Employment Agreement - McKesson HBOC Inc. and Paul Julian


                             EMPLOYMENT AGREEMENT
                             --------------------

THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of August 1, 1999 (the
"Effective Date"), by and between McKesson HBOC, Inc. (the "Company"), a
Delaware corporation with its principal office at One Post Street, San
Francisco, California, and Paul Julian ("Executive").

                                   RECITALS
                                   --------

A.     The Company, in its business, develops and uses certain Confidential
       Information (as defined in Paragraph 7(c) below). Such Confidential
       Information will necessarily be communicated to or acquired by Executive
       by virtue of his employment with the Company, and the Company has spent
       time, effort and money to develop such Confidential Information and to
       promote and increase its goodwill; and

B.     The Company desires to retain the services of, and employ, Executive on
       its own behalf and on behalf of its affiliated companies for the period
       provided in this Agreement and, in so doing, to protect its Confidential
       Information and goodwill, and Executive is willing to accept employment
       by the Company on a full-time basis for such period, upon the terms and
       conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereto agree as follows:

1.  Employment.  Subject to the terms and conditions of this Agreement, the
    ----------                                                             
    Company agrees to employ Executive, and Executive agrees to accept
    employment from, and remain in the employ of, the Company for the period
    stated in Paragraph 3 hereof.

2.  Position and Responsibilities.  During the period of his employment
    -----------------------------                                      
    hereunder, Executive agrees to serve the Company, and the Company shall
    employ Executive, as [President, Medical Group] of the Company or in such
    other senior corporate executive capacity or capacities as may be specified
    from time to time by the Chief Executive Officer or either of the Co-Chief
    Executive Officers, as the case may be, of the Company (either, hereinafter
    referred to as the "Chief Executive Officer").

3.  Term and Duties.
    --------------- 

    a) Term of Employment.  The period of Executive's employment under this
       ------------------                                                  
       Agreement shall be deemed to have commenced on the date of this Agreement
       and shall continue until March 31, 2002.

    b) Duties.  During the period of his employment hereunder and except for
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       illness, reasonable vacation periods, and reasonable leaves of absence,
       Executive shall devote his best efforts and all his business time,
       attention, skill and efforts to the business and affairs of the Company
       and its affiliated companies, as such business and affairs now exist and
       as they may be hereafter changed or added to, under and pursuant to the
       general direction of 

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       the Board of Directors of the Company (the "Board"); provided, however,
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       that, with the approval of the Chief Executive Officer, Executive may
       serve, or continue to serve, on the boards of directors of, hold any
       other offices or positions in, companies or organizations which, in such
       officer's judgment, will not present any conflict of interest with the
       Company or any of its subsidiaries or affiliates or divisions, or
       materially affect the performance of Executive's duties pursuant to this
       Agreement. The Company shall retain full direction and control of the
       means and methods by which Executive performs the services for which he
       is employed hereunder. The services which are to be employed by Executive
       hereunder are to be rendered in the Commonwealth of Virginia, or in such
       other place or places in the United States or elsewhere as may be
       determined from time to time by the Board, but are to be rendered
       primarily at the headquarters of the Company's General Medical subsidiary
       in Richmond, Virginia. Unless and until otherwise mutually agreed to
       between the Company and Executive, Executive shall be at liberty to
       maintain his residence in Richmond, Virginia.

4.  Compensation and Reimbursement of Expenses; Other Benefits.
    ---------------------------------------------------------- 

    a) Compensation.  During the period of his employment hereunder, Executive
       ------------                                                           
       shall be paid a salary, in monthly or semi-monthly installments (in
       accordance with the Company's normal payroll practices for senior
       executive officers), at the rate of Three Hundred Fifty Thousand Dollars
       ($350,000.00) per year, or such higher salary as may be from time to time
       approved by the Board (or any duly authorized Committee thereof) (any
       such higher salary so approved to be thereafter the minimum salary
       payable to Executive during the remainder of the term hereof), plus such
       additional incentive compensation, if any, as may be awarded to him
       yearly by the Board (or any duly authorized Committee thereof). For
       purposes of the MIP (as defined in subparagraph (c) below), for each of
       the Company's fiscal years ending during the term of this Agreement,
       Executive's Individual Target Award shall be 60% of his base salary for
       the applicable Year (as defined in the MIP). Executive shall also receive
       an automobile allowance from the Company of One Thousand Dollars
       ($1,000.00) per month during the term of this Agreement.

