Common use of Inventory Covenants Clause in Contracts

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain correct and accurate inventory records in a manner consistent with its current practices as of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the Inventory, each Guarantor: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Secured Party, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Guarantor's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisein any twelve (12) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Divisionmonth period, but in each case at any time or times as Administrative Agent Secured Party may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Secured Party with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Secured Party concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, herein without the prior written consent of Administrative AgentSecured Party, except for sales, returns or transfers sales of Inventory in the ordinary course of its such Guarantor's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth in the Information Certificate or permitted herein; (d) Borrowers upon Secured Party's request, shall, at their its expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Secured Party may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Secured Party written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Secured Party and by an appraiser acceptable to Administrative AgentSecured Party, addressed to Administrative Agent Secured Party and Lenders and or upon which Administrative Agent Secured Party and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, each Borrower and Guarantor proceeds thereof; (g) assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed Inventory, except for the right of return given to customers of such Guarantor consistent with its current policies as of the basis for any liability of any Borrower or Guarantor as to any third party)date hereof; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or such Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestshall not, Borrowers shallwithout prior written notice to Secured Party, at their expenseacquire or accept any Inventory on consignment or approval. In addition to, conduct through an inventory counting service acceptable to Administrative Agentand not in limitation of, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only anything to the extent that a physical count that is acceptable contrary contained herein, Secured Party shall have the right to Borrowers request the delivery to Secured Party of all documents, invoices and Administrative Agent has not been conducted by such inventory counting service within bills of lading relating to any in-transit Inventory. In the immediately preceding two fiscal quarters so long as no Default or event any account debtor returns Inventory when an Event of Default shall exist exists or have has occurred or four (4) fiscal week period and is continuing, Guarantors shall, upon Secured Party's request, hold the returned Inventory in trust for Secured Party, segregate all returned Inventory from all of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as its other property, dispose of the Effective Date) at returned Inventory solely according to Secured Party's instructions, and not issue any time a Default credits, discounts or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersallowances with respect thereto without Secured Party's prior written consent.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count counts of the Inventory at least twice each fiscal year as to non-perishable (excluding Inventory of the Retail Division located in retail stores that have not been open for more than twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether months) either through periodic cycle counts or otherwise) wall to wall counts, so that all Inventory located at distribution centers and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as retail stores that have been open for more than twelve months is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory counts of the Inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentAgent (unless such removal is at the direction of the ABL Agent to the extent such direction is not in violation of the Intercreditor Agreement), except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported business, (ii) for sales, returns and exchanges of Inventory to Administrative Agent manufacturers and suppliers in accordance with the terms hereof and except ordinary course of business; (iii) to move Inventory directly from one location set forth or permitted herein to another such permitted location and except (iv) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at period (or one (1) additional time in any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) as Agent may request but not at Borrowers’ expense), but at any time or times as Administrative Agent may reasonably request on or after upon the occurrence and during the continuance of an Event of Default Default, during a Compliance Period or if there is a Material Adverse Effect (at Administrative Agent’s own Borrowers’ sole expense, in each case), deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, to the extent applicable, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and Lenders, on the one hand, Secured Parties and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right Inventory other than returns and exchanges of return given to retail Inventory from customers of Borrowers in the ordinary course business of business and in accordance such Borrower or Guarantor consistent with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval except for (determined in accordance with the current accounting principles x) magazines, stationery and greeting cards, and (y) perishable food stuffs of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersde minimus value.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and each Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers Borrower and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishablesbut at any time or times as Agent may request after an Event of Default has occurred and is continuing, as applicable, and promptly following such physical inventory (whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers Borrower and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Agent’s request, Borrower shall, at their expense, no more than two (i2) not less than times in any twelve (12) month period (and only one (1) time in any twelve (12) month period, if at the Agent’s option, in the event that Excess Availability at all times during such twelve (12) month period is equal to or greater than an amount equal to twenty (20%) percent of the Total Borrowing Base$15,000,000), (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may reasonably request at the expense of Agent and Lenders, or at any time or times a Agent may request on or at Borrower’s expense at any time after an Event of Default exists or at Administrative Agent’s own expense, in each casehas occurred and is continuing, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers Borrower and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on in the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating event any count conducted pursuant to the production, use, sale Section 7.3(b) above indicates any material irregularities or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.adverse

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Debtor shall at all times maintain inventory records reasonably satisfactory to Secured Party, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Debtor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each Debtor shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Secured Party may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Secured Party with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Secured Party concerning such physical count; (c) Borrowers and Guarantors each Debtor shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentSecured Party, except for sales, returns or transfers sales of Inventory in the ordinary course of its each Debtor’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Secured Party’s request, each Debtor shall, at their its expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Secured Party may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Secured Party written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Secured Party and by an appraiser acceptable to Administrative AgentSecured Party, addressed to Administrative Agent and Lenders and Secured Party or upon which Administrative Agent and Lenders are Secured Party is expressly permitted to rely; (e) Borrowers and Guarantors each Debtor shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor Debtor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors each Debtor shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor such Debtor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors each Debtor shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s requesteach Debtor shall not, Borrowers shallwithout prior written notice to Secured Party, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Guarantor shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Guarantor shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseand for so long as the same is continuing, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Guarantor shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) Borrowers shall, at all times, provide sufficient storage for and Lendersmaintain sufficient stocks of all manuals, on installation kits and other product support, marketing and sales materials related to Inventory of Borrowers consisting of finished goods in order to satisfy any requirements for such materials known or expected by any Borrower in connection with the one handoperation, and Borrowers and Guarantors, on the other hand, marketing or sale of such Inventory by any Borrower or otherwise; (h) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gi) Borrowers and Guarantors Guarantor shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hj) Borrowers and Guarantors Guarantor shall keep the Inventory in good and marketable condition; (k) Borrowers and Guarantor shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval; and (il) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count without limiting the rights of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only with respect to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default establishment of Reserves or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) otherwise, at any time a Default Excess Availability is less than $2,500,000, Agent may, at its option, establish Reserves to reflect accounts payable or Event other obligations outstanding to the Microsoft Companies in the aggregate more than sixty (60) days past due, or in the event that the aggregate amount of Default shall exist such accounts payable or have occurredother obligations more than thirty (30) days past due but less than sixty (60) days past due exceed $1,000,000, then to reflect all such accounts payable or other obligations in the results of which shall be reported directly aggregate more than thirty (30) days past due (in each case other than accounts payable or other obligations being contested or disputed by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent Borrower or Guarantor in good faith) or that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersexceed $3,000,000 for software obligations or $1,000,000 for hardware obligations.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records, consistent with the current practices each Borrower as of the date hereof, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein, provided, that, such Borrower may remove Inventory to any locations not otherwise permitted hereunder so long as the aggregate amount of all of such Inventory at such other locations does not have a Value in excess of $10,000; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default and for so long as the same is continuing or at Administrative Agent’s own expense, any time on or after any change in each casethe calculation of standard costs of Inventory, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent in good faith and by an appraiser acceptable to Administrative AgentAgent (which includes Hilco Appraisal Services, LLC), addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to relyrely (provided, that, any appraisal requested at such time as an Event of Default exists or has occurred and is continuing or on and after a change in the calculation of standard costs shall not be considered for purposes of the limitation on the number of appraisals provided for herein); (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance in all material respects and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory other than the right of customers to return given to retail customers of Borrowers defective or non-conforming goods in the ordinary course of business and in accordance with the then current return policy of Borrowersbusiness; (hi) Borrowers and Guarantors shall give Agent not less than thirty (30) days’ written notice prior to the effectiveness of any change in the method of calculation of the standard costs of Inventory; (j) Borrowers shall keep the Inventory generally in good and marketable condition; and (ik) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation not, without prior written notice to Administrative Agent that appropriate adjustments have been made to or the inventory records specific identification of such Inventory in a report with respect thereto provided by Borrowers to reconcile the inventory count Agent pursuant to the inventory records of BorrowersSection 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers (other than Sumco and Guarantors shall, H&H Electronic) shall conduct a physical count of the their Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the and H&H Electronic shall conduct a physical count of its Inventory of the Distribution Divisionat least once each month, but (in each case any case) at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) upon Agent’s request, Borrowers shall, at their expense, no more than two (2) times in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent a written assayer’s report as to the Precious Metals Inventory in form, scope and methodology acceptable to Agent and by an assayer acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (f) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (fg) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (h) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gi) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hj) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ik) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as reasonably describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shallat their