial paper issued by the related Conduit Purchaser (the “ Required Ratings ”). Upon delivery of the executed Assignment Agreement to the Collateral Agent, such selling Committed Purchaser shall be released from its obligations hereunder to the extent of such assignment. Thereafter the Purchasing Committed Purchaser shall for all purposes be a Committed Purchaser party to this Agreement and shall have all the rights and obligations of a Committed Purchaser under this Agreement to the same extent as if it were an original party hereto and no further consent or action by Seller, the Purchasers or the Collateral Agent shall be required.

(c) Each of the Committed Purchasers that is (i) not a Conduit Purchaser and (ii) a member of a Purchaser Group that has a Conduit Purchaser as a member, agrees that in the event that it shall cease to have the Required Ratings (an “ Affected Committed Purchaser ”), such Affected Committed Purchaser shall be obliged, at the request of the Conduit Purchasers in such Committed Purchaser’s Purchaser Group or the applicable Managing Agent, to assign all of its rights and obligations hereunder to (x) another Committed Purchaser or (y) another funding entity nominated by such Managing Agent and acceptable to such affected Conduit Purchasers, and willing to participate in this Agreement through the Facility Termination Date in the place of such Affected Committed Purchaser; provided , that the Affected Committed Purchaser receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Committed Purchaser’s Pro Rata Share of the Aggregate Capital and Yield owing to the Committed Purchasers and all accrued but unpaid fees and other costs and expenses payable in respect of its Pro Rata Share of the Purchaser Interests of the Committed Purchasers.

Section 11.2 Participations . Any Committed Purchaser may, in the ordinary course of its business at any time sell to one or more Persons (each a “ Participant ”) participating interests in its Pro Rata Share of the Purchaser Interests of the Committed Purchasers or any other interest of such Committed Purchaser hereunder. The selling Committed Purchaser will consult with the Seller regarding the suitability of each Participant prior to the effectiveness of any participation pursuant to this Section 11.2 and, so long as the Seller’s response is not unreasonably withheld or delayed, such Committed Purchaser will use commercially reasonable efforts to accommodate the Seller’s preferences, and, if the Seller timely solicits a commitment from an eligible Participant on terms that are not disadvantageous to the selling Committed Purchaser, such Committed Purchaser will accommodate the Seller’s request. Notwithstanding any such sale by a Committed Purchaser of a participating interest to a Participant, such Committed Purchaser’s rights and obligations under this Agreement shall remain unchanged, such Committed Purchaser shall remain solely responsible for the performance of its obligations hereunder, and Seller, the Servicer, the Conduit Purchasers, the Managing Agents and the Collateral Agent shall continue to deal solely and directly with such Committed Purchaser in connection with such Committed Purchaser’s rights and obligations under this Agreement. No Participant shall have rights greater than those of the related Committed Purchaser. Each Committed Purchaser agrees that any agreement between such Committed Purchaser and any such Participant in respect of such participating interest shall not restrict such Committed Purchaser’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 11.1(b)(i) .

Section 11.3 Additional Purchaser Groups; Joinder by Conduit Purchaser .

(a) Upon the Seller’s request, an additional Purchaser Group may be added to this Agreement at any time by the execution and delivery of a joinder agreement, substantially in the form set forth in Exhibit VII hereto (a “ Joinder Agreement ”) by the members of such proposed additional Purchaser Group, the Seller, the Servicer and the Collateral Agent, which execution and delivery shall not be unreasonably refused by such parties. Upon the effective date of such Joinder Agreement, (i) each Person specified therein as a “New Conduit Purchaser” shall become a party hereto as a Conduit Purchaser, entitled to the rights and subject to the obligations of a Conduit Purchaser hereunder, (ii) each Person specified therein as a “New Committed Purchaser” shall become a party hereto as a Committed Purchaser, entitled to the rights and subject to the obligations of a Committed Purchaser hereunder, (iii) each Person specified therein as a “New Managing Agent” shall become a party hereto as a Managing Agent, entitled to the rights and subject to the obligations of a Managing Agent hereunder and (iv) the Purchase Limit shall be increased, if appropriate, by an amount which is equal to (x) the aggregate

Commitments of the New Committed Purchasers party to such Joinder Agreement. On or prior to the effective date of such Joinder Agreement, the Seller, each new Purchaser and the new Managing Agent shall enter into a Fee Letter for purposes of setting forth the fees payable to the members of such Purchaser Group in connection with this Agreement.