    b) Reimbursement of Expenses.  The Company shall pay or reimburse Executive,
       -------------------------                                                
       in accordance with its normal policies and practices, for all reasonable
       travel and other expenses incurred by Executive in performing his
       obligations hereunder. The Company further agrees to furnish Executive
       with such assistance and accommodations as shall be suitable to the
       character of Executive's position with the Company and adequate for the
       performance of his duties hereunder.

    c) Other Benefits.  During the period of his employment hereunder, Executive
       --------------                                                           
       shall be entitled to receive all other benefits of employment generally
       available to other members of the Company's senior management and those
       benefits for which key executives are or shall become eligible, when and
       as he becomes eligible therefor, including without limitation, group
       health and life insurance benefits, short and long-term disability plans,
       deferred compensation plans, and participation in the Company's Profit-
       Sharing Investment Plan, Employee Stock Purchase Plan, Executive Medical
       Plan, 1989 Management Incentive Plan ("MIP"), 1984 Executive Benefit
       Retirement Plan ("EBRP"), 1988 Executive 

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       Survivor Benefits Plan ("ESBP"), Stock Purchase Plan and 1994 Restricted
       Stock and Stock Option Plan (or any other similar plan or arrangement),
       and the Company agrees that none of such benefits shall be altered in any
       manner or in such a way as to reduce any then existing entitlement of
       Executive thereunder.

5.  Stock Options. On or about August 16, 1999, Executive will be granted a
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    non-qualified stock option to purchase Two Hundred Thousand (200,000) shares
    of the Company's common stock, at a per share exercise price equal to the
    fair market value of a share of the Company's common stock on the date of
    grant (the "Grant Date"), which option will vest at the rate of fifty
    percent (50%) on the second anniversary of the Grant Date, seventy-five
    percent (75%) on the third anniversary of the Grant Date and one hundred
    percent (100%) on the fourth anniversary of the Grant Date. Such option will
    otherwise be subject to the terms and conditions of the Company's Stock
    Option and Restricted Stock Plan (or any other similar plan or arrangement).

6.  Benefits Payable Upon Disability or Death.
    ----------------------------------------- 

    a) Disability Benefits.  If, during the term of this Agreement, Executive 
       -------------------        
       shall be prevented from properly performing services hereunder by reason
       of his illness or other physical or mental incapacity, the Company shall
       continue to pay Executive his then current salary hereunder during the
       period of such disability; or, if less, for a period of (12) calendar
       months, at which time the Company's obligations hereunder shall cease and
       terminate.

    b) Death Benefits.  In the event of the death of Executive during the term 
       --------------                  
       of this Agreement, Executive's salary payable hereunder shall continue to
       be paid to Executive's surviving spouse, or if there is no spouse
       surviving, then to Executive's designee or representative (as the case
       may be) through the six-month period following the end of the calendar
       month in which Executive's death occurs. Thereafter, all of the Company's
       obligations hereunder shall cease and terminate.

    c) Other Plans.  The provisions of this Paragraph 6 shall not affect any
       -----------                                                          
       rights of Executive's heirs, administrators, executors, legatees,
       beneficiaries or assigns under the Company's Profit-Sharing Investment
       Plan, EBRP, ESBP, Restricted Stock and Stock Option Plan (or any other
       similar plan or arrangement), any stock purchase plan or any other
       employee benefit plan of the Company, and any such rights shall be
       governed by the terms of the respective plans.

