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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED JUNE 30, 1997
------------------------
AMERISOURCE HEALTH CORPORATION
(A DELAWARE CORPORATION)
(FORMERLY AMERISOURCE DISTRIBUTION CORPORATION)
<TABLE>
<CAPTION>
(REGISTRANT, STATE OF
(COMMISSION INCORPORATION (IRS EMPLOYER
FILE NUMBER) ADDRESS AND TELEPHONE NUMBER) IDENTIFICATION NO.)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
33-27835-01 P.O. BOX 959, VALLEY FORGE, 23-2546940
PENNSYLVANIA 19482
(610) 296-4480
</TABLE>
------------------------
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 [ ]
------------------------
The number of shares of common stock of AmeriSource Health Corporation
outstanding as of June 30, 1997 was: Class A -- 17,075,808, Class
B -- 6,490,370, Class C -- 173,483.
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<PAGE> 2
INDEX
AMERISOURCE HEALTH CORPORATION
<TABLE>
<C> <S>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets -- June 30, 1997 and September 30, 1996
Consolidated statements of operations -- Three months ended June 30, 1997 and
June 30, 1996
Consolidated statements of operations -- Nine months ended June 30, 1997 and June
30, 1996
Consolidated statements of cash flows -- Nine months ended June 30, 1997 and June
30, 1996
Management's Discussion and Analysis of Financial Condition and Results of
Item 2. Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. AMERISOURCE HEALTH CORPORATION FINANCIAL STATEMENTS (UNAUDITED)
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1997 1996
----------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 83,925 $ 65,575
Restricted cash.................................................. 8,434 5,626
Accounts receivable less allowance for doubtful accounts:
6/97 -- $19,192, 9/96 -- $14,848.............................. 490,626 390,331
Merchandise inventories.......................................... 795,122 650,296
Prepaid expenses and other....................................... 5,179 3,236
---------- ----------
Total current assets..................................... 1,383,286 1,115,064
Property and Equipment, at cost.................................... 111,167 91,508
Less accumulated depreciation.................................... 45,640 39,842
---------- ----------
65,527 51,666
Other assets....................................................... 53,523 21,230
---------- ----------
$ 1,502,336 $ 1,187,960
========== ==========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 874,315 $ 714,984
Accrued expenses and other....................................... 41,518 29,446
Accrued income taxes............................................. 9,454 6,002
Deferred income taxes............................................ 39,579 35,350
---------- ----------
Total current liabilities................................ 964,866 785,782
Long-Term Debt:
Revolving credit facility........................................ 219,230 205,047
Receivables securitization financing............................. 303,904 226,878
Other debt....................................................... 9,201 1,768
---------- ----------
532,335 433,693
Other Liabilities.................................................. 11,180 5,293
Stockholders' Equity
Common Stock, $.01 par value:
Class A (Voting and convertible):
50,000,000 shares authorized; issued 6/97 -- 17,426,890
shares; 9/96 -- 17,291,100 shares.......................... 174 173
Class B (Non-voting and convertible):
15,000,000 shares authorized; issued 6/97 -- 9,440,370
shares; 9/96 -- 9,440,370 shares........................... 95 95
Class C (Non-voting and convertible):
2,000,000 shares authorized; issued 6/97 -- 173,483 shares;
9/96 -- 242,298 shares..................................... 2 2
Capital in excess of par value................................... 230,000 228,537
Retained earnings (deficit)...................................... (230,096) (259,395)
Cost of common stock in treasury................................. (6,220) (6,220)
---------- ----------
(6,045) (36,808)
---------- ----------
$ 1,502,336 $ 1,187,960
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
---------- ----------
(UNAUDITED)
<S> <C> <C>
Revenues............................................................ $2,064,174 $1,420,006
Cost of goods sold.................................................. 1,963,714 1,339,475
---------- ----------
Gross Profit........................................................ 100,460 80,531
Selling and administrative expenses................................. 76,211 51,378
Depreciation........................................................ 3,257 2,429
---------- ----------
Operating income.................................................. 20,992 26,724
Interest expense.................................................... 10,611 9,088
---------- ----------
Income before taxes and extraordinary item.......................... 10,381 17,636
Taxes on income..................................................... 4,049 7,231
---------- ----------
Income before extraordinary item.................................... 6,332 10,405
Extraordinary charge-early retirement of debt, net of income tax
benefit........................................................... -- (7,242)
---------- ----------
Net income........................................................ $ 6,332 $ 3,163
========== ==========
Earnings per share (fully diluted):
Income before extraordinary item.................................. $ .26 $ .45
Extraordinary item................................................ -- (.31)
---------- ----------
Net income..................................................... $ .26 $ .14
========== ==========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
---------- ----------
(UNAUDITED)
<S> <C> <C>
Revenues............................................................ $5,596,578 $4,064,575
Cost of goods sold.................................................. 5,317,065 3,836,161
---------- ----------
Gross Profit........................................................ 279,513 228,414
Selling and administrative expenses................................. 188,517 143,623
Depreciation........................................................ 8,427 6,393
---------- ----------
Operating income.................................................. 82,569 78,398
Interest expense.................................................... 30,966 28,090
---------- ----------
Income before taxes and extraordinary item.......................... 51,603 50,308
Taxes on income..................................................... 20,322 20,953
---------- ----------
Income before extraordinary item.................................... 31,281 29,355
Extraordinary charge-early retirement of debt, net of income tax
benefit........................................................... (1,982) (7,242)
---------- ----------
Net income........................................................ $ 29,299 $ 22,113
========== ==========
Earnings per share (fully diluted):
Income before extraordinary item.................................. $ 1.29 $ 1.29
Extraordinary item................................................ (.08) (.32)
---------- ----------
Net income..................................................... $ 1.21 $ .97
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 7
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------------------------
1997 1996
----------- ----------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................................... $ 29,299 $ 22,113
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation.................................................. 8,427 6,393
Amortization.................................................. 2,125 2,041
Provision for losses on accounts receivable................... 3,252 1,140
Gain on disposal of property and equipment.................... 2,929 (16)
Deferred income taxes......................................... 6,025 8,815
Loss on early retirement of debt.............................. 3,250 11,142
Changes in operating assets and liabilities (net of effect of
companies acquired):
Restricted cash............................................. (2,808) 8,547
Accounts receivable......................................... (25,213) 7,094
Merchandise inventories..................................... (49,518) (179,122)
Prepaid expenses............................................ (263) (657)
Accounts payable, accrued expenses and income taxes......... 92,053 102,166
Miscellaneous................................................. 32 2,059
----------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES...... 69,590 (8,285)
INVESTING ACTIVITIES
Capital expenditures............................................. (12,735) (12,008)
Proceeds from sales of property and equipment.................... 1,967 527
Cost of companies acquired....................................... (138,652) (28,725)
----------- ---------
NET CASH USED IN INVESTING ACTIVITIES.................... (149,420) (40,206)
FINANCING ACTIVITIES
Long-term debt borrowings........................................ 1,615,923 1,324,712
Long-term debt repayments........................................ (1,517,307) (1,298,166)
Net proceeds from public offering................................ -- 49,300
Deferred financing costs and other............................... (1,900) --
Exercise of stock options........................................ 1,464 42
----------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES................ 98,180 75,888
----------- ---------
Increase in cash and cash equivalents.............................. 18,350 27,397
Cash and cash equivalents at beginning of period................... 65,575 32,171
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......................... $ 83,925 $ 59,568
=========== =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 8
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying financial statements present the consolidated financial
position, results of operations and cash flows of AmeriSource Health Corporation
and its wholly-owned subsidiaries (the "Company") as of the dates and for the
periods indicated. All material intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary to present fairly
the financial position as of June 30, 1997, the results of operations for the
three and nine months ended June 30, 1997 and 1996 and the cash flows for the
nine months ended June 30, 1997 and 1996 have been included. Certain information
and footnote disclosures normally included in financial statements presented in
accordance with generally accepted accounting principles, but which are not
required for interim reporting purposes, have been omitted. The accompanying
unaudited condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1996.
NOTE 2 -- LEGAL MATTERS AND CONTINGENCIES
In the ordinary course of its business, the Company becomes involved in
lawsuits, administrative proceedings and governmental investigations, including
antitrust, environmental, product liability and regulatory agency and other
matters. In some of these proceedings, plaintiffs may seek to recover large and
sometimes unspecified amounts and the matters may remain unresolved for several
years. On the basis of information furnished by counsel and others, the Company
does not believe that these matters, individually or in the aggregate, will have
a material adverse effect on its business or financial condition.
The Company is subject to contingencies pursuant to environmental laws and
regulations at one of its former distribution centers that may require the
Company to take remediation efforts. In fiscal 1994, the Company accrued $4.1
million to cover future consulting, legal, and remediation and ongoing
monitoring costs. The accrued liability, which is reflected in other long-term
liabilities on the accompanying consolidated balance sheet ($3.8 million at June
30, 1997), is based on an engineering analysis prepared by outside consultants
and represents an estimate of the extent of contamination and choice of remedy,
existing technology and presently enacted laws and regulations. However, changes
in remediation standards, improvements in cleanup technology and discovery of
additional information concerning the site could affect the estimated liability
in the future. The Company is investigating the possibility of asserting claims
against responsible parties for recovery of these costs. Whether or not any
recovery may be forthcoming is unknown at this time, although the Company
intends to vigorously enforce its rights and remedies.
In November 1993, the Company, along with six other wholesale distributors
and twenty-four pharmaceutical manufacturers, was named as a defendant in the
United States District Court for the Southern District of New York, in a series
of purported class action antitrust lawsuits alleging violations of various
antitrust laws associated with the chargeback pricing system. In addition, the
Company is a party to parallel suits filed in state courts in Minnesota,
Mississippi and Alabama. Plaintiffs seek injunctive relief, treble damages,
attorneys' fees, and costs. In October 1994, the Company entered into a
Judgement Sharing Agreement with other wholesaler and pharmaceutical
manufacturer defendants. Under the Judgement Sharing Agreement (a) the
manufacturer defendants agreed to reimburse the wholesaler defendants for
litigation costs incurred, up to an aggregate of $9 million; and (b) if a
judgement is entered into against both manufacturers and wholesalers, the total
exposure for joint and several liability of the Company is limited to the lesser
of 1% of such judgement or $1 million. Pursuant to the Judgement Sharing
Agreement, the Company has released any claims that it might have had against
the manufacturers for the claims presented
7
<PAGE> 9
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
by the plaintiffs in these lawsuits. The Judgement Sharing Agreement covers the
federal court litigation as well as cases which have been filed in various state
courts. On April 4, 1996, the federal court granted the wholesalers' motion for
summary judgment. The plaintiffs are appealing the grant of summary judgement in
favor of the wholesalers to the United States Court of Appeals for the Seventh
Circuit.
NOTE 3 -- EARNINGS PER SHARE
Earnings per share is computed on the basis of the weighted average number
of shares outstanding during the periods presented (23,739,661 and 22,733,126
for the three months ended June 30, 1997 and June 30, 1996, respectively; and
23,706,386 and 22,358,166 for the nine months ended June 30, 1997 and June 30,
1996, respectively) plus the dilutive effect of stock options (598,737 and
612,204 for the three and nine months ended June 30, 1997, respectively; and
401,142 and 355,737 for the three and nine months ended June 30, 1996,
respectively on a fully diluted basis).
NOTE 4 -- ACQUISITION
In March 1997, the Company acquired all of the equity interests of Walker
Drug Company, L.L.C. in a cash transaction. Walker Drug Company, L.L.C. is
wholesale pharmaceutical distributor based in Pelham, Alabama with annualized
revenues of approximately $800 million. The purchase price was $138.7 million.
The acquisition was accounted for by the purchase method and, accordingly is
included in the consolidated financial statements from the date of acquisition.
The excess of the purchase price over net assets acquired of $28.2 million has
been allocated to goodwill (which is included in other assets) and is being
amortized on a straight line basis over 40 years. Changes in purchase accounting
activities may result in a reallocation of the purchase price within one year of
the acquisition. The acquisition was funded by borrowings under the Company's
revolving credit agreement. The following table reflects financial results on a
pro forma basis, assuming the acquisition had occurred at the beginning of the
periods presented:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues.................................................... $5,974,533 $4,584,332
Income before extraordinary items........................... 34,391 30,313
Net income.................................................. 32,409 23,071
Earnings per share (fully diluted):
Income before extraordinary item.......................... $ 1.41 $ 1.34
Extraordinary item........................................ (.08) (.32)
---------- ----------
Net income........................................ $ 1.33 $ 1.02
========== ==========
</TABLE>
NOTE 5 -- LONG-TERM DEBT
In January 1997, the Company entered into a new revolving credit agreement
(the "Credit Agreement") with a syndicate of senior lenders providing a senior
secured facility of $500 million. Among other things, the Credit Agreement: (1)
is for a term of five years, expiring in January, 2002; (2) provides for
interest rate step downs to as low as LIBOR plus 25 basis points upon the
attainment of certain financial ratios; (3) provides for the release of security
upon the attainment of certain financial ratios or once the Company achieves
investment grade senior, unsecured debt ratings from two credit rating agencies;
(4) provides for a borrowing base of 70% of the eligible inventory; and (5)
provides higher limits for possible acquisitions. An extraordinary loss of $2.0
million (net of tax benefits of $1.3 million) was recorded in the second quarter
of fiscal 1997, representing the write-off of the unamortized financing fees
related to the retirement of the prior $380 million revolving credit facility.
In connection with the Credit Agreement, the Company incurred approximately $3.0
8
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AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
million in financing fees which have been deferred and are being amortized on a
straight-line basis over the five-year term of the Credit Agreement.
Revolving loans made under the Credit Agreement may be prepaid during its
term, without premium and may subsequently be reborrowed. Commitments under the
Credit Agreement may be permanently reduced in full or in part at any time at
the option of the Company upon prior written notice.
Borrowings under the Credit Agreement bear interest at the rate of LIBOR
plus an applicable margin (1.25% at June 30, 1997). Interest on loans under the
Credit Agreement is payable quarterly. Under the terms of the Credit Agreement,
the Company granted the senior lenders perfected first priority security on
interest in the Company's inventory for collateral against borrowings under the
Credit Agreement. The Company is required to pay a commitment fee on the average
unused portion of the Credit Agreement (.31% per annum at June 30, 1997) plus an
annual administration fee. At June 30, 1997, the $219.2 million outstanding
under the Credit Agreement bore interest at the rate of 7.6% per annum.
The indentures governing the Credit Agreement contain restrictions and
covenants which include limitations on incurrence of additional indebtedness,
restrictions on dividends and distributions to stockholders, the repurchase of
stock and the making of certain other restricted payments, the issuance of
preferred stock, the creation of certain liens, transactions with subsidiaries
and other affiliates and certain corporate acts such as mergers, consolidation
and the sale of substantially all assets. Additional covenants require
compliance with financial tests, including maintenance of minimum net worth,
leverage, and fixed charge coverage.
Pursuant to its receivable securitization financing, the Company issued $90
million of Floating Rate Class A Trade Receivables Participation Certificates
Series 1997-1 (the "Series 1997-1 Certificates") in April 1997. The Series
1997-1 Certificates consist of AAA rated fixed principal, variable rate
certificates with a term of five years and a rate of LIBOR plus .20%. The
proceeds from the issuance were used to pay down borrowings under the Credit
Agreement. In connection with the Series 1997-1 Certificates, the Company
incurred approximately $.7 million in financing fees which have been deferred
and are being amortized on a straight-line basis over the five year term of the
Series 1997-1 Certificates.
NOTE 6 -- CHANGE IN ESTIMATE
During its second quarter of fiscal 1997, the Company changed its method of
estimating its interim LIFO inventory from a detailed quarterly index
calculation method to a method which allocates a portion of the estimated annual
LIFO provision to each quarter based on each quarter's actual inventory
appreciation. The new method provides for a better match between current costs
and revenues and reduces interim fluctuations caused by changes in product mix
during the year. Prior to this change, substantially all of the Company's annual
LIFO provision was recorded in its first six fiscal months. Approximately 80% of
the Company's estimated annual LIFO provision was recorded in the first nine
months of fiscal 1997 under the new estimation method.
NOTE 7 -- RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings Per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact is expected to
result in an increase in primary earnings per share of $.01 for the three months
ended June 30, 1997 and have no effect on the three months ended June 30, 1996;
and increases of $.03 and $.02 for the nine months ended June 30, 1997 and June
30, 1996, respectively. The impact of Statement 128 on the calculation of fully
diluted earnings per share for these periods is not expected to be material.
9
<PAGE> 11
AMERISOURCE HEALTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
In June 1997 the FASB issued Statement No. 130, "Reporting Comprehensive
Income" and Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information". Both Statements become effective for fiscal periods
beginning after December 15, 1997 with early adoption permitted. The Company is
evaluating the effects these Statements will have on its financial reporting and
disclosures. The Statement is expected to have no effect on the Company's
results of operations, financial position, capital resources or liquidity.
NOTE 8 -- FACILITY CONSOLIDATIONS AND OTHER CHARGES
The Company commenced cost reduction plans in the third quarter of fiscal
1997 to consolidate three of its pharmaceutical distribution facilities into
other existing facilities and to restructure its sales force. The cost reduction
initiatives will be completed by December 1997 and resulted in the following
charges included in selling and administrative expense in the third quarter of
fiscal 1997.
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Write-downs of assets..................................... $3,857
Severance................................................. 1,832
Lease cancellations....................................... 727
------
$6,416
======
</TABLE>
Write-downs of assets include buildings, warehouse and computer equipment,
and other assets to be disposed of primarily related to the facility closings.
Severance includes the termination costs of 240 warehouse and sales employees.
Approximately 20 of these employees were terminated by June 30, 1997 and the
remainder are expected to be terminated by December 1997. The above amounts
exclude the shut-down costs of a facility acquired in the Walker Drug Company
acquisition that was contemplated in the acquisition and accordingly, included
in the purchase price allocation.
In addition to the above charges, the Company incurred $5.2 million of
charges related to the retirement of its former President and CEO as well as
other executive terminations during the third quarter of fiscal 1997.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Revenues for the three months ended June 30, 1997 increased 45% to $2.1
billion from $1.4 billion in the corresponding period in fiscal 1996. For the
nine months ended June 30, 1997, revenues were $5.6 billion, an increase of 38%
compared to the prior year. The year-to-year revenue gains reflect increases
across all customer groups and all geographic regions. The acquisitions of
Walker Drug Company, L.L.C. ("Walker Drug Company") in March 1997, and Gulf
Distribution, Inc. in February 1996, resulted in an increase in revenues of 13%
and 7% for the three and nine months ending June 30, 1997, respectively. During
the nine months ended June 30, 1997, sales to hospitals increased 36%, sales to
independent drug store customers increased 43%, and sales to the chain drug
store customer group increased 32%, as compared with the prior period.
Approximately 31% of the hospital revenue increase is due to the addition of one
large mail order pharmacy customer. During the nine months ended June 30, 1997
sales to hospitals accounted for 48% of total revenues, while sales to
independent drug stores accounted for 33% and sales to chain drug stores for 19%
of the total.
Gross profit of $100.5 million in the third quarter of fiscal 1997
increased by 25% over 1996 due to the increase in revenues. As a percentage of
revenues, the gross profit in the third quarter of fiscal 1997 was 4.87% as
compared to 5.67% in the prior year. For the nine months ended June 30, 1997,
the gross profit percentage was 4.99% as compared to 5.62% in the prior year.
Approximately 25% and 30% of the decline in gross profit percentage from the
prior year quarter and nine months, respectively, was due to the addition of a
large ($280 million in annualized revenues) mail order pharmacy customer at a
gross profit percentage significantly lower than normal percentages. However,
this customer is expected to provide the Company with its normal return on
committed capital due to a low cost to service and a relatively low working
capital requirement. The third quarter percentage was also impacted by less
inventory appreciation profits than in the prior year as a percentage of revenue
due to increased inventory turns and fewer manufacturer price increases. A
reduction in selling margin percentage due to continuing price competition
throughout the industry and the higher than average growth of the Company's
largest customers also contributed to the decline. Gross profit may continue to
be impacted by price competition and changes in customer and product mix.