(b) Any Purchaser Group may add a Conduit Purchaser member at any time by the execution and delivery of a Joinder Agreement by such proposed Conduit Purchaser, the other members of such Purchaser Group, the Seller, the Servicer and the Collateral Agent, which execution and delivery shall not be unreasonably refused by such parties. Upon the effective date of such Joinder Agreement, each Person specified therein as a “New Conduit Purchaser” shall become a party hereto as a Conduit Purchaser, entitled to the rights and subject to the obligations of a Conduit Purchaser hereunder.

Section 11.4 Extension of Facility Termination Date . The Seller may advise any Managing Agent in writing of its desire to extend the Facility Termination Date for an additional period not exceeding 364 days, provided such request is made not more than 90 days prior to, and not less than 60 days prior to, the then current Facility Termination Date. Each Managing Agent so advised by the Seller shall promptly notify each Committed Purchaser in its related Purchaser Group of any such request and each such Committed Purchaser shall notify its related Managing Agent, the Collateral Agent and the Seller of its decision to accept or decline the request for such extension no later than 30 days prior to the then current Facility Termination Date (it being understood that each Committed Purchaser may accept or decline such request in its sole discretion and on such terms as it may elect, and the failure to so notify its Managing Agent, the Collateral Agent and the Seller shall be deemed an election not to extend by such Committed Purchaser). In the event that at least one Committed Purchaser agrees to extend the Facility Termination Date, the Seller Parties, the Collateral Agent, the extending Committed Purchasers and the applicable Managing Agent or Managing Agents shall enter into such documents as such extending Committed Purchasers may deem necessary or appropriate to reflect such extension, and all reasonable costs and expenses incurred by such Committed Purchasers, the Managing Agents and the Collateral Agent (including reasonable attorneys’ fees) shall be paid by the Seller. In the event that any Committed Purchaser (a) declines the request to extend the Facility Termination Date or (b) is in a Purchaser Group with respect to which the Seller did not seek an extension of the Facility Termination Date (each such Committed Purchaser being referred to herein as a “ Non-Renewing Committed Purchaser ”), and, in the case of a Non-Renewing Committed Purchaser described in clause (a), the Commitment of such Non-Renewing Committed Purchaser is not assigned to another Person in accordance with the terms of this Article XI prior to the then current Facility Termination Date, the Purchase Limit shall be reduced by an amount equal to each such Non-Renewing Committed Purchaser’s Commitment on the then current Facility Termination Date.

Section 11.5 Terminating Committed Purchasers .

(a) Any Affected Committed Purchaser or Non-Renewing Committed Purchaser which has not assigned its rights and obligations hereunder if requested pursuant to this Article XI shall be a “ Terminating Committed Purchaser ” for purposes of this Agreement as of the then current Facility Termination Date (or, in the case of any Affected Committed Purchaser, such earlier date as declared by the Conduit Purchaser in such Affected Committed Purchaser’s Purchaser Group). If an Amortization Event has occurred, and the Committed Purchasers in a Purchaser Group have voted or otherwise determined to declare an Amortization Date, but the Committed Purchasers in the other Purchaser Groups have voted or otherwise determined not to declare an Amortization Date, then the Committed Purchasers in such Purchaser Group (and each Conduit Purchaser in such Purchaser Group that has any Capital outstanding at such time) may, upon written notice to the Servicer, the Seller and the Collateral Agent, elect to become, and shall become, Terminating Committed Purchasers effective on the date specified in such notice, which shall be a date no less than three (3) Business Days after the date such notice is received by the Servicer, the Seller and the Collateral Agent.

(b) Each Terminating Committed Purchaser shall be allocated, in accordance with Section 2.2 , a ratable portion of Collections according to its respective Termination Percentage from the date of its becoming a Terminating Committed Purchaser (the “ Termination Date ”) until such Terminating Committed Purchaser’s Capital shall be paid in full. Each Terminating Committed Purchaser’s Termination Percentage shall remain constant prior to the Amortization Date. On and after the Amortization Date, each Termination Percentage shall be disregarded, and each Terminating Committed Purchaser’s Capital shall be reduced ratably with all Committed Purchasers in accordance with Section 2.3 .