expense, conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice once each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division year, provided, that is satisfactory to Borrowers and Administrative Guarantors shall conduct additional physical counts of Inventory as provided herein at any time or times as Agent may request, such additional physical counts at Agent’s expense unless an Event of Default then exists, one in which case at Borrowers’ and Guarantors’ expense, and promptly following all such physical inventories (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentAgent (which consent shall not be unreasonably withheld), except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein and except to return defective or non-conforming Inventory to the manufacturers or vendors thereof; (d) Borrowers shall, at and shall cause their expenseSubsidiaries to, cooperate with any appraiser retained by Agent in the conduct of appraisals of Inventory, such appraisals (i) not less than one (1) to be conducted at such time in any twelve (12) month period, if Excess Availability at all or times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Baseas Agent may request, (iiii)(x) not to be conducted, at Borrower’s expense, no less than two (2) times in any twelve (12) month period, if unless Adjusted Excess Availability at any time during is less than the Specified Amount, then no less than three (3) times in such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iiiy) to be conducted, at any time or times as Administrative Agent may request on or after Agent’s expense unless an Event of Default or then exists in which case at Administrative Agent’s own Borrowers’ expense, in each case, deliver or cause and (ii) to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; Inventory except for the right of return given to retail customers of Borrowers such Borrower or Guarantor in the ordinary course of the business and of such Borrower or Guarantor in accordance with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender’s request, Borrower shall, at their its expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve calendar year (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at but any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault), deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an Hilco Appraisal Services or other appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ih) upon Administrative Agent’s requestBorrower shall not, Borrowers shallwithout prior written notice to Lender, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowerson consignment.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count counts of the Inventory at least twice each fiscal year as to non-perishable (excluding Inventory of the Retail Division located in retail stores that have not been open for more than twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether months) either through periodic cycle counts or otherwise) wall to wall counts, so that all Inventory located at distribution centers and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as retail stores that have been open for more than twelve months is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory counts of the Inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported business, (ii) for sales, returns and exchanges of Inventory to Administrative Agent manufacturers and suppliers in accordance with the terms hereof and except ordinary course of business; (iii) to move Inventory directly from one location set forth or permitted herein to another such permitted location and except (iv) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month periodperiod (or more frequently as Agent may determine but not at Borrowers’ expense), if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may reasonably request on or after upon the occurrence and during the continuance of an Event of Default or if there is a Material Adverse Effect (at Administrative Agent’s own Borrowers’ sole expense, in each case), deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; provided, however, that at all times Average Excess Availability is greater than fifty percent (50%) of the Revolving Commitments for the prior twelve month period prior to such request, only one such appraisal shall be at the sole expense of Borrowers and Guarantors; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, to the extent applicable, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and Lenders, on the one hand, Secured Parties and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right Inventory other than returns and exchanges of return given to retail Inventory from customers of Borrowers in the ordinary course business of business and in accordance such Borrower or Guarantor consistent with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval except for (determined in accordance with the current accounting principles x) magazines, stationery and greeting cards, and (y) perishable food stuffs of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersde minimus value.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Borrowers shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrowers' cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrowers' business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such any Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Lender's request, Borrowers shall, at their expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess period in which no Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times Triggering Event occurs or twice in any twelve (12) month period, if Excess period during which an Availability at any time during such twelve Triggering Event occurs or an Availability Compliance Period (12) month period is less than or equal related to an amount equal to twenty (20%Availability Triggering Event) percent of the Total Borrowing Base and (iii) exists, but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes assume all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation not, without prior written notice to Administrative Agent that appropriate adjustments have been made to Lender or the inventory records specific identification of such Inventory with respect thereto provided by Borrowers to reconcile the inventory count Lender pursuant to the inventory records of BorrowersSection 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records that are correct and accurate inventory records in a manner consistent with its current practices as all material respects and itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice once each year, but at any time or times (but not more frequently than once in any fiscal year quarter) as to non-perishable Inventory Agent may reasonably request at any time a Default or an Event of the Retail Division Default exists or has occurred and is continuing, and promptly following such physical inventory (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and shall supply Agent at least once each fiscal quarter if any such counts are performed within such quarter, or otherwise once each fiscal year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such a Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, shall deliver or cause to be delivered to Administrative Agent Agent, at Borrowers’ expense, written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent (and by an appraiser acceptable selected from a list of Agent-approved appraisers to be supplied by Agent to the Administrative Borrower containing not fewer than two appraisers, as such list may be augmented to include additional appraisers at the reasonable request of the Administrative Borrower or otherwise amended by Agent, from time to time), addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely, upon Agent’s request up to two (2) times in any twelve (12) consecutive month period, or at any time or times as Excess Availability shall be less than the greater of $25,000,000 or twenty (20%) percent of the least of the Maximum Credit, the Borrowing Base or the Revolving Loan Limit, up to three (3) times in any twelve (12) consecutive month period, or at any other time or times as Agent may request at any time an Event of Default shall exist or have occurred and be continuing or at any other time at Agent’s expense; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and GuarantorsBorrowers, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (gf) as of the date hereof, Borrowers and Guarantors shall do not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such InventoryInventory but shall give Agent prior written notice if such practice changes together with such information with respect to the new policy as may reasonably be requested by Agent; except for (g) Borrowers shall use commercially reasonable practices to keep the right of return given to retail customers of Borrowers Inventory generally in good and marketable condition in the ordinary course of business business; and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the not acquire or accept any Inventory on consignment or approval unless such Inventory has been identified in good and marketable condition; and (ia report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable hereof when required to Administrative Agent, a physical count of the Inventory of the Retail Division be included in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative such report or Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers otherwise received prior written notice thereof in form and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service substance reasonably satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersAgent.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain correct and accurate inventory records in a manner consistent with its current practices as of the Effective Date date hereof (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual stock ledger inventory system at the Retail Division for pharmacy and non-perishablesDivision), (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least twice once each fiscal year quarter as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual stock ledger inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one two (12) time times each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwiseyear) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Datedate hereof) as to the perishable Inventory of the Retail Division, three (3) times each year as to Inventory of the United Wholesale Division (provided, that, in the event that the United Wholesale Division Assets are not sold pursuant to the United Wholesale Sale Agreements on or before March 31, 2004, Agent may require that such physical counts be conducted more frequently) and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent's request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent 67 written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each US Borrower and Guarantor shall at all times maintain inventory records satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent US Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each US Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent and Tranche B Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors each US Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its such US Borrower’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Agent’s and Tranche B Agent’s request, each US Borrower shall, at their its expense, (i) not less but no more than one (1) time once in any twelve six (126) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent and Tranche B Agent written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Required Lenders and by an appraiser acceptable to Administrative AgentRequired Lenders, addressed to Administrative Agent and Lenders and or upon which Administrative Agent and Lenders are is expressly permitted to rely; (e) Borrowers and Guarantors each US Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each US Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors each US Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any such US Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors each US Borrower shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s requesteach US Borrower shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable without prior written notice to Administrative Agent and Tranche B Agent, a physical count acquire or accept any Inventory on consignment or approval and (j) none of the Inventory of or other Collateral constitutes farm products or the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersproceeds thereof.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count counts of the Inventory at least twice each fiscal year as to non-perishable (excluding Inventory of the Retail Division located in retail stores that have not been open for more than twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether months) either through periodic cycle counts or otherwise) wall to wall counts, so that all Inventory located at distribution centers and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as retail stores that have been open for more than twelve months is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory counts of the Inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported business, (ii) for sales, returns and exchanges of Inventory to Administrative Agent manufacturers and suppliers in accordance with the terms hereof and except ordinary course of business; (iii) to move Inventory directly from one location set forth or permitted herein to another such permitted location and except (iv) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve period (12or one (1) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times additional time in any twelve (12) month period, period as Agent may request and at Borrowers’ expense if Excess Availability is less than the greater of (x) 20% of the Borrowing Cap and (y) $20,000,000 at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) period), but at any time or times as Administrative Agent may reasonably request on or after upon the occurrence and during the continuance of an Event of Default or if there is a Material Adverse Effect (at Administrative Agent’s own Borrowers’ sole expense, in each case), deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, to the extent applicable, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and Lenders, on the one hand, Secured Parties and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right Inventory other than returns and exchanges of return given to retail Inventory from customers of Borrowers in the ordinary course business of business and in accordance such Borrower or Guarantor consistent with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval except for (determined in accordance with the current accounting principles x) magazines, stationery and greeting cards, and (y) perishable food stuffs of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersde minimus value.