7.  Obligations of Executive During and After Employment.
    ---------------------------------------------------- 

    a) Noncompetition.  Executive agrees that during the term of his employment
       --------------                                                          
       hereunder, and for the "Restricted Period" (as hereinafter defined)
       thereafter following the termination of Executive's employment with the
       Company for any reason, he will not, within the United States,
       participate, engage or have any interest in, directly or indirectly, any
       person, firm, corporation, or business (whether as an employee, officer,
       director, agent, creditor, or consultant or in any capacity which calls
       for the rendering of personal services, advice, acts of management,
       operation or control) which carries on any business or 

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        activity competitive with the Company or any affiliated company
        (including, without limitation, any products or services sold,
        investigated, developed or otherwise pursued by the Company or any
        affiliated company at any time or from time to time) without the prior
        written consent of the Chief Executive Officer. For purposes of this
        Paragraph 7(a), the "Restricted Period" shall be deemed to be the longer
        of (i) one (1) year following termination of Executive's employment for
        any reason or (ii) the period during which Executive is receiving salary
        continuation payments hereunder. This Paragraph 7(a) shall survive the
        termination or expiration of this Agreement.

    b)  Unauthorized Use of Confidential Information.  Executive acknowledges 
        -------------------------------------------
        and agrees that (i) during the course of his employment Executive will
        have produced and/or have access to Confidential Information (as defined
        in subparagraph (c) hereof), of the Company and its affiliated
        companies, and (ii) the unauthorized use or sale of any of such
        confidential or proprietary information at any time would harm the
        Company and would constitute unfair competition with the Company.
        Executive promises and agrees not to engage in any unfair competition
        with the Company either during or after the term of this Agreement.
        Therefore, during and subsequent to his employment by the Company and
        its affiliated companies, Executive agrees to hold in confidence and
        not, directly or indirectly, disclose, use, copy or make lists of any
        such information, except to the extent expressly authorized by the
        Company in writing or as required by law. All records, files, drawings,
        documents, equipment, and the like, or copies thereof, relating to the
        Company's business, or the business of any of its affiliated companies,
        which Executive shall prepare, use, or come into contact with, shall be
        and remain the sole property of the Company, and shall not be removed
        (except to allow Executive to perform his responsibilities hereunder
        while traveling for business purposes or otherwise working away from his
        office) from the Company's or the affiliated company's premises without
        its prior written consent, and shall be promptly returned to the Company
        upon termination of employment with the Company and its affiliated
        companies. This paragraph 7(b) shall survive the termination or
        expiration of this Agreement.

    c)  Confidential Information Defined.  For purposes of this Agreement,
        --------------------------------                                  
        "Confidential Information" means all information (whether reduced to
        written, electronic, magnetic or other tangible form) acquired in any
        way by Executive during the course of his employment with the Company or
        any of its affiliated companies concerning the products, projects,
        activities, business or affairs of the Company and its affiliated
        companies, or the Company's or any of its affiliated company's
        customers, including, without limitation, (i) all information concerning
        trade secrets of the Company and its affiliated companies, including
        computer programs, system documentation, special hardware, product
        hardware, related software development, manuals, formulae, processes,
        methods, machines, compositions, ideas, improvements or inventions of
        the Company and its affiliated companies, (ii) all sales and financial
        information concerning the Company and its affiliated companies, (iii)
        all customer and supplier lists of the Company and its affiliated
        companies, (iv) all information concerning products or projects under
        development by the Company or any of its affiliated companies or
        marketing plans for any of those products or projects, and (v) all
        information in any way concerning the products, projects, activities,
        business or affairs of customers of the Company or any of its affiliated
        companies which was fur-

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        nished to him by the Company or any of its agents or customers;
        provided, however, that Confidential Information does not include
        information which (A) becomes available to the public other than as a
        result of a disclosure by Executive, (B) was available to him on a non-
        confidential basis outside of his employment with the Company, or (C)
        becomes available to him on a non-confidential basis from a source other
        than the Company or any of its agents, creditors, suppliers, lessors,
        lessees or customers.