The Company commenced cost reduction plans in the third quarter of fiscal
1997 to consolidate three of its pharmaceutical distribution facilities into
other existing facilities and to restructure its sales force. The cost reduction
initiatives will be completed by December 1997 and resulted in a $6.4 million
charge to selling and administrative expense in the third fiscal quarter of
1997. Write-downs of $3.9 million of assets includes buildings, warehouse and
computer equipment, and other assets to be disposed of primarily related to the
facility closings. Severance charges of $1.8 million were recorded for the
termination of 240 sales and warehouse employees. Approximately 20 of these
employees were terminated by June 30, 1997 and the remainder are expected to be
terminated by December 31, 1997. Additionally, $0.7 million of costs related to
lease terminations were recorded. The above amounts exclude the shut-down costs
of a facility acquired in the Walker Drug Company acquisition that was
contemplated in the acquisition, and accordingly, included in the purchase price
allocation. In addition to the cost reduction initiatives, the Company incurred
$5.2 million of charges related to the retirement of its former President and
CEO as well as other executive terminations during the third quarter. Annualized
cost savings of $6.0 to $8.0 million are expected as a result of the cost
reduction initiatives.
Operating expenses, including the $11.6 million of special charges
discussed in the preceding paragraph, increased by $25.7 million or 48%, in the
third quarter of fiscal 1997 compared with the prior year, and as a percentage
of revenues, were 3.85% in 1997 and 3.79% in 1996. Excluding the $11.6 million
of special charges, operating expenses as a percentage of revenues were 3.29%
for the third quarter of fiscal 1997. For the first nine months of fiscal 1997,
operating expenses increased 31% compared to the prior year and represented
3.52% of revenues versus 3.69% of revenues in the prior year. Excluding the
special charges, operating expenses as a percentage of revenues were 3.31% for
the nine months ended June 30, 1997. The increase in expenses was due to
increased delivery and warehouse expense associated with the significant revenue
increase. The decrease as a percentage of revenue in fiscal 1997 is primarily
due to continued economies of
11
<PAGE> 13
scale at the Company's established locations and the low service cost associated
with the large mail order customer which has offset higher than anticipated
integration costs of the Company's Orlando, FL facility.
Operating income of $21.0 million in the third quarter of fiscal 1997
decreased by 21% from the prior year. For the nine months ended June 30, 1997
operating income increased by 5%. Excluding the effect of the special charges of
$11.6 million in the third quarter of fiscal 1997, operating income increased
22% and 20% for the three and nine months ended June 30, 1997, respectively, as
compared to the prior year. Excluding the special charges, the Company's
operating margin declined to 1.58% and 1.68% for the three and nine months ended
June 30, 1997, respectively, as compared to 1.88% and 1.93% for the comparable
prior year periods. The decrease is due to the decrease in gross profit
percentage discussed above, offset in part by reduced operating expenses as a
percentage of revenues.
Interest expense of $10.6 million in the third quarter of fiscal 1997
represents an increase of 17% compared to the prior year quarter. For the nine
month period ended June 30, 1997 interest expense increased 10% versus the prior
year period. The increase over the prior year was due to increased borrowings to
fund the Company's strong revenue increase and the purchase of Walker Drug
Company in March 1997. Average borrowings during the quarter ended June 30, 1997
were $619 million as compared to average borrowings of $489 million in the prior
year third quarter. For the nine months ended June 30, 1997, average borrowings
were $597 million versus average borrowings of $487 million in the prior year.
The increased average indebtedness was offset in part by reduced borrowing rates
compared to the prior year due to the redemption of the remaining $74.3 million
of 11 1/4% senior debentures in the third quarter of fiscal 1996 and rate
reductions under the Company's revolving credit facility and receivables
securitization financing.
The income tax provisions for the three and nine months ended June 30, 1997
were computed based on an estimate of the full year effective tax rate. The
extraordinary charge in fiscal 1997 of $2.0 million, net of a tax benefit of
$1.3 million, was due to the write-off of unamortized deferred financing fees
related to the retirement of the prior $380 million revolving credit facility.
During the second quarter the Company changed its method of estimating its
interim LIFO inventory. The new estimation method better matches current costs
and revenues and reduces interim fluctuations caused by changes in product mix
during the year. Prior to this change, substantially all of the Company's annual
LIFO provision was recorded in its first six fiscal months. Approximately 80% of
the Company's estimated annual LIFO provision was recorded in the first nine
months of fiscal 1997 under the new estimation method.
LIQUIDITY AND CAPITAL RESOURCES
During the nine-month period ended June 30, 1997, the Company's operating
activities generated $69.6 million in cash. An increase in inventory turns, a
reduction in days sales outstanding and an increase in days payables outstanding
offset the increased working capital requirements of the significant revenue
growth. Operating cash uses during the nine month period ended June 30, 1997
included $27.4 million in interest payments and $11.1 million in income tax
payments.
Capital expenditures for the nine months ended June 30, 1997 were $12.7
million and relate principally to investments in warehouse automation, warehouse
improvements, and information technology which are expected to continue
throughout the year.
In March 1997, the Company acquired all of the equity interests of Walker
Drug Company Inc. in a cash transaction. The transaction was funded by
borrowings under the revolving credit facility. Walker Drug Company is a Pelham,
Alabama-based pharmaceutical wholesaler with annualized revenues of
approximately $800 million. The purchase price was $138.7 million and the
transaction was accounted for by the purchase method. The excess of the purchase
price over net assets acquired of $28.2 million has been allocated to goodwill
and is being amortized over 40 years.
Cash provided by financing activities during the first nine months of
fiscal 1997 represents borrowings under the Company's revolving credit facility
and its receivable securitization financing primarily to fund its
12
<PAGE> 14
working capital requirements and the purchase of Walker Drug Company. In January
1997, the Company entered into a new revolving credit agreement (the "Credit
Agreement") with a syndicate of senior lenders providing a senior secured
facility of $500 million. Proceeds from borrowings under this Credit Agreement
were used to retire the $380 million revolving credit facility. Among other
things, the Credit Agreement (1) is for a term of five years, expiring in
January 2002; (2) provides for interest rate step downs upon the attainment of
certain financial ratios; (3) provides for the release of security upon the
attainment of certain financial ratios or once the Company achieves investment
grade senior, unsecured debt ratings from two credit rating agencies; (4)
provides for a borrowing base of 70% of the eligible inventory; and (5) provides
higher limits for potential acquisitions. At June 30, 1997, borrowings under the
Company's $500 million revolving credit facility were $219 million (at an
average interest rate of 7.6%) and borrowings under the $375 million Receivables
Program were $304 million (at an average interest rate of 6.0%). In April 1997,
the Company issued $90 million of Floating Rate Class A Trade Receivable
Participation Certificates Series 1997-1 under its Receivable Program. These
certificates consist of AAA rated fixed principal, variable rate certificates
with a term of five years and a rate of LIBOR plus .20%. The proceeds from the
issuance were used to pay down borrowings under the Credit Agreement.
An increase in interest rates would adversely affect the Company's
operating results and the cash flow available after debt service to fund
operations and expansion and, if permitted to do so under its revolving credit
facility, to pay dividends on its capital stock.
The Company's operating results have generated sufficient cash flow which,
together with borrowings under its debt agreements and credit terms from
suppliers, have provided sufficient capital resources to finance working capital
and cash operating requirements, fund capital expenditures, and interest
currently payable on outstanding debt. The Company's primary ongoing cash
requirements will be to fund payment of interest on indebtedness, finance
working capital, and fund capital expenditures and routine growth and expansion
through new business opportunities. Future cash flows from operations and
borrowings are expected to be sufficient to fund the Company's ongoing cash
requirements.
The Company is subject to certain contingencies pursuant to environmental
laws and regulations at one of its former distribution centers that may require
remediation efforts. In fiscal 1994, the Company accrued a liability of $4.1
million to cover future consulting, legal and remediation, and ongoing
monitoring costs. The accrued liability ($3.8 million at June 30, 1997), which
is reflected in other long-term liabilities on the accompanying consolidated
balance sheet, is based on an estimate of the extent of contamination and choice
of remedy, existing technology, and presently enacted laws and regulation,
however, changes in remediation standards, improvements in cleanup technology,
and discovery of additional information concerning the site could affect the
estimated liability in the future. The Company is investigating the possibility
of asserting claims against responsible parties for recovery of these costs.
Whether or not any recovery may be forthcoming is unknown at this time.
Certain information in this Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements as such term is defined in Section 27A of the Securities Act and
Section 21E of the Exchange Act. Certain factors such as changes in interest
rates, competitive pressures, customer and product mix, inventory investment
buying opportunities, and capital markets could cause actual results to differ
materially from those in forward-looking statements.
13
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 4.1 -- Amendment to Pooling and Servicing Agreement and
Receivables Purchase Agreement, dated as of March 5, 1997
among AmeriSource Receivables Corporation, AmeriSource
Corporation, and Manufacturers and Traders Trust Company, as
Trustee.
4.2 -- Certificate Purchase Agreement, dated as of April 11,
1997, among AmeriSource Corporation, AmeriSource Receivables
Corporation, BT Securities Corporation, Bankers Trust
International PLC, and Bankers Trust Australia Limited.
4.3 -- Amendment to Pooling and Servicing Agreement and
Receivables Purchase Agreement dated as of April 17, 1997
among AmeriSource Receivables Corporation, AmeriSource
Corporation, and Manufacturers and Traders Trust Company, as
Trustee.
4.4 -- Series 1997-1 Supplement to Pooling and Servicing
Agreement dated as of April 17, 1997 among AmeriSource
Receivables Corporation as Transferor, AmeriSource
Corporation, as initial Servicer and Manufacturers and
Traders Trust Company as Trustee.
27 -- Financial Data Schedule
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended June 30, 1997.
14
<PAGE> 16
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.
AMERISOURCE HEALTH CORPORATION
/s/ KURT J. HILZINGER
--------------------------------------
Kurt J. Hilzinger
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
Date: August 13, 1997
15
<PAGE> 1
EXHIBIT 1
<PAGE> 2
- --------------------------------------------------------------------------------
AMENDMENT
TO POOLING AND SERVICING AGREEMENT
AND
RECEIVABLES PURCHASE AGREEMENT
dated as of March 5, 1997
among
AMERISOURCE RECEIVABLES CORPORATION,
AMERISOURCE CORPORATION,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
- --------------------------------------------------------------------------------
<PAGE> 3
This AMENDMENT dated as of March 5, 1997 (this "Amendment") is made
among AMERISOURCE RECEIVABLES CORPORATION, a Delaware corporation, as transferor
("ARC"), AMERISOURCE CORPORATION, a Delaware corporation, as the initial
Servicer ("AmeriSource"), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, as Trustee (in that capacity, together with any
successor in that capacity, the "Trustee").
BACKGROUND
1. AmeriSource, ARC and the Trustee (together, the "Original Parties")
have entered into the Pooling and Servicing Agreement, dated as of December 13,
1994 and amended as of April 4, 1995 (as so amended, the "Pooling Agreement"),
pursuant to which they agreed to create certain Series and Classes of
Certificates; and AmeriSource and ARC have entered into the Receivables Purchase
Agreement, dated and amended as of the same dates (as so amended, the "Purchase
Agreement"), pursuant to which AmeriSource agreed to sell and contribute, and
ARC agreed to purchase and receive, certain Receivables. Except as otherwise
defined herein, capitalized terms have the meanings that Appendix A to the
Pooling Agreement assigns to them.
2. The Original Parties wish to amend the Pooling Agreement and the
Purchase Agreement so as to revise certain definitions.
NOW, THEREFORE, for good and valuable consideration (the receipt of
which is acknowledged) the parties agree as follows:
ARTICLE I
AMENDMENTS
SECTION 1.01 Definitions. Capitalized terms used but not otherwise
defined herein have the meanings set forth in Appendix A to the Pooling
Agreement.
SECTION 1.02 Changes to Definitions. Appendix A to the Pooling
Agreement and the Purchase Agreement is hereby amended as follows:
(a) The definition of "Aged Receivables Ratio" is amended by
adding the following new proviso, immediately prior to the end thereof:
; provided, however, that for purposes of calculating
the Aged Receivables Ratio for any Calculation Period prior to
March, 1998, the were
<PAGE> 4
past due 121 to 150 days shall be deemed to equal the
Walker/Pelham Aged Receivables Proxy for such Calculation
Period.
(b) The following new term is added, immediately following the
definition of "Exchange Date":
"Exempt Division" means a division of the Seller that
is specified as an "Exempt Division" in a written notice from
Servicer to the Trustee, the Rating Agencies and the Agent;
provided that each of the following requirements must be
satisfied with respect to such division: (i) such designation
is made within thirty days after such Seller's acquisition of
the operations conducted by such division, (ii) the Servicer
shall have given the Trustee and the Applicable Rating
Agencies written notice of such designation, (iii) the
customers of such division have been instructed to make all
payments in respect to receivables originated by such division
to a location other than to any of the Bank Accounts, and (iv)
none of the data included in the Daily Reports, Monthly
Reports or other information supplied to the Trustee or
Holders includes any information about such division or
amounts owed to it; and provided further that, the designation
of a division as an "Exempt Division" may be terminated at any
time, by written notice from Servicer to the Trustee and the
Applicable Rating Agencies.
(c) The following new term is added, immediately following the
definition of "PBGC":
"Pelham Division" means the division of the Seller
that conducts operations formerly conducted by the division of
Walker based in Pelham, Alabama.
(d) The following new terms are added, immediately following
the definition of "Variable Amount":
"Walker" means Walker Drug Company, L.L.C.
"Walker/Pelham Aged Receivables Proxy" means, with
respect to each of the Calculation Periods set forth below,
the amount set opposite such Calculation Period:
<TABLE>
<CAPTION>
Calculation Period Amount
------------------ ------
<S> <C>
January, 1996 $ 832,000
February, 1996 $ 611,000
March, 1996 $ 703,000
April, 1996 $1,003,000
May, 1996 $ 679,000
</TABLE>
page 2
<PAGE> 5
<TABLE>
<S> <C>
June, 1996 $987,000
July, 1996 $871,000
August, 1996 $842,000
September, 1996 $833,000
October, 1996 $864,000
November, 1996 $899,000
December, 1996 $860,000
January, 1997 $832,000
February, 1997 $832,000
</TABLE>
"Walker Excess" means, at any time, the excess (if
any) of (a) the aggregate Unpaid Balance of Eligible
Receivables originated by Walker, over (b) 20% of the
aggregate Unpaid Balance of all Eligible Receivables.
(e) The definition of "Net Eligible Receivables" is amended by
adding the following new clause, immediately prior to the end thereof:
, minus (in the case of any determination made with
respect to a Calculation Period prior to the March, 1998
Calculation Period) the Walker Excess.
(f) The definition of "Receivables" is amended by adding the
following new proviso, immediately prior to the end thereof:
; provided that "Receivable" shall not include any
such right to payment owed solely to an Exempt Division.
(g) The following new defined term is added, immediately
following the definition of "Majority Investors":
"Manufacturer Obligations" means all obligations of
suppliers to make payments or other accommodations to the
Seller on account of special pricing arrangements or other
arrangements with Obligors, returns of inventory or other
circumstances relating to the sale, marketing or distribution
of such supplier's products.
(h) The definition of "Related Security" is amended by adding
the following sentence thereto:
Without limiting the foregoing, it is understood and
agreed that Related Security includes all Manufacturer
Obligations, payments in respect thereof and other proceeds
thereof.
page 3
<PAGE> 6
The Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to ARC, all of the Seller's right, title and interest in, to and under
all Manufacturer Obligations, all payments in respect thereof and all other
proceeds thereof. ARC hereby sells, transfers, assigns, sets over and otherwise
conveys to the Trust, for the benefit of the Certificateholders, all of its
right, title and interest in, to and under all Manufacturer Obligations, all
payments in respect thereof and all other proceeds thereof.
It is understood and agreed that Manufacturer Obligations will not be
classified as "Receivables" or "Eligible Receivables" for purposes of the
Transaction Documents.
SECTION 1.03 Changes to Purchase Agreement. Section 8.2 of the Purchase
Agreement is amended by adding the following new proviso, immediately prior to
the end thereof:
; provided, further, that if, at any time prior to
the Liquidation Commencement Date, the Internal Revenue
Service or the PBGC shall file notice of one or more
Involuntary Adverse Claims (other than Permitted Adverse
Claims), then on and after the date on which an Authorized
Officer of ARC obtains knowledge of such filing until the date
on which ARC receives a written release of such Involuntary
Adverse Claims (which release shall be satisfactory to the
Applicable Rating Agencies) from the Internal Revenue Service
or the PBGC, ARC shall not purchase Receivables and Related
Purchased Assets from the Seller.
SECTION 1.04 Changes to Pooling Agreement. (a) Clause (h) of the first
sentence of Section 9.01 of the Pooling Agreement is amended to read in its
entirety as follows:
(h) the Internal Revenue Service or the PBGC shall
file notice of one or more Involuntary Adverse Claims (other
than Permitted Adverse Claims);.
(b) The definition of "Carrying Cost Reserve" in Section
4.03(a) of the Pooling Agreement is amended by adding the following new
clause, immediately prior to the end thereof:
, plus (iii) an amount equal to (A) the aggregate
Unpaid Balance of the Receivables, multiplied by (B)
one-twelfth of 2.5% multiplied by a fraction the numerator of
which is the product of 1.75 and the number of Turnover Days
and the denominator of which is 360.
page 4
<PAGE> 7
SECTION 1.05 Designation of Exempt Division. All of the Seller's
divisions that conduct operations formerly conducted by Walker (other than
Pelham Division) are hereby designated as Exempt Divisions.
ARTICLE II
CONDITIONS, REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Conditions Precedent. This Amendment shall be effective
from and after the later of (a) March 5, 1997 or (b) the date upon which all of
the conditions precedent specified below have been satisfied (the "Effective
Date"). The conditions precedent are:
(i) The Trustee shall have received from each of AmeriSource
and ARC a certificate, dated as of the date hereof, of an Authorized
Officer as to:
(A) resolutions of its board of directors then in
full force and effect authorizing the execution, delivery and
performance of this Amendment,
(B) the incumbency and signature of those of its
officers authorized to act with respect to this Amendment,
upon which certificate the Trustee may conclusively rely.
(ii) The Trustee shall have received an opinion of counsel to
AmeriSource and ARC that the modifications to the Pooling Agreement and
the Purchase Agreement made pursuant to this Amendment are legal, valid
and binding upon each of AmeriSource and ARC and that such amendments
are permitted under the terms of the Pooling Agreement and the Purchase
Agreement.
(iii) The representations and warranties of AmeriSource and
ARC as set forth in the Transaction Documents shall continue to be true
and correct, and the Trustee shall have received the certificate of an
Authorized Officer of each of AmeriSource and ARC to the effect that
the representations and warranties continue to be true and correct.
(iv) Pursuant to Section 10.1(a) of the Purchase Agreement and
Section 13.01(a) of the Pooling Agreement, ARC shall have delivered
this Amendment to the Applicable Rating Agencies at least ten Business
Days (or such shorter time as shall be acceptable to each of them)
prior to the execution and delivery hereof and the Rating Agency
Condition shall have been met.
SECTION 2.02 Representations and Warranties. Each of AmeriSource and
ARC represents and warrants to the Trustee that:
page 5
<PAGE> 8
(a) The execution and delivery by it of this Amendment, and
the performance of its obligations under the Pooling Agreement and the
Purchase Agreement as modified by this Amendment, are within its
corporate powers, have been duly authorized by all necessary corporate
action, have received all necessary governmental approvals other than
Assignment of Claims Act filings (if any shall be required), and other
consents or approvals and do not and will not contravene or conflict
with, or create any Adverse Claim under, (i) any provision of law, (ii)
its constituent documents, (iii) any court or administrative decree
applicable to it or (iv) any contractual restriction binding upon it or
its property which conflict or adverse claim would have a substantial
likelihood of having Material Adverse Affect.
