Liquidity Facility Credit Agreement

Exhibit 4.18


LIQUIDITY FACILITY CREDIT AGREEMENT


Dated as of December __, 1998


among


AMERISOURCE CORPORATION
as Borrower,


AMERISOURCE HEALTH CORPORATION
and Certain Subsidiaries and Affiliates,
as Guarantors,


THE LENDERS NAMED HEREIN


AND


NATIONSBANK, N.A.,
as Administrative Agent


TABLE OF CONTENTS


SECTION 1 DEFINITIONS........................................................1
1.1 Definitions...........................................................1
1.2 Computation of Time Periods...........................................7
1.3 Accounting Terms......................................................7


SECTION 2 CREDIT FACILITIES..................................................8
2.1 Revolving Loans.......................................................8


SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES....................10
3.1 Default Rate.........................................................10
3.2 Extension and Conversion.............................................10
3.3 Voluntary Prepayments................................................11
3.4 Reductions in Commitments and Mandatory Prepayments..................11
3.5 Fees. ............................................................12
3.6 Capital Adequacy.....................................................12
3.7 Inability To Determine Interest Rate.................................13
3.8 Illegality...........................................................13
3.9 Requirements of Law..................................................14
3.10 Taxes. ............................................................15
3.11 Indemnity...........................................................17
3.12 Pro Rata Treatment..................................................18
3.13 Sharing of Payments.................................................18
3.14 Payments, Computations, Etc.........................................19
3.15 Evidence of Debt....................................................21


SECTION 4 GUARANTY..........................................................21
4.1 The Guarantee........................................................21
4.2 Obligations Unconditional............................................22
4.3 Reinstatement........................................................23
4.4 Certain Additional Waivers...........................................23
4.5 Remedies.............................................................23
4.6 Rights of Contribution...............................................24
4.7 Continuing Guarantee.................................................24


SECTION 5 CONDITIONS........................................................24
5.1 Conditions to Closing................................................25
5.2 Conditions to Effectiveness..........................................26
5.3 Conditions to All Extensions of Credit...............................26


SECTION 6 REPRESENTATIONS, WARRANTIES AND COVENANTS.........................27
6.1 Incorporation........................................................27
6.2 Additional Representations...........................................28
6.3 Additional Covenants.................................................28


SECTION 7 EVENTS OF DEFAULT.................................................29
7.1 Events of Default....................................................29
7.2 Acceleration; Remedies...............................................31


SECTION 8 AGENCY PROVISIONS.................................................32
8.1 Appointment..........................................................32
8.2 Delegation of Duties.................................................32
8.3 Exculpatory Provisions...............................................32
8.4 Reliance on Communications...........................................33
8.5 Notice of Default....................................................33
8.6 Non-Reliance on Administrative Agent and Other Lenders...............34
8.7 Indemnification......................................................34
8.8 Administrative Agent in its Individual Capacity......................35
8.9 Successor Administrative Agent.......................................35


8.10 Intercreditor Agreements............................................35


SECTION 9 MISCELLANEOUS.....................................................36
9.1 Notices..............................................................36
9.2 Right of Set-Off.....................................................37
9.3 Benefit of Agreement.................................................37
9.4 No Waiver; Remedies Cumulative.......................................40
9.5 Payment of Expenses, etc.............................................40
9.6 Amendments, Waivers and Consents.....................................41
9.7 Counterparts.........................................................41
9.8 Headings.............................................................42
9.9 Survival.............................................................42
9.10 Governing Law; Submission to Jurisdiction; Venue....................42
9.11 Severability........................................................43
9.12 Entirety............................................................43
9.13 Binding Effect; Termination.........................................43
9.14 Confidentiality.....................................................43
9.15 Source of Funds.....................................................44
9.16 Conflict............................................................44


ii


SCHEDULES


Schedule 2.1(a) Schedule of Lenders and Commitments Schedule 2.1(b)(i) Form of Notice of Borrowing Schedule 2.1(e) Form of Revolving Note Schedule 3.2 Form of Notice of Extension/Conversion Schedule 5.1(g)(v) Form of Secretary's Certificate Schedule 5.1(g)(vi)(A) Form of Solvency Certificate - AmeriSource Corporation Schedule 5.1(g)(vi)(B) Form of Solvency Certificate - AmeriSource Health
Corporation Schedule 8.10(a) Form of Securitization Intercreditor Agreement Schedule 8.10(b) Form of Liquidity Intercreditor Agreement Schedule 9.3(b) Form of Assignment and Acceptance


iii


EXHIBIT 4.18


CREDIT AGREEMENT


THIS CREDIT AGREEMENT dated as of December __, 1998 (the "Credit
------ Agreement"), is by and among AMERISOURCE CORPORATION, a Delaware corporation (the "Borrower"), AMERISOURCE HEALTH CORPORATION, a Delaware corporation (the
-------- "Company") and the subsidiaries and affiliates identified on the signature pages - - -------- hereto and such other subsidiaries and affiliates as may from time to time become Guarantors hereunder in accordance with the provisions hereof (collectively with the Company, the "Guarantors"), the lenders named herein and
---------- such other lenders as may become a party hereto (the "Lenders"), and
------- NATIONSBANK, N.A., as Administrative Agent (in such capacity, the
"Administrative Agent"). - - ---------------------