    d)  Nonsolicitation.  Executive recognizes and acknowledges that it is
        ---------------                                                   
        essential for the proper protection of the business of the Company and
        its affiliated companies that Executive be restrained for a reasonable
        period following the termination of Executive's employment with the
        Company and its affiliated companies from: (i) soliciting or inducing
        any employee of the Company or any of its affiliated companies to leave
        the employ of the Company or any of its affiliated companies; (ii)
        hiring or attempting to hire any employee of the Company or any of its
        affiliated companies; or (iii) soliciting the trade of or trading with
        the customers of the Company or any of its affiliated companies for any
        competitive business purpose. Accordingly, Executive agrees that during
        the term of his employment hereunder, and for the Restricted Period
        thereafter following the termination of Executive's employment with the
        Company and its affiliated companies for any reason, Executive shall
        not, directly or indirectly, (x) hire, solicit, aid in or encourage the
        hiring and/or solicitation of, contract with, aid in or encourage the
        contracting with, or induce or encourage to leave the employment of the
        Company or any of its affiliated companies, any employee of the Company
        or any of its affiliated companies; and (y) solicit, aid in or encourage
        the solicitation of, contract with, aid in or encourage the contracting
        with, service, or contact any person or entity which is, or was, within
        three years prior to the termination of Executive's employment with the
        Company and its affiliated companies, a customer or client of the
        Company or any of its affiliated companies for the purpose of offering
        or selling a product or service competitive with any of those offered by
        the Company of any of its affiliated companies. For purposes of this
        Paragraph 7(d), the "Restricted Period" shall be deemed to be the longer
        of (i) two (2) years following termination of Executive's employment for
        any reason or (ii) the period during which Executive is receiving salary
        continuation payments hereunder. This Paragraph 7(d) shall survive the
        termination or expiration of this Agreement.

    e)  Remedy for Breach.  Executive agrees that in the event of a breach or
        -----------------                                                    
        threatened breach of any of the covenants contained in this Paragraph 7,
        the Company shall have the right and remedy to have such covenants
        specifically enforced by any court having jurisdiction, it being
        acknowledged and agreed that any material breach of any of the covenants
        will cause irreparable injury to the Company and that money damages will
        not provide an adequate remedy to the Company.

    f)  Blue-Penciling.  Executive acknowledges and agrees that the 
        --------------                     
        noncompetition and nonsolicitation provisions contained herein are
        reasonable and valid in geographic, temporal and subject matter scope
        and in all other respects, and do not impose limitations greater than
        are necessary to protect the goodwill, Confidential Information and
        other business interests of the Company. Nevertheless, if any court
        determines that any of said noncompetition and other restrictive
        covenants and agreements, or any part thereof, is unen-

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        forceable because of the duration or geographic scope of such provision,
        such court shall have the power to reduce the duration or scope of such
        provision, as the case may be, and, in its reduced form, such provision
        shall then be enforceable to the maximum extent permitted by applicable
        law.

8.  Termination.
    ----------- 

    a)  For Cause.  Notwithstanding anything herein to the contrary, the Company
        ---------                                                               
        may, without liability, terminate Executive's employment hereunder for
        Cause (as defined below) at any time upon written notice from the Board
        (or any duly authorized Committee thereof) specifying such Cause, and
        thereafter, the Company's obligations hereunder shall cease and
        terminate; provided, however, that such written notice shall not be
                   --------  ------- 
        delivered until after the Board (or any duly authorized Committee
        thereof) shall have given Executive written notice specifying the
        conduct alleged to have constituted such Cause and Executive has failed
        to cure such conduct, if curable, within fifteen (15) days following
        receipt of such notice. As used herein, the term "Cause" shall mean (i)
        Executive's willful misconduct, habitual neglect or dishonesty with
        respect to matters involving the Company or its subsidiaries which is
        materially and demonstrably injurious to the Company, or (ii) a material
        breach by Executive of one or more terms of this Agreement.

    b)  Arbitration Required to Confirm Cause.  In the event of a termination 
        -------------------------------------     
        for Cause pursuant to subparagraph (a) above, the Company shall continue
        to pay Executive's then current compensation as specified in this
        Agreement until the issuance of an arbitration award affirming the
        Company's action. Such arbitration shall be held in accordance with the
        provisions of Paragraph 9(d) below. In the event the award upholds the
        action of the Company, Executive shall promptly repay to the Company any
        sums received pursuant to this subparagraph 8(b), following termination
        of employment.