(b) This Amendment has been duly executed and delivered by it,
and the Pooling Agreement and the Purchase Agreement, as amended, are
its legal, valid and binding obligations, enforceable against it in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(c) The warranties made by it in the Pooling Agreement and the
Purchase Agreement are true and correct as of the date hereof as though
made on that date, except to the extent that the warranties
specifically relate to an earlier date.
(d) After giving effect to this Amendment, no Liquidation
Event or Unmatured Liquidation Event shall have occurred and be
continuing.
SECTION 2.03 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(a) it is a banking corporation organized, existing and in
good standing under the laws of the State of New York,
(b) it has full power, authority and right to execute, deliver
and perform this Amendment, and has taken all necessary action to
authorize the execution, delivery and performance by it of this
Amendment, and
(c) this Amendment has been duly executed and delivered by the
Trustee, and is a legal, valid and binding obligation of the Trustee,
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
page 6
<PAGE> 9
ARTICLE III
MISCELLANEOUS
SECTION 3.01 Miscellaneous. (a) THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
(b) This Amendment may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original, and all of which together shall
constitute one and the same agreement.
(c) Any reference to the Pooling Agreement or the Purchase Agreement
contained in any notice, request, certificate or other document executed
concurrently with or after the Effective Date shall be deemed to be a reference
to the Pooling Agreement or the Purchase Agreement as amended hereby. Except as
expressly modified hereby, the Transaction Documents hereby are ratified and
confirmed by the parties hereto. The amended Pooling Agreement, the amended
Purchase Agreement and the other Transaction Documents remain in full force and
effect.
page 7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this Amendment as of the day and year first above
written.
AMERISOURCE RECEIVABLES CORPORATION,
as transferor
By: ____________________________________________
Title: _________________________________________
Address: P.O. Box 1735
Southeastern, Pennsylvania 19399-1735
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
AMERISOURCE CORPORATION,
as initial Servicer
By: ____________________________________________
Title: _________________________________________
Address: 300 Chester Field Parkway
Malvern, Pennsylvania 19355
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By: ____________________________________________
Title: _________________________________________
Address: One M&T Plaza
Buffalo, New York 14203
Attention: Russell Whitley
Telephone: (716) 842-5602
Facsimile: (716) 842-4474
<PAGE> 1
EXHIBIT 2
<PAGE> 2
- --------------------------------------------------------------------------------
CERTIFICATE PURCHASE AGREEMENT
dated as of April 11, 1997
among
AMERISOURCE CORPORATION,
AMERISOURCE RECEIVABLES CORPORATION,
BT SECURITIES CORPORATION,
BANKERS TRUST INTERNATIONAL PLC,
and
BANKERS TRUST AUSTRALIA LIMITED
- --------------------------------------------------------------------------------
<PAGE> 3
AMERISOURCE RECEIVABLES CORPORATION
CERTIFICATE PURCHASE AGREEMENT
as of April 11, 1997
BT SECURITIES CORPORATION
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
BANKERS TRUST INTERNATIONAL PLC
One Appold Street
Broadgate
London EC2A 2HE
England
BANKERS TRUST AUSTRALIA LIMITED
c/o Bankers Trust International PLC
One Appold Street
Broadgate
London EC2A 4HE
England
Ladies and Gentlemen:
AmeriSource Corporation, a Delaware corporation ("AmeriSource"), and
AmeriSource Receivables Corporation, a Delaware corporation and a wholly owned
subsidiary of AmeriSource ("ARC"), hereby confirm their agreement with each of
you (each an "Initial Purchaser," and collectively the "Initial Purchasers"), as
set forth below.
SECTION 1. The Certificates. (a) Subject to the terms and conditions
herein contained, ARC proposes to sell to the Initial Purchasers, $90,000,000
aggregate principal amount of its Series 1997-1 Certificates (the
"Certificates"), as more fully described in Section 3. The terms of the
Certificates are more fully set forth in the Offering Memorandum (as hereinafter
defined).
(b) The Certificates are to be issued under (a) a Pooling and Servicing
Agreement, dated as of December 13, 1994 (as amended or otherwise modified from
time to time, the
<PAGE> 4
"Pooling Agreement"), among ARC, as transferor, AmeriSource, as initial
Servicer, and Manufacturers and Traders Trust Company, as Trustee, and (b) a
supplement to the Pooling Agreement, to be entered into on or about April 17,
1997 (the "Series Supplement"), among ARC, AmeriSource, as Servicer, and the
Trustee. Capitalized terms used but not defined in this Purchase Agreement (the
"Agreement") have the meanings assigned to them in Appendix A to the Pooling
Agreement.
(c) The Certificates will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933 and the rules and
regulations promulgated thereunder, as amended (the "Act"), in reliance on
exemptions therefrom.
(d) In connection with the sale of the Certificates, ARC has prepared a
preliminary offering memorandum dated March 14, 1997 (the "Preliminary Offering
Memorandum") and a final offering memorandum dated April 11, 1997 (the "Offering
Memorandum"), each of which will be in form and substance satisfactory to each
of the Initial Purchasers. All references to the Preliminary Offering Memorandum
or the Offering Memorandum shall be deemed to include all their attachments.
(e) Each of AmeriSource and ARC hereby expressly authorizes the Initial
Purchasers to use the Preliminary Offering Memorandum and the Offering
Memorandum, as they may at any time have been amended or supplemented, in
connection with the offer and sale of the Certificates. AmeriSource and ARC
hereby ratify and affirm all distributions of the Preliminary Offering
Memorandum by the Initial Purchasers prior to the date of this Agreement and
authorize the Initial Purchasers to distribute the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the initial resale of
the Certificates. Each of AmeriSource and ARC also hereby expressly authorizes
the Initial Purchasers to distribute (i) AmeriSource Health Corporation's 1996
Annual Report on Form 10K, (ii) AmeriSource Health Corporation's Quarterly
Report on Form 10Q for the quarter ending December 31, 1996 and (iii) any other
document filed by AmeriSource Health Corporation with the Securities and
Exchange Commission (the "Commission") after December 31, 1996, and (iv) copies
of the Transaction Documents and of opinions and other documents delivered in
connection with the execution of the Transaction Documents (collectively, the
"Additional Disclosure Documents") in connection with the sale of the
Certificates.
(f) Each of AmeriSource and ARC understands that the Initial Purchasers
propose to make an offering of the Certificates, as soon as they deem advisable
after this Agreement has been executed and delivered, on the terms and in the
manner set forth in the Offering Memorandum and Section 3 to Persons whom the
Initial Purchasers reasonably believe to be
-2-
<PAGE> 5
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A and to a limited number of other
institutional "accredited investors" ("Accredited Investors"), as defined in
Rule 501(a)(1), (2), (3) and (7) under Regulation D of the Act in private sales
exempt from registration under the Act, and outside the United States of America
to certain Persons in reliance upon Regulation S under the Act ("Regulation S").
SECTION 2. Representations and Warranties of AmeriSource and ARC.
AmeriSource and ARC represent and warrant, jointly and severally, to the Initial
Purchasers that:
(a) None of the Preliminary Offering Memorandum, the Offering
Memorandum or any amendment thereof or supplement thereto as of the respective
dates thereof, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
subsection do not apply to statements or omissions made in reliance upon and in
conformity with the information described in Section 12 and any other
information that is furnished to ARC in writing by the Initial Purchasers after
the date hereof expressly for use in any amendment or supplement to the Offering
Memorandum.
(b) The Certificates, the Transaction Documents and the businesses of
each of AmeriSource and ARC each conforms in all material respects to the
respective descriptions thereof contained in the Offering Memorandum.
(c) The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources that AmeriSource and ARC believe
to be reliable and accurate in all material respects. The information concerning
the Receivables that is included in the Offering Memorandum presents fairly in
all material respects the information purported to be stated therein. There has
been no material adverse change in the delinquency, dilution, loss and other
information with respect to the Receivables from that set forth in the Offering
Memorandum.
(d) Each of AmeriSource and ARC is a corporation duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has full power and authority to own its properties and to
conduct its business as the properties presently are owned and the business
presently is conducted. Each of AmeriSource and ARC had at all relevant times,
and now has, all necessary power, authority and legal right to acquire, own and
transfer, in the manner contemplated by the Transaction Documents, (i) in the
case of AmeriSource, the Receivables and the Related Assets and (ii) in the case
of ARC, the Receivables and the Related Transferred Assets.
-3-
<PAGE> 6
(e) Each of AmeriSource and ARC is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements),
and has obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business requires
qualification, licenses or approvals and where the failure so to qualify, to
obtain such licenses and approvals or to preserve and maintain the
qualification, licenses or approvals could have a Material Adverse Effect.
(f) ARC has all necessary power and authority to execute and deliver
the Certificates. Each Certificate has been duly and validly authorized by ARC
and, from and after the date on which such Certificate is executed by ARC and
authenticated by the Trustee in accordance with the terms of the Pooling
Agreement and the Series Supplement and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will be validly
issued and outstanding and will constitute a valid and legally binding
obligation of the Trust entitled to the benefits of the Pooling Agreement and
the Series Supplement and enforceable against the Trust in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law.
(g) Each of AmeriSource and ARC has (i) all necessary corporate power
and authority to (A) execute and deliver this Agreement and the Transaction
Documents to which it is a party, and (B) perform its obligations under this
Agreement and the Transaction Documents to which it is a party, and (ii) duly
authorized by all necessary corporate action the execution, delivery and
performance of this Agreement and the Transaction Documents to which it is a
party and the consummation of the transactions provided for in the Agreement and
the Transaction Documents to which it is a party.
(h) Each of the Transaction Documents to which AmeriSource or ARC, as
the case may be, is a party, when executed and delivered by it (and assuming the
due authorization, execution and delivery thereof by the other parties thereto),
will constitute its legal, valid and binding agreement, enforceable against it
in accordance with the terms thereof, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law.
(i) This Agreement has been duly and validly executed and delivered by
AmeriSource and by ARC.
(j) All authorizations, consents, orders and approvals of, or other
action by, any Governmental Authority that are required to be obtained by either
AmeriSource or ARC, and all notices to and filings with any Governmental
Authority that are required to be made by either AmeriSource or ARC, in the case
of each of the foregoing in connection with the due
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<PAGE> 7
execution, delivery and performance by AmeriSource and ARC of this Agreement and
the Transaction Documents to which they are a party and the consummation of the
transactions contemplated by this Agreement and the Transaction Documents to
which they are a party, have been obtained or made and are in full force and
effect except (i) filings under the Assignment of Claims Act or any analogous
state or local law, (ii) filings under any state "Blue Sky" laws and (iii) where
the failure to obtain or make any such authorization, consent, order, approval,
notice or filing, individually or in the aggregate for all such failures, would
not reasonably be expected to have a Material Adverse Effect.
(k) The execution, delivery and performance of, and the consummation of
the transactions contemplated by, this Agreement and the Transaction Documents
and the fulfillment of the terms hereof and thereof by each of AmeriSource and
ARC will not (i) conflict with, violate, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, (A) the certificate of incorporation or the by-laws of
AmeriSource or ARC, or (B) any indenture, loan agreement, mortgage, deed of
trust or other agreement or instrument to which AmeriSource or ARC is a party or
by which AmeriSource or ARC or any of their respective properties is bound, (ii)
result in the creation or imposition of any Adverse Claim (other than any
Permitted Adverse Claim or any Adverse Claim created in favor of ARC pursuant to
the Purchase Agreement or in favor of the Trustee pursuant to the Pooling
Agreement) upon any of the properties of AmeriSource or ARC, or (iii) conflict
with or violate any federal, state, local or foreign law or any decision,
decree, order, rule or regulation applicable to AmeriSource or ARC or any of
their respective properties of any Governmental Authority, which, in the case of
each of clauses (i)(B), (ii) and (iii), conflict, violation, breach, default or
Adverse Claim, individually or in the aggregate, would have a substantial
likelihood of having a Material Adverse Effect.
(l) The financial statements and schedules included in the Additional
Disclosure Documents (the "Financial Statements") present fairly in all material
respects the financial position, results of operations and cash flows of
AmeriSource at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, except as otherwise stated therein. Ernst & Young (the
"Independent Accountants") is an independent public accounting firm within the
meaning of the Act.
(m) Except as disclosed in the notes to the Financial Statements or in
the Preliminary Offering Memorandum, since the date of the Financial Statements,
(i) there has been no material adverse change in the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
AmeriSource or ARC, whether or not arising in the ordinary course of business,
and (ii) there have been no transactions entered into by AmeriSource or ARC that
are material with respect to AmeriSource or ARC and that would be required to be
disclosed under applicable law in connection with the offering, sale or resale
of the Certificates.
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<PAGE> 8
(n) (i) There is no action, suit, proceeding or investigation pending
or, to the knowledge of either AmeriSource or ARC, threatened against them
before any court, regulatory body, arbitrator, administrative agency or other
tribunal or governmental instrumentality, and (ii) neither AmeriSource nor ARC
is subject to any order, judgment, decree, injunction, stipulation or consent
order of or with any court or other Governmental Authority that, in the case of
each of clauses (i) and (ii), (A) asserts the invalidity of this Agreement or
the Transaction Documents, (B) seeks any determination or ruling that would
materially and adversely affect the performance by AmeriSource or ARC of its
obligations under this Agreement or any Transaction Document or the validity or
enforceability of this Agreement or any Transaction Document, (C) seeks to
affect adversely the income tax attributes of the transfers occurring pursuant
to the Purchase Agreement or the Pooling Agreement under the United States
Federal income tax system or any state income tax system or (D) except as
described in Schedule I, individually or in the aggregate for all such actions,
suits, proceedings and investigations would have a substantial likelihood of
having a Material Adverse Effect. For purposes of the foregoing, the "knowledge
of either AmeriSource or ARC" means the knowledge of Kurt J. Hilzinger, Michael
D. DiCandilo, Teresa Ciccotelli or any other executive officer of AmeriSource or
ARC.
(o) Neither this Agreement nor any transaction contemplated herein or
in the Offering Memorandum will result in a violation of, or give rise to an
obligation on the part of any purchaser to register, file or give notice under,
Regulations G, T, U or X of the Federal Reserve Board or any other regulation
issued by the Federal Reserve Board pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in each case as in effect on the Closing
Date.
(p) AmeriSource, ARC and the Trust are not, and are not controlled by,
an "investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(q) None of AmeriSource, ARC or any of their respective Affiliates (as
defined in Rule 501(b) of Regulation D under the Act) has directly, or through
any agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Act) that is or will
be integrated with the sale of the Certificates in a manner that would require
the registration under the Act of the offering of the Certificates or (ii)
assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 8, engaged in any form of general solicitation or general
advertising in connection with the offering of the Certificates (as those terms
are used in Regulation D under the Act) or in any manner involving a public
offering of the Certificates within the meaning of Section 4(2) of the Act.
(r) None of AmeriSource, ARC, any of their respective Affiliates or any
Person acting on their behalf has engaged in any directed selling efforts (as
that term is defined in Regulation
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<PAGE> 9
S) with respect to any Certificates, and AmeriSource, ARC and their respective
Affiliates or otherwise made offers or sales of securities under circumstances
that would require registration of the Certificates under the Act and any Person
acting on its or their behalf have complied with the offering restrictions
requirement of Regulation S.
(s) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 8, it is not necessary in connection with the
offer, sale and delivery of the Certificates in the manner contemplated by this
Agreement to register any of the Certificates under the Act or to qualify the
Pooling Agreement under the Trust Indenture Act of 1939, as amended.
(t) On the Closing Date, (i) each of the representations and warranties
of AmeriSource and ARC that is set forth in the Purchase Agreement, the Pooling
Agreement and the other Transaction Documents will be true and correct, subject
to any materiality standards contained therein and except such representations
and warranties that speak as of a particular date (which were true as of that
date), and (ii) subject to any materiality standards contained therein, neither
AmeriSource nor ARC will be in breach of any covenant or agreement set forth in
the Purchase Agreement, the Pooling Agreement or any other Transaction Document.
(u) No event (including without limitation the inclusion in the Trust
of receivables originated by the Pelham Division of Walker) has occurred and is
continuing that constitutes or gives rise to, or with the passage of time or the
giving of notice or both would constitute or give rise to, a Liquidation Event
or a Servicer Default.
(v) The Certificates meet the eligibility requirements of Rule
144A(d)(3) under the Act.
(w) Set forth on Schedule IV hereto is a list of each employee pension
or benefit plan with respect to which AmeriSource or AmeriSource Health
Corporation is a party in interest or disqualified person. The execution and
delivery of this Agreement, the other Transaction Documents and the sale of the
Certificates to be purchased by the Initial Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by AmeriSource in the preceding
sentence is made in reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by the Initial
Purchasers of Certificates as set forth in the Offering Memorandum under the
Section entitled "Notice to Investors."
(x) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all of the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
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<PAGE> 10
SECTION 3. Purchase, Sale and Delivery of the Certificates. On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, ARC agrees
to sell to the Initial Purchasers, and each Initial Purchaser agrees to
purchase, severally and not jointly, Certificates in the principal amount set
forth opposite the name of each Initial Purchaser on Schedule II at the purchase
price specified in Schedule II. The discount reflected in the purchase price
shall constitute compensation to each Initial Purchaser in addition to, and not
in substitution for, the other amounts referred to in Section 6 and any other
amount payable by AmeriSource or ARC to any Initial Purchaser or its affiliate
in connection with the transactions contemplated by the Transaction Documents
except that the discount will be credited against the success fee referred to in
Section 6(c) of this Agreement. The Certificates that each Initial Purchaser has
agreed to purchase in such denominations and registered in such name or names as
the Initial Purchasers shall designate two Business Days prior to the Closing
Date, shall be delivered to the holder against payment by or on behalf of the
Initial Purchasers of the purchase price therefor by wire transfer (same day
funds) to the account or accounts that ARC shall specify not less than one
Business Day prior to the Closing Date. The delivery of and payment for the
Certificates shall be made at the New York offices of Mayer, Brown & Platt, at
10:00 a.m., New York City time, on April 17, 1997 or at such other place, time
or date as the Initial Purchasers, AmeriSource and ARC may agree upon, such time
and date of delivery against payment being herein referred to as the "Closing
Date." ARC will make copies of the Certificates available for checking by the
Initial Purchasers at the offices in New York, New York of BT Securities
Corporation at least 24 hours prior to the Closing Date.
SECTION 4. Offering by the Initial Purchasers. (a) The Initial
Purchasers propose to make an offering of the Certificates, upon the terms set
forth in the Offering Memorandum, as soon as practicable after this Agreement is
entered into and as in their judgment is advisable. During the period from the
date of this Agreement until the Initial Purchasers have sold all of the
Certificates, ARC and AmeriSource agree to assist the Initial Purchasers in any
marketing of the Certificates and (promptly upon request) to provide all
information reasonably deemed necessary by the Initial Purchasers in such
marketing. In addition, during such period ARC and AmeriSource will use their
best efforts to make appropriate officers and representatives of ARC and
AmeriSource available to participate in the information meetings for potential
investors at such times and places as the Initial Purchasers may reasonably
request. Further, each of ARC and AmeriSource agrees, upon the request of an
Initial Purchaser, to use reasonable efforts to cause the Independent
Accountants to deliver to any potential purchaser of a Certificate an agreed
upon procedures letter comparable to the agreed upon procedures letter described
in Section 7(l).