W I T N E S S E T H


WHEREAS, the Borrower has requested that the Lenders provide a $100 million revolving liquidity facility for the purposes hereinafter set forth;


WHEREAS, the Lenders have agreed to make the requested credit facility available to the Borrower on the terms and conditions hereinafter set forth;


NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


SECTION 1
DEFINITIONS
-----------


1.1 Definitions.
-----------


As used in this Credit Agreement, the following terms shall have the meanings specified below unless the context otherwise requires, and provided
-------- that terms used but not otherwise defined shall have the meanings provided in the Existing Credit Agreement:


"Additional Credit Party" means each Person that becomes a Guarantor
-----------------------
after the Closing Date by execution of a Joinder Agreement.


"Administrative Agent" shall have the meaning assigned to such term in
--------------------
the heading hereof, together with any successors or assigns.


"Administrative Agent's Fee Letter" means that certain letter
---------------------------------
agreement, dated as of December __, 1998, between the Administrative Agent
and the Borrower, as amended, modified, supplemented or replaced from time
to time.


"Administrative Agent's Fees" shall have the meaning assigned to such
---------------------------
term in Section 3.5(b).


1


"Agents" means, collectively, NationsBank, N.A., as Administrative
------
Agent and [______________] as [_____________] Agent.


"Aggregate Revolving Committed Amount" means the aggregate amount of
------------------------------------
Revolving Commitments in effect from time to time, being initially ONE
HUNDRED MILLION DOLLARS ($100,000,000).


"Base Rate" means, for any day, the rate per annum (rounded upwards,
---------
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1%
----
or (b) the Prime Rate in effect on such day. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be determined without
regard to clause (a) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be effective on the effective date of such change in the Prime Rate
or the Federal Funds Rate, respectively.


"Base Rate Loan" means any Loan bearing interest at a rate determined
--------------
by reference to the Base Rate.


"Borrower" means the Person identified as such in the heading hereof,
--------
together with any permitted successors and assigns.


"Borrowing Base" means, at any time, an amount equal to (i) seventy
--------------
percent (70%) of Eligible Inventory minus (ii) Obligations outstanding
under the Existing Credit Agreement.


"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Charlotte, North Carolina or Philadelphia,
Pennsylvania are authorized or required by law to close, except that, when
------ ----
used in connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in U.S. dollar deposits in
London, England, Charlotte, North Carolina and New York, New York.


"Closing Date" means the date hereof.
------------


"Commitment" means the Revolving Commitment.
----------


"Commitment Fee" shall have the meaning given such term in Section
--------------
3.5(a).


"Commitment Percentage" means the Revolving Commitment Percentage.
---------------------


"Commitment Period" means the period from and including the Effective
-----------------
Date to but not including the earlier of (i) the Termination Date, or (ii)
the date on which the


2


Revolving Commitments terminate in accordance with the provisions of this
Credit Agreement.


"Company" means AmeriSource Health Corporation, a Delaware
-------
corporation, as referenced in the opening paragraph, its successors and
permitted assigns.


"Credit Documents" means a collective reference to this Credit
----------------
Agreement, the Notes, the Security Agreement, the Pledge Agreement, each
Joinder Agreement, the Administrative Agent's Fee Letter, the Liquidity
Intercreditor Agreement and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.


"Credit Party" means any of the Borrower and the Guarantors.
------------


"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.


"Defaulting Lender" means, at any time, any Lender that, at such time,
-----------------
(i) has failed to make an Extension of Credit required pursuant to the
terms of this Credit Agreement, (ii) has failed to pay to the
Administrative Agent or any Lender an amount owed by such Lender pursuant
to the terms of the Credit Agreement or any other of the Credit Documents,
or (iii) has been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar proceeding.


"Dollars" and "$" means dollars in lawful currency of the United
------- -
States of America.


"Effective Date" means the date on or after the Closing Date on which
--------------
the conditions set out in Section 5.2 have been satisfied or waived.


"Eurodollar Loan" means any Loan bearing interest at a rate determined
---------------
by reference to the Eurodollar Rate.