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor the Borrowers shall at all times maintain inventory records reasonably satisfactory to the Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of Inventory, the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent Borrowers’ cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy monthly withdrawals therefrom and non-perishables), additions thereto; (b) the Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice once each fiscal year as to perpetual inventory and quarterly as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Divisioninventory, but in each case at any time or times as Administrative Agent the Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent the Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent the Lender concerning such physical count; (c) the Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agentthe Lender, except for sales, returns or transfers sales of Inventory in the ordinary course of its the Borrowers’ business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which the Borrowers that is in transit to the locations set forth or permitted herein; (d) upon the Lender's request, the Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent the Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent the Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent the Lender and by an appraiser acceptable to Administrative Agentthe Lender, addressed to Administrative Agent and Lenders the Lender and upon which Administrative Agent and Lenders are the Lender is expressly permitted to rely; (e) the Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) the Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes assume all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) except as set forth on Schedule 5.2 hereto as agreed to by the Lender, the Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return return, or may obligate any Borrower or Guarantor the Borrowers to repurchase repurchase, such Inventory; except for Inventory other than the right return of return given to retail customers of Borrowers defective Inventory in the ordinary course of business and in accordance with the then current return policy of Borrowersbusiness; (hi) the Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestthe Borrowers shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only without prior written notice to the extent that Lender or the specific identification of such Inventory in a physical count that is acceptable to report with respect thereto provided by the Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers Lender pursuant to reconcile the inventory count to the inventory records of BorrowersSection 8.6 hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as all material respects itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year (except with respect to pharmacy and/or non-perishablesInventory consisting of finished goods windows located at a plant of a Borrower or Guarantor, as applicableto which a physical count shall be conducted not less frequently than as of each calendar month end), but at any time or times as Agent may request at any time a Default or an Event of Default exists or has occurred and is continuing, and promptly following such physical inventory (whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and shall supply Agent at least once each calendar quarter if any such counts are performed within such quarter, or otherwise once each calendar year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; except, that, Borrowers and Guarantors may remove Inventory not constituting Eligible Inventory and having an aggregate value of not more than the US Dollar Equivalent of $1,000,000 to locations not otherwise permitted hereunder; provided, that, as the date of the removal of any such Inventory and after giving effect thereto (i) no Default or Event of Default shall exist or have occurred and be continuing and (ii) Global Excess Availability of Borrowers equals not less than twelve and one-half (12 1/2%) percent of the Maximum Credit, (iii) Canadian Excess Availability equals not less than twelve and one-half (12 1/2%) percent of the Canadian Loan Limit and (iv) US Excess Availability equals not less than twelve and one-half (12 1/2%) percent of the US Loan Limit; (d) Borrowers shall, (i) at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability (ii) at their expense, one (1) additional time at any time during that Global Excess Availability is less than the US Dollar Equivalent of $75,000,000, upon Agent’s request, (iii) at Agent’s expense, one (1) further additional time, as Agent may request in such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iiiiv) at any time or times at Borrowers’ expense as Administrative Agent may request on if a Default or after an Event of Default shall exist or at Administrative Agent’s own expense, in each casehave occurred and be continuing, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) as of the date hereof, Borrowers and Guarantors shall do not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory but shall give Agent prior written notice if such practice changes together with such information with respect to the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return new policy of Borrowersas may reasonably be requested by Agent; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall provide to Agent prompt notice of any License Agreement entered into by a Borrower or Guarantor related to Accounts or Inventory, which License Agreement constitutes a Material Contract; and (determined in accordance with the current accounting principles of j) Borrowers and Guarantors as of the Effective Dateshall not acquire or accept any Inventory on consignment or approval unless such Inventory has been specifically identified in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at any time a Default hereof when required to be included in such report or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service Agent has otherwise received prior written notice thereof in form and substance reasonably satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersAgent.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Debtor shall at all times maintain inventory records reasonably satisfactory to Secured Party, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Debtor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Debtor shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Secured Party may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Secured Party with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Secured Party concerning such physical count; (c) Borrowers and Guarantors Debtor shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentSecured Party, except for sales, returns or transfers sales of Inventory in the ordinary course of its Debtor’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Secured Party’s request, Debtor shall, at their its expense, (i) not less no more than one (1) time once in any twelve three (123) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Secured Party may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Secured Party written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Secured Party and by an appraiser acceptable to Administrative AgentSecured Party, addressed to Administrative Agent and Lenders and Secured Party or upon which Administrative Agent and Lenders are Secured Party is expressly permitted to rely; (e) Borrowers and Guarantors Debtor shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor Debtor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors Debtor shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Debtor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors Debtor shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s requestDebtor shall not, Borrowers shallwithout prior written notice to Secured Party, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers Borrower shall, at their its expense, at least once each year or, upon Lender's request, once in each six (i) not less than one (1) time in any twelve (126) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.Lender is

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent in substantially the same manner as being maintained on the date hereof (subject, however, to the terms of clause (o) of the definition of Eligible Inventory), keeping records correct and accurate inventory records in a manner consistent with its current practices as all material respects itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory and such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Borrower’s or Guarantor’s cost therefor; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that no less frequently than is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance consistent with the current accounting past practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution DivisionGuarantors, but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory shall shall, promptly upon Agent’s request, supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except except: (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein (including any new location opened pursuant to Section 9.2 hereof) to another such location and except for location, (iii) Inventory shipped from the manufacturer or distributor thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein (including any new locations opened pursuant to Section 9.2 hereof), and (iv) Inventory (other than Inventory consisting of fuel located at leased terminals) having a value not greater than $500,000 in the aggregate any time; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on at the expense of Agent or after at the expense of Borrowers upon the occurrence and during the continuance of an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; provided, that, if a Cash Dominion Period exists, upon Agent’s request, Borrowers shall, at their expense, deliver or cause to be delivered to Agent an additional written inventory appraisal during any twelve (12) month period which shall be in form, scope and methodology reasonably acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent Borrowers and LendersGuarantors, on the one hand, and Borrowers Agent and GuarantorsLenders, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory Inventory, (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; , except for the right of return given to retail customers of Borrowers such Borrower or Guarantor in the ordinary course of the business and of such Borrower or Guarantor in accordance with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the all Eligible Inventory in good and marketable conditioncondition for so long as it constitutes Eligible Inventory; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory, if any: (a) each Borrower and ------------------- Guarantor shall at all times maintain inventory records reasonably satisfactory to Secured Party, keeping in all material respects correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of Inventory, the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Guarantor shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and Guarantor at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Secured Party may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent Secured Party with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Secured Party concerning such physical count; (c) Borrowers and Guarantors Guarantor shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentSecured Party, except for sales, returns or transfers sales of Inventory in the ordinary course of its Guarantor's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or of Guarantor permitted herein under the Loan Agreement to another such location and except for to discard obsolete Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth Inventory damaged or permitted hereindestroyed by casualty; (d) Borrowers upon Secured Party's request, Guarantor shall, at their its expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Secured Party may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseand for so long as the same is continuing, deliver or cause to be delivered to Administrative Agent Secured Party written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Secured Party and by an appraiser with experience in the appraising of rubber and rubber related assets, acceptable to Administrative AgentSecured Party, addressed to Administrative Agent and Lenders Secured Party, and upon which Administrative Agent and Lenders are Secured Party is expressly permitted to rely; (e) Borrowers and Guarantors Guarantor shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent Secured Party and LendersGuarantor, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors Guarantor shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; Inventory (except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy customary practices of BorrowersGuarantor as of the date hereof); (h) Borrowers and Guarantors Guarantor shall keep the Inventory in good and marketable conditioncondition in all material respects (other than obsolete Inventory or Inventory lost or damaged by any casualty or similar event); and (i) upon Administrative Agent’s requestGuarantor shall not, Borrowers shallwithout prior written notice to Secured Party, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and otherwise at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to periodic cycle counts or otherwise) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Agent’s request, Borrower shall, at their its expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default Default, or at Administrative any time, at Agent’s own expenserequest if Excess Availability is less than Three Million (3,000,000) Dollars, in each caseprovided, however, that Excess Availability will not be tested for this purpose prior to the date which is six (6) months from the date hereof, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, each proceeds thereof; (g) Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors Borrower shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestBorrower shall not, Borrowers shallwithout prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval. In addition to the foregoing, in the event that the Borrower, at their expenseany time, conduct through an inventory counting service acceptable to Administrative has Inventory on consignment having a value in excess of One Million ($1,000,000) Dollars in the aggregate, Borrower, at the request of Agent, a physical count of the Inventory of the Retail Division in formshall obtain consignee waivers, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service in form and substance satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records Agent, from any consignee in possession or control of Borrowers to reconcile the inventory count to the inventory records Inventory having a value in excess of BorrowersThree Hundred Thousand ($300,000) Dollars.

