EXHIBIT (10)
MCKESSON CORPORATION
1994 STOCK OPTION AND RESTRICTED STOCK PLAN
(As Amended Through January 28, 1998)
1. Establishment, Purpose and Definitions.
(a) There is hereby adopted the McKesson Corporation
1994 Stock Option and Restricted Stock Plan (the "Plan"). The
Plan shall be the successor to the McKesson Corporation 1988
Restricted Stock Plan and the McKesson Corporation 1978 Stock
Option Plan (collectively, the "Predecessor Plans") with respect
to those awards under the Predecessor Plans which will be
equitably adjusted to become awards under the Plan ("Adjusted
Awards"), all in connection with the restructuring of McKesson
Corporation, a Delaware corporation ("Old McKesson"), that will
result in the sale of Old McKesson's PCS business to Eli Lilly
and Company (the "Transaction"). In connection with the
Transaction, SP Ventures, Inc. shall be renamed McKesson
Corporation (both of such entities being referred to herein as
the "Company", in each case as the context so requires) and the
Plan shall be renamed the McKesson Corporation 1994 Stock Option
and Restricted Stock Plan.
(b) The purpose of this Plan is to provide a means
whereby key executives of the Company and its affiliates may be
given an opportunity to purchase shares of the common stock
($0.01 par value) of the Company (the "Stock") pursuant to
options which may or may not qualify as "incentive stock options"
under Section 422 of the Internal Revenue Code, as amended (the
"Code"), and by providing participants with grants of restricted
shares of Stock ("Restricted Stock") in accordance with the terms
and conditions set forth herein. Until July 30, 1997, the Plan
also provided for grants of options to members of the Board of
Directors of the Company who were not employed as regular
salaried officers or employees of the Company or its affiliates
("Non-Employee Directors"). On that date, the stockholders
approved the Non-Employee Directors' Equity Compensation and
Deferral Plan (the "1997 Plan"), and all grants of options to
Non-Employee Directors from that date forward will be made under
the 1997 Plan. All options previously granted to Non-Employee
Directors under this Plan will continue to be governed by the
terms and conditions in effect at the time of the grant of such
options.
2. Stock Subject to the Plan.
(a) The aggregate number of shares of Stock available
for the grant of awards hereunder shall equal the sum of (a) the
number of shares of Stock issuable in connection with Adjusted
Awards, plus (b) 17,300,000 (all such shares shall be subject to
equitable adjustment as provided herein). With respect to the
shares of Stock referred to in clause (b) above (the "Future
Award Shares") no more than 2,200,000 shares may be awarded as
Restricted Stock (subject to equitable adjustment as provided
herein). The maximum number of Future Award Shares that may be
granted to any individual during any plan year in the form of
Restricted Stock shall not exceed 40,000 and the maximum number
of Future Award Shares that may be granted to any individual in
the form of options during any plan year shall not exceed
600,000; in each case, such maximum number shall be subject to
equitable adjustment as provided herein. All awards of Future
Award Shares shall be contingent on the approval of the Plan by
the stockholders of the Company at its first annual meeting of
stockholders next following consummation of the Transaction.
As the Committee (as hereinafter defined) may determine
from time to time, the Stock may consist either in whole or in
part of shares of authorized but unissued Stock, or shares of
authorized and issued Stock reacquired by the Company and held in
its treasury. If an option covered by Future Award Shares is
surrendered for cash or for any other reason (except surrender
for shares of Stock) ceases to be exercisable in whole or in
part, the shares which were subject to such option but as to
which the option had not been exercised shall continue to be
available for grants of stock options under the Plan. If any
shares of Stock underlying Restricted Stock grants which are
covered by Future Award Shares shall be reacquired by the Company
pursuant to the termination provisions described herein or in the
instruments evidencing the making of such Restricted Stock
grants, such shares shall again be available for grant of
Restricted Stock awards under the Plan (to the extent permitted
under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Prior to the granting of awards,
the Company shall be under no obligation to reserve or retain in
its treasury any particular number of shares of Stock at any
time, and no particular shares of Stock, whether issued or held
as treasury Stock, shall be identified as being available for
future awards under the Plan.
(b) In the case of options which are intended to
qualify as "incentive stock options" under Section 422 of the
Code, the aggregate fair market value (determined as of the time
the option is granted) of the Stock with respect to which
incentive stock options are exercisable for the first time by any
eligible key executive during any calendar year (under this Plan
and any other plans of the Company) shall not exceed $100,000.