SECTION 5. Covenants of AmeriSource and ARC. Each of AmeriSource and
ARC jointly and severally covenants and agrees with the Initial Purchasers that:
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<PAGE> 11
(a) Neither AmeriSource nor ARC will amend or supplement the Offering
Memorandum or any amendment thereof or supplement thereto unless each of the
Initial Purchasers previously shall have been advised thereof and been furnished
a copy thereof prior to the proposed amendment or supplement and shall not have
reasonably objected in writing within 5 business days after being furnished a
copy thereof. AmeriSource and ARC will, promptly upon the reasonable request by
any of the Initial Purchasers, prepare any amendments of or supplements to the
Offering Memorandum that, in the opinion of the Initial Purchaser, may be
necessary or advisable in connection with the resale of the Certificates by the
Initial Purchasers. During the period beginning on the date hereof and ending on
the earlier of (i) the date on which the Initial Purchasers shall have
transferred or sold the Certificates and (ii) 10 days after the Closing Date,
AmeriSource and ARC shall, to the extent practicable (taking into account the
disclosure requirements and restrictions imposed by applicable law), supply the
initial Purchasers drafts or duplicate copies of any reports required to be
filed by them with the Commission at least two Business Days prior to any such
filing, and in any event will supply such reports to the Initial Purchasers
concurrently with any such filing thereof; provided, that AmeriSource and ARC
shall not be required to supply such drafts or reports to the Initial Purchasers
if (x) such reports do not contain information that reflect circumstances that
would have a material adverse effect on the financial condition of AmeriSource
or ARC, taken as a whole, or (y) such reports do not contain information that,
taken as a whole, would cause the information disclosed in the Preliminary
Offering Memorandum, the Offering Memorandum or the Additional Disclosure
Documents to be materially incomplete or misleading; provided, further that the
Initial Purchasers agree that they shall in no event use or disclose such
reports or drafts or the information contained therein in a manner that could
violate any applicable laws.
(b) AmeriSource and ARC will take any action for the qualification or
exemption of the Certificates for offer, sale and resale under the securities or
"Blue Sky" laws of any jurisdictions that any of the Initial Purchasers shall
reasonably request and will pay all reasonable expenses (including reasonable
fees and disbursements of counsel) in connection with the qualification or
exemption and in connection with the determination of the eligibility of the
Certificates for investment under the laws of the jurisdictions that the Initial
Purchasers may designate, provided that in no event shall AmeriSource or ARC be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of process in
suits, other than arising out of the offering or sale of the Certificates, in
any jurisdiction where it is not now so subject. Thereafter, while any of the
Certificates remain outstanding, AmeriSource and ARC will arrange for the filing
and making of, and will pay all fees applicable to, any statements and reports
and renewals of registration necessary in order to continue to qualify or exempt
the Certificates for secondary market transactions in the various jurisdictions
in which the Certificates were originally registered or exempted for sale. If
any of the Initial Purchasers shall pay any of the fees or expenses referred to
in this subsection, AmeriSource and ARC shall promptly reimburse the Initial
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<PAGE> 12
Purchaser; it being understood and agreed that the reimbursement shall not be
subject to any limitations on reimbursement set forth in Section 6.
(c) If, at any time prior to the completion of the distribution of the
Certificates, any event occurs or condition exists as a result of which it is
necessary or desirable, in the opinion of the Initial Purchasers, AmeriSource or
ARC, to amend or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made or existing at the
time the Offering Memorandum is delivered to a prospective purchaser of any
legal or beneficial interest in the Certificates, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the Offering
Memorandum to comply with applicable law, AmeriSource and ARC will promptly
notify the Initial Purchasers thereof and will prepare and deliver to the
Initial Purchasers, at the expense of AmeriSource and ARC, an amendment of or
supplement to the Offering Memorandum that corrects the statement or omission or
effects such compliance.
(d) AmeriSource and ARC will, without charge, provide to the Initial
Purchasers as many copies of the Offering Memorandum and any amendment thereof
or supplement thereto as the Initial Purchasers may reasonably request.
(e) AmeriSource will, and will cause ARC to, apply the net proceeds
from the sale of the Certificates as set forth in the "Use of Proceeds" section
of the Offering Memorandum. Neither AmeriSource nor ARC will use the proceeds of
the sale of the Certificates or any part thereof, directly or indirectly, to
purchase or carry any "margin security" (as defined in Regulations G, T, U or X
issued by the Federal Reserve Board) or to reduce or retire any indebtedness
originally incurred to purchase any margin security.
(f) None of AmeriSource, ARC or any of their respective Subsidiaries or
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) that could be
integrated with the sale of the Certificates in a manner that would require the
registration of the Certificates under the Act.
(g) None of AmeriSource, ARC, any of their respective Subsidiaries or
Affiliates or any Person acting on its or their behalf will engage in any
directed selling efforts (as that term is defined in Regulation S) with respect
to any Certificates, and each of AmeriSource, ARC, any of their respective
Subsidiaries or Affiliates and any Person acting on its or their behalf will
comply with the offering restrictions requirement of Regulation S.
(h) AmeriSource and ARC will not, and will not permit any of their
respective Subsidiaries or Affiliates to, solicit any offer to buy or offer to
sell the Certificates by means of any form of general solicitation or general
advertising (as those terms are used in
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<PAGE> 13
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act.
(i) None of AmeriSource, ARC or any of their respective Subsidiaries or
Affiliates shall contact or solicit potential investors to purchase any
Certificate, engage any Person to assist in the placement or sale of the
Certificates or sell any Certificates to any Person, in the case of each of the
foregoing, other than the Initial Purchasers except as consented to by the
Initial Purchasers.
(j) So long as any of the Certificates are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, ARC shall, unless it becomes
subject to and complies with the reporting requirements of Section 13 or 15(d)
of the Exchange Act, provide to any holder of such restricted securities, or to
any prospective purchaser of such restricted securities designated by a Holder),
upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Act. This covenant is
intended to be for the benefit of the holders, and prospective purchasers
designated by such holders, from time to time of such restricted securities.
(k) AmeriSource and ARC will use their best efforts to (i) permit the
Certificates to be eligible for clearance and settlement through DTC, and (ii)
permit the Certificates to be eligible for clearance and settlement through
Cedel S.A. and the Euroclear System.
(l) Until all Obligations under the Certificates shall have been
finally and fully paid and performed, ARC shall deliver to the Initial
Purchasers each Settlement Statement (and, if requested by the Initial
Purchasers, each Daily Report) contemporaneously with the delivery thereof to
the Trustee pursuant to the Pooling Agreement.
(m) Neither ARC nor AmeriSource shall, nor shall they permit any of
their respective affiliates to, resell any Certificates that have been acquired
by any of them.
(n) During the period commencing on the date hereof and ending on the
issuance of the Certificates, AmeriSource and ARC shall not cause any other
borrowings or debt instruments or securities similar to the Certificates
(whether issued or guaranteed by AmeriSource or ARC) are either placed or
syndicated by AmeriSource, ARC or their Affiliates in the international or U.S.
capital markets, directly or on their behalf, in any manner which would in the
reasonable judgment of the Initial Purchasers have a detrimental effect on the
successful placement of the Certificates unless mutually agreed to in writing by
the Initial Purchasers, ARC and AmeriSource.
(o) None of AmeriSource, ARC, any of their respective Affiliates or
Subsidiaries, or any person acting on its or their behalf shall make offers or
sales of securities under circumstances that would require the registration of
the Certificates under the Act or permit
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<PAGE> 14
ARC or the Trust to become an "investment company" registered or required to be
registered under the Investment Company Act.
SECTION 6. Expenses; Fees. (a) Each of AmeriSource and ARC agrees,
jointly and severally, to pay all reasonable costs and expenses incident to the
purchase and initial resale of the Certificates by the Initial Purchasers and
the transactions contemplated by this Agreement and the Transaction Documents,
whether or not the transactions contemplated herein or therein are consummated
or this Agreement is terminated pursuant to Section 11, including (without
limitation) all costs and expenses incident to (i) the preparation, printing,
word processing or other production of documents with respect to such
transactions, including any costs in respect of the Transaction Documents, the
Preliminary Offering Memorandum and the Offering Memorandum and any amendment
thereof or supplement thereto, and any "Blue Sky" memorandum, (ii) all
arrangements relating to the delivery to the Initial Purchasers of copies of the
foregoing documents, (iii) the reasonable fees and disbursements of one firm of
attorneys retained by the Initial Purchasers, (iv) the reasonable fees and
expenses of outside tax, accounting and other consultants and advisors to the
Initial Purchasers, (v) travel expenses, out-of-pocket audit fees and expenses,
and other out-of-pocket fees and expenses of the Initial Purchasers, (vi) the
fees and disbursements of counsel, accountants and other consultants, experts
and advisors retained by AmeriSource or ARC, (vii) preparation, issuance and
delivery of the Certificates, (viii) trustee's fees and expenses, including
expenses of counsel retained by the Trustee, (ix) the qualification of the
Certificates under state securities and "Blue Sky" laws (including filing fees
and fees and disbursements of counsel for the Initial Purchasers relating
thereto), (x) expenses in connection with any meetings with prospective
investors in the Certificates, (xi) all expenses and fees incurred in connection
with the application for use of any clearing or similar system, quotation of the
Certificates on any market and (xii) fees charged by S&P, Duff & Phelps and any
other rating agencies and their counsel for the rating of the Certificates.
AmeriSource and ARC acknowledge that the Initial Purchasers are not responsible
for the fees, costs and expenses set forth in this subsection.
(b) AmeriSource and ARC further agree, jointly and severally, to pay or
reimburse, on a timely basis, the Initial Purchasers for all out-of-pocket fees,
costs and expenses incurred by them or a third party selected by them (which may
include an Affiliate of an Initial Purchaser) in connection with the conduct of
a due diligence examination of the Receivables and of the activities of
AmeriSource, its Subsidiaries and Affiliates with respect to the Receivables
whether or not the transactions contemplated herein are consummated. Each of
AmeriSource and ARC agrees that these fees may include (without limitation) fees
and expenses incurred in connection with time spent at the offices of
AmeriSource and Walker and in the preparation of a limited scope examination
report. Further, it is understood that the due diligence examination will not
preclude the need for the agreed upon procedures letters to be issued by Ernst &
Young and Arthur Andersen as is described in Section 7(n) in respect of
information contained in the Offering Memorandum.
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<PAGE> 15
(c) ARC shall pay to the Initial Purchasers a success fee, concurrently
with the issuance of the Certificates, equal to $400,000. The Initial Purchasers
are hereby authorized to deduct such fee from the proceeds of the Certificates
prior to the remittance of such proceeds to ARC.
(d) The amounts payable under each clause of this section shall be
cumulative, and payment of amounts referred to in one clause shall not reduce
amounts payable under another clause.
SECTION 7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase and pay for the Certificates
shall, in their sole discretion, be subject to the following conditions:
(a) AmeriSource shall, at or before the Closing Date, have fully
completed a statutory merger with Walker.
(b) The Trust shall have good and marketable title to the Receivables
and Related Security, free and clear of all Adverse Claims (other than Permitted
Adverse Claims).
(c) ARC shall have (i) caused all Uniform Commercial Code financing
statements required to perfect (A) the first priority ownership interest of ARC
in the Receivables and Related Security under the Purchase Agreement and (B) the
first priority ownership interest granted by ARC to the Trustee pursuant to the
Pooling Agreement in the Receivables and other Transferred Assets, in each case,
to be duly filed in the manner required by the laws of each appropriate
jurisdiction, and (ii) paid, or caused to be paid, all transfer taxes,
documentary stamp taxes and filing fees incurred in connection therewith.
(d) All corporate and other proceedings in connection with the
transactions contemplated herein and in the Transaction Documents and all
documents and certificates incident thereto shall be satisfactory in form and
substance to the Initial Purchasers and their counsel, and the Initial
Purchasers shall have received any other documents and certificates incident to
the transactions that any of the Initial Purchasers or their counsel shall
reasonably request. The Initial Purchasers or their counsel shall have received
on the Closing Date certified copies of all documents evidencing corporate
action taken by each of AmeriSource, ARC and the Trustee to approve the
execution and delivery of the Transaction Documents to which they are a party
and the consummation of the transactions contemplated hereby and thereby.
(e) The Transaction Documents and the Certificates shall conform in all
material respects to the descriptions thereof contained in the Offering
Memorandum. Immediately prior to the sale of the Certificates to the Initial
Purchasers, the Certificates shall have been executed by ARC and authenticated
by or on behalf of the Trustee, and each of the Pooling Agreement,
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<PAGE> 16
the Purchase Agreement, this Agreement, the Series Supplement and the other
Transaction Documents that are to be executed and delivered on or prior to the
Closing Date shall have been executed and delivered. The Initial Purchasers and
the Trustee shall have received on the Closing Date a fully executed counterpart
original and any required conformed copies of all Transaction Documents
delivered on or prior to the Closing Date, and the Trustee shall have received
the Certificates.
(f) The Initial Purchasers or their counsel shall have received on the
Closing Date signature and incumbency certificates executed by Authorized
Officers of AmeriSource, ARC and the Trustee certifying the identities and
signatures of those officers who executed each of the Transaction Documents to
which AmeriSource, ARC or the Trustee, as the case may be, is a party.
(g) Upon consummation of the transactions contemplated in the
Transaction Documents that are to occur on or prior to the Closing Date, ARC
shall have a net worth of not less than the amount required by the Pooling
Agreement as certified by the Chief Financial Officer, Treasurer or similar
Authorized Officer of ARC.
(h) The purchase of the Certificates by the Initial Purchasers shall be
permitted by the laws and regulations to which the Initial Purchasers are
subject.
(i) ARC shall have delivered on the Closing Date to the Initial
Purchasers or their counsel evidence of acceptance by Prentice-Hall Corporation
Systems, Inc. of its appointment by ARC and AmeriSource as agent for service of
process in New York.
(j) The Certificates shall have been rated "AAA" by S&P and Duff &
Phelps Credit Rating Co., Inc. ("Duff Phelps" and, together with S&P, the
"Rating Agencies"), the ratings shall be in full force and effect and the
Initial Purchasers shall have received on the Closing Date a letter from the
Rating Agencies dated on or before the Closing Date to such effect.
(k) Subsequent to the respective dates as of which information is given
in the Offering Memorandum, there shall not have occurred (i) any material
adverse change, or any development involving a prospective material adverse
change, in the condition (financial or otherwise) or in the earnings, business,
operations or business prospects of AmeriSource and its Subsidiaries and
Affiliates, taken as a whole, or of ARC, whether or not arising in the ordinary
course of business, (ii) any other event or occurrence that could have a
Material Adverse Effect, (iii) a suspension or material limitation in trading in
any securities issued by AmeriSource or any of its Affiliates, or in securities
generally, on any securities exchange or the establishment of minimum prices on
any such exchange, (iv) a general moratorium on commercial banking activities
declared by either Federal, Pennsylvania or New York State authorities, (v) any
downgrading in the rating accorded securities issued by AmeriSource or any of
its Affiliates by any "nationally recognized statistical rating organization,"
as that term
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<PAGE> 17
is defined for purposes of Rule 436(g) under the Act, or any public announcement
that any such organization has under surveillance or review its rating of any
debt securities of AmeriSource or its Affiliates (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of the rating), (vi) any outbreak or escalation of major
hostilities in which the United States of America is involved, any declaration
of war by Congress or any other substantial national or international calamity
or emergency that in the judgment of the Initial Purchasers makes it inadvisable
to proceed with the solicitation of offers to purchase Certificates, or (vii)
any material adverse change in financial, political or economic conditions that
in the judgment of the Initial Purchasers makes it inadvisable to purchase the
Certificates or to proceed with the solicitation of offers to purchase
Certificates.
(l) On the Closing Date, the Initial Purchasers shall have received
opinions, dated the Closing Date, addressed to the Initial Purchasers and
satisfactory to their counsel, of (i) Dechert Price & Rhoads, special counsel to
AmeriSource and ARC, (A) as to perfection of the Trustee's interest in the
Receivables and other Transferred Assets and other UCC matters, (B) as to "true
sale" and substantive consolidation, (C) as to corporate, securities and other
matters, (D) as to certain securities laws matters, and (E) such other matters
as were addressed in the opinions delivered by such firm in connection with the
issuance of the Series 1995-1 Certificates by the Trust, (ii) Hodgson, Russ,
Andrews, Woods & Goodyear, special counsel to the Trustee, as to certain matters
relating to the Trustee and (iii) such opinion letters, if any, as shall be
delivered to the Rating Agencies with respect to matters not addressed in
clauses (i) and (ii) above.
(m) On or before the Closing Date, the Initial Purchaser shall have
received letters from counsel for AmeriSource and ARC allowing the Initial
Purchasers to rely upon any opinions delivered in connection with the
acquisition by AmeriSource of Walker, the transaction merging AmeriSource and
Walker and the related amendment to the Transaction Documents, as if such
opinions were addressed to the Initial Purchasers.
(n) The Initial Purchasers shall have received from Ernst & Young and
Arthur Andersen agreed upon procedures letters with respect to the Offering
Memorandum dated the date hereof and the Closing Date, addressed to the Initial
Purchasers and in form and substance satisfactory to the Initial Purchasers and
their counsel.
(o) The Initial Purchasers shall have received an opinion from Mayer,
Brown & Platt, in form and substance satisfactory to the Initial Purchasers, as
to such matters that they require.
(p) The representations and warranties of each of AmeriSource and ARC
contained in this Agreement and in the Transaction Documents to which it is a
party shall be true and correct as of the date hereof and as of the Closing
Date; AmeriSource and ARC shall have
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<PAGE> 18
performed all covenants and agreements and satisfied all conditions on their
respective parts to be performed or satisfied hereunder and under the
Transaction Documents on or prior to the Closing Date; and no event shall have
occurred and no condition shall exist that would constitute a Liquidation Event
or a Servicer Default under the Pooling Agreement, either with or without notice
or lapse of time or both.
(q) Subsequent to the respective dates as of which information is given
in the Offering Memorandum, other than as contemplated by the Offering
Memorandum, none of AmeriSource and its Subsidiaries and Affiliates, taken as a
whole, or ARC shall have entered into any transactions that are material to the
business, condition (financial or otherwise) or results of operations or
business prospects of AmeriSource and its Subsidiaries and Affiliates, taken as
a whole, or ARC.
(r) The Initial Purchasers shall have received a certificate of each of
AmeriSource and ARC, dated the Closing Date, signed on behalf of AmeriSource and
ARC (as applicable) by its President or any Vice President and its Chief
Financial Officer, to the effect that:
(i) The representations and warranties of each of AmeriSource
and ARC contained in this Agreement and in the Transaction Documents to
which each is a party are true and correct as of the Closing Date as if
made on such date, subject to any materiality standards contained
therein and except such representations and warranties that speak as of
a particular date; subject to any materiality standards contained
therein, AmeriSource and ARC have performed all covenants and
agreements and satisfied all conditions on their respective parts to be
performed or satisfied hereunder and under the Transaction Documents on
or prior to the Closing Date; subsequent to the date of the Financial
Statements, there has been no material adverse change in the business,
condition (financial or otherwise) or results of operations or business
prospects of AmeriSource and its Subsidiaries and Affiliates, taken as
a whole, or ARC; and no event has occurred and no condition exists that
would constitute a Liquidation Event or a Servicer Default, either with
or without notice or lapse of time or both.
(ii) Upon consummation of the transactions contemplated in the
Transaction Documents that are to occur on or prior to the Closing
Date, ARC shall have a net worth of not less than the amount required
by the Pooling Agreement.
(iii) Subsequent to the respective dates as of which
information is given in the Offering Memorandum, there has not occurred
(A) any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise) or in the earnings, business, operations or business
prospects of AmeriSource and its Subsidiaries and Affiliates, taken as
a whole, or ARC, whether or not arising in the ordinary course of
business, or (B) any other event or occurrence that would have a
Material Adverse Effect.
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<PAGE> 19
(iv) Subsequent to the respective dates as of which
information is given in the Offering Memorandum, other than as
contemplated by the Offering Memorandum, none of AmeriSource and its
Subsidiaries and Affiliates, taken as a whole, or ARC has entered into
any transactions that are material and adverse to the business,
condition (financial or otherwise) or results of operations or business
prospects of AmeriSource and its Subsidiaries and Affiliates, taken as
a whole, or ARC.
(v) As of the Closing Date, neither the Offering Memorandum
nor any amendment thereof or supplement thereto, contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the certificate will not apply to statements or omissions made in
reliance upon and in conformity with the information described in
Section 12 and any other information that is furnished to ARC in
writing by the Initial Purchasers after the date hereof expressly for
use in any amendment or supplement to the Offering Memorandum.