(c) On the date any Committed Purchaser becomes a Terminating Committed Purchaser, the Commitment of such Committed Purchaser shall terminate and the Purchase Limit shall be reduced by an amount equal to such Committed Purchaser’s Commitment. Upon reduction to zero of the Capital of all of the Purchaser Interests of a Terminating Committed Purchaser (after application of Collections thereto pursuant to Sections 2.2 and 2.4 ) all rights and obligations of such terminating Committed Purchaser hereunder shall be terminated and such terminating Committed Purchaser shall no longer be a “Committed Purchaser” hereunder; provided , however , that the provisions of Article IX shall continue in effect for its benefit with respect to Purchaser Interests or the Commitment held by such Terminating Committed Purchaser prior to its termination as a Committed Purchaser.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Waivers and Amendments .

(a) No failure or delay on the part of the Collateral Agent, the Managing Agents or any Purchaser in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.

(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 12.1(b) . The Conduit Purchasers, Seller, the Servicer, the Managing Agents and the Collateral Agent, at the direction of the Required Committed Purchasers, may enter into written modifications or waivers of any provisions of this Agreement, provided , however , that no such modification or waiver shall:

(i) without the consent of each affected Purchaser, (A) extend the Facility Termination Date or the date of any payment or deposit of Collections by Seller or the Servicer, (B) reduce the rate or extend the time of payment of Yield (or any component thereof), (C) reduce any fee payable to the Collateral Agent or the Managing Agents for the benefit of the Purchasers, (D) except pursuant to Article XI hereof, change the amount of the Capital of any Purchaser, any Committed Purchaser’s Pro Rata Share (except as may be required pursuant to a Conduit Purchaser’s Liquidity Agreement) or any Committed Purchaser’s Commitment, (E) amend, modify or waive any provision of the definition of Required Committed Purchasers or this Section 12.1(b) , (F) consent to or permit the assignment or transfer by Seller of any of its rights and obligations under this Agreement, (G) change the definition of “Concentration Limit,” “Defaulted Receivables,” “Default Proxy Ratio,” “Delinquency

Ratio,” “Delinquent Receivable,” “Discount and Servicing Fee Reserve,” “Dilution Horizon Ratio,” “Dilution Reserve,” “Dilution Reserve Ratio,” “Dilution Ratio,” “Eligible Receivable,” “Loss Horizon Ratio,” “Loss Reserve,” “Loss Reserve Ratio,” “Loss-to-Balance Ratio,” or “Receivables Dilution Ratio” or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or

(ii) without the written consent of any then Collateral Agent or Managing Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Collateral Agent or Managing Agent, as applicable.

Notwithstanding the foregoing, (i) without the consent of the Committed Purchasers, the Collateral Agent may, with the consent of Seller, amend this Agreement solely to add additional Persons as Committed Purchasers hereunder and (ii) the Collateral Agent, the Required Committed Purchasers and the Conduit Purchasers may enter into amendments to modify any of the terms or provisions of Article X , Article XI and Section 12.13 or any other provision of this Agreement without the consent of Seller, provided that such amendment has no negative impact upon Seller. Any modification or waiver made in accordance with this Section 12.1 shall apply to each of the Purchasers equally and shall be binding upon Seller, the Purchasers, the Managing Agents and the Collateral Agent.

Section 12.2 Notices . Except as provided below, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or facsimile numbers set forth below:

If to the Seller:

CGSF Funding Corporation

One Post Street

San Francisco, California 94104

Fax: (415) 983-9369

If to the Servicer:

McKesson Corporation

One Post Street

San Francisco, California 94104

Fax: (415) 983-9369

If to the Collateral Agent:

JPMorgan Chase Bank, N.A.

Asset Backed Securities

10 South Dearborn Street

Suite IL1-0079

Chicago, IL 60670

Fax: (312) 732-4487

If to any Managing Agent:

The address set forth on Schedule B hereto

If to any Purchaser:

The address of the related Managing Agent set forth on Schedule B hereto

or, in each case, at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 12.2 . Seller hereby authorizes the Collateral Agent to effect purchases and Tranche Period and Discount Rate selections based on telephonic notices made by any Person whom the Collateral Agent in good faith believes to be acting on behalf of Seller. Seller agrees to deliver promptly to the Collateral Agent a written confirmation of each telephonic notice signed by an authorized officer of Seller; however, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation differs from the action taken by the Collateral Agent, the records of the Collateral Agent shall govern absent manifest error.

