IN
ACCORDANCE WITH THE TERMS HEREOF, ESTABLISH A SEPARATE SUBSIDIARY THAT IS ONLY
ENGAGED IN THE BUSINESS OF PURCHASING GOODS FROM SUPPLIERS AND DELIVERING GOODS
GIVING RISE TO MILITARY RECEIVABLES, PROVIDED, THAT, SUCH SEPARATE SUBSIDIARY OR
SUBSIDIARIES SHALL BE A BORROWER HEREUNDER AND SHALL SATISFY ALL OF THE
REQUIREMENTS OF SECTION 9.24, INCLUDING THE EXECUTION AND DELIVERY OF SUCH
AGREEMENTS AND DOCUMENTS AS ADMINISTRATIVE AGENT MAY REASONABLY REQUEST IN
CONNECTION THEREWITH.
(D)
ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT AT ANY TIME OR TIMES, IN
ADMINISTRATIVE AGENT'S NAME OR IN THE NAME OF A NOMINEE OF ADMINISTRATIVE AGENT,
TO VERIFY THE VALIDITY, AMOUNT OR ANY OTHER MATTER RELATING TO ANY RECEIVABLES
OR OTHER COLLATERAL, BY MAIL, TELEPHONE, FACSIMILE TRANSMISSION OR OTHERWISE.
7.3
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