(s) The Initial Purchasers shall have received confirmation, in the
case of Certificates of a Series represented by a Registered Book Entry
Certificate, that the Certificates have been accepted for clearance of secondary
market trading by The Depositary Trust Company, the Euroclear System and Cedel
S.A.
(t) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 9:00 a.m., New York City
time on April 17, 1997 or at such later date and time as you may approve in
writing.
(u) All conditions to the issuance of the Certificates in the Pooling
Agreement (including without limitation the delivery of a Tax Opinion and the
satisfaction of the Rating Agency Condition with respect to each outstanding
Series) shall have been satisfied, AmeriSource and ARC shall have delivered a
certificate to that effect to the Initial Purchasers, and all opinions delivered
in connection with the satisfaction of such conditions shall be addressed to the
Initial Purchasers.
AmeriSource and ARC shall furnish to the Initial Purchasers (x) such
other agreements, instruments, documents, opinions, certificates, letters and
schedules as the Initial Purchasers or their counsel reasonably may request and
(y) originals and conformed copies of all opinions, certificates, letters,
schedules, agreements, documents and instruments delivered pursuant to this
Agreement in the quantities that any of the Initial Purchasers shall reasonably
request.
SECTION 8. Offering of Certificates; Restrictions on Transfer; Listing.
Each of the Initial Purchasers represents and warrants to AmeriSource and ARC
that it is an Accredited Investor. Each of the Initial Purchasers represents and
warrants to AmeriSource and ARC that
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<PAGE> 20
it has not offered or sold, and will not offer or sell, any Certificates within
the United States except in accordance with Rule 903 of Regulation S or, in the
case of BT Securities Corporation, to Persons reasonably believed by them to be
Qualified Institutional Buyers in reliance on the exemption from registration
provided by Rule 144A and to a limited number of other institutional Accredited
Investors. Accordingly, each Initial Purchaser agrees that neither it, its
affiliates nor any Persons acting on its or their behalf have engaged or will
engage in any directed selling efforts with respect to the Certificates being
sold in reliance upon Regulation S. Each of the Initial Purchasers recognizes
its responsibility for compliance with applicable securities laws in connection
with its own activities undertaken in connection with the sale of the
Certificates. Each Initial Purchaser further represents and warrants that it has
not entered into and will not enter into any contractual arrangement with
respect to the distribution of the Certificates, except with its Affiliates or
with the prior written consent of ARC.
Each Initial Purchaser agrees that, at or prior to confirmation of sale
of the Certificates pursuant to Regulation S, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Certificates from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Certificates covered hereby have not been registered
under the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S under the Securities Act. Terms
used above have the means given to them by Regulation S."
Terms used in the preceding two paragraphs shall have the meanings
given to them by Regulation S.
Each Initial Purchaser represents and agrees that (A) it has not
offered or sold and will not offer or sell any Certificates in the United
Kingdom, by means of any document, other than to persons whose ordinary
activities involve them in acquiring, holding, managing and disposing of
investments (as principal or agent) for purposes of their businesses or
otherwise in circumstances which have not resulted and do not result in an offer
to the public in the United Kingdom within the meaning of the Financial Services
Act 1986 (Investment Advertisement) (Exemptions) Order 1996, as amended, (B) it
has complied and will comply with all applicable provisions of the Financial
Services Act of 1986 with respect to anything done by it in relation to the
Certificates in, from or otherwise involving the United Kingdom, and (C) it has
only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issue of the
Certificates if that person is of a kind described in Article 9(3) of the
Financial Services Act 1986
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<PAGE> 21
(Investment Advertisement) (Exemptions) Order 1988 or a person to whom the
document may otherwise lawfully be issued or passed on.
Each Initial Purchaser acknowledges that no action has been or will be
taken in any jurisdiction by ARC that would permit a public offering of the
Certificates, or possession or distribution of the Offering Circular or any
other offering material, in any country or jurisdiction where action for that
purpose is required. Each Initial Purchaser will comply with all applicable laws
and regulations in each jurisdiction in which it purchases, offers, sells or
delivers Certificates or has in its possession or distributes any Offering
Materials or any other offering material, in all cases at its own expense. Each
Initial Purchaser will obtain by consent, approval or permission required by it
for the acquisition, offer, sale or delivery by it of Certificates under the
laws and regulations in force in any jurisdiction in which it makes any such
acquisition, offer, sale or delivery.
SECTION 9. Indemnification and Contribution. (a) AmeriSource and ARC,
jointly and severally, agree to indemnify and hold harmless each of the Initial
Purchasers, their respective Affiliates, directors, officers, employees, agents,
representatives and each Person who controls any of the Initial Purchasers
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
against any losses, claims, damages or other liabilities, costs and expenses to
which any of the Initial Purchasers or any other indemnified party may become
subject, insofar as any losses, claims, damages or liabilities (or actions in
respect thereof) relate to, arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Preliminary Offering Memorandum, the
Offering Memorandum or any amendment of or supplement to any of the
foregoing, (B) any Additional Disclosure Document or (C) any
application or other document, or any amendment thereof or supplement
thereto, executed by AmeriSource or ARC or based upon written
information furnished by or on behalf of AmeriSource or ARC filed in
any jurisdiction in order to qualify the Certificates under the
securities or "Blue Sky" laws thereof or filed with any securities
association or securities exchange (each an "Application"), or
(ii) the omission or alleged omission to state, in any
Preliminary Offering Memorandum, the Offering Memorandum or any
amendment of or supplement to any of the foregoing, any Additional
Disclosure Document or any Application, a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and in each case will reimburse, as incurred, each indemnified party for any
legal or other out-of-pocket expenses incurred in connection with investigating,
defending against or appearing as a third-party witness in connection with any
loss, claim, damage, liability or action; provided, however, that AmeriSource
and ARC will not be liable in any case under clause (i)
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<PAGE> 22
or (ii) to the extent that any loss, claim, damage or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Offering Memorandum, the Offering
Memorandum or any amendment or supplement thereto, or any Application that, in
the case of each of the foregoing, is made in reliance upon and in conformity
with the information described in Section 12 or any other information that is
furnished to ARC in writing by the Initial Purchasers after the date hereof
expressly for use in any amendment or supplement to the Offering Memorandum;
provided, further, that the foregoing indemnity, insofar as it relates to the
Preliminary Offering Memorandum or any amendments or supplements thereto issued
prior to the Offering Memorandum, shall not inure to the benefit of the Initial
Purchasers or their respective employees, directors, agents, officers and
representatives or to any Person who controls an Initial Purchaser if the person
asserting the loss, claim, damage or liability which gives rise to such
indemnity (the "Underlying Claimant") purchased Certificates from an Initial
Purchaser and if a copy of the Offering Memorandum and any available amendments
or supplements thereto were not sent or given by such Initial Purchaser or on
such Initial Purchaser's behalf to such Underlying Claimant at or prior to the
written confirmation of the sale of Certificates to such Underlying Claimant
(unless such failure to so send or give the Offering Memorandum and/or such
amendments or supplements results from the failure of AmeriSource and ARC to
comply with Section 5(c)), and if the Offering Memorandum together with any then
available amendments or supplements thereto would have cured the defect giving
rise to such losses, claims, damages or liabilities.
AmeriSource and ARC shall not be liable under this section for any
settlement of any claim or action effected without their prior written consent,
which shall not be unreasonably withheld. AmeriSource and ARC shall not, without
the prior written consent of the Initial Purchasers, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought under this
section (whether or not the Initial Purchasers or any other indemnified party is
an actual or potential party to the claim, action, suit or proceeding) unless
the settlement, compromise or consent includes an unconditional release of the
Initial Purchasers and each other indemnified party described in this clause
from all liability arising out of the claim, action, suit or proceeding.
(b) Each Initial Purchaser will indemnify and hold harmless each of
AmeriSource, ARC, their directors, officers, employees, agents and
representatives and each Person who controls AmeriSource or ARC (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) against any
losses, claims, damages or liabilities to which AmeriSource, ARC or any other
indemnified party may become subject, insofar as the losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Preliminary Offering Memorandum, the Offering Memorandum or any amendment
thereof or supplement thereto, or any Application, or (ii) the omission or the
alleged omission to state therein a
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<PAGE> 23
material fact required to be stated in the Preliminary Offering Memorandum, the
Offering Memorandum or any amendment thereof or supplement thereto, or any
Application, necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with the information described in Section 12 and any other written
information concerning the Initial Purchaser that is furnished to AmeriSource or
ARC after the date hereof by the Initial Purchasers specifically for use in any
amendment or supplement to the Offering Memorandum; and, subject to the
limitation set forth immediately preceding this clause, each Initial Purchaser
will reimburse, as incurred, any legal or other expenses incurred by AmeriSource
or ARC or any other indemnified party in connection with investigating or
defending against or appearing as a third-party witness in connection with any
loss, claim, damage, liability or action in respect thereof. An Initial
Purchaser shall not be liable under this section for any settlement of any claim
or action effected without its prior written consent, which shall not be
unreasonably withheld. Notwithstanding any other provision of this subsection,
each Initial Purchaser's indemnification obligations shall be limited in amount
to the aggregate of total discounts, commissions and other compensation received
by it under this Agreement.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action or proceeding for which an
indemnified party is entitled to indemnification under this section, the
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this section, notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability under subsection (a) or (b) (as applicable)
unless and to the extent that the failure to notify results in the forfeiture by
the indemnifying party of substantial rights and defenses. If any action or
proceeding is brought that involves any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to the indemnified party;
provided, however, that if (i) such counsel shall have advised the indemnified
party that the rules of professional responsibility would preclude, under the
circumstances on the date of such determination, one firm of attorneys from
representing both the indemnified and the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after receipt by the indemnifying party of notice of the institution of the
action or proceeding, then, in each case, (A) the indemnifying party shall not
have the right to direct the defense of the action on behalf of the indemnified
party or parties, (B) the indemnified party or parties shall have the right to
select separate counsel to defend the action on behalf of the indemnified party
or parties and (C) all costs and expenses of each indemnified party in
connection with the action or proceeding shall be paid by the indemnifying party
pursuant to subsection (a) or (b) (as applicable). Notwithstanding the
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foregoing, in no event shall an indemnifying party, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all indemnified parties, together with any
necessary local counsel.
After notice from the indemnifying party to the indemnified party of
the indemnifying party's election so to assume the defense thereof and approval
by the indemnified party of counsel appointed to defend the action, the
indemnifying party will not be liable to the indemnified party under this
section for any legal or other expenses, other than reasonable legal and other
out-of-pocket costs of investigation, subsequently incurred by the indemnified
party in connection with the defense thereof, unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso at the end
of the immediately preceding paragraph or (ii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at the
expense of the indemnifying party. If the indemnifying party assumes the defense
of any action or proceeding, the indemnified party shall have the right to
employ separate counsel therein, and to participate in the defense thereof, but
the fees and expenses of its counsel shall be borne exclusively by the
indemnified party without any right or entitlement to reimbursement by an
indemnifying party or its Affiliates except as otherwise provided in the
preceding sentence and in the preceding paragraph.
(d) In circumstances in which the indemnity agreement provided for in
the preceding subsections is unavailable (other than by reason of the
application of one of the provisos to the first grammatical paragraph of Section
9(a)) or insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by the indemnified party as a
result of losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (i) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Certificates or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the indemnifying
party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in losses, claims, damages or liabilities (or actions in respect
thereof). It is the parties' intention that, to the maximum extent permitted by
applicable law, (A) the relative benefits received by AmeriSource and ARC on the
one hand and the Initial Purchasers on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (before deducting
expenses) received by or on behalf of ARC bear to the total discounts and
commissions received by the Initial Purchasers with respect to the offering, and
(B) the relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission
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<PAGE> 25
or alleged omission to state a material fact relates to information supplied by
AmeriSource or ARC on the one hand, or the Initial Purchasers on the other, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
AmeriSource, ARC and the Initial Purchasers agree that it would not be
equitable if the amount of contribution pursuant to this section were determined
by pro rata or per capita allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
preceding paragraph. Notwithstanding any other provision of this subsection, no
Initial Purchaser shall be obligated to make contributions hereunder that in the
aggregate exceed the total discounts, commissions and other compensation
received by it under this Agreement, less the aggregate amount of any damages
that it otherwise has been required to pay by reason of the untrue or alleged
untrue statements, or the omissions or alleged omissions to state, a material
fact. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. For purposes of this
subsection, each affiliate, director, officer, employee, agent and
representative of each of the Initial Purchasers and each Person who controls
any Initial Purchaser (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) shall have the same rights to contribution as the Initial
Purchasers, and each affiliate, director, officer, employee, agent and
representative of AmeriSource and ARC and each Person who controls AmeriSource
or ARC (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act), shall have the same rights to contribution as AmeriSource and
ARC.
SECTION 10. Survival; Scope of Liability. The respective
representations, warranties, agreements, covenants, indemnities and other
statements of AmeriSource, ARC, their respective officers and the Initial
Purchasers set forth in this Agreement or made by or on behalf of any of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (a) any investigation made by or on behalf of AmeriSource, ARC,
the Initial Purchasers or any of their respective officers or directors, or any
controlling Person referred to in Section 9 and (b) delivery of and payment for
the Certificates. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 9 shall remain in full force and effect
regardless of any termination or cancellation of this Agreement.
SECTION 11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchasers by notice to AmeriSource and ARC given
on or prior to the Closing Date in the event that AmeriSource or ARC shall have
failed, refused or been unable to perform all obligations and satisfy all
conditions on their respective parts to be performed or satisfied hereunder at
or prior thereto or if, on or prior to the Closing Date:
(i) there shall have been, in the sole judgment of the Initial
Purchasers, any material adverse change, or any development involving a
material adverse change, in
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<PAGE> 26
the business, condition (financial or otherwise) or results of
operations or business prospects of AmeriSource and its Subsidiaries
and Affiliates, taken as a whole, or ARC, except in each case as
described in or contemplated by the Offering Memorandum (exclusive of
any amendment or supplement thereto),
(ii) trading in any securities issued by AmeriSource or its
Affiliates, or in securities generally, on the New York Stock Exchange,
American Stock Exchange or NASDAQ National Market shall have been
suspended or minimum or maximum prices shall have been established on
any such exchange,
(iii) a banking moratorium shall have been declared by New
York, Pennsylvania or United States authorities, or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States of America and any foreign power,
or (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States of America or any other national
or international calamity or emergency, or (C) any material change in
the financial markets that, in the sole judgment of the Initial
Purchasers, makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Certificates as contemplated by the
Offering Memorandum.
Termination of this Agreement pursuant to this section (a) shall be
without liability of any party to any other party except that the Initial
Purchasers shall be entitled to any fees and expenses payable, in each case in
accordance with Section 6.
(b) If, on the closing date, any of the Initial Purchasers shall fail
or refuse to purchase Certificates that it has agreed to purchase hereunder on
such date and arrangements satisfactory to the non defaulting Initial Purchasers
and the Issuer for the purchase of the Certificates are not made within 36 hours
after such default, the Agreement shall terminate without liability on the part
of the non defaulting Initial Purchasers or the Issuer. In any such case, either
of the non defaulting Initial Purchasers or the Issuer shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Offering Memorandum or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Initial Purchaser from liability in respect of
any default of such Purchaser under this Agreement.
SECTION 12. Information Supplied by the Initial Purchasers. The
statements set forth in Schedule III (to the extent such statements relate to
the Initial Purchasers) constitute the only information furnished by the Initial
Purchasers to AmeriSource and ARC for purposes of inclusion in the Preliminary
Offering Memorandum, the supplements thereto and the Offering Memorandum.
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<PAGE> 27
SECTION 13. Notices. Unless otherwise provided herein, all notices
required under the terms and provisions hereof shall be in writing and either
delivered by hand, by mail or by facsimile, and any notice shall be effective
when received at the address or facsimile number (as applicable) specified
below:
If to ARC:
AmeriSource Receivables Corporation
300 Chester Field Parkway
Malvern, PA 19355
Attention: Kurt J. Hilzinger
Facsimile No.: (610) 993-9085
If to AmeriSource:
AmeriSource Corporation
300 Chester Field Parkway
Malvern, Pennsylvania 19355
Attention: Kurt J. Hilzinger
Facsimile No.: (610) 993-9085
If to the Initial Purchasers:
BT Securities Corporation
130 Liberty Street
New York, New York 10015
Attention: Sebastiano Riva
Facsimile No.: (212) 250-7590
with a copy to:
BT Securities Corporation
130 Liberty Street
New York, New York 10015
Attention: Salvatore Palazzolo
Facsimile No.: (212) 250-5063
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<PAGE> 28
Bankers Trust International PLC
One Appold Street
Broadgate
London EC2A 2HE
England
Attention: Paul Sennett
Facsimile No.: 011-44-171-982-5814
or at such other address or facsimile number as any party may designate from
time to time by notice duly given to the other parties in accordance with the
terms of this section.
SECTION 14. Successors; Joint or Several Obligations. (a) This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers, AmeriSource, ARC and their respective successors and legal
representatives. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any Person, other than the parties hereto, their
respective successors and the controlling Persons, Affiliates, directors,
officers, employees, agents and representatives referred to in Section 9 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the parties hereto, their respective
successors and said controlling Persons, Affiliates, directors, officers,
employees, agents and representatives and their heirs and legal representatives,
and for the benefit of no other Person. No purchaser of a beneficial interest in
the Certificates from any of the Initial Purchasers will be deemed a successor
because of such purchase.
(b) It is understood and agreed that (i) the obligations of AmeriSource
and ARC under this Agreement are joint and several obligations, and (ii) the
obligations of the Initial Purchasers under this Agreement are several but not
joint obligations.
SECTION 15. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which together shall constitute one and the same agreement.
SECTION 16. No Petition. Each of the Initial Purchasers covenant and
agree that, prior to the date that is one year and one day after the date on
which all Certificates are paid in full, it will not institute against, or join
any other Person in instituting against, ARC any insolvency proceeding (namely,
any proceeding of the type referred to in the definition of Event of Bankruptcy
in Appendix A to the Pooling Agreement). The foregoing shall not limit the right
of the Initial Purchasers to file any claim in or otherwise take any action with
respect to any such insolvency proceeding that was instituted against ARC by any
Person other than the Initial Purchasers.
-26-
<PAGE> 29
SECTION 17. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES.
SECTION 18. Submission to Jurisdiction. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND HEREBY (A) IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN THE STATE OR FEDERAL COURT, (B)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF THE ACTION OR PROCEEDING, AND (C)
IN THE CASE OF AMERISOURCE AND ARC, IRREVOCABLY APPOINTS THE PROCESS AGENT AS
ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY SERVICE OF COPIES OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS THAT MAY BE SERVED IN ANY ACTION OR
PROCEEDING. THE SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF THE
PROCESS TO AMERISOURCE OR ARC (AS APPLICABLE) IN CARE OF THE PROCESS AGENT AT
THE PROCESS AGENT'S ADDRESS, AND EACH OF AMERISOURCE AND ARC HEREBY IRREVOCABLY
AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT THE SERVICE ON ITS BEHALF. AS
AN ALTERNATIVE METHOD OF SERVICE, THE PARTIES ALSO IRREVOCABLY CONSENT TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY ACTION OR PROCEEDING BY THE MAILING OF
COPIES OF THE PROCESS TO THE PARTIES (AS APPLICABLE) AT THEIR ADDRESSES
SPECIFIED HEREIN. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY
HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OR ALL
OF THE OTHER PARTIES OR ANY OF THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 19. Amendments. This Agreement may be amended at any time upon
the written consent of each of the parties hereto.
SECTION 20. Severability of Provisions. If any one or more of the
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then the unenforceable agreements, provisions or
terms shall be deemed severable from the remaining agreements, provisions or
terms of this Agreement and shall in no way affect the validity or
enforceability of the other agreements, provisions or terms of this Agreement.
-27-
<PAGE> 30
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among AmeriSource,
ARC and the Initial Purchasers.