(c) In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of
cash, stock, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, spin-
off, combination, repurchase, or share exchange, or other similar
corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to preserve (but not increase)
the rights of participants under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems
necessary or appropriate to any or all of (i) the number and kind
of shares which may thereafter be issued in connection with
Future Award Shares (with respect to both Restricted Stock and
option awards), (ii) the number and kind of shares issued in
respect of outstanding Adjusted Awards, (iii) the number and kind
of shares issued in respect of outstanding awards of Future Award
Shares, and (iv) the exercise price relating to any options.
3. Eligibility.
Persons who shall be eligible to have granted to them
awards provided for by the Plan shall be such key executives of
the Company and its affiliates as the Committee, in its sole
discretion, shall designate from time to time.
4. Administration of the Plan.
(a) The Plan shall be administered by a committee (the
"Committee") consisting of not less than two directors of the
Company to be appointed by the Board, each of whom is an "outside
director" within the meaning of Section 162(m) of the Code and a
"non-employee director" within the meaning of Rule 16b-3 under
the Exchange Act.
(b) The Committee may from time to time determine
which key executives of the Company and its affiliates shall be
granted awards under the Plan, the terms thereof, and the number
of shares covered by an option or the number of shares of
Restricted Stock to be granted.
(c) The Committee shall have the sole authority, in
its absolute discretion, to adopt, amend, and rescind such rules
and regulations as, in its opinion, may be advisable in the
administration of the Plan, to construe and interpret the Plan,
the rules and regulations, and the instruments evidencing awards
granted under the Plan and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the
Committee shall be final and binding on all participants and
other interested parties.
5. Stock Options and Stock Appreciation Rights.
(a) The Option Price.
The exercise price of each option shall not be less
than the fair market value of the Stock covered by such option on
the date the option is granted, except that the option price
associated with Adjusted Awards shall be such price as results
from the equitable adjustment of such awards. Such fair market
value shall, if the Stock is not listed or admitted to trading on
a stock exchange, be the mean between the lowest reported bid
price and highest reported asked price of the Stock on the date
the option is granted in the over-the-counter market, as reported
by any publication of general circulation selected by the Company
which regularly reports the market price of the Stock in such
market, or, if the Stock is then listed or admitted to trading on
any stock exchange, the composite closing price on such day as
reported in the Wall Street Journal; provided, however, that if
the Committee determines that as a result of the Transaction fair
market value may be more accurately determined based on the
average closing price of the Stock over a three-consecutive-day
period immediately prior to the grant, then such average will
constitute fair market value. Such price shall be subject to
adjustment as provided in paragraph 2(c) hereof.
(b) Terms and Conditions of Options.
(i) Each option granted pursuant to the Plan
shall be evidenced by a written grant agreement (the "Agreement")
executed by the Company and the person to whom such option is
granted which shall provide such terms and conditions as the
Committee may determine, in its sole discretion.
(ii) Unless otherwise provided in the Agreement,
the term of each option shall be for no more than ten years and
three months; provided however that the term of each option
intended to qualify as an "incentive stock option" shall be for
no more than ten years.
(iii) The Agreement may contain such other
terms, provisions, and conditions as may be determined by the
Committee (not inconsistent with this Plan) including, without
limitation, provisions relating to stock appreciation rights
("SARs") with respect to options granted hereunder. Unless
otherwise provided in the Agreement, the Committee may, in its
sole discretion, extend the post-termination exercise period with
respect to an option (but not beyond the original term of such
option). If an option, or any part thereof, is intended to
qualify as an "incentive stock option", the Agreement shall
contain those terms and conditions necessary to so qualify said
option or such part thereof.
(iv) The Committee shall have the authority to
accelerate the exercisability of any outstanding option at such
time and under such circumstances as it, in its sole discretion,
deems appropriate.
(v) Adjusted Awards shall remain subject to the
same terms and conditions to which they were subject prior to any
equitable adjustment made in respect of the Transaction.
(c) Stock Appreciation Rights.
The Committee may, under such terms and conditions as
it deems appropriate, authorize the surrender by an optionee of
all or part of an unexercised option and authorize a payment in
consideration thereof of an amount equal to the difference
obtained by subtracting the option price of the shares then
subject to exercise under such option from the fair market value
of the Stock represented by such shares on the date of surrender,
provided that the Committee determines that such settlement is
consistent with the purpose of the Plan. Such payment may be made
in shares of Stock valued at their fair market value on the date
of surrender of such option or in cash, or partly in shares and
partly in cash. Acceptance of such surrender and the manner of
payment shall be in the discretion of the Committee. If an
option is surrendered for cash, the shares covered by the
surrendered option will thereafter be available for grant under
the Plan to the extent permitted under Rule 16b-3 of the Exchange
Act.
(d) Use of Proceeds.
Proceeds realized from the sale of Stock pursuant to
options granted under the Plan shall constitute general funds of
the Company.
6. Restricted Stock Awards.
(a) Terms and Conditions.