    c)  Other than for Cause; Performance, Reorganization.  Notwithstanding
        -------------------------------------------------                  
        anything herein to the contrary, the Company may also terminate
        Executive's employment (without regard to any general or specific
        policies of the Company relating to the employment or termination of its
        employees) (i) should Executive fail to perform his duties hereunder in
        a manner satisfactory to the Chief Executive Officer, provided that
        Executive shall first be given written notice of such unsatisfactory
        performance and a period of ninety (90) days to improve such performance
        to a level deemed acceptable to the Chief Executive Officer, (ii) should
        Executive's position be eliminated as a result of a reorganization or
        restructuring of the Company or any of its affiliated companies or (iii)
        for any other reason or reasons.

    d)  Obligations of the Company on Termination of Employment.
        ------------------------------------------------------- 

        (i)  If the Company terminates Executive's employment pursuant to
             subparagraph 8(a) above and the Company's action is affirmed as
             specified in subparagraph 8(b) above or Executive terminates his
             employment with the Company other than for Good Reason (as defined
             in subparagraph (d)(iii)), then all of the Company's obligations
             hereunder shall immediately cease and terminate. Executive shall
             thereupon have no

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              further right or entitlement to additional salary, incentive
              compensation payments or awards, or any perquisites from the
              Company whatsoever, and Executive's rights, if any, under the
              Company's employee and executive benefit plans shall be determined
              solely in accordance with the express terms of the respective
              plans;

        (ii)  If the Company terminates Executive's employment pursuant to
              subparagraph 8(c) above or Executive terminates his employment
              with the Company for Good Reason prior to the expiration of this
              Agreement, then in lieu of any benefits payable pursuant to the
              Company's Executive Severance Policy (so long as the compensation
              and benefits payable hereunder equal or exceed those payable under
              said Policy) and in complete satisfaction and discharge of all of
              its obligations to Executive hereunder, the Company shall,
              provided Executive is not in breach of the provisions of Paragraph
              7 hereof, and except as provided in Paragraph 9(c) below, (A)
              continue Executive's then base salary, without increase, for the
              remainder of the term of this Agreement, provided, however, that
                                                       --------  -------  
              the Company's obligation to make such salary payments shall be
              reduced by any compensation received by Executive from a
              subsequent employer during such term, (B) consider Executive for a
              bonus under the terms of the Company's MIP for the fiscal year in
              which termination occurs (but not for any subsequent year)
              provided that any such bonus, if earned, shall be pro-rated to
              reflect the portion of the year for which Executive was actively
              employed, (C) continue Executive's automobile allowance and
              Executive Medical Plan benefits until the expiration date of this
              Agreement, (D) subject to the express special forfeiture and
              repayment provisions of the respective plans (or the terms and
              conditions applicable thereto), continue the accrual and vesting
              of Executive's rights, benefits and existing awards for the
              remainder of the term of this Agreement for purposes of the EBRP,
              ESBP, and the Stock Option and Restricted Stock Plan (or any other
              similar plan or arrangement), provided, however, that (unless the
                                            --------  ------- 
              Board, or any duly authorized Committee, in its sole discretion,
              determines otherwise) Executive shall in no event receive or be
              entitled either to additional grants or awards subsequent to the
              date of termination, or "Approved Retirement" status, under the
              foregoing plans, and (E) terminate Executive's participation in
              the Company's tax-qualified profit-sharing plans and stock
              purchase plans, pursuant to the terms of the respective plans, as
              of the date of Executive's termination of employment.

       (iii)  For purposes of this Agreement, "Good Reason" shall mean any of
              the following actions, if taken without the express written
              consent of Executive, (A) any material change by the Company in
              Executive's functions, duties or responsibilities as President,
              Medical Group, which change would cause Executive's position with
              the Company to become of less dignity, responsibility, importance,
              or scope as compared to the position and attributes that applied
              to Executive as of the Effective Date; (B) any reduction in
              Executive's base salary, other than a proportional reduction
              effected as part of an across-the-board reduction affecting all
              executive employees of the Company; (C) any material failure by
              the Company to comply with any of the provisions of the Agreement;
              (D) the Company's requiring Executive to be based at any office or
              location more than 25 miles from the office at which Executive is
              based as of the Effective Date, except for travel reasonably
              required in the performance of Executive's

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             responsibilities; or (E) any failure by the Company to obtain the
             express assumption of the Agreement by any successor or assign of
             the Company.