Very truly yours,
AMERISOURCE CORPORATION
By: ________________________________
Title: _____________________________
AMERISOURCE RECEIVABLES CORPORATION
By: ________________________________
Title: _____________________________
Accepted and agreed to April 11, 1997:
BT SECURITIES CORPORATION
By: ___________________________________
Authorized Signatory
BANKERS TRUST INTERNATIONAL PLC
By: ___________________________________
Authorized Signatory
BANKERS TRUST AUSTRALIA LIMITED
By: ___________________________________
Authorized Signatory
<PAGE> 31
SCHEDULE I
to Purchase Agreement
LITIGATION and OTHER PROCEEDINGS
Litigation described under "Special Considerations - Legal Proceedings" in the
Offering Memorandum.
<PAGE> 32
SCHEDULE II
to Purchase Agreement
<TABLE>
<CAPTION>
Principal Amount
Name of Initial of Class A Certificate
Purchaser to be Purchased Purchase Price
- --------------- ----------------------- --------------
<S> <C> <C>
BT Securities Corporation $33,000,000 $33,000,000
Bankers Trust International PLC $37,000,000 $37,000,000
Bankers Trust Australia Limited $20,000,000 $20,000,000
</TABLE>
<PAGE> 33
SCHEDULE III
to Purchase Agreement
Section 12 of the Purchase Agreement shall refer to the following
information in the Offering Memorandum:
The last two sentences of the first paragraph and second sentence of
the ninth paragraph under the heading PLAN OF DISTRIBUTION and the third
sentence under the heading SPECIAL CONSIDERATIONS--Limited Liquidity and
Restrictions on Transfer.
<PAGE> 34
SCHEDULE IV
to Purchase Agreement
<TABLE>
<S> <C> <C>
DEFINED BENEFIT PLANS
PLAN E.I.N. P.I.N.
AmeriSource Corporation Participating
Companies Pension Plan 23-2353106 001
AmeriSource Corporation Toledo Union
Employees Pension Plan 23-2353106 011
Walker Drug Company 401(k) Plan 63-0242624
DEFINED CONTRIBUTION PLANS
PLAN E.I.N. P.I.N.
AmeriSource Corporation Employee Investment Plan 23-2353106 010
AmeriSource Corporation Defined
Contribution Plan (frozen) 23-2353106 015
Rita-Ann Distributors, Inc. Pension Plan (frozen) 23-2353106 008
WELFARE BENEFIT PLANS
PLAN E.I.N. P.I.N.
AmeriSource Corporation Group Life Plan 23-2353106 620
AmeriSource Corporation Group Health Plan 23-2353106 625
AmeriSource Corporation Long Term Disability Plan 23-2353106 635
Walker Drug Company Employee Benefit
Plan and Trust 63-0242624
Walker Drug Company Group Term Life, Additional
Contribution Life Insurance, Accidental Death
and Dismemberment, Long Term Disability 63-0242624
Albers Drug Co. Life AD&D Plan 62-0111400
Albers Drug Co. Life and AD&D Thrift Plan 62-0111400
</TABLE>
<PAGE> 35
Albers Health Insurance Plan 62-0111400
Albers Inc. and Affiliates Flexible Benefits Plan 62-0111400
<PAGE> 1
EXHIBIT 3
<PAGE> 2
AMENDMENT
TO POOLING AND SERVICING AGREEMENT
AND
RECEIVABLES PURCHASE AGREEMENT
dated as of April 17, 1997
among
AMERISOURCE RECEIVABLES CORPORATION,
AMERISOURCE CORPORATION,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
<PAGE> 3
This AMENDMENT dated as of April 17, 1997 (this "Amendment") is made
among AMERISOURCE RECEIVABLES CORPORATION, a Delaware corporation, as transferor
("ARC"), AMERISOURCE CORPORATION, a Delaware corporation, as the initial
Servicer ("AmeriSource"), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New
York banking corporation, as Trustee (in that capacity, together with any
successor in that capacity, the "Trustee").
BACKGROUND
1. AmeriSource, ARC and the Trustee (together, the "Original Parties")
have entered into the Pooling and Servicing Agreement, dated as of December 13,
1994 and amended prior to the date hereof (as so amended, the "Pooling
Agreement"), pursuant to which they agreed to create certain Series and Classes
of Certificates; and AmeriSource and ARC have entered into the Receivables
Purchase Agreement, dated as of the same date and amended prior to the date
hereof (as so amended, the "Purchase Agreement"), pursuant to which AmeriSource
agreed to sell and contribute, and ARC agreed to purchase and receive, certain
Receivables.
2. AmeriSource and ARC wish to amend the Pooling Agreement and the
Purchase Agreement as provided herein, as the Trustee is willing to consent (by
its execution hereof) to such amendments subject to the conditions specified
herein.
NOW, THEREFORE, for good and valuable consideration (the receipt of
which is acknowledged) the parties agree as follows:
ARTICLE I
AMENDMENTS
SECTION 1.01 Definitions. Capitalized terms used but not otherwise
defined herein have the meanings set forth in Appendix A to the Pooling
Agreement.
SECTION 1.02 New Definitions. The following new defined terms are added
to Appendix A to the Pooling Agreement and the Purchase Agreement, each in the
proper alphabetical spot:
"Class A Benchmark Percentage" means, with respect to any Obligor, the
percentage set forth below for the category of Persons to which such Obligor
belongs:
(a) 19.8% for any Tier-1 Obligor;
<PAGE> 4
(b) 9.9% for (i) any Tier-2 Obligor or (ii) all
Receivables owing from any foreign Obligor, payment
of which is fully supported by a direct pay letter of
credit line is (A) issued by a domestic banking
institution rated at least "A" by the Applicable
Rating Agencies and (B) assigned to the Trustee;
(c) 6.6% for any Tier-3 Obligor;
(d) 4.95% for any Tier-4 Obligor; and
(e) 3.3% for any Tier-5 Obligor;
provided, that ARC may, by notice in any Settlement Statement (and after
satisfying the Rating Agency Condition) increase or decrease any Class A
Benchmark Percentage. Any change to a Class A Benchmark Percentage may result in
a corresponding change to the Class A Concentration Factor and hence in the
Minimum Required Reserve Ratio.
"Class A Multiplier" means, with respect to any Tier of Obligors set
forth below, the number set opposite such Tier:
<TABLE>
<CAPTION>
Tier Multiplier
---- ----------
<S> <C>
Tier-1 1
Tier-2 2
Tier-3 3
Tier-4 4
Tier-5 6
</TABLE>
"Class B Benchmark Percentage" means, with respect to any Obligor, the
percentage set forth below for the category of Persons to which such Obligor
belongs:
(a) 100% for any Tier-1 Obligor and any Federal Obligor;
(b) 100% for (i) any Tier-2 Obligor or (ii) all
Receivables owing from any foreign Obligor, payment
of which is fully supported by a direct pay letter of
credit that is (A) issued by a domestic banking
institution rated at least "A" by the Applicable
Rating Agencies and (B) assigned to the Trustee;
(c) 11% for any Tier-3 Obligor;
(d) 5.5% for any Tier-4 Obligor; and
(e) 3.66% for any Tier-5 Obligor;
page 2
<PAGE> 5
provided, that ARC may, by notice in any Settlement Statement (and after
satisfying the Rating Agency Condition) increase or decrease any Class B
Benchmark Percentage. Any change to a Class B Benchmark Percentage may result in
a corresponding change to the Class B Concentration Factor and hence in the
Minimum Required Reserve Ratio, as set forth in the definitions thereof.
"Class B Multiplier" means, with respect to any Tier of Obligors set
forth below, the number set opposite such Tier:
<TABLE>
<CAPTION>
Tier Number
---- ------
<S> <C>
3 1
4 2
5 3
</TABLE>
"Measured Class A Obligors" means, at any time:
(i) with respect to Tier-1 Obligors, the Tier-1 Obligor that
owes the highest amount of Eligible Receivables included in the Base
Amount, after giving effect to the proviso to the definition of Class A
Incremental Concentration Balance,
(ii) with respect to Tier-2 Obligors, the two Tier-2 Obligors
that owe the highest amount of Eligible Receivables included in the
Base Amount, after giving effect to the proviso to the definition of
Class A Incremental Concentration Balance,
(iii) with respect to Tier-3 Obligors, the three Tier-3
Obligors that owe the highest amount of Eligible Receivables included
in the Base Amount, after giving effect to the proviso to the
definition of Class A Incremental Concentration Balance,
(iv) with respect to Tier-4 Obligors, the four Tier-4 Obligors
that owe the highest amount of Eligible Receivables included in the
Base Amount, after giving effect to the proviso to the definition of
Class A Incremental Concentration Balance, and
(v) with respect to Tier-5 Obligors, the six Tier-5 Obligors
that owe the highest amount of Eligible Receivables included in the
Base Amount, after giving effect to the proviso to the definition of
Class A Incremental Concentration Balance.
"Measured Class B Obligors" means, at any time:
(i) with respect to Tier-3 Obligors, the Tier-3 Obligor that
owes the highest amount of Eligible Receivables included in the Base
Amount, after giving effect to the proviso to the definition of Excess
Concentration Balance;
page 3
<PAGE> 6
(ii) with respect to Tier-4 Obligors, the two Tier-4 Obligors
that owe the highest amount of Eligible Receivables included in the
Base Amount, after giving effect to the proviso to the definition of
Excess Concentration Balance; and
(iii) with respect to Tier-5 Obligors, the three Tier-5
Obligors that owe the highest amount of Eligible Receivables included
in the Base Amount, after giving effect to the proviso to the
definition of Excess Concentration Balance.
"Tier" means a category of Obligors, which category includes all Tier-1
Obligors, all Tier-2 Obligors, all Tier-3 Obligors, all Tier-4 Obligors, or all
Tier-5 Obligors, as the context shall indicate.
SECTION 1.03 Changes to Definitions. The definitions of "Class A
Concentration Factor", "Class A Incremental Concentration Balance", "Class B
Concentration Factor" and "Excess Concentration Balance", in Appendix A to the
Pooling Agreement and the Purchase Agreement, are amended and restated to read
as follows:
"Class A Concentration Factor" means, as of any Cut-Off Date, the
greatest of the results obtained by multiplying the Class A Benchmark Percentage
for each Tier by the Class A Multiplier for such Tier.
"Class A Incremental Concentration Balance" means, at any time, the
excess, if any, of (a) the sum of the amounts computed with respect to all
Obligors pursuant to the following sentence over (b) the sum of the Excess
Concentration Balances. The amount to be calculated for purposes of clause (a)
with respect to each Obligor (other than any Federal Obligor, for which such
amount shall be zero) on any day equals the amount of otherwise Eligible
Receivables due from the Obligor that, expressed as a percentage of the Adjusted
Eligible Receivables, exceeds the Class A Benchmark Percentage for the category
of Persons to which such Obligor belongs; provided that the percentage used to
calculate such excess for any Obligor in any Tier may be increased at any time
if there is a corresponding decrease in the percentage used to calculate such
excess for other Obligors in the same Tier so that the aggregate amount of
Eligible Receivables owed by the Measured Class A Obligors of any Tier
(expressed as a percentage of Adjusted Eligible Receivables) shall not exceed
the product of the Class A Benchmark Percentage for such Tier times the Class A
Multiplier for such Tier.
"Class B Concentration Factor" means, as of any Cut-Off Date, the
greatest of the results obtained by multiplying the Class B Benchmark Percentage
for Tier-3 Obligors, Tier- 4 Obligors or Tier-5 Obligors by the Class B
Multiplier for such Tier.
"Excess Concentration Balance" means, for any Obligor, the aggregate
outstanding balances of Eligible Receivables it owes that, expressed as a
percentage of Adjusted Eligible Receivables, exceeds the Class B Benchmark
Percentage for the category of Persons to which such Obligor belongs; provided
that the percentage used to calculate such excess for any Obligor in a Tier may
be increased at any time if there is a corresponding decrease in the
page 4
<PAGE> 7
percentage used to calculate such excess for other Obligors in the same Tier so
that the aggregate amount of Eligible Receivables owed by the Measured Class B
Obligors of any Tier (expressed as a percentage of Adjusted Eligible
Receivables) shall not exceed the product of the Class B Benchmark Percentage
for such Tier times the Class B Multiplier for such Tier.
SECTION 1.04 Changes to Purchase Agreement. (a) Clause (c) of Section
3.3 of the Purchase Agreement is amended in its entirety to read as follows:
(c) third, in such order as ARC may elect, (A) to
repay amounts owed by ARC to the Seller under the ARC Note
provided, however, that no Liquidation Event or Unmatured
Liquidation Event has occurred, (B) to pay amounts owed
pursuant to Section 3.1(f), (C) to declare and pay dividends
to the Seller to the extent permitted by law, so long as ARC
shall be in compliance with Section 7.02(o) of the Pooling
Agreement after giving effect to the dividends, or (D) to
invest in Eligible Investments, provided that any such
Eligible Investment shall have been liquidated within five
Business Days and applied by ARC to one of the other purposes
specified in this clause third.
(b) Clause (h) of Section 6.3 of the Purchase Agreement requiring the
Seller to account for the transactions contemplated by the Purchase Agreement as
a sale of the Purchased Assets by Seller to ARC is deleted in its entirety.
ARTICLE II
CONDITIONS, REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Conditions Precedent. This Amendment shall be effective
from and after the later of (a) April 17, 1997 or (b) the date upon which all of
the conditions precedent specified below have been satisfied (the "Effective
Date"). The conditions precedent are:
(i) The Trustee shall have received from each of AmeriSource
and ARC a certificate, dated as of the date hereof, of an Authorized
Officer as to:
(A) resolutions of its board of directors then in
full force and effect authorizing the execution, delivery and
performance of this Amendment,
(B) the incumbency and signature of those of its
officers authorized to act with respect to this Amendment,
upon which certificate the Trustee may conclusively rely.
page 5
<PAGE> 8
(ii) The Trustee shall have received an opinion of counsel to
AmeriSource and ARC that the modifications to the Pooling Agreement and
the Purchase Agreement made pursuant to this Amendment are legal, valid
and binding upon each of AmeriSource and ARC and that such amendments
are permitted under the terms of the Pooling Agreement and the Purchase
Agreement.
(iii) The representations and warranties of AmeriSource and
ARC as set forth in the Transaction Documents shall continue to be true
and correct, and the Trustee shall have received the certificate of an
Authorized Officer of each of AmeriSource and ARC to the effect that
the representations and warranties continue to be true and correct.
(iv) Pursuant to Section 10.1(a) of the Purchase Agreement and
Section 13.01(a) of the Pooling Agreement, ARC shall have delivered
this Amendment to the Applicable Rating Agencies at least ten Business
Days (or such shorter time as shall be acceptable to each of them)
prior to the execution and delivery hereof and the Rating Agency
Condition shall have been met.
SECTION 2.02 Representations and Warranties. Each of AmeriSource and
ARC represents and warrants to the Trustee that:
(a) The execution and delivery by it of this Amendment, and
the performance of its obligations under the Pooling Agreement and the
Purchase Agreement as modified by this Amendment, are within its
corporate powers, have been duly authorized by all necessary corporate
action, have received all necessary governmental approvals other than
Assignment of Claims Act filings (if any shall be required), and other
consents or approvals and do not and will not contravene or conflict
with, or create any Adverse Claim under, (i) any provision of law, (ii)
its constituent documents, (iii) any court or administrative decree
applicable to it or (iv) any contractual restriction binding upon it or
its property which conflict or adverse claim would have a substantial
likelihood of having Material Adverse Affect.
(b) This Amendment has been duly executed and delivered by it,
and the Pooling Agreement and the Purchase Agreement, as amended, are
its legal, valid and binding obligations, enforceable against it in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(c) The warranties made by it in the Pooling Agreement and the
Purchase Agreement are true and correct as of the date hereof as though
made on that date, except to the extent that the warranties
specifically relate to an earlier date.
page 6
<PAGE> 9
(d) After giving effect to this Amendment, no Liquidation
Event or Unmatured Liquidation Event shall have occurred and be
continuing.
SECTION 2.03 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(a) it is a banking corporation organized, existing and in
good standing under the laws of the State of New York,
(b) it has full power, authority and right to execute, deliver
and perform this Amendment, and has taken all necessary action to
authorize the execution, delivery and performance by it of this
Amendment, and
(c) this Amendment has been duly executed and delivered by the
Trustee, and is a legal, valid and binding obligation of the Trustee,
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01 Miscellaneous. (a) THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
(b) This Amendment may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original, and all of which together shall
constitute one and the same agreement.
(c) Any reference to the Pooling Agreement or the Purchase Agreement
contained in any notice, request, certificate or other document executed
concurrently with or after the Effective Date shall be deemed to be a reference
to the Pooling Agreement or the Purchase Agreement as amended hereby. Except as
expressly modified hereby, the Transaction Documents hereby are ratified and
confirmed by the parties hereto. The amended Pooling Agreement, the amended
Purchase Agreement and the other Transaction Documents remain in full force and
effect.
page 7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this Amendment as of the day and year first above
written.
AMERISOURCE RECEIVABLES CORPORATION,
as transferor
By:
---------------------------------------------
Title:
----------------------------------------
Address: P.O. Box 1735
Southeastern, Pennsylvania 19399-1735
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
AMERISOURCE CORPORATION,
as initial Servicer
By:
---------------------------------------------
Title:
----------------------------------------
Address: 300 Chester Field Parkway
Malvern, Pennsylvania 19355
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
The Trustee joins in this Amendment
for purposes of evidencing its
consent thereto.
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
---------------------------------------------
Title:
----------------------------------------
Address: One M&T Plaza
Buffalo, New York 14203
Attention: Russell Whitley
Telephone: (716) 842-5602
Facsimile: (716) 842-4474
page 8
<PAGE> 1
EXHIBIT 4
<PAGE> 2
SERIES 1997-1 SUPPLEMENT
TO POOLING AND SERVICING AGREEMENT
dated as of April 17, 1997
among
AMERISOURCE RECEIVABLES CORPORATION,
as Transferor,
AMERISOURCE CORPORATION,
as initial Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
AMERISOURCE RECEIVABLES MASTER TRUST
$90,000,000 SERIES 1997-1 CERTIFICATES
<PAGE> 3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; INCORPORATION OF TERMS
OF POOLING AGREEMENT
<TABLE>
<S> <C>
SECTION 1.01 Definitions............................................................ 1
SECTION 1.02 Incorporation of Terms and Conditions of the Pooling Agreement......... 4
ARTICLE II
DESIGNATION; TRANSFER RESTRICTIONS
SECTION 2.01 Designation............................................................ 4
SECTION 2.02 Form of Certificates................................................... 4
SECTION 2.03 Restrictions on Transfer............................................... 5
ARTICLE III
CONDITIONS TO ISSUANCE OF CERTIFICATES
SECTION 3.01 Conditions to Issuance................................................. 7
ARTICLE IV
PAYMENTS
SECTION 4.01 Payments............................................................... 7
SECTION 4.02 Interest............................................................... 7
SECTION 4.03 Principal Payments..................................................... 7
SECTION 4.04 Optional Prepayment; Certain Liquidation Events........................ 8
SECTION 4.05 Application of Payments................................................ 8
ARTICLE V
PAY-OUT EVENTS
SECTION 5.01 Pay-Out Events......................................................... 9
ARTICLE VI
OPTIONAL REPURCHASE OF INVESTOR INTERESTS
SECTION 6.01 Optional Repurchase of Investor Interests.............................. 9
</TABLE>
<PAGE> 4
ARTICLE VII
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 7.01 Governing Law.......................................................... 10
SECTION 7.02 Counterparts........................................................... 10
SECTION 7.03 Severability of Provisions............................................. 10
SECTION 7.04 Amendment, Waiver, Etc................................................. 10
SECTION 7.05 The Trustee............................................................ 11
SECTION 7.06 Instructions in Writing................................................ 11
SECTION 7.07 Certificate to Applicable Rating Agencies.............................. 11
SECTION 7.08 Duff & Phelps.......................................................... 11
SECTION 7.09 Rule 144A.............................................................. 12
SECTION 7.10 ERISA.................................................................. 13
SECTION 7.11 Monthly Reports to Certificateholders.................................. 13
</TABLE>
EXHIBITS
EXHIBIT A Form of Series 1997-1 Certificate
<PAGE> 5
This SERIES 1997-1 SUPPLEMENT, dated as of April 17, 1997 (this
"Supplement"), is made among AMERISOURCE RECEIVABLES CORPORATION, a Delaware
corporation, as transferor ("ARC"), AMERISOURCE CORPORATION, a Delaware
corporation, as the initial Servicer (in that capacity, together with any
successor in that capacity, the "Servicer"), and MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation, as Trustee (in that capacity, together
with any successor in that capacity, the "Trustee").