Each Restricted Stock grant made pursuant to the Plan
shall be evidenced by an Agreement executed by the Company and
the person to whom such Restricted Stock is granted (the
"Grantee"). Each Restricted Stock grant made under the Plan
shall, unless otherwise provided in the Agreement, contain the
following terms, conditions and restrictions and such additional
terms, conditions and restrictions as may be determined by the
Committee. Adjusted Awards shall maintain the same terms and
conditions to which they were subject prior to any equitable
adjustment made in respect of the Transaction.
(b) Restrictions.
Until the restrictions imposed on any Restricted Stock
grant shall lapse, shares of Stock granted to a participant
pursuant to a Restricted Stock grant:
(i) shall not be sold, assigned, transferred,
pledged, hypothecated, or otherwise disposed of, and
(ii) shall, if the Grantee's continuous employment
with the Company shall terminate for any reason, unless otherwise
provided in the Agreement, be returned to the Company forthwith,
and all the rights of the Grantee to such shares shall
immediately terminate; provided that if the Committee, in its
sole discretion, shall within ninety (90) days of such
termination of employment, notify the participant in writing of
its decision not to terminate the Grantee's rights in such
shares, then the Grantee shall continue to be the owner of such
shares subject to such continuing restrictions as the Committee
may prescribe in such notice. If the Grantee's interests in the
shares granted pursuant to a Restricted Stock grant shall be
terminated, such Grantee shall forthwith deliver or cause to be
delivered to the Secretary of the Company the certificate(s), if
any, previously delivered to the Grantee for such shares,
accompanied by such endorsement(s) and/or instrument(s) of
transfer as may be required by the Secretary of the Company.
(c) Lapse of Restrictions.
Except as otherwise provided in the Plan or the
Agreement, the restrictions imposed on any Restricted Stock grant
shall commence with the date of the grant and continue during a
period set by the Committee. Notwithstanding the foregoing, the
Committee may accelerate the lapsing of restrictions on a
Restricted Stock grant under such terms and conditions as it may
deem appropriate.
(d) Restrictive Legend; Certificates May be Held in
Custody.
Each certificate evidencing shares granted pursuant to
a Restricted Stock grant may bear an appropriate legend referring
to the terms, conditions and restrictions described in the Plan
and in the instrument evidencing the Restricted Stock grant. Any
attempt to dispose of such shares in contravention of such terms,
conditions and restrictions shall be invalid. The Committee may
enact rules which provide that the certificates evidencing such
shares may be held in custody by a bank or other institution, or
that the Company may itself hold such shares in custody, until
restriction thereon shall have lapsed.
(e) Restrictions upon Making of Restricted Stock
Grants.
The registration or qualification under any federal or
state law of any shares to be granted pursuant to Restricted
Stock grants or the resale or other disposition of any such
shares by or on behalf of the Grantees receiving such shares may
be necessary or desirable as a condition of or in connection with
such Restricted Stock grants, and, in any such event, if the
Committee in its sole discretion so determines, delivery of the
certificates for such shares shall not be made until such
registration or qualification shall have been completed.
(f) Special Provisions Regarding Awards.
Notwithstanding anything to the contrary contained
herein, unless otherwise provided in the Agreement governing a
Restricted Stock grant, Restricted Stock awards granted pursuant
to this Section 6 to Executive Officers (as such term is defined
in Rule 3b-7 promulgated under the Exchange Act) shall be based
on the attainment by the Company (or a subsidiary or division of
the Company if applicable) of performance goals pre-established
by the Committee, during a performance period pre-established by
the Committee, based on one or more of the following criteria:
(i) the attainment of a specified percentage return on total
capital employed by the Company (or a subsidiary or division of
the Company); (ii) the attainment of a specified percentage
return on total stockholder equity of the Company; (iii) the
attainment of a specified percentage increase in earnings per
share of Stock from continuing operations; (iv) the attainment of
a specified percentage increase in net income of the Company;
(v) the attainment of a specified percentage increase in profit
before taxation of the Company (or a subsidiary or division of
the Company); and (vi) the attainment of a specified percentage
increase in revenues of the Company (or a subsidiary or division
of the Company). In addition, such performance goals may be
based upon the attainment of specified levels of Company
performance under one or more of the measures described above
relative to the performance of other corporations.
Each such performance criteria shall be evaluated in
accordance with generally accepted accounting principles. Such
shares of Restricted Stock shall be released from restrictions
only after the attainment of such performance measures have been
certified by the Committee.
7. Change in Control.
Upon a Change in Control (as hereinafter defined), then
notwithstanding anything herein to the contrary, all options
granted under the Plan that are outstanding at the time of such
Change in Control shall become immediately exercisable in full
and all restrictions with respect to shares of Restricted Stock
shall lapse and such shares shall become fully vested and
exercisable.