Inventory Covenants. With respect to the Inventory: (a) each ------------------- Borrower shall and Guarantor Parent shall cause each Obligor and Additional L/C Debtor to at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrowers cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise(at which representatives of Agent may be present) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance at such time or times as is consistent with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Divisiondate hereof, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault in accordance with clause (e) below, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor Borrowers which is in transit to the locations set forth or permitted herein; (d) upon Agent's request, Borrowers shall, at their expense, no more than three (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (23) times in any twelve (12) month period, if Excess Availability but at any additional time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) times as Agent may request at Lenders' expense, or at any time or times as Administrative Agent may request at Borrower's expense on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are is expressly permitted to rely; and (e) after the occurrence and during the continuance of an Event of Default, Borrowers shall, at their expense, conduct through RGIS Inventory Specialists, Inc. or another inventory counting service acceptable to Agent, a physical count of the Inventory in form, scope and Guarantors methodology acceptable to Agent, the results of which shall be reported directly by such inventory counting service to Agent and Borrowers shall promptly deliver confirmation in a form satisfactory to Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to Borrower's inventory records; Borrowers shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes assume all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Inventory; each Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Borrowers to repurchase such Inventory; Inventory except for the right of return given to retail customers of Borrowers in the ordinary course of the business and of Borrowers in accordance with the then current return policy of BorrowersBorrower; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s requestBorrowers shall not acquire or accept any Inventory on consignment or approval, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count except for the sale of the Inventory jewelry in Retail Store Subsidiaries of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only Catherines to the extent that a physical count that such Inventory is acceptable reported to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersterms hereof.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Borrowers shall at all times maintain inventory records, keeping correct and accurate inventory records in a manner itemizing and describing the kind, type, quality and quantity of Inventory, such Borrower's cost therefor and daily withdrawals therefrom and additions thereto consistent with its the current practices of Borrowers as of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), date hereof; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period otherwise so that such Inventory as is required by the independent certified public accountants of Borrowers and Guarantors (determined Timet in accordance connection with the current accounting practices opinion of Borrowers and Guarantors as of the Effective Datesuch accountants to be delivered to Lender pursuant to Section 9.6(a)(ii) as hereof to the perishable Inventory of the Retail Division, and be covered by such counts is subject to such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to periodic cycle counts or otherwise) shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted hereinLOCATIONS SET FORTH OR PERMITTED HEREIN, without the prior written consent of Administrative AgentWITHOUT THE PRIOR WRITTEN CONSENT OF LENDER, except EXCEPT (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except a Borrower's business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location and except location, (iii) for Inventory shipped from the manufacturer thereof to such a Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein and (iv) to have material processed or tested by a subcontractor in the ordinary course of a Borrower=s business; (d) Borrowers upon Lender's request, at any time after August 30, 2000, each Borrower shall, at their its expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; rely (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the productionextent possible, use, sale or other disposition of Lender shall use reasonable efforts to have the Inventory (but nothing contained herein shall be construed same appraisal firm as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count had previously done appraisals of the Inventory of the Retail Division in formBorrowers conduct any such subsequent appraisals, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined it does not result in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.material delay);

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain correct and accurate inventory records in a manner consistent with its current practices as of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely, provided, that, unless an Event of Default exists or if Excess Availability at such time is less than thirty-five (35%) percent of the Total Borrowing Base, Administrative Agent, at its sole discretion after the request by Xxxxxxxxx, may agree to defer for a period of six months (but not more than two times during the term of this Agreement and not for consecutive six month periods) the delivery of any such appraisal required hereunder; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each 6991691.13 120 Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Loan Party shall at all times maintain inventory records reasonably satisfactory to Administrative Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Loan Party’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Loan Parties shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time four times each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as reasonably required by this Agreement or as the Administrative Agent may request on or after a Default or an Event of Default, and promptly following any such physical inventory shall supply the Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to the Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor Loan Party which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Administrative Agent’s request, Loan Parties shall, at their expense, (i) not less no more than one (1) time four times in any twelve (12) -month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent Agents and Lenders and upon which Administrative Agent Agents and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Loan Party to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors Loan Parties shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestLoan Parties shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable without prior written notice to Administrative Agent (but only to or the extent that specific identification of such Inventory in a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted report with respect thereto provided by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service Borrower to Administrative Agent and Borrowers shall promptly deliver confirmation pursuant to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersSection 8.05(a) hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors no Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrowers' business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers shall, at their expense, once in every six (i) not less than one (1) time in any twelve (126) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request at Lender's expense, or at Borrowers' expense any time or times as Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.appraiser

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory with respect to Inventory counting service on behalf of Borrowers and Guarantors shall, (i) Borrower shall conduct a physical count of the its Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic unless Borrower's cycle counts or otherwise, of Inventory during such year are reasonably acceptable to Lender as to the scope, methodology and frequency and are at least ninety-five (95%) percent accurate when compared with Borrower's Inventory of the Distribution Divisionaccounting records, but in each case (ii) Borrower shall conduct a physical inventory at any time or times as Administrative Agent Lender may request on or after and during the continuance of an Event of Default, and (iii) promptly following any such physical inventory or each cycle count, upon request by Lender, Borrower shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count or cycle count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.permitted

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors neither Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers shalleach Borrower shall deliver to Lender, at their expense, (i) not reports prepared by third party surveyors, acceptable to Lender, with respect to the quantity, grade, cost, etc. of such Borrower's inventory with such reports to be prepared on a frequency consistent with historical practice, but in no event less than one once per month (1) time in any twelve (12) month period, if Excess Availability or at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times other intervals as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expensefrom time to time), in each case, deliver or cause to and which reports shall be delivered directly to Administrative Agent written appraisals as to the Inventory Lender and shall be in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to relyLender; (e) Borrowers and Guarantors each Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto)laws; (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors each Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any a Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors each Borrower shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records itemizing and describing in a manner consistent with its current practices as all material respects the kind, type and quality of Inventory and itemizing and describing the Effective Date (except to the extent quantity of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative AgentInventory, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as otherwise so that all Inventory is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to a cycle count or otherwise) shall supply Administrative Agent with a report in the form and with such reasonable specificity as may be reasonably satisfactory to Administrative Agent concerning the results of such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except (ii) to move Inventory directly from one location set forth or permitted herein to another such location and except except, and (iii) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, period (or if at any time the aggregate amount of the Excess Availability at all times during such twelve (12) month period of Borrowers is greater less than an amount equal to twenty (20%) percent of the Total Borrowing BaseMaximum Credit, (ii) not less than then two (2) times in any twelve (12) month period), if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseany time as Agent may request at its expense (for the account of Lenders), deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; , except for the right rights of customers to return given to retail customers of Borrowers defective or non-conforming goods in the ordinary course of business and in accordance with the then current effective return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Borrower Agent to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower's or Guarantor's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice once each fiscal year year, but at any time or times as to non-perishable Inventory Agent may request at any time an Event of the Retail Division Default exists or has occurred and is continuing, and promptly following such physical inventory (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein and except to return defective or non-conforming Inventory to the manufacturers or vendors thereof; (d) upon Agent's request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not no less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; methodology (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and each Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, Borrower's or such practices as a result of the establishment of a reliable, consistent Guarantor's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers Borrower and Guarantors shall, or a third party inventory counting service on behalf shall conduct cycle counts of Borrowers the Inventory at least once each year which shall include counts of at least 85% of the Borrower's and Guarantors' Inventory; provided that Borrower and Guarantors shall, shall conduct a physical count of the ---- Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such cycle count or physical inventory count, as applicable, shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers Borrower and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or such Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Agent's request, Borrower shall, at their its expense, (i) not less no more than one (1) time in once during any twelve (12) month periodfiscal year, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers Borrower and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition none of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.65

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwisewall to wall counts so that at least ninety-five (95%) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as all Inventory is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to year during the Inventory of the Distribution Division, term hereof but in each case at any time or times as Administrative Agent Lender may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Lender’s request, Borrowers shall, (i) at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability (ii) at their expense one (1) additional time at any time during that Excess Availability is less than $10,000,000, (iii) at Lender’s expense, two (2) further additional times, as Lender may request in such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iiiiv) at any time or times at Borrowers’ expense as Administrative Agent Lender may request on if a Default or after an Event of Default shall exist or at Administrative Agent’s own expense, in each casehave occurred and be continuing, deliver or cause to be delivered to Administrative Agent Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser reasonably acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; , except for the right of to return given to retail customers of Borrowers in the ordinary course of the business and of Borrowers in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable conditioncondition (subject to Borrowers’ normal reserves for damaged and defective Inventory); and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Lender or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Lender pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent and accurate perpetual inventory system at Borrower's cost therefor, the Retail Division for pharmacy Sales Price thereof and non-perishables), daily withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors shall, or Borrower shall cause a third party inventory counting service on behalf of Borrowers and Guarantors shall, firm reasonably acceptable to Lender to conduct a complete physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory a minimum of the Retail Division once over every twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one 12) month period (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic by cycle counts count or otherwise), except, that, (i) and once each fiscal four (4upon the occurrence of an Event of Default which results in an acceleration of payment of all Obligations pursuant to Section 10.2(b) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Divisionhereof, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case such physical count shall be conducted at any time or times as Administrative Agent Lender may request on or after and (ii) upon the occurrence of an Event of DefaultDefault which does not result in such acceleration of payment of all Obligations, such physical count shall be conducted at any time as Lender may request but no more than once in any three (3) month period, and promptly following any such physical inventory count, such firm shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; ; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; location; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after upon the occurrence of an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and Lender by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; rely (with the understanding that Lender may establish Availability Reserves as Lender may deem advisable in its reasonable discretion based upon the results of such updated appraisals in accordance with Section 1.4 and 2.1 hereof); (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); ; (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); Inventory; (g) Borrowers and Guarantors Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory with the right exception of return given to retail customers of Borrowers Inventory sold in the ordinary course of Borrower's business subject to Borrower's normal and in accordance with the then current customary return policy of Borrowers; policy; (h) Borrowers and Guarantors Borrower shall keep the Inventory in good and marketable condition; and ; (i) Borrower shall not, without prior written notice to Lender, acquire or accept any Inventory on consignment or approval except as set forth on Schedule 7.3(1) hereto; and (j) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through the occurrence of an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default Default, Borrower shall exist or have occurred or four (4) fiscal week period not return any Inventory to its vendors without the prior consent of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersLender.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) of its Inventory according to current practices (or, if requested by Lender upon the occurrence and once each fiscal four (4) week period during the continuation of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, a physical Inventory count), and promptly following any such physical inventory count shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender’s request, Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent set forth by Lender and by an appraiser acceptable recommended by Lender (Lender shall use its commercially reasonable effort to Administrative Agentsupply Borrower with a choice of at least two appraisers from Lender’s approved list of appraisers), addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); ; (fa) It is the intention of the parties hereto that the obligations of Borrower under the Financing Statements and guarantees thereof be secured by a perfected first priority security interest in the Collateral. Accordingly, with respect to assets acquired after the Closing Date that are intended to be subject to the Lien created by this Agreement but which are not so subject, Borrower shall, from time to time (and, in any event, within 30 days after the reasonable request by Lender to do so), (A) execute and deliver to Lender such amendments to Lender or such other documents as between Administrative Agent and Lender shall reasonably deem necessary or advisable to grant to Lender, for the benefit of Lenders, a Lien on such assets, (B) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable requirements of law, including, without limitation, the one handfiling of financing statements in such jurisdictions as may be reasonably requested by Lender, and Borrowers and Guarantors(C) if requested by Lender, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or deliver to Lender legal opinions relating to the productionmatters described in clauses (A) and (B) immediately preceding, use, sale or other disposition of the Inventory (but nothing contained herein which opinions shall be construed as the basis for any liability of any Borrower or Guarantor as in form and substance, and from counsel, reasonably satisfactory to Lender. (b) With respect to any third party); (g) Borrowers and Guarantors shall not sell Inventory Person that, subsequent to any customer on approvalthe Closing Date, or any other basis which entitles becomes a domestic Recourse Subsidiary of Parent, promptly upon the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right request of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and Lender: (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable cause such new Subsidiary to Administrative Agent, become a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only party to the extent that a physical count that Subsidiary Guarantee, pursuant to documentation which is acceptable in form and substance reasonably satisfactory to Borrowers Lender and Administrative Agent has not been conducted (ii) if requested by such inventory counting service within Lender, deliver to Lender legal opinions relating to the matters described in clause (i) immediately preceding two fiscal quarters so long as no Default or Event of Default preceding, which opinions shall exist or have occurred or four be in form and substance, and from counsel, reasonably satisfactory to Lender. (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Datea) at any time a Default or an Event of Default shall exist exists or have occurred, the results has occurred and is continuing (i) demand payment on Accounts or other proceeds of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.Inventory or other Collateral,

Inventory Covenants. With respect to the Inventory: Inventory (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records itemizing and describing the kind, type, quality and quantity of Inventory and such Borrower’s cost therefor, in a manner each case consistent with its current practices as of the Effective Date (except records reviewed by Agent prior to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Original Closing Date; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent or Term Loan Agent may request on or after during the existence of an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location and except location, (iii) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein or (iv) to an outside processor for processing; (d) Borrowers upon Agent’s request, Borrower shall, at their expense, (i) not less no more than one (1) time in any twelve twenty-four (12) month period, if Excess Availability at all times during such twelve (1224) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times or once in any twelve (12) month periodperiod in respect of core Inventory), if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event during the existence of Default or at Administrative Agent’s own expense, in each casea Trigger Event, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an independent appraiser acceptable to Administrative AgentAgent applying an approach to valuation which is consistent to the approach used in the appraisals of Borrowers’ Inventory prepared for Agent prior to Original Closing Date, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent that appropriate adjustments have been made pursuant to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersSection 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count counts of the Inventory at least twice each fiscal year as to non-perishable (excluding Inventory of the Retail Division located in retail stores that have not been open for more than twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether months) either through periodic cycle counts or otherwise) wall to wall counts, so that all Inventory located at distribution centers and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as retail stores that have been open for more than twelve months is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported business, (ii) for sales, returns and exchanges of Inventory to Administrative Agent manufacturers and suppliers in accordance with the terms hereof and except ordinary course of business; (iii) to move Inventory directly from one location set forth or permitted herein to another such location and except (iv) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month periodperiod (or more frequently as Agent may determine but not at Borrowers’ expense), if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may reasonably request on or after upon the occurrence and during the continuance of an Event of Default or at Administrative Agent’s own expense, in each caseif there is a Material Adverse Effect, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, to the extent applicable, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and Lenders, on the one hand, Secured Parties and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right Inventory other than returns and exchanges of return given to retail Inventory from customers of Borrowers in the ordinary course business of business and in accordance such Borrower or Guarantor consistent with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval except for (determined in accordance with the current accounting principles x) magazines, stationery and greeting cards, and (y) perishable food stuffs of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersde minimus value.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain correct and accurate inventory records in a manner consistent with its current practices as of the Effective Date date hereof (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Datedate hereof) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the Inventory: (a) each US Borrower and Guarantor shall at all times maintain inventory records satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent US Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each US Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors each US Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its such US Borrower’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender’s request, each US Borrower shall, at their its expense, (i) not less but no more than one (1) time once in any twelve three (123) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors each US Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each US Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (g) Borrowers and Guarantors each US Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any such US Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors each US Borrower shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s requesteach US Borrower shall not, Borrowers shallwithout prior written notice to Lender, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count acquire or accept any Inventory on consignment or approval and (j) none of the Inventory of or other Collateral constitutes farm products or the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersproceeds thereof.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as all material respects itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice once each fiscal year year, but at any time or times as to non-perishable Inventory Agent may request at any time a Default or an Event of the Retail Division Default exists or has occurred and is continuing, and promptly following such physical inventory (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and shall supply Agent at least once each calendar quarter if any such counts are performed within such quarter, or otherwise once each calendar year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory having an aggregate value of more than $500,000 in the aggregate, from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, (i) at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability (ii) at any time during Agent’s expense, one (1) further additional time, as Agent may request in such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times at Borrowers’ expense as Administrative Agent may request on if a Default or after an Event of Default shall exist or at Administrative Agent’s own expense, in each casehave occurred and be continuing, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) as of the date hereof, Borrowers and Guarantors shall do not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory but shall give Agent prior written notice if such practice changes together with such information with respect to the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return new policy of Borrowersas may reasonably be requested by Agent; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable conditionall respects as required under the terms of this Agreement; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not acquire or accept any Inventory on consignment or approval unless such Inventory has been specifically identified in accordance a report with the current accounting principles of Borrowers respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof when required to be included in such report or Agent has otherwise received prior written notice thereof in form and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service substance reasonably satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersAgent.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors Borrower shall, or a third party inventory counting service on behalf of Borrowers at its sole cost and Guarantors shallexpense, conduct a physical count of the Inventory at least twice once during each fiscal year as to non-perishable Inventory of the Retail Division twelve (or on and 12) month period after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Divisiondate hereof, and at least once up to an additional three (3) times during each year, whether through periodic cycle counts or otherwise, twelve (12) month period as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and at any other time or times as Lender may request at Lender's sole cost and expense, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers d upon Lender's request, Borrower shall, at their its sole cost and expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all and up to an additional three (3) times during such each twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent Lender may request on or after an Event of Default Default, and at any other time or times as Lender may request at Administrative Agent’s own Lender's sole cost and expense, in each case, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records itemizing and describing the kind, type, quality and quantity of Inventory, Borrower's cost therefor and daily withdrawals therefrom and additions thereto; (b) Borrower shall conduct cycle counts in a manner consistent accordance with its current practices as of the Effective Date practice such that each stock keeping unit (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), (b"SKU") Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and counted at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any each such physical inventory cycle count, Borrower shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical cycle count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, sales or returns or transfers of Inventory in the ordinary course of its Borrower's business and Inventory that are reported to Administrative Agent in accordance with the terms hereof is under repair by a third party and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Agent's request, Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and or upon which Administrative Agent and Lenders are is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their its expense, conduct through no more than once as directed by Agent in any three (3) month period, but at any time or times as Agent may request on or after an inventory counting service acceptable Event of Default, deliver or cause to Administrative Agent, a physical count of be delivered to Agent written desktop appraisals as to the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is and by an appraiser acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation upon which Agent is expressly permitted to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.rely;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agents, keeping correct and accurate inventory records in a manner consistent with its current practices as all material respects itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory either through periodic cycle counts or wall to wall counts, so that all Inventory is subject to such counts at least twice once each fiscal year year, but at any time or times as to non-perishable Inventory Agents may request at any time a Default or an Event of the Retail Division Default exists or has occurred and is continuing, and promptly following such physical inventory (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwisewall to wall counts) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and shall supply Agents at least once each calendar quarter if any such counts are performed within such quarter, or otherwise once each calendar year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Agents concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentAgents, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during or up to one (1) additional time in such twelve (12) month period is greater than an upon Agents’ request that could be delivered only when the aggregate principal amount equal to twenty (20%) percent of the Total Borrowing BaseRevolving Loans and Letter of Credit Obligations outstanding with respect to all Borrowers exceeds $5,000,000, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability but at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times their expense as Administrative Agent Agents may request on if a Default or after an Event of Default shall exist or at Administrative Agent’s own expensehave occurred and be continuing, in each caseor the aggregate amount of the Excess Availability shall be less than $7,500,000, deliver or cause to be delivered to Administrative Agent Agents written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Agents and by an appraiser reasonably acceptable to Administrative AgentAgents, addressed to Administrative Agent Agents and Lenders and upon which Administrative Agent Agents and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent Agents and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) as of the date hereof, Borrowers and Guarantors shall do not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory but shall give Agents prior written notice if such practice changes together with such information with respect to the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return new policy of Borrowersas may reasonably be requested by Agents; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not acquire or accept any Inventory on consignment or approval unless such Inventory has been specifically identified in accordance a report with the current accounting principles of Borrowers respect thereto provided by Borrower Agent to Agents pursuant to Section 7.1(a) hereof when required to be included in such report or Agents has otherwise received prior written notice thereof in form and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service substance reasonably satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersAgents.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of DefaultDefault which is continuing, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each casewhich is continuing, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor ------------------- shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping in all material respects correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of Inventory, the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers by no later than February 15, 2000, the books and Guarantors shall, or a third party records of each Borrower shall be reconciled and adjusted to reflect the results of the 1999 year-end physical inventory counting service and all reports with respect to Inventory provided by any Borrower to Agent and Lenders shall be based on behalf the amount of Borrowers the Inventory after giving effect to such reconciliation and Guarantors shall, adjustment; (c) each Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and such Borrower at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (cd) Borrowers and Guarantors each Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except such Borrower's business, (ii) to move Inventory directly from one location of such Borrower set forth or permitted herein to another such location of such Borrower or any other Borrower (so long as a financing statement between Agent as secured party and except such other Borrower, as debtor, covering such Inventory has previously been recorded in the appropriate governmental offices of the jurisdiction of such location), provided, that, in no event shall the Inventory and Equipment located in Mexico have an aggregate value in excess of $8,000,000 at any time and (iii) for Inventory shipped from the manufacturer thereof to such any Borrower or Guarantor to any Borrower's customer which is in transit from such manufacturer to the locations set forth or permitted hereinherein or to such customer; (de) upon Agent's request, Borrowers shall, at their expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseand for so long as the same is continuing, deliver or cause to be delivered to Administrative Agent written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders Lenders, and upon which Administrative Agent and Lenders are expressly permitted to rely; (ef) Borrowers and Guarantors each Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (fg) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed Inventory, except for liabilities incurred by a Lender due to acts or omissions of such Lender which constitute gross negligence or wilful misconduct as the basis for any liability determined pursuant to a final non-appealable order of any Borrower or Guarantor as to any third party)a court of competent jurisdiction; (gh) Borrowers and Guarantors each Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any such Borrower or Guarantor to repurchase such Inventory; Inventory (except for the right of return given to retail of customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowersfor Inventory which is defective or non-conforming); (hi) Borrowers and Guarantors each Borrower shall keep the Inventory in good and marketable conditioncondition (other than obsolete Inventory); and (ij) upon Administrative Agent’s requesteach Borrower shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable without prior written notice to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Borrower's cost therefor; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and otherwise at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to periodic cycle counting or otherwise) shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, no more than four (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (24) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower's or Guarantor's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers (other than Sumco and Guarantors shall, H&H Electronic) shall conduct a physical count of the their Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the and Sumco and H&H Electronic shall conduct a physical count of their Inventory of the Distribution Divisionat least once a month, but (in each case any case) at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent's request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) upon Agent's request, Borrowers shall, at their expense, no more than two (2) times in any twelve (12) month period, but at any time or times as Agent may request on or after an Event of Default, deliver or cause to be delivered to Agent a written assayer's report as to the Precious Metal Inventory in form, scope and methodology acceptable to Agent and by an assayer acceptable to Agent, addressed to Agent and Lenders upon which Agent and Lenders are expressly permitted to rely; (f) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (fg) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (h) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gi) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hj) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ik) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in accordance a report with the current accounting principles of Borrowers and Guarantors as of the Effective Daterespect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) at hereof, acquire or accept any time a Default Inventory on consignment or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: Inventory (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records itemizing and describing the kind, type, quality and quantity of Inventory and such Borrower’s cost therefor, in a manner each case consistent with its current practices as of the Effective Date (except records reviewed by Agent prior to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Original Closing Date; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after during the existence of an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location and except location, (iii) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinherein or (iv) to an outside processor for processing; (d) Borrowers upon Agent’s request, Borrower shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve period (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times or twice in any twelve (12) month periodperiod in respect of core Inventory), if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after during the existence of an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an independent appraiser acceptable to Administrative AgentAgent applying an approach to valuation which is consistent to the approach used in the appraisals of Borrowers’ Inventory prepared for Agent prior to Original Closing Date, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent that appropriate adjustments have been made pursuant to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersSection 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping in all material respects correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of Inventory, the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each Borrower shall conduct a physical count of the its Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or and after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors each Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its the business that are reported to Administrative Agent in accordance with the terms hereof of such Borrower and except (ii) to move Inventory directly from one location of a Borrower set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to of such Borrower or Guarantor which is any other Borrower (so long as a financing statement between Lender, as secured party (as to assets of US Borrowers) covering such Inventory has previously been recorded in transit to the locations set forth or permitted hereinappropriate governmental offices of the jurisdiction of such location); (d) upon Lender's request, Borrowers shall, at their expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender, and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors each Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor will promptly notify Lender in writing if any creditor of a Borrower imposes retention of title provisions on such Borrower as part of its conditions of supply to such Borrower in addition to those reported to Lender pursuant to Section 7.1(a)(i); (g) each Borrower assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory Inventory, (but nothing contained herein shall be construed as the basis for any liability of any h) each Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any a Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors each Borrower shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of each Borrower shall not acquire or accept any Inventory on consignment or approval unless such Inventory is marked as being consigned and segregated from the other Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the ------------------- Inventory: : (a) each Borrower and Guarantor Loan Party shall at all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Loan Party's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Loan Parties shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as the Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply the Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to the Administrative Agent concerning such physical count; (c) Borrowers and Guarantors the Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the Administrative Agent and the Collateral Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location, (iii) for consignments of Inventory to a third party (or similar arrangements with respect to Inventory) with an aggregate Book Value of all such Inventory not at any time exceeding $2,000,000, (iv) to move Inventory to such other locations outside of the continental United States as the Loan Parties may elect, provided that, in -------- the case of this clause (iv) (A) the book value of such Inventory (together with any other Inventory located outside of the continental United States, whether pursuant to consignment arrangements or otherwise) shall not exceed an aggregate amount equal to $15,000,000 at any time outstanding, and (B) such Inventory shall be moved to such other location in the ordinary course of business of such Loan Party, and except (v) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor Loan Party which is in transit to the locations set forth or permitted herein; (d) upon the Administrative Agent's request, the Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as the Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to the Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to the Administrative Agent and by an appraiser acceptable to the Administrative Agent, addressed to Administrative Agent Agents and Lenders and upon which Administrative Agent Agents and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors the Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers except as otherwise expressly permitted under clauses (c)(iii) and Guarantors (c)(iv) above, the Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Loan Party to repurchase such Inventory; except for (i) the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors Loan Parties shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestthe Loan Parties shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable without prior written notice to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only or the specific identification of such Inventory in a report with respect thereto provided by the Administrative Borrower to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default pursuant to Section 9.03(a), acquire or Event of Default shall exist accept any -------------- Inventory on consignment or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor Borrowers shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrowers' cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, Default and promptly following any such physical inventory inventory, Borrowers shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrowers' business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) upon Lender's request, Borrowers shall, at their expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, that is continuing; deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.and

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lenders and Lenders' Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory with respect to Inventory counting service on behalf of Borrowers and Guarantors shall, (i) each Borrower shall conduct a physical count of the its Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic unless such Borrower's cycle counts or otherwise, of Inventory during such year are reasonably acceptable to Lender as to the scope, methodology and frequency and are at least ninety-five (95%) percent accurate when compared with such Borrower's Inventory of the Distribution Divisionaccounting records, but in each case (ii) Borrowers shall conduct a physical inventory at any time or times as Administrative Lenders' Agent may request on or after and during the continuance of an Event of Default, and (iii) promptly following any such physical inventory or each cycle count, upon request by Lenders' Agent, each Borrower shall supply Administrative Lenders' Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Lenders' Agent and Lenders concerning such physical count or cycle count; (c) Borrowers and Guarantors no Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Lenders' Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its such Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count counts of the Inventory at least twice each fiscal year as to non-perishable (excluding Inventory of the Retail Division located in retail stores that have not been open for more than twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether months) either through periodic cycle counts or otherwise) wall to wall counts, so that all Inventory located at distribution centers and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as retail stores that have been open for more than twelve months is subject to the perishable Inventory of the Retail Division, and such counts at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory counts of the Inventory (whether through periodic cycle counts or wall to wall counts) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported business, (ii) for sales, returns and exchanges of Inventory to Administrative Agent manufacturers and suppliers in accordance with the terms hereof and except ordinary course of business; (iii) to move Inventory directly from one location set forth or permitted herein to another such permitted location and except (iv) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month periodperiod (or more frequently as Agent may determine but not at Borrowers’ expense), if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may reasonably request on or after upon the occurrence and during the continuance of an Event of Default or if there is a Material Adverse Effect (at Administrative Agent’s own Borrowers’ sole expense, in each case), deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; provided, however, that at all times Average Excess Availability is greater than fifty percent (50%) of the Commitments for the prior twelve month period prior to such request, only one such appraisal shall be at the sole expense of Borrowers and Guarantors; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, to the extent applicable, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and Lenders, on the one hand, Secured Parties and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right Inventory other than returns and exchanges of return given to retail Inventory from customers of Borrowers in the ordinary course business of business and in accordance such Borrower or Guarantor consistent with the then current return policy of Borrowerssuch Borrower or Guarantor; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval except for (determined in accordance with the current accounting principles x) magazines, stationery and greeting cards, and (y) perishable food stuffs of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersde minimus value.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to the Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower’s or Guarantor’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) the Borrowers and Guarantors shall, or a third party inventory counting service on behalf shall continue their current practices for conducting physical counts of Borrowers Inventory in the distribution centers and Guarantors shall, the retail stores but shall also conduct a such physical count counts of the such Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative the Agent may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative the Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative the Agent concerning such physical count; (c) the Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted hereinin the Security Documents, without the prior written consent of Administrative the Agent, except for sales, returns sales or transfers other dispositions of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon the Agent’s request, the Borrowers shall, at their expense, no more than three (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (23) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative the Agent may request on or after an Event of Default or at Administrative Agent’s own expenseany time Excess Availability is less than $150,000,000, and in each caseany event at any time at the expense of the Lenders, deliver or cause to be delivered to Administrative the Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative the Agent and by an appraiser acceptable to Administrative the Agent, addressed to Administrative the Agent and Lenders and upon which Administrative the Agent and Lenders are expressly permitted to rely; (e) the Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition none of the Inventory or other Collateral constitutes farm products (but nothing contained herein shall be construed as defined in the basis for any liability of any Borrower UCC) or Guarantor as to any third party)the proceeds thereof; (g) the Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis upon which entitles the customer has a right to return or may obligate obligates any Borrower or Guarantor to repurchase such Inventory (it being acknowledged that this does not include discretionary decisions on the part of the Borrowers and Guarantors to repurchase Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers); (h) the Borrowers and Guarantors shall keep maintain current rent payments (within applicable grace periods contained in the leases) at all locations that contain Inventory in good and marketable condition; and (i) upon Administrative the Borrowers and the Guarantors shall provide Agent with a weekly report of new purchases of Inventory consisting of produce, dairy, meat and seafood or other categories or departments of Inventory as designated by the Agent’s request; in the event that Agent determines Inventory turnover or the nature, Borrowers shallquality, at their expensequantity, conduct through an inventory counting service acceptable to Administrative Agent, a physical count gross margin or mix of the Inventory of has deteriorated, Agent shall, in its sole discretion, have the Retail Division in form, scope and methodology acceptable right to Administrative Agent (but only to the extent that establish a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of BorrowersReserve.