Section 12.3 Ratable Payments . If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any portion of the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to Section 9.2 or 9.3 ) in a greater proportion than that received by any other Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser will hold its ratable proportion of such Aggregate Unpaids; provided that if all or any portion of such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 12.4 Protection of Ownership Interests of the Purchasers .

(a) Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that the Collateral Agent may reasonably request, to perfect, protect or more fully evidence the Purchaser Interests, or to enable the Collateral Agent or the Purchasers to exercise and enforce their rights and remedies hereunder. At any time following the occurrence of the Amortization Date resulting from an Amortization Event, the Collateral Agent may, or the Collateral Agent may direct Seller or the Servicer to, notify the Obligors of Receivables, at Seller’s expense, of the ownership or security interests of the Purchasers under this Agreement and after the occurrence and during the continuance of an Amortization Event, may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Collateral Agent or its designee. Seller or the Servicer (as applicable) shall, at any Purchaser’s request, withhold the identity of such Purchaser in any such notification.

(b) If any Seller Party fails to perform any of its obligations hereunder, the Collateral Agent or any Purchaser may (but shall not be required to) perform, or cause performance of, such obligation, and the Collateral Agent’s or such Purchaser’s costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 9.3 . Each Seller Party irrevocably authorizes the Collateral Agent at any time and from time to time in the sole discretion of the Collateral Agent, and appoints the Collateral Agent as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on behalf of Seller as debtor and to file financing statements necessary or desirable in the Collateral Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Purchasers in the Receivables (which financing statements may include a description of collateral consistent with Section 12.14(b) or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to

ensure that the perfection of the interests of the Collateral Agent therein, including, without limitation, describing such property as “all assets of the Debtor whether now owned or hereafter acquired and wheresoever located, including all accessions thereto and proceeds thereof” or words of similar effect) and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Collateral Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the interests of the Purchasers in the Receivables. This appointment is coupled with an interest and is irrevocable.

Section 12.5 Confidentiality .

(a) Each Seller Party and each Purchaser shall maintain and shall cause each of its employees and officers to maintain the confidentiality of this Agreement and the other confidential proprietary information with respect to the Collateral Agent, the Managing Agent and the Conduit Purchasers and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Seller Party and such Purchaser and its officers and employees may disclose such information to such Seller Party’s and such Purchaser’s external accountants and attorneys and as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).

(b) The Collateral Agent, each Managing Agent and each Purchaser shall maintain and shall cause each of its employees and officers to maintain the confidentiality of any material nonpublic information with respect to the Seller Parties (the “ Information ”); provided , that each Seller Party hereby consents to the disclosure of Information (i) to the Collateral Agent, the Managing Agents, the Committed Purchasers or the Conduit Purchasers by each other and (ii) by the Collateral Agent, any Managing Agent or any Purchaser to: (A) any prospective or actual assignee or participant of any of them, provided , that each such Person has been informed of the confidential nature of such Information and has agreed, pursuant to an agreement containing provisions substantially similar to this Section, to keep such Information confidential, (B) any rating agency then rating the Commercial Paper of any Conduit Purchaser and any nationally recognized statistical rating organization in compliance with Rule 17g-5 under the Securities Exchange Act of 1934, as amended (or to any other rating agency in compliance with any similar rule or regulation in any relevant jurisdiction, provided that such other rating agency is bound by confidentiality obligations no less stringent than those required under such Rule 17g-5), (C) any Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Conduit Purchaser or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Managing Agent or one of its Affiliates acts as the administrator, administrative agent or collateral agent, provided , that each such Person has been informed of the confidential nature of such Information and has agreed to keep such Information confidential, (D) any officers, directors, employees, outside accountants and attorneys of the Collateral Agent, any Managing Agent or any Purchaser (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), or (E) pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law); provided , that to the extent permitted by applicable law or regulation, each of the Collateral Agent, each Managing Agent and each Purchaser agrees to notify the Seller Parties prior to (if reasonably practicable) or concurrently with its disclosure of such Information pursuant to Section 12.5(b)(i)(A) or Section 12.5(b)(i)(E) of this Agreement. Each of the Collateral Agent, each Managing Agent and each Purchaser acknowledges that it has developed compliance procedures regarding the use of material nonpublic information in accordance with applicable law, including United States federal and state securities laws.