A "Change in Control" of the Company shall be deemed to
have occurred if any of the events set forth in any one of the
following paragraphs shall occur:
(i) any "person" (as such term is used in
sections 13(d) and 14(d) of the Exchange Act), excluding the
Company or any of its affiliates, a trustee or any fiduciary
holding securities under an employee benefit plan of the Company
or any of its affiliates, an underwriter temporarily holding
securities pursuant to an offering of such securities or a
corporation owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their ownership
of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities; or
(ii) during any period of not more than two
consecutive years, individuals who at the beginning of such
period constitute the Board and any new director (other than a
director designated by a Person who has entered into an agreement
with the Company to effect a transaction described in clause (i),
(iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve
a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 50% of
the combined voting power of the Company's then outstanding
securities; or
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Stock immediately prior to
such transaction or series of transactions continue to have the
same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately prior
to such transaction or series of transactions.
8. Amendment and Termination of the Plan.
The Board at any time and from time to time may
suspend, terminate, modify or amend the Plan; provided, however,
that an amendment which requires stockholder approval in order
for the Plan to continue to comply with Section 162(m) of the
Code or any other law, regulation or stock exchange requirement
shall not be effective unless approved by the requisite vote of
stockholders. No suspension, termination, modification or
amendment of the Plan may adversely affect any award previously
granted without the written consent of the Grantee.
9. Assignability.
Each option award granted pursuant to this Plan shall,
during the participant's lifetime, be exercisable only by him.
No award nor any right thereunder shall be transferable by the
participant by operation of law or otherwise other than by will,
the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code or the Employee
Retirement Income Security Act of 1974, as amended.
10. Payment Upon Exercise.
Payment of the purchase price upon exercise of any
option granted under this Plan shall be made in cash; provided
that the Committee, in its sole discretion, may permit an option
holder to pay the option price, in whole or in part, by tendering
to the Company shares of Stock owned by the option holder, and
having a fair market value equal to the option price. The fair
market value of such Stock shall be determined by the Committee
as it deems appropriate, or as may be required in order to comply
with any applicable law or regulation.
11. Effective Date and Duration of the Plan.
The Plan shall become effective upon its adoption by
the Board and the approval thereof by Old McKesson as the sole
stockholder of the Company; provided, however, that the
effectiveness of the Plan shall be contingent upon the occurrence
of the Transaction and all awards of Future Award Shares shall be
contingent on the approval of the Plan by the stockholders of the
Company at its first annual meeting of stockholders. Unless
sooner terminated, the Plan shall remain in effect until
terminated by action of the Board, provided, however, that the
duration of the Plan shall in no event exceed ten years from the
date of the adoption of the Plan by the Board. Termination of
the Plan shall not affect any awards previously granted pursuant
thereto, which shall remain in effect until their restrictions
shall have lapsed (with respect to Restricted Stock grants) or
until exercised (with respect to option grants) all in accordance
with their terms.
12. Agreement by Participant Regarding Withholding Taxes.
If the Committee shall so require, as a condition of
exercise of an option or SAR or upon the lapsing of restrictions
imposed on Restricted Stock (each a "Tax Event"), each
participant shall agree that no later than the date of the Tax
Event, the participant will pay to the Company or make
arrangements satisfactory to the Committee regarding payment of
any federal, state or local taxes of any kind required by law to
be withheld upon the Tax Event. Alternatively, the Committee may
provide, in its sole discretion, that a participant may elect, to
the extent permitted or required by law, to have the Company
deduct federal, state and local taxes of any kind required by law
to be withheld upon the Tax Event from any payment of any kind
due to the participant, including withholding of Shares.
13. Rights as a Shareholder.
A participant granted an award hereunder or a
transferee of an award shall have no rights as a stockholder with
respect to any shares covered by the award until the date of the
issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior
to the date such stock certificate is issued, except as otherwise
provided in the Plan.
14. No Rights to Employment.
Nothing in the Plan or in any award granted or
Agreement entered into pursuant hereto shall confer upon any
participant the right to continue in the employ of, or in an
independent contractor relationship with, the Company or any
subsidiary or to be entitled to any remuneration or benefits not
set forth in the Plan or such Agreement or to interfere with or
limit in any way the right of the Company or any such subsidiary
to terminate such participant's employment. Awards granted under
the Plan shall not be affected by any change in duties or
position of a participant as long as such participant continues
to be employed by, or in a consultant relationship with, the
Company or any subsidiary.
15. Interpretation.
The Plan is designed and intended to comply with Rule
16b-3 promulgated under the Exchange Act and Section 162(m) of
the Code and all provisions hereof shall be construed in a manner
to so comply.