Pursuant to the Pooling and Servicing Agreement, dated as of December
13, 1994, (as it may be amended, supplemented or otherwise modified from time to
time, and as supplemented hereby, the "Pooling Agreement"), among ARC, the
Servicer and the Trustee, ARC may from time to time direct the Trustee to issue,
on behalf of the Trust, one or more Series of Investor Certificates representing
undivided interests in the Trust. Certain terms applicable to a Series are to be
set forth in a Supplement. This Supplement is a Supplement as such is defined in
the Pooling Agreement.
Pursuant to this Supplement, ARC and the Trustee shall create a Series
of Fixed Principal Certificates and specify certain of their terms.
ARTICLE I
DEFINITIONS; INCORPORATION OF TERMS
OF POOLING AGREEMENT
SECTION 1.01 Definitions. (a) Except as otherwise defined herein,
capitalized terms have the meanings that Appendix A to the Pooling Agreement
assigns to them, and this Supplement shall be interpreted in accordance with the
conventions set forth in Parts B, C and D of that Appendix A.
(b) Each capitalized term defined herein relates only to the Series
1997-1 Certificates and to no other Series of Certificates issued by the Trust.
Whenever used in this Supplement, the following words and phrases shall have the
following meanings:
"Accumulation Commencement Date" means the first day of the December
2001 Calculation Period.
"Benefit Plan" means a pension, profit sharing or other employee
benefit plan subject to ERISA or the Code.
"Book-Entry Series 1997-1 Certificates" is defined in Section 2.02(b)
of this Supplement.
page 1
<PAGE> 6
"Cede" means Cede & Co.
"CEDEL" means CEDEL, societe anonyme.
"Code" means the Internal Revenue Code of 1986, as amended.
"DTC" means The Depository Trust Company.
"Eligible Institution" means a bank that: (a) has a long-term debt
rating of at least "A-1+" or "AAA" by S&P and, if rated by them, a comparable
rating from Duff & Phelps, or (b) otherwise is approved by the Applicable Rating
Agencies.
"Expected Final Payment Date" means the Scheduled Principal Payment
Date.
"First Principal Payment Date" means the earliest to occur of (i) if
the Pay-Out Period for the Series 1997-1 Certificates has commenced due to the
occurrence of a Pay-Out Event, the first Distribution Date occurring after the
Calculation Period in which such Pay-Out Event occurs, (ii) the first
Distribution Date occurring after the commencement of the Liquidation Period,
and (iii) the Scheduled Principal Payment Date.
"Institutional Accredited Investor" has the meaning given to an
institutional "accredited investor" within Rule 5.01(a)(1), (2), (3) or (7) of
the Securities Act.
"Interest Period" means (a) the period from the Closing Date to the
first Distribution Date falling after the Closing Date (b) thereafter, each
period from one Distribution Date to the next Distribution Date.
"Issuance Date" means the date on which the Series 1997-1 Certificates
are issued and authenticated by the Trustee.
"LIBOR" means, with respect to any Distribution Date, the rate per
annum for deposits in Dollars having a one-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m., London time, two London Business Days prior
to that Distribution Date (as determined by the Trustee and promptly notified to
the Servicer). For purposes of the foregoing, "Telerate Page 3750" means the
display page so designated on the Dow Jones Telerate Service (or such other
pages as may replace that page on that service or such other service or services
as may be nominated by the British Banker's Association for the purpose of
displaying London interbank offered rates for Dollar deposits), and "London
Business Day" means a day upon which dealings in deposits in Dollars are
transacted in the London interbank market. Notwithstanding the foregoing, in the
event that no rate for one-month Dollar deposits appears on Telerate Page 3750
on the applicable date for determining LIBOR with respect to any Distribution
Date, then LIBOR shall be determined as the arithmetic mean (rounded upwards
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<PAGE> 7
to the next highest 1/16th of 1%) of the rates at which one-month Dollar
deposits are offered to prime banks in the London interbank market by four major
banks in that market selected by the Trustee as of the determination date and
time specified above. If fewer than two quotations are provided by such banks,
then LIBOR shall be determined as the arithmetic mean (rounded upwards as above)
of the rates at which one-month loans in Dollars are offered to leading European
banks by three major banks in New York City selected by the Trustee as of 11:00
a.m. New York City time on the determination date specified above.
"Pay-Out Event" is defined in Section 5.01 of this Supplement.
"Pay-Out Period Commencement Date" means, with respect to the Series
1997-1 Certificates (and notwithstanding the definition of this term in the
Pooling Agreement) the earlier to occur of the Accumulation Commencement Date
and the date on which a Pay-Out Event occurs.
"Qualified Institutional Buyer" has the meaning specified in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale Date" means, with respect to the Series 1997-1 Certificates, the
December, 2002 Distribution Date.
"Scheduled Final Payment Date" means, for the Series 1997-1
Certificates, the Sale Date for such Certificates.
"Scheduled Principal Payment Date" means for the Series 1997-1
Certificates, the March, 2002 Distribution Date.
"Series 1997-1 Certificate Rate" means, with respect to the interest
payment to be made on any Distribution Date, LIBOR for the preceding
Distribution Date plus 0.20% per annum, calculated on the basis of a 360-day
year and the number of days in the Interest Period ending on that Distribution
Date.
"Series 1997-1 Certificates" means any one of the Class of floating
rate and Fixed Principal Certificates executed by ARC and authenticated by or on
behalf of the Trustee that is substantially in the form of Exhibit A and is
issued pursuant to this Supplement.
"Series 1997-1 Initial Invested Amount" means $90,000,000.
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"Series 1997-1 Invested Amount" means, at any time, the Series 1997-1
Initial Invested Amount reduced (but not below zero) by (a) the aggregate amount
of all distributions that have been made to the Holders of Series 1997-1
Certificates on account of the principal of the Series 1997-1 Certificates, (b)
the amount of all Investor Allocable Charged-Off Amounts that have been
allocated to Series 1997-1 Certificates (net of Investor Net Recoveries that
have been allocated to Series 1997-1 Certificates) and (c) the amount of funds
on deposit in the Defeasance Account with respect to Series 1997-1 Certificates.
SECTION 1.02 Incorporation of Terms and Conditions of the Pooling
Agreement. This Supplement hereby incorporates by reference the terms and
provisions of the Pooling Agreement as if they were set forth in full herein. As
supplemented by this Supplement, the Pooling Agreement is hereby in all respects
ratified and confirmed and both together shall be read, taken and construed as
one and the same agreement. In the event of any conflict or inconsistency
between the terms of this Supplement and the terms of the Pooling Agreement as
the terms apply to any of the Series 1997-1 Certificates, the terms of this
Supplement shall control with respect to the Series 1997-1 Certificates.
ARTICLE II
DESIGNATION; TRANSFER RESTRICTIONS
SECTION 2.01 Designation. There is hereby created a series of Fixed
Principal Certificates to be issued pursuant to the Pooling Agreement and this
Supplement to be known as "Series 1997-1 Certificates." Subject to the
conditions set forth in Article III, the Trustee shall authenticate and deliver
the Series 1997-1 Certificates, to or upon the order of ARC, in an aggregate
principal amount equal to the Series 1997-1 Initial Invested Amount. The Series
1997-1 Certificates shall be authenticated and delivered in the manner and at
the times for authentication and delivery of Fixed Principal Certificates that
are specified in Article VI of the Pooling Agreement. The Series 1997-1
Certificates are a Senior Class. Notwithstanding the terms of Section 6.01 of
the Pooling Agreement, the Series 1997-1 Certificates shall be in minimum
denominations of $100,000 and in integral multiples thereof.
SECTION 2.02 Form of Certificates. (a) Series 1997-1 Certificates sold
in reliance on Rule 144A will be represented by permanent 144A Book-Entry
Certificates in registered form without interest coupons, which will be
deposited with the Trustee on behalf of DTC and registered in the name of Cede
as nominee for DTC.
(b) Until the 40th day following the later of the commencement of the
offering of the Series 1997-1 Certificates and the Issuance Date, Series 1997-1
Certificates sold in offshore transactions in reliance on Regulation S under the
Securities Act will be represented by a Regulation S Temporary Book-Entry
Certificate in definitive, fully registered form
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<PAGE> 9
without interest coupons, which will be deposited with the Trustee on behalf of
DTC and registered in the name of Cede as nominee for DTC. Transfers of
interests in the Regulation S Temporary Book-Entry Certificate only may be made
through Euroclear and CEDEL. At the end of such 40-day period, holders of
interests in the Regulation S Temporary Book-Entry Certificate will be required
to make certain certifications described in Section 6.12 of the Pooling
Agreement in order to exchange their interests in the Regulation S Temporary
Book-Entry Certificates for interests in Unrestricted Book-Entry Certificates,
which shall be in registered form without interest coupons, and which will be
deposited upon the order of ARC with the Trustee on behalf of DTC and registered
in the name of Cede as nominee for DTC. Beneficial interests in the 144A
Book-Entry Certificates, the Regulation S Temporary Book-Entry Certificates and
the Unrestricted Book-Entry Certificates (collectively, the "Book-Entry Series
1997-1 Certificates") will be shown on, and transfers thereof will be effected
only through, records maintained by DTC and its direct and indirect
participants, including Euroclear and CEDEL. After the initial issuance of such
Book-Entry Series 1997-1 Certificates, Series 1997-1 Certificates in
certificated form will be issued in exchange for the Book-Entry Series 1997-1
Certificates only as set forth in the Pooling Agreement.
(c) Series 1997-1 Certificates sold to Institutional Accredited
Investors (other than pursuant to Rule 144A or Regulation S) will be in
registered form without coupons. Such Certificates will initially be registered
in the name of Cede as nominee for DTC and deposited with the Trustee on behalf
of DTC. Beneficial owners of such Certificates, however, may request
registration of such Certificates in their names or the names of their nominees.
SECTION 2.03 Restrictions on Transfer (a) The Series 1997-1
Certificates have not been and will not be registered under the Securities Act
and may not be offered or sold in the United States or to or for the account of
any U.S. person (as such terms are defined in Regulation S) except in a
transaction that is exempt from or not subject to the registration requirements
of the Securities Act. Accordingly, each Series 1997-1 Certificateholder whose
interest is represented by a global certificate will be deemed to have
represented that it is purchasing the Certificates for its own account or for an
account with respect to which it exercises sole investment discretion and that
it or such account is (a) a Qualified Institutional Buyer aware that the sale is
being made to it in reliance on Rule 144A, (b) an Institutional Accredited
Investor or (c) a foreign purchaser that is outside the United States for
purposes of Regulation S.
(b) Each purchaser of Series 1997-1 Certificates will be deemed to have
acknowledged and agreed as follows (terms used in this paragraph that are
defined in Rule 144A or Regulation S are used herein as defined therein):
(i) The purchaser (x) is (A) a Qualified Institutional Buyer,
(B) aware that the sale to it is being made in reliance on Rule 144A
and (C) acquiring such Series 1997-1 Certificates for its own account
or for the account of a Qualified Institutional Buyer,
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<PAGE> 10
(y) is a person who is acquiring the Series 1997-1 Certificates in an
offshore transaction in accordance with Rule 903 of Regulation S under
the Securities Act or (z) is an Institutional Accredited Investor that
is, concurrently with its purchase, executing and delivering a letter
in the form required by the private placement memorandum for the Series
1997-1 Certificates.
(ii) In the case of a purchaser to whom a sale is made
pursuant to Rule 144A, it understands that such Series 1997-1
Certificate has not been and will not be registered under the
Securities Act, and that (x) if in the future it decides to resell,
pledge or otherwise transfer such Series 1997-1 Certificate, such
Series 1997-1 Certificate may be resold, pledged or transferred without
registration only (A) to a person whom the seller reasonably believes
is a Qualified Institutional Buyer in a transaction meeting the
requirements under Rule 144A, (B) to certain non-U.S. persons outside
the United States in accordance with Rule 904 of Regulation S, (C) to
ARC, or (D) pursuant to an effective registration statement under the
Securities Act, and in the case of each of the foregoing clauses (A)
through (D) in accordance with any applicable securities laws of any
State of the United States or any applicable jurisdictions and (y) it
will, and each subsequent holder will be required to, notify any
purchaser of any Series 1997-1 Certificate from it of the resale
restrictions referred to in clause (x) above.
(iii) It understands that each Series 1997-1 Certificate will,
unless otherwise agreed by ARC and the holder thereof, bear a legend of
the type specified in Exhibit A.
(c) Each investor that purchases a Series 1997-1 Certificate from any
of the Initial Purchasers will be required to certify in writing either that (a)
it is not acquiring the Series 1997-1 Certificates for or on behalf of, and will
not transfer the Series 1997-1 Certificates to, a Benefit Plan or any entity
that includes the assets of any Benefit Plan, or (b) if the foregoing is not the
case, that the acquisition and holding of the Series 1997-1 Certificates, and
the operations of the Trust (to the extent affected by the acquisition or
holding of the Series 1997-1 Certificate by that purchaser) nevertheless will
not result in a nonexempt prohibited transaction under ERISA or the Code (in
which case the investor will be required to specify the exemption upon which it
is relying). Each subsequent purchaser of a Series 1997-1 Certificate (by its
purchase of the Series 1997-1 Certificate) will be deemed to have represented
and agreed that either (a) it is not acquiring the Series 1997-1 Certificates
for or on behalf of, and will not transfer the Series 1997-1 Certificates to, a
Benefit Plan or any entity that includes the assets of any Benefit Plan, or (b)
if the foregoing is not the case, that the acquisition and holding of the Series
1997-1 Certificates, and the operations of the Trust (to the extent affected by
the acquisition or holding of the Series 1997-1 Certificate by that purchaser)
nevertheless will not result in a nonexempt prohibited transaction under ERISA
or the Code.
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(d) Transfers of the Series 1997-1 Certificates may only be made in
accordance with the Pooling Agreement (including without limitation Section 6.12
thereof).
ARTICLE III
CONDITIONS TO ISSUANCE OF CERTIFICATES
SECTION 3.01 Conditions to Issuance. The Trustee will not authenticate
any Series 1997-1 Certificates unless:
(a) all conditions to the issuance of the Series 1997-1
Certificates under Section 6.10 of the Pooling Agreement shall have
been satisfied, and
(b) the Series 1997-1 Certificates shall have been rated "AAA"
by S&P and by Duff & Phelps.
ARTICLE IV
PAYMENTS
SECTION 4.01 Payments. Except as expressly provided otherwise in this
Supplement, interest and principal shall be distributed in respect of the Series
1997-1 Certificates at the times described in, and in the amounts calculated
pursuant to, Articles IV and V of the Pooling Agreement for payments that are to
be made with respect to Fixed Principal Certificates.
SECTION 4.02 Interest. The Series 1997-1 Certificates shall bear
interest on and after the Closing Date at the Series 1997-1 Certificate Rate.
Interest with respect to the Series 1997-1 Certificates due but not paid on any
Distribution Date will be due on the next Distribution Date with additional
interest on such amount at the applicable Certificate Rate plus 2% per annum to
the extent permitted by law. For the purpose of calculating interest, Investor
Allocable Charged-Off Amounts that were applied on a Settlement Date to reduce
Investor Invested Amounts will not be given effect until the next Distribution
Date.
SECTION 4.03 Principal Payments. On each Business Day during the
Pay-Out Period for the Series 1997-1 Certificates (until the Series 1997-1
Invested Amount has been provided for in full), the Servicer shall, pursuant to
Section 4.03(g) of the Pooling Agreement, allocate a portion of the Collections
available in the Master Collection Account, after making any required transfers
to the Carrying Cost Account, to the Series 1997-1 Invested Amount
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<PAGE> 12
and transfer it to the Defeasance Account. The portion of Collections so
allocated and transferred shall equal the balance of collected funds on deposit
in the Master Collection Account multiplied by the applicable Defeasance
Allocation Percentage. The amounts allocated to the Defeasance Account during
each Calculation Period shall be distributed to the Holders of the Series 1997-1
Certificates in accordance with Section 4.05 below on the First Principal
Payment Date and on each Distribution Date thereafter. If a Liquidation Period
commences while the Series 1997-1 Certificates remain outstanding, principal
will be allocated and paid to the Holders of those Certificates in accordance
with the terms of Sections 4.03(h) and 5.01 of the Pooling Agreement.
SECTION 4.04 Optional Prepayment; Certain Liquidation Events. (a) On
any Distribution Date prior to the earlier of the commencement of the
Liquidation Period or a Pay-Out Period, ARC shall have the right, upon not less
than 35 days' notice to the Trustee, to cause the Series 1997-1 Certificates to
be prepaid in full, or in part in a minimum amount of $9,000,000 or in higher
integral multiples of $1,000,000, in each case without premium or penalty. The
Trustee shall notify the Series 1997-1 Certificateholders to be prepaid within
five Business Days of receiving notice of a voluntary prepayment. Commencing
upon the date specified in the notice to the Trustee (until an amount equal to
the amount to be prepaid has been accumulated), the Servicer shall allocate a
portion of the Collections available in the Master Collection Account, after
making any required transfers to the Carrying Cost Account, to the Defeasance
Account for purposes of the prepayment. The portion of Collections so allocated
and transferred shall equal (A) the Defeasance Allocation Percentage for the
Series 1997-1 Certificates multiplied by (B) the amount of the available
Collections. Any voluntary prepayment shall be made on the later to occur of (x)
the Distribution Date specified in the notice of prepayment and (y) the
Distribution Date on which sufficient funds have been accumulated in the
Defeasance Account.
(b) In the event of any partial prepayment of the Series 1997-1
Certificates, the Holders of those Certificates shall be paid their pro rata
share of the partial prepayment calculated in accordance with the outstanding
principal amount of each Series 1997-1 Certificate as of the related Record
Date.
SECTION 4.05 Application of Payments. On each Distribution Date prior
to the Liquidation Period, the Trustee, acting upon instructions from the
Servicer, will make the following distributions to the Series 1997-1
Certificateholders in the following order of priority from amounts available for
allocation:
(a) to Holders of the Series 1997-1 Certificates, (i) interest
accrued on their Certificates during the immediately preceding Interest
Period plus (ii) the aggregate amount of shortfalls in distributions of
interest to them as provided in clause (i) for all prior Distribution
Dates, together with interest thereon at the applicable Certificate
Rate during which the shortfall was outstanding plus 2% per annum, and
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(b) to Holders of the Series 1997-1 Certificates in reduction
of the outstanding principal amount of their Certificates, on the First
Principal Payment Date and each Distribution Date thereafter until the
principal amount of the Series 1997-1 Certificates has been repaid in
full, in an amount equal to the lesser of (i) the funds on deposit in
the Defeasance Account allocable to the Series 1997-1 Certificates and
(ii) the unpaid principal amount of the Series 1997-1 Certificates.
If a Liquidation Period commences while the Series 1997-1 Certificates
remain outstanding, distributions will be made to the Holders of those
Certificates in accordance with the terms of Sections 4.03(h) and 5.01 of the
Pooling Agreement.
ARTICLE V
PAY-OUT EVENTS
SECTION 5.01 Pay-Out Events. Any of the following shall be a "Pay-Out
Event" with respect to the Series 1997-1 Certificates:
(a) the Majority Investors waive a Liquidation Event described
in Section 9.01(a), (e), (h) or (k) of the Pooling Agreement, in which
case a Pay-Out Event shall be deemed to have occurred automatically
unless the occurrence of the Pay-Out Period Commencement Date is waived
by Holders of the Series 1997-1 Certificates representing more than 50%
of the Series 1997-1 Invested Amount, by notice to the Trustee, ARC and
the Servicer, given within the applicable grace period;
(b) the Majority Investors do not declare a Liquidation
Commencement Date with respect to a Liquidation Event described in
Section 9.01(b), (f), (g) or (l) of the Pooling Agreement, and Holders
of the Series 1997-1 Certificates representing more than 50% of the
Series 1997-1 Invested Amount declare that a Pay-Out Event has
occurred; or
(c) the Series 1997-1 Invested Amount shall not have been
reduced to zero on or prior to the Scheduled Principal Payment Date.