"Eurodollar Rate" means, for the Interest Period for each Eurodollar
---------------
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate determined pursuant to
the following formula:


Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage


"Eurodollar Reserve Percentage" means for any day, that percentage
-----------------------------
(expressed as a decimal) which is in effect from time to time under
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is


3


defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of Eurodollar
Loans is determined), whether or not Lender has any Eurocurrency
liabilities subject to such reserve requirement at that time. Eurodollar
Loans shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to
time to a Lender. The Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurodollar Reserve
Percentage.


"Event of Default" means such term as defined in Section 7.1.
----------------


"Existing Credit Agreement" means that Credit Agreement dated as of
-------------------------
January 8, 1997 among the Borrower, the Company and the other Guarantors
identified therein, the Lenders identified therein and NationsBank, N.A.,
as Administrative Agent, as amended and modified.


"Extension of Credit" means, as to any Lender, the making of, or
-------------------
participation in, a Loan by such Lender.


"Fees" means all fees payable pursuant to Section 3.5.
----


"Federal Funds Rate" means, for any day, the rate of interest per
------------------
annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day,

provided that (A) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day and (B) if no such rate is so published on such next preceding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to the Administrative Agent on such day on such transactions as
determined by the Administrative Agent.


"Guarantor" means the Company and each of those other Persons
---------
identified as a "Guarantor" on the signature pages hereto, and each
Additional Credit Party which may hereafter execute a Joinder Agreement,
together with their successors and permitted assigns.


"Guaranteed Obligations" means, as to each Guarantor, without
----------------------
duplication, (i) all obligations of the Borrower to the Lenders and the
Administrative Agent , whenever arising, under this Credit Agreement, the
Notes or the Credit Documents relating to the Obligations hereunder, and
(ii) all liabilities and obligations, whenever arising, owing from the
Borrower to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement relating to Loans or Obligations hereunder.


"Incorporated Covenants" means such term as defined in Section 6.1.
----------------------


"Incorporated Representations" means such term as defined in Section
---------------------------- 6.1.


4


"Interbank Offered Rate" means, for the Interest Period for each
----------------------
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal
to the rate of interest, determined by the Administrative Agent on the
basis of the offered rates for deposits in dollars for a period of time
corresponding to such Interest Period (and commencing on the first day of
such Interest Period), appearing on Telerate Page 3750 (or, if, for any
reason, Telerate Page 3750 is not available, the Reuters Screen LIBO Page)
as of approximately 11:00 A.M. (London time) two (2) Business Days before
the first day of such Interest Period. As used herein, "Telerate Page
3750" means the display designated as page 3750 by Dow Jones Telerate, Inc.
(or such other page as may replace such page on that service for the
purpose of displaying the British Bankers Association London interbank
offered rates) and "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks).


"Interest Payment Date" means (i) as to any Base Rate Loan, the first
---------------------
day of each January, April, July and October, the date of repayment of
principal of such Loan and the Termination Date and (ii) as to any
Eurodollar Loan, the last day of each Interest Period for such Loan, the
date of repayment of principal of such Loan and on the Termination Date,
and in addition where the applicable Interest Period is more than 3 months,
then also on the date 3 months from the beginning of the Interest Period,
and each 3 months thereafter. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day.


"Interest Period" means as to any Eurodollar Loan, a period of one,
---------------
two, or three month's duration, as the Borrower may elect, commencing in
each case, on the date of the borrowing (including conversions, extensions
and renewals); provided, however, (A) if any Interest Period would end on a
-------- -------
day which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day (except that in the case of Eurodollar
Loans where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (B) no Interest
Period shall extend beyond the Termination Date, and (C) in the case of
Eurodollar Loans, where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on the last day
of such calendar month.


"Joinder Agreement" means a Joinder Agreement substantially in the
-----------------
form of Schedule 7.11-1 to the Existing Credit Agreement but relating to
---------------
this Credit Agreement and the obligations hereunder, executed and delivered
by an Additional Credit Party in accordance with the provisions of Section
6.3(b).


"Lenders" means each of the Persons identified as a "Lender" on the
-------
signature pages hereto, and their successors and assigns.


5


"Liquidity Intercreditor Agreement" means the Intercreditor Agreement
---------------------------------
dated as of ____________ among NationsBank, N.A., as Administrative Agent
under the Existing Credit Agreement, NationsBank, N.A., as Administrative
Agent under this Credit Agreement, and the Credit Parties, as amended and
modified, as referenced in Section 8.10(b).


"Loan" or "Loans" means the Revolving Loans.
---- -----


"NationsBank" means NationsBank, N.A. and its successors.
-----------


"Non-Excluded Taxes" means such term as is defined in Section 3.10.
------------------


"Note" or "Notes" means any Revolving Note.
---- -----


"Notice of Borrowing" means a written notice of borrowing in
-------------------
substantially the form of Schedule 2.1(b)(i), as required by Section
------------------
2.1(b)(i).

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