Section 12.6 Bankruptcy Petition . Each of Seller, the Servicer, the Collateral Agent, the Managing Agents and each Committed Purchaser hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior Indebtedness of a Conduit Purchaser, it will not institute against, or join any other Person in instituting against, such Conduit Purchaser, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.

Section 12.7 Limitation of Liability; Limitation of Payment; No Recourse .

(a) Notwithstanding any provisions contained in this Agreement or any other Transaction Document to the contrary, no Conduit Purchaser shall be obligated to pay any amount pursuant to this Agreement or any other Transaction Document unless such Conduit Purchaser has excess cash flow from operations or has received funds which may be used to make such payment and which funds or excess cash flow are not required to repay any of such Conduit Purchaser’s Commercial Paper when due. Any amount which any Conduit Purchaser does not pay pursuant to the operation of the preceding sentence shall not constitute a claim against such Conduit Purchaser for any such insufficiency but shall continue to accrue. Each party hereto agrees that the payment of any claim (as defined in Section 101 of the Federal Bankruptcy Code) of any such party shall be subordinated to the payment in full of all obligations of such Conduit Purchaser in respect of Commercial Paper. The agreements in this section shall survive the termination of this Agreement and the other Transaction Documents.

(b) Notwithstanding anything in this Agreement or any other Transaction Document to the contrary, the obligations of each Conduit Purchaser under the Transaction Documents are solely the corporate obligations of such Conduit Purchaser. No recourse shall be had for any obligation or claim arising out of or based upon any Transaction Document against any stockholder, employee, officer, director, incorporator, trustee, grantor, noteholder, member, manager or agent of such Conduit Purchaser. The agreements in this section shall survive the termination of this Agreement and the other Transaction Documents.

(c) Except with respect to any claim arising out of the willful misconduct or gross negligence of the Conduit Purchasers, the Managing Agents, the Collateral Agent, or any Committed Purchaser, no claim may be made by any Seller Party or any other Person against any Conduit Purchaser, the Collateral Agent or any Committed Purchaser or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Seller Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

Section 12.8 CHOICE OF LAW . THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW) OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE PURCHASERS’ SECURITY INTEREST IN THE PURCHASER INTERESTS IS GOVERNED BY THE LAW OF ANOTHER STATE, AS REQUIRED BY THE LAWS OF THE STATE OF NEW YORK.

Section 12.9 CONSENT TO JURISDICTION . EACH SELLER PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS

AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH OF SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT, THE MANAGING AGENTS OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO REALIZE ON THE INTERESTS OF THE PURCHASERS AND THE COLLATERAL AGENT IN ANY RECEIVABLES, RELATED SECURITY OR PROCEEDS THEREOF. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY AGAINST THE COLLATERAL AGENT, ANY MANAGING AGENT OR ANY PURCHASER OR ANY AFFILIATE OF ANY SUCH PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK .

Section 12.10 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER .

Section 12.11 Integration; Binding Effect; Survival of Terms .

(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.

(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided , however , that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article IV , (ii) the indemnification and payment provisions of Article IX , and Sections 12.5 and 12.6 shall be continuing and shall survive any termination of this Agreement.

Section 12.12 Counterparts; Severability; Section References . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.

Section 12.13 Agent Roles .

(a) JPMorgan Chase Roles . Each of the Committed Purchasers acknowledges that JPMorgan Chase acts, or may in the future act, (i) as administrative agent or administrative trustee for one or more of the Conduit Purchasers, (ii) as Managing Agent for one or more of the Conduit Purchasers, (iii) as issuing and paying agent for one or more Conduit Purchaser’s Commercial Paper, (iv) to provide credit or liquidity enhancement for the timely payment for one or more Conduit Purchaser’s Commercial Paper and (v) to provide other services from time to time for some or all of the Purchasers (collectively, the “ JPMorgan Chase Roles ”). Without limiting the generality of this Section 12.13(a) , each Committed Purchaser hereby acknowledges and consents to any and all JPMorgan Chase Roles and agrees that in connection with any JPMorgan Chase Role, JPMorgan Chase may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent or administrative trustee for the related Conduit Purchasers, and the giving of notice of a mandatory purchase pursuant its Liquidity Agreement.