ARTICLE VI
OPTIONAL REPURCHASE OF INVESTOR INTERESTS
SECTION 6.01 Optional Repurchase of Investor Interests. On any
Distribution Date occurring during the Liquidation Period or a Pay-Out Period
with respect to the Series 1997-1
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Certificates on or after the date that the Series 1997-1 Invested Amount is
reduced to five percent or less of the initial aggregate principal amount of the
Investor Certificates of the Series, ARC shall have the option to repurchase the
undivided interests in the Trust Assets represented by the Series 1997-1
Certificates on the Distribution Date. The purchase price will be an amount
equal to the Series 1997-1 Invested Amount plus accrued and unpaid interest (and
accrued and unpaid interest with respect to interest that was due but not paid
on any prior Distribution Date) through the day preceding the Distribution Date
at the Certificate Rate applicable to the Series plus the amount of all Investor
Allocable Charged-Off Amounts that have been allocated to the Series 1997-1
Certificates (net of Investor Net Recoveries that have been allocated to the
Series 1997-1 Certificates). Upon the tender of all of the outstanding
Certificates of the Series by the Certificateholders, the Trustee shall
distribute the amounts, together with all funds on deposit in the Defeasance
Account that are allocable to the Series 1997-1 Certificates, to the
Certificateholders of the Series on the next Distribution Date in repayment of
the principal amount and accrued and unpaid interest owing to the
Certificateholders. Following any repurchase, the Certificateholders of the
Series shall have no further rights with respect to the Receivables. In the
event that ARC fails for any reason to deposit in the Principal Funding Account
the aggregate purchase price for the Series 1997-1 Certificates, payments shall
continue to be made to the Certificateholders of the Series in accordance with
the terms of the Pooling Agreement and this Supplement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
SECTION 7.02 Counterparts. This Supplement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which together shall constitute one and the same instrument.
SECTION 7.03 Severability of Provisions. If any one or more of the
provisions or terms of this Supplement shall for any reason whatsoever be held
invalid, then the unenforceable provision(s) or term(s) shall be deemed
severable from the remaining provisions or terms of this Supplement and shall in
no way affect the validity or enforceability of the other provisions or terms of
this Supplement.
SECTION 7.04 Amendment, Waiver, Etc. This Supplement may be amended,
subject to Section 13.01 of the Pooling Agreement, from time to time by the
Servicer, ARC and the
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Trustee by a written instrument signed by each of them, without the consent of
any Holders of the Series 1997-1 Certificates; provided, however, that such
action shall not adversely affect in any material respect the interests of any
Holder of a Series 1997-1 Certificate; and provided further, that for purposes
of this Supplement, any decrease in an applicable Certificate Rate or any
postponement of the Scheduled Principal Payment Date shall be deemed to
materially adversely affect the interests of a Holder of a Series 1997-1
Certificate. This Supplement also may be amended, modified or waived from time
to time by the Servicer, ARC and the Trustee with the consent of the Required
Series Holders of the Series 1997-1 Certificates to the extent permitted by
Section 13.01 of the Pooling Agreement, and the terms of that section shall
apply to any such amendment, modification or waiver.
SECTION 7.05 The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplement or for or in respect of the recitals contained herein, all of which
recitals are made solely by ARC and the Servicer.
SECTION 7.06 Instructions in Writing. All instructions given by the
Servicer to the Trustee pursuant to this Supplement shall be in writing, and may
be included in a Daily Report or Settlement Statement.
SECTION 7.07 Certificate to Applicable Rating Agencies. During the
first week of each year, the Trustee shall provide the Applicable Rating
Agencies with a certificate, signed by a Responsible Officer, to the effect that
the Trustee is not aware of any Liquidation Events.
SECTION 7.08 Duff & Phelps. (a) Any reference to S&P in any Transaction
Document that relates to the Series 1997-1 Certificates shall be deemed also to
refer to Duff & Phelps, and any requirement that a Person's short-term or
long-term debt have any rating shall be deemed to include a requirement that, if
such Person's short-term or long-term debt has been rated by Duff & Phelps, it
has received at least the equivalent rating from Duff & Phelps.
(b) Regardless of the terms of any other Transaction Document, for so
long as Duff & Phelps rates the Series 1997-1 Certificates:
(i) the Trustee, in the case of an entity that is subject
to risk-based capital adequacy requirements, shall have risk-based
capital of at least $250,000,000 or, in the case of an entity that is
not subject to risk-based capital adequacy requirements, a combined
capital and surplus of at least $250,000,000; and in either case the
Trustee must have a long-term unsecured debt rating of at least "A"
from Duff & Phelps or, if not rated by Duff & Phelps, by S&P,
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(ii) the bank at which the Trust Accounts are located must
have a long-term unsecured debt rating of at least "A" rating from Duff
& Phelps, or, if not rated by Duff & Phelps, by S&P,
(iii) the accounting firm engaged to review AmeriSource's and
ARC's financial results and perform the obligations of accountants
required by the Transaction Documents shall be one of the accounting
firms generally recognized as belonging to the "big 6,"
(iv) the Servicer will notify Duff & Phelps upon any change
in the Trustee ten days before such change becomes effective (or, in
the case of involuntary assignments upon merger, when the Servicer
obtains actual knowledge, if later); provided, however, that the
failure to provide such notice shall not deem such change of Trustee
invalid,
(v) the Trustee promptly will forward all reports it
receives in connection with the Transaction Documents (other than Daily
Reports) to Duff & Phelps,
(vi) AmeriSource will maintain insurance equivalent to its
current crime coverage, so long as such coverage is commercially
available,
(vii) AmeriSource may not cease to be a Seller under the
Purchase Agreement unless the Rating Agency Condition is satisfied in
connection with such removal,
(viii) within two Business Days of its receipt of a Settlement
Statement, the Trustee will verify the mathematical computations
contained in such report and shall notify the Servicer and each of the
Applicable Rating Agencies of any discrepancies therein, whereupon the
Servicer shall deliver to the Applicable Rating Agencies within 5
Business Days thereafter a certificate describing the nature and cause
of such discrepancies and the action that the Servicer proposes to take
with respect thereto; provided, however, that the above is not to be
understood as requiring the Trustee to make an affirmative
certification during those months in which the mathematical
computations contained in the Settlement Statement are found to be
correct,
(ix) any Successor Servicer shall be required, in addition
to its other obligations, to service the Receivables in accordance with
standards of reasonable commercial prudence, and
(x) the second line of Section 7.02(n)(ii) of the Pooling
Agreement will have added after the word "not" the words "and never has
been".
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SECTION 7.09 Rule 144A. So long as any of the Series 1997-1
Certificates are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, ARC shall, unless it becomes subject to and complies
with the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, or rule 12g3-2(b) thereunder, provide to any
Holder of such restricted securities, or to any prospective purchaser of such
restricted securities designated by a Holder, upon the request of such Holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Act.
SECTION 7.10 ERISA. By the acceptance of a Series 1997-1 Certificate,
each Holder will be deemed to represent and warrant that either (a) it is not
purchasing such Certificate or an interest herein, in whole or in part, with
funds that are "plan assets" within the meaning of U.S. Department of Labor
Regulation Section 2510.3-101 or (b) if the foregoing is not the case, that the
acquisition or holding of such Certificate, and the operation of the Trust (to
the extent affected by the acquisition or holding of such Certificate by the
Holder), nevertheless will not result in a non-exempt prohibited transaction
under ERISA or the Code.
SECTION 7.11 Monthly Reports to Certificateholders. Copies of the
Settlement Statement delivered pursuant to Section 5.03(a) of the Pooling
Agreement shall be provided free of charge by the Trustee to purchasers of
beneficial interests in the Series 1997-1 Certificates in connection with the
initial distribution thereof and may be obtained free of charge upon request
from the Trustee (and presentation of a confirmation evidencing the purchase of
such beneficial interest) by subsequent purchasers.
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IN WITNESS WHEREOF, ARC, the Servicer and the Trustee have caused this
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
AMERISOURCE RECEIVABLES CORPORATION,
as transferor
By:
-----------------------------------------
Title:
------------------------------------
Address: P.O. Box 1735
Southeastern, Pennsylvania 19399-1735
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
AMERISOURCE CORPORATION,
as initial Servicer
By:
-----------------------------------------
Title:
------------------------------------
Address: 300 Chester Field Parkway
Malvern, Pennsylvania 19355
Attention: Kurt Hilzinger
Telephone: (610) 296-4480
Facsimile: (610) 993-9085
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Title:
------------------------------------
Address: One M&T Plaza
Buffalo, New York 14203
Attention: Russell Whitley
Telephone: (716) 842-5602
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Facsimile: (716) 842-4474
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<PAGE> 20
EXHIBIT A
to the Series 1997-1 Supplement
FORM OF SERIES 1997-1 CERTIFICATE
[INCLUDE IF CERTIFICATE IS A BOOK-ENTRY CERTIFICATE DEPOSITED WITH DTC
OR A CUSTODIAN ON BEHALF OF DTC -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[INCLUDE IF CERTIFICATE IS A 144A BOOK-ENTRY CERTIFICATE OR CERTIFICATE
ISSUED IN EXCHANGE THEREFOR -- THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OF THE UNITED STATES OF
AMERICA. THE CERTIFICATEHOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE CERTIFICATEHOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A (A "QUALIFIED INSTITUTIONAL BUYER"),
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER, AND WHOM THE CERTIFICATEHOLDER HAS INFORMED, IN EACH CASE, THAT THE
OFFER, RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(2) IN A TRANSACTION COMPLYING WITH THE PROVISIONS OF REGULATION S UNDER THE
SECURITIES ACT OR (3) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PROVIDES CERTAIN
REPRESENTATIONS AND AGREEMENTS TO THE TRUSTEE, AND, IF THE
page 1
<PAGE> 21
TRUSTEE SO REQUIRES, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE WITH
RESPECT TO THE AVAILABILITY OF SUCH EXEMPTION PRIOR TO THE RESALE OR TRANSFER.
WITH RESPECT TO CLAUSES (1), (2) AND (3), SUBJECT TO THE RECEIPT BY THE TRUSTEE
OF OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE THAT THE OFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, IN
EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES
OF AMERICA OR OTHER APPLICABLE JURISDICTION AND SECURITIES AND BLUE SKY LAWS OF
THE STATES OF THE UNITED STATES OF AMERICA. THE CERTIFICATEHOLDER OF THIS
CERTIFICATE AGREES THAT IT WILL, AND EACH SUBSEQUENT CERTIFICATEHOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS CERTIFICATE OF THE RESALE RESTRICTIONS
REFERRED TO ABOVE.]
[INCLUDE IF CERTIFICATE IS AN UNRESTRICTED BOOK-ENTRY CERTIFICATE OR
CERTIFICATE ISSUED IN EXCHANGE THEREFOR -- THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OF THE
UNITED STATES OF AMERICA. THE CERTIFICATEHOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS.]
[INCLUDE IF CERTIFICATE IS A REGULATION S TEMPORARY BOOK-ENTRY
CERTIFICATE OR CERTIFICATE ISSUED IN EXCHANGE THEREFOR -- THIS CERTIFICATE HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OF
THE UNITED STATES OF AMERICA. THIS CERTIFICATE IS A REGULATION S TEMPORARY
BOOK-ENTRY CERTIFICATE WITHIN THE MEANING OF THE POOLING AGREEMENT. THE
CERTIFICATEHOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT INTERESTS
IN THIS REGULATION S TEMPORARY BOOK-ENTRY CERTIFICATE MAY NOT BE OFFERED OR SOLD
TO A U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON PRIOR TO THE
EXCHANGE DATE (AS DEFINED IN THE POOLING AGREEMENT), AND NO TRANSFER OR EXCHANGE
OF AN INTEREST IN THIS REGULATION S TEMPORARY BOOK-ENTRY CERTIFICATE MAY BE MADE
FOR AN INTEREST IN THE 144A BOOK-ENTRY CERTIFICATE OR IN THE UNRESTRICTED
BOOK-ENTRY CERTIFICATE UNTIL AFTER THE LATER OF THE EXCHANGE DATE AND THE DATE
ON WHICH CERTAIN CERTIFICATIONS RELATING TO THE INTEREST HAVE BEEN PROVIDED IN
ACCORDANCE WITH THE TERMS OF THE POOLING AGREEMENT, TO THE EFFECT THAT THE
BENEFICIAL OWNER OR OWNERS
page 2
<PAGE> 22
OF SUCH INTEREST ARE NOT U.S. PERSONS. THE CERTIFICATEHOLDER OF THIS CERTIFICATE
AGREES THAT IT WILL, AND EACH SUBSEQUENT CERTIFICATEHOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS CERTIFICATE OF THE RESALE RESTRICTIONS REFERRED TO
ABOVE.]
[INCLUDE IF THE CERTIFICATE IS A RESTRICTED CERTIFICATE IN DEFINITIVE
FORM -- THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN
CONTRAVENTION OF THAT ACT. THIS CERTIFICATE WILL BE NOT ACCEPTED FOR
REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO
THE REGISTRAR AND TRANSFER AGENT THAT THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE POOLING AGREEMENT HAVE BEEN COMPLIED WITH.]
AMERISOURCE RECEIVABLES MASTER TRUST
SERIES 1997-1 CERTIFICATE
CUSIP Number: ________ Initial Stated Amount: $________
Percentage Interest evidenced
by this Certificate: ___%
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in the AmeriSource
Receivables Master Trust (the "Trust") that was created pursuant to (a) the
Pooling and Servicing Agreement, dated as of December 13, 1994 (as the same may
be amended, supplemented, amended and restated or otherwise modified from time
to time, the "Pooling Agreement"), among AmeriSource Receivables Corporation, a
Delaware corporation, as transferor ("ARC"), AmeriSource Corporation, a Delaware
corporation, as initial Servicer (in such capacity, the "Servicer"), and
Manufacturers and Traders Trust Company, a New York banking corporation, as
trustee (together with its successors and assigns in such capacity, the
"Trustee") and (b) the Supplement dated as of April 17, 1997 relating to the
Series 1997-1 Certificates (the "Supplement"). This Certificate is one of the
duly authorized Series 1997-1 Certificates designated and issued under the
Pooling Agreement and the Supplement. Except as otherwise defined herein,
capitalized terms have the meanings that Appendix A to the Pooling Agreement
assigns to them. This Certificate is subject to the terms, provisions and
conditions of, and is entitled to the benefits afforded by, the Pooling
Agreement, to which terms, provisions and conditions the Holder of this
Certificate by virtue of the acceptance hereof assents and by which the Holder
is bound. The Series 1997-1 Certificates are a Senior Class.
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<PAGE> 23
The Holder hereof shall and is hereby authorized to record on the grid
attached to this Certificate (or at the Holder's option, in its internal books
and records) the date and amount of each repayment of the principal amount
represented by this Certificate and any reductions to the Stated Amount of this
Certificate; provided, however, that failure to make any such recordation on the
grid or records or any error in the grid or records shall not adversely affect
the Holder's rights with respect to its interest in the assets of the Trust and
its right to receive Fixed Principal Yield in respect of the outstanding
principal amount of this Certificate.
Fixed Principal Yield shall accrue on this Certificate as set forth in
the Pooling Agreement and the Supplement. This Certificate is subject to
prepayment prior to the maturity hereof to the extent set forth in the Pooling
Agreement and the Supplement.
The Pooling Agreement and the Supplement may be amended and the rights
and obligations of the parties thereto and of the Holder of this Certificate
modified as set forth in the Pooling Agreement and the Supplement.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not entitle the Holder hereof to
any benefit under the Transaction Documents or be valid for any purpose.
This Certificate does not represent a recourse obligation of, or an
interest in, ARC, any Seller, the Servicer, the Trustee or any Affiliate of any
of them. This Certificate is limited in right of payment to the Trust Assets.
As provided in the Pooling Agreement, and subject to the restrictions
on sale, transfer and disposition set forth in the Transaction Documents, upon
surrender for registration of transfer of this Certificate at any office or
agency of the Transfer Agent and Registrar maintained for that purpose, ARC
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and Series that is/are in authorized denominations of like aggregate
fractional interests in the Fixed Principal Interest of the Series 1997-1
Certificates, and that bear(s) a number that is not contemporaneously
outstanding.
As provided in the Pooling Agreement, and subject to the restrictions
on exchange set forth in the Transaction Documents, at the option of the Holder,
this Certificate may be exchanged for other Certificates of the same Class and
Series of authorized denominations of like aggregate fractional interests in the
Fixed Principal Interest of the Series 1997-1 Certificates and bearing numbers
that are not contemporaneously outstanding, upon surrender of this Certificate
to be exchanged at any such office or agency. If this Certificate is so
surrendered for exchange, ARC shall execute, and the Trustee shall authenticate
and deliver, the appropriate number of Certificates of the same Class and
Series.
page 4
<PAGE> 24
If this Certificate is presented or surrendered for registration of
transfer or exchange, it shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Holder hereof or his attorney-in-fact duly
authorized in a writing delivered to the Transfer Agent and Registrar.
By its acceptance of this Certificate, each Holder hereof (a)
acknowledges that it is the intent of ARC, and agrees that it is the intent of
the Holder that, for Federal, state and local income and franchise tax purposes
only, the Investor Certificates (including this Certificate) will be treated as
evidence of indebtedness secured by the Trust Assets and the Trust not be
characterized as an association taxable as a corporation, (b) agrees to treat
this Certificate for Federal, state and local income and franchise tax purposes
as indebtedness and (c) agrees that the provisions of the Transaction Documents
shall be construed to further these intentions of the parties.
This Certificate shall be construed in accordance with the laws of the
State of New York, without regard to its conflict of laws principles, and all
obligations, rights and remedies under or arising in connection with this
Certificate shall be determined in accordance with the laws of the State of New
York.
IN WITNESS WHEREOF, ARC has caused this Certificate to be executed by
its officer thereunto duly authorized.
AMERISOURCE RECEIVABLES CORPORATION
By:
-------------------------------
Title:
--------------------------
page 5
<PAGE> 25
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1997-1 Certificates referred to in the
Pooling Agreement.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Title:
--------------------------------
Dated: April 17, 1997
page 6
<PAGE> 26
REPAYMENTS OF PRINCIPAL
Outstanding
Amount Principal Stated Certificate Reduction
Repaid Balance Amount Rate Made By Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
page 7
<PAGE> 27
CALCULATION OF OUTSTANDING PRINCIPAL
Notwithstanding the Stated Amount of this Certificate, the outstanding
principal amount under this Certificate is as stated below.
Outstanding Principal Transfers to Transfers from
Amount of this Certificate Certificate Certificate Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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page 8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 83,925
<SECURITIES> 0
<RECEIVABLES> 490,626
<ALLOWANCES> 19,192
<INVENTORY> 795,122
<CURRENT-ASSETS> 1,385,286
<PP&E> 111,167
<DEPRECIATION> 45,640
<TOTAL-ASSETS> 1,502,336
<CURRENT-LIABILITIES> 964,866
<BONDS> 532,335
0
0
<COMMON> 271
<OTHER-SE> (6,316)
<TOTAL-LIABILITY-AND-EQUITY> 1,502,336
<SALES> 5,596,578
<TOTAL-REVENUES> 5,596,578
<CGS> 5,317,065
<TOTAL-COSTS> 5,317,065
<OTHER-EXPENSES> 196,944
<LOSS-PROVISION> 3,232
<INTEREST-EXPENSE> 30,966
<INCOME-PRETAX> 51,603
<INCOME-TAX> 20,322
<INCOME-CONTINUING> 31,281
<DISCONTINUED> 0
<EXTRAORDINARY> (1,982)
<CHANGES> 0
<NET-INCOME> 29,299
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