Inventory Covenants. With respect to the Inventory: Inventory (other than consignment Inventory and supplies): (a) each Borrower and Guarantor Loan Party shall at all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Loan Party’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Loan Parties shall conduct a physical count of the Inventory (i) at least twice each fiscal any time any Agent may request (provided that (x) any Agent shall make such request no more frequently than once in any calendar year as and (y) prior to non-perishable Inventory conducting such physical count of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative AgentInventory, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance such Agent making such request shall consult with the current accounting practices of Borrowers and Guarantors as of the Effective Date) Parent as to the perishable Inventory of the Retail Division, methodology and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case survey) and (ii) at any time or times as Administrative any Agent may request on or after an Event of Default, and in each case promptly following any such physical inventory count shall supply Administrative any Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative such Agent concerning such physical count; (c) Borrowers and Guarantors the Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the Administrative Agent and the Collateral Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth on Schedule 7.01(bb) or permitted herein to another such location location, and except (iii) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor Loan Party which is in transit to the locations set forth or permitted herein; (d) upon the Administrative Agent’s request, the Borrowers shall, at their expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as the Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to the Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to the Administrative Agent and by an appraiser acceptable to the Administrative Agent, addressed to Administrative Agent Agents and Lenders and upon which Administrative Agent Agents and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors the Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors the Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Loan Party to repurchase such Inventory; except for (i) the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors Loan Parties shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestthe Loan Parties shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable without prior written notice to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only or the specific identification of such Inventory in a report with respect thereto provided by the Borrower to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default pursuant to Section 9.03(a) hereof, acquire or Event of Default shall exist accept any Inventory on consignment or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may in good faith be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except EXCEPT (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein to another such location location, and except for (iii) Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Agent's request, Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseand for so long as the same is continuing, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except Inventory, Borrower's cost for such Inventory and daily withdrawals from and additions to the extent of changes in such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Inventory; (b) Borrowers and Guarantors shallBorrower shall cause, at Borrower's expense, RGIS or a such other third party inventory counting service on behalf of Borrowers and Guarantors shall, firm acceptable to Lender to conduct a complete physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory a minimum of the Retail Division once every twelve (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (112) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, months but in each case at any time or times as Administrative Agent Lender may request on or after upon the occurrence of an Event of Default, and promptly following any such physical inventory count such firm shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported and returns authorized pursuant to Administrative Agent in accordance with the terms hereof Subsection 7.3(j) of this Agreement, and except to move Inventory directly from one location set forth or permitted herein to another such location location, including without limitation, a third party return processing facility with respect to which Lender has received a bailee waiver in form and except for Inventory shipped from the manufacturer thereof substance satisfactory to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; Lender, (d) Borrowers shallupon Lender's request, Borrower shall deliver or cause to be delivered to Lender written reports or appraisals as to the Inventory in form and scope acceptable to Lender by an appraiser acceptable to Lender, and conducted on a basis consistent with the appraisal of the BGA Consulting, a division of the Buxbxxx Xxxup dated September 8, 1998, addressed to Lender or upon which Lender is expressly permitted to rely, provided that Borrower shall be required to provide such reports or appraisals at their expense, (i) not less Borrower's own expense no more than one (1) time twice in any twelve (12) month periodperiod so long as no Event of Default has occurred, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) at any time or times as Administrative Agent Lender may request on or after upon the occurrence of an Event of Default or Default, and at Administrative Agent’s own any time as Lender may request at Lender's expense, in each case, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor Loan Party shall at all times maintain inventory records reasonably satisfactory to Agent in substantially the same manner as being maintained on the date hereof (subject, however, to the terms of clause (o) of the definition of Eligible Inventory), keeping records correct and accurate inventory records in a manner consistent with its current practices as all material respects itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory and such practices as a result of the establishment of a reliable, consistent and accurate perpetual inventory system at the Retail Division for pharmacy and non-perishables), Loan Party’s cost therefor; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Loan Parties shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that no less frequently than is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance consistent with the current accounting past practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution DivisionLoan Parties, but in each case at any time or times as Administrative Agent may request on or after upon the occurrence and during the continuance of an Event of Default, and promptly following any such physical inventory shall shall, promptly upon Agent’s request, supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except except: (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth or permitted herein (including any new location opened pursuant to Section 9.2 hereof) to another such location and except for location, (iii) Inventory shipped from the manufacturer or distributor thereof to such Borrower or Guarantor Loan Party which is in transit to the locations set forth or permitted hereinherein (including any new locations opened pursuant to Section 9.2 hereof), and (iv) Inventory (other than Inventory consisting of fuel located at leased terminals) having a value not greater than $500,000 in the aggregate any time; (d) upon Agent’s request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on at the expense of Agent or after at the expense of Borrowers upon the occurrence and during the continuance of an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; provided, that, if a Cash Dominion Period exists, upon Agent’s request, Borrowers shall, at their expense, deliver or cause to be delivered to Agent an additional written inventory appraisal during any twelve (12) month period which shall be in form, scope and methodology reasonably acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Agent and LendersLoan Parties, on the one hand, and Borrowers Agent and GuarantorsLenders, on the other hand, each Borrower and Guarantor Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory Inventory, (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (gh) Borrowers and Guarantors Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Loan Party to repurchase such Inventory; , except for the right of return given to retail customers of Borrowers such Loan Party in the ordinary course of the business and of such Loan Party in accordance with the then current return policy of Borrowerssuch Loan Party; (hi) Borrowers and Guarantors Loan Parties shall keep the all Eligible Inventory in good and marketable conditioncondition for so long as it constitutes Eligible Inventory; and (ij) upon Loan Parties shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Agent’s requestBorrower to Agent pursuant to Section 7.1(a) hereof, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping records that are correct and accurate inventory in all material respects including records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Borrower's or Guarantor's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after the occurrence and during the continuance of an Event of Default, and promptly as soon as reasonably practicable following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative 50 Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory with a Value in excess of $250,000, in the case of Inventory at any one (1) location, or in excess of $500,000 in the aggregate for all Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, such consent not to be unreasonably withheld or delayed so long as no Default or Event of Default has occurred and is continuing, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported (including amounts shipped to Administrative Agent outside processors identified on Schedule 8.2 to the Information Certificate (subject to the rights of Borrowers and Guarantors to deliver Inventory into the possession of additional processors in accordance with the terms hereof Section 9.2)) and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent's request, Borrowers shall, at their expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after the occurrence and during the continuance of an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology substantially the same as reflected in the appraisals delivered to Agent prior to the Date hereof or otherwise reasonably acceptable to Administrative Agent and by an appraiser reasonably acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; provided, however, that so long as no Default or Event of Default shall have occurred and be continuing, Agent shall not retain any appraiser without the prior written consent of Administrative Borrower Representative, which consent shall not be unreasonably withheld or delayed; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in material conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Administrative Borrowers, Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors shall keep the Inventory in good and marketable condition, ordinary wear and tear excepted; and (ij) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined shall not, without prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Administrative Borrower Representative to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval, except in accordance with the current accounting principles of Borrowers past practices and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowerspolicies.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records, consistent with the current practices of Borrower as of the date hereof, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time once each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent may request on or after an Event of DefaultDefault and for so long as the same is continuing, and promptly following any such physical inventory shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein, PROVIDED, THAT, Borrower may remove Inventory to any locations not otherwise permitted hereunder so long as the aggregate amount of all of such Inventory at such other locations does not have a Value in excess of $10,000; (d) Borrowers upon Agent's request, Borrower shall, at their its expense, (i) not less no more than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default and for so long as the same is continuing or at Administrative Agent’s own expense, any time on or after any change in each casethe calculation of standard costs of Inventory, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent in good faith and by an appraiser acceptable to Administrative AgentAgent (which includes Hilco Appraisal Services, LLC), addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to relyrely (PROVIDED, THAT, any appraisal requested at such time as an Event of Default exists or has occurred and is continuing or on and after a change in the calculation of standard costs shall not be considered for purposes of the limitation on the number of appraisals provided for herein); (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance in all material respects and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, each proceeds thereof; (g) Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for Inventory other than the right of customers to return given to retail customers of Borrowers defective or non-conforming goods in the ordinary course of business and in accordance with the then current return policy of Borrowersbusiness; (hi) Borrowers and Guarantors Borrower shall give Agent not less than thirty (30) days' written notice prior to the effectiveness of any change in the method of calculation of the standard costs of Inventory; (j) Borrower shall keep the Inventory generally in good and marketable condition; and (ik) upon Administrative Agent’s requestBorrower shall not, Borrowers shallwithout prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Borrower to Agent pursuant to Section 7.1(a) hereof, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default on consignment or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals and non-perishables), drawdowns therefrom and additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted hereinherein (other than Inventory received for testing or delivered as samples with a Value not to exceed $100,000 in the aggregate per annum), without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower’s business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers subject to limitation on expenses set forth in Section 9.15 hereof, Borrower shall, at their its expense, at least once every six (i6) not less than one (1) time in any twelve (12) month periodmonths, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders and Lender or upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;