(b) Managing Agent Institution Roles . Each of the Committed Purchasers acknowledges that each Committed Purchaser that serves as a Managing Agent hereunder (a “ Managing Agent Institution ”) acts, or may in the future act, (i) as Managing Agent for a Conduit Purchaser or Conduit Purchasers, (ii) as issuing and paying agent for such Conduit Purchaser’s Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for such Conduit Purchaser’s Commercial Paper and (iv) to provide other services from time to time for some or all of the Purchasers (collectively, the “ Managing Agent Institution Roles ”). Without limiting the generality of this Section 12.13(b) , each Committed Purchaser hereby acknowledges and consents to any and all Managing Agent Institution Roles and agrees that in connection with any Managing Agent Institution Role, the applicable Managing Agent Institution may take, or refrain from taking, any action that it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for the related Conduit Purchasers, if any, and the giving of notice to the Collateral Agent or any Managing Agent of a mandatory purchase pursuant to its Liquidity Agreement.

Section 12.14 Characterization .

(a) It is the intention of the parties hereto that each purchase hereunder shall constitute and be treated as an absolute and irrevocable sale, which purchase shall provide the applicable Purchaser with the full benefits of ownership of the applicable Purchaser Interest. Except as specifically provided in this Agreement, each sale of a Purchaser Interest hereunder is made without recourse to Seller; provided , however , that (i) Seller shall be liable to each Purchaser and the Collateral Agent for all representations, warranties and covenants made by Seller pursuant to the terms of this Agreement, and (ii) such sale does not constitute and is not intended to result in an assumption by any Purchaser or the Collateral Agent or any assignee thereof of any obligation of Seller or the Originator or any other person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller or the Originator.

(b) The Seller hereby grants to the Collateral Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all of Seller’s right, title and interest in, to and under all Receivables now existing or hereafter arising, the Collections, each Collection Account, all Related Security, all other rights and payments relating to such Receivables, all of Seller’s rights under the Receivables Sale Agreement and all proceeds of any thereof to secure the prompt and complete payment of the Aggregate Unpaids. After an Amortization Event, the Collateral Agent and the Purchasers shall have, in addition to the rights and remedies that they may have under this Agreement, all other rights and remedies provided to a secured creditor after default under the UCC and other applicable law, which rights and remedies shall be cumulative. The Seller represents and warrants that each remittance of Collections to the Collateral Agent, any Managing Agent or any Purchaser hereunder has been (i) in payment of a debt incurred in the ordinary course of its business or financial affairs and (ii) made in the ordinary course of its business or financial affairs.

Section 12.15 Amendment and Restatement; Consent to Amendment of Receivables Sale Agreement . This Agreement amends, restates and supersedes in its entirety the Original RPA and shall not constitute a novation thereof. It is the intent of each of the parties hereto that all references to the Original RPA in any Transaction Document to which such party is a party and which becomes or remains effective on or after the date hereof shall be deemed to mean and be references to this Agreement. By its signature hereto, the Collateral Agent and each Managing Agent consents to the terms of (1) the Third Amended and Restated Receivables Sale Agreement of even date herewith between McKesson Corporation, as seller and the Seller, as buyer and (2) the Reaffirmation, Termination and Assignment Agreement of even date herewith among California Golden State Finance Company, the Originator and the Seller.

Section 12.16 Federal Reserve . Notwithstanding any other provision of this Agreement to the contrary, any Committed Purchaser may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Purchaser Interest and any rights to payment of Capital and Yield) under this Agreement to secure obligations of such Committed Purchaser to a Federal Reserve Bank, without notice to or consent of the Seller or the Collateral Agent; provided that no such pledge or grant of a security interest shall release a Committed Purchaser from any of its obligations hereunder, or substitute any such pledgee or grantee for such Committed Purchaser as a party hereto.

Section 12.17 USA PATRIOT Act . Each Committed Purchaser that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”) hereby notifies the Seller Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Seller Party, which information includes the name and address of each Seller Party and other information that will allow such Committed Purchaser to identify each Seller Party in accordance with the Patriot Act.

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.


CGSF FUNDING CORPORATION, as the Seller

By:		/s/ Nicholas A. Loiacono
Name:		Nicholas A. Loiacono
Title:		President

McKESSON CORPORATION, as the Servicer

By:		/s/ Willie C. Bogan
Name:		Willie C. Bogan
Title:		Secretary

Signature Page to Fourth Amended and