9.  General Provisions.
    ------------------ 

    a)  Executive's rights and obligations hereunder shall not be transferable
        by assignment or otherwise. Nothing in this Agreement shall prevent the
        consolidation of the Company with, or its merger into, any other
        corporation, or the sale by the Company of all or substantially all of
        its properties or assets; and this Agreement shall inure to the benefit
        of, be binding upon and be enforceable by, any successor surviving or
        resulting corporation, or other entity to which such assets shall be
        transferred. This Agreement shall not be terminated by the voluntary or
        involuntary dissolution of the Company.

    b)  This Agreement (together with the Termination Agreement between the
        parties of even date herewith) and the rights of Executive with respect
        to the benefits of employment referred to in Paragraph 4(c) constitute
        the entire agreement between the parties hereto in respect of the
        employment of Executive by the Company. This Agreement supersedes and
        replaces all prior oral and written agreements, understandings,
        commitments, and practices between the parties.

    c)  In the event Executive's employment with the Company shall terminate
        under circumstances otherwise providing Executive with a right to
        benefits under both Section 5 of the Termination Agreement and Paragraph
        8(d)(ii) of this Agreement, Executive shall be entitled to receive the
        greater of the benefits provided therein or herein, calculated 
        -------                         
        individually, without duplication.

    d)  Any dispute, controversy or claim arising under or in connection with
        this Agreement, or the breach hereof, other than any dispute,
        controversy claim or breach arising under Paragraph 7 of this Agreement,
        shall be settled exclusively by arbitration in accordance with the Rules
        of the American Arbitration Association then in effect. Judgment upon
        the award rendered by the arbitrator may be entered in any court of
        competent jurisdiction. Any arbitration held pursuant to this paragraph
        in connection with any termination of Executive's employment shall take
        place in San Francisco, California at the earliest possible date. If any
        proceeding is necessary to enforce or interpret the terms of this
        Agreement, or to recover damages for breach thereof, the prevailing
        party shall be entitled to reasonable attorneys fees and necessary costs
        and disbursements, not to exceed in the aggregate one percent (1%) of
        the net worth of the other party, in addition to any other relief to
        which he or it may be entitled.

    e)  Executive expressly acknowledges and agrees that, in the event the
        benefits provided hereunder are subject to the excise tax provision set
        forth in Section 4999 of the Internal Revenue Code of 1986, as amended,
        (i) Executive shall be responsible for and (ii) Executive shall not be
        entitled to any additional payment from the Company for any Federal,
        state, and local income and employment taxes, interest or penalties that
        may arise in connection with such benefits.

                                                                          Page 8

 
    f)  The provisions of this Agreement shall be regarded as divisible, and if
        any of said provisions or any part hereof are declared invalid or
        unenforceable by a court of competent jurisdiction, the validity and
        enforceability of the remainder of such provisions or parts hereof and
        the applicability hereof shall not be affected thereby.

    g)  This Agreement may not be amended or modified except by a written
        instrument executed by the Company and Executive.

    h)  This Agreement and the rights and obligations hereunder shall be
        governed by and construed in accordance with the laws of the
        Commonwealth of Virginia without regard to its principles of conflict of
        laws.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                             McKESSON HBOC, INC.
                                             A Delaware Corporation


                                             By /s/ Ivan D. Meyerson
                                                --------------------------------
                                                    Senior Vice President
ATTEST:


/s/ Kristina Veaco                           /s/ Paul Julian 
-------------------------------              -----------------------------------
    Assistant Secretary                          Executive


By the Authority of the
Compensation Committee
of the Board of Directors
of McKesson HBOC, Inc.
on July 6, 1999.

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