Inventory Covenants. With respect to the Inventory: Inventory (other than consignment Inventory and supplies): (a) each Borrower and Guarantor Loan Party shall at all times maintain inventory records reasonably satisfactory to the Administrative Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in Inventory, such practices as a result of the establishment of a reliable, consistent Loan Party’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Loan Parties shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1i) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative any Agent may request (provided that any Agent shall make such a request no more frequently than once in any calendar year) and (ii) at any time any Agent may request on or after an Event of Default, and in each case promptly following any such physical inventory count shall supply Administrative any Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative such Agent concerning such physical count; (ccount;(c) Borrowers and Guarantors the Loan Parties shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the Administrative Agent and the Collateral Agent, except (i) for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except business, (ii) to move Inventory directly from one location set forth on Schedule 7.01(bb) or permitted herein to another such location location, and except (iii) for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor Loan Party which is in transit to the locations set forth or permitted herein; (d) Borrowers upon the Administrative Agent’s request, the Borrower shall, at their its expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as the Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to the Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to the Administrative Agent and by an appraiser acceptable to the Administrative Agent, addressed to Administrative Agent Agents and Lenders and upon which Administrative Agent Agents and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors the Loan Parties shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, proceeds thereof; (g) each Borrower and Guarantor Loan Party assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors the Loan Parties shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor Loan Party to repurchase such Inventory; except for (i) the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors Loan Parties shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestthe Loan Parties shall not, Borrowers shall, at their expense, conduct through an inventory counting service acceptable without prior written notice to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only or the specific identification of such Inventory in a report with respect thereto provided by the Borrower to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default pursuant to Section 9.03(a) hereof, acquire or Event of Default shall exist accept any Inventory on consignment or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersapproval.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of Inventory, the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliable, consistent cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, each Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors each Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative AgentLender, except for sales, returns or transfers sales of Inventory in the ordinary course of its such Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted hereinlocation; (d) Borrowers upon Lender's request, each Borrower shall, at their its expense, (i) not less no more than one (1) time once in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default exists or at Administrative Agent’s own expense, in each casehas occurred, deliver or cause to be delivered to Administrative Agent Lender written reports or appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors each Borrower shall produce, use, store and maintain the Inventory Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and or (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the each Borrower shall not acquire or accept any Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only on consignment or approval except to the extent that a physical count that such Inventory is acceptable to Borrowers and Administrative Agent has not been conducted specifically identified by such inventory counting service within the immediately preceding two fiscal quarters so long Borrower to Lender in any report with respect to Inventory provided by Borrower to Lender and is not included as no Default Eligible Inventory in any Borrowing Base Certificate or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowersotherwise.

Inventory Covenants. With respect to the Inventory: (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower’s cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and otherwise at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, year but in each case at any time or times as Administrative Agent may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to periodic cycle counts or otherwise) shall supply Administrative Agent with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Administrative Agent, except for sales, returns or transfers sales of Inventory in the ordinary course of its business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the Table of Contents locations set forth or permitted herein; (d) Borrowers upon Agent’s request, Borrower shall, at their its expense, (i) not less than one (1) time in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less no more than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent and by an appraiser acceptable to Administrative Agent, addressed to Administrative Agent and Lenders and upon which Administrative Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors Borrower shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on none of the one hand, and Borrowers and Guarantors, on Inventory or other Collateral constitutes farm products or the other hand, each proceeds thereof; (g) Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party)Inventory; (gh) Borrowers and Guarantors Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (hi) Borrowers and Guarantors Borrower shall keep the Inventory in good and marketable condition; and (ij) upon Administrative Agent’s requestBorrower shall not, Borrowers shallwithout prior written notice to Agent or the specific identification of such Inventory in a report with respect thereto provided by Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval. In addition to the foregoing, in the event that the Borrower, at their expenseany time, conduct through an inventory counting service acceptable to Administrative has Inventory on consignment having a value in excess of $1,000,000 in the aggregate, Borrower, at the request of Agent, a physical count of the Inventory of the Retail Division in formshall obtain consignee waivers, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service in form and substance satisfactory to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records Agent, from any consignee in possession or control of Borrowers to reconcile the inventory count to the inventory records Inventory having a value in excess of Borrowers$300,000.

Inventory Covenants. With respect to the Inventory: : (a) each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Lender, keeping correct and accurate inventory records in a manner consistent with its current practices as itemizing and describing the kind, type, quality and quantity of the Effective Date (except to the extent of changes in such practices as a result of the establishment of a reliableInventory, consistent Borrower's cost therefor and accurate perpetual inventory system at the Retail Division for pharmacy daily withdrawals therefrom and non-perishables), additions thereto; (b) Borrowers and Guarantors shall, or a third party inventory counting service on behalf of Borrowers and Guarantors shall, Borrower shall conduct a physical count of the Inventory at least twice each fiscal year as to non-perishable Inventory of the Retail Division (or on and after the establishment of a retail perpetual inventory system for pharmacy or non-perishables at the Retail Division that is satisfactory to Borrowers and Administrative Agent, one (1) time each year with respect to pharmacy and/or non-perishables, as applicable, whether either through periodic cycle counts or otherwise) and once each fiscal four (4) week period of Borrowers and Guarantors (determined in accordance with the current accounting practices of Borrowers and Guarantors as of the Effective Date) as to the perishable Inventory of the Retail Division, and otherwise at least once each year, whether through periodic cycle counts or otherwise, as to the Inventory of the Distribution Division, but in each case at any time or times as Administrative Agent Lender may request on or after an Event of Default, and promptly following any such physical inventory (whether pursuant to periodic cycle counts or otherwise) shall supply Administrative Agent Lender with a report in the form and with such specificity as may be reasonably satisfactory to Administrative Agent Lender concerning such physical count; (c) Borrowers and Guarantors Borrower shall not remove any Inventory from the locations set forth or permitted herein, including pursuant to Section 9.2 hereof, without the prior written consent of Administrative AgentLender, which consent shall not be unreasonably withheld, except for sales, returns or transfers sales of Inventory in the ordinary course of its Borrower's business that are reported to Administrative Agent in accordance with the terms hereof and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) Borrowers upon Lender's request, Borrower shall, at their its expense, (i) not less no more than one (1) time twice in any twelve (12) month period, if Excess Availability at all times during such twelve (12) month period is greater than an amount equal to twenty (20%) percent of the Total Borrowing Base, (ii) not less than two (2) times in any twelve (12) month period, if Excess Availability at any time during such twelve (12) month period is less than or equal to an amount equal to twenty (20%) percent of the Total Borrowing Base and (iii) but at any time or times as Administrative Agent Lender may request on or after an Event of Default or at Administrative Agent’s own expense, in each caseDefault, deliver or cause to be delivered to Administrative Agent Lender written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to Administrative Agent Lender and by an appraiser reasonably acceptable to Administrative AgentLender, addressed to Administrative Agent and Lenders Lender and upon which Administrative Agent and Lenders are Lender is expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws in all material respects (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) as between Administrative Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory (but nothing contained herein shall be construed as the basis for any liability of any Borrower or Guarantor as to any third party); (g) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory; except for the right of return given to retail customers of Borrowers in the ordinary course of business and in accordance with the then current return policy of Borrowers; (h) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (i) upon Administrative Agent’s request, Borrowers shall, at their expense, conduct through an inventory counting service acceptable to Administrative Agent, a physical count of the Inventory of the Retail Division in form, scope and methodology acceptable to Administrative Agent (but only to the extent that a physical count that is acceptable to Borrowers and Administrative Agent has not been conducted by such inventory counting service within the immediately preceding two fiscal quarters so long as no Default or Event of Default shall exist or have occurred or four (4) fiscal week period of Borrowers and Guarantors (determined in accordance with the current accounting principles of Borrowers and Guarantors as of the Effective Date) at any time a Default or Event of Default shall exist or have occurred, the results of which shall be reported directly by such inventory counting service to Administrative Agent and Borrowers shall promptly deliver confirmation to Administrative Agent that appropriate adjustments have been made to the inventory records of Borrowers to reconcile the inventory count to the inventory records of Borrowers.;