Common use of Eligible Inventory Clause in Contracts

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agent.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower Eligible Inventory" shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Inventory owned by Borrower; provided that Eligible Inventory shall not include any Inventory inventory (a) held on consignment, or not otherwise owned by Borrower, (b) which is damaged or is subject to any legal encumbrance other than Permitted Encumbrances, (c) which is not in the possession of the Borrower: Borrower unless (i) that is not owned by Agents have received a waiver from the Borrower free and clear of all Liens and rights of any other Person party in possession (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance including, without limitation, with respect to that Inventory), except the Liens all consolidator locations) of such inventory in favor of the Agent, on behalf of itself form and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower substance reasonably satisfactory to Agents or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and the total duration of such transit time is not more than three (3) Business Days, (d) which is subject to any lien, encumbrance or security interest which is otherwise prior to the liens granted to Agent (other than landlord's or lessor's liens under leases to which Borrower is a party provided no amount secured by such lien has become due and payable and not been paid), (e) as to which appropriate Uniform Commercial Code financing statements showing Borrower as debtor and Agent as secured party have not been filed in the proper filing office or offices in order to perfect Agent's security interest therein, (f) which has been shipped to a customer of Borrower regardless of whether such shipment is on a consignment basis, (g) which is not located on premises owned, leased or operated by the Borrower; (iv) that is covered by at a negotiable document of title, Permitted Inventory Location unless such document Inventory is in transit from one Permitted Inventory Location to another Permitted Inventory Location, and evidence the total duration of acceptable insurance covering such Inventory have been delivered to the Agent; transit time is not more than three (v3) that in the Agent’s reasonable determinationBusiness Days, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vih) that which consists of display items, promotional materials, items or packing or shipping materials, manufacturing supplies, work-in-in process Inventory or replacement parts; , (viii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s 's business; , (ixj) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can only be transported or sold only with licenses that are not readily available; or , or (xvk) that which is not covered by casualty insurance acceptable to Agents. General criteria for Eligible Inventory may be established and revised by Agents from time to time if Agents reasonably determine that there has been a substantive change in the Agentshrinkage, character, composition or mix, markdowns or retail markons and markups inconsistent with prior period practice, industry standards or current business plans. Agents may in their Permitted Discretion from time to time, upon three (3) days' prior notice to Borrower establish Reserves with respect to Eligible Inventory to the extent that Agents reasonably determine that (A) the liquidation value of the Eligible Inventory, or any category thereof, has decreased , or (B) the nature of the inventory has changed. In determining whether to establish Reserves with respect to Eligible Inventory, Agents may consider events, conditions, contingencies or risks which are also considered in determining Eligible Inventory.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered Inventory owned by the a Borrower to the Agent and on other information available to the that is deemed by Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if anyPermitted Discretion, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoingEligible Inventory; provided that, no Inventory shall be Eligible Inventory shall not include unless it (a) is located at a Borrower’s principal place of business or any Inventory of the other facility storing cased goods and/or bulk wine that complies with such Borrower: ’s related representations and warranties contained in this Agreement, (ib) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory)used, except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excessreturned, obsolete, unsalablespoiled, shopworninadequately sealed, secondspackaged or stored, damagedor otherwise unmerchantable, imperfect consigned, demonstrative or unfit for sale; custom inventory, supplies (vi) that consists of display items, promotional materialsother than bulk wine), packing or shipping materials, manufacturing supplies(c) is bulk wine at cost or wholesale “FOB” cased wine, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not older than three years following December 31 of a type held its vintage year for sale white wine and that is either (i) not older than four years following December 31 of its vintage year for red wine or (ii) is four years or older following December 31 of its vintage year for red wine but does not exceed $5,000,000 in the ordinary course aggregate in Value of such red wine; (d) is not held on consignment, nor subject to any deposit or down payment; (e) meets all standards imposed by any Governmental Authority; (f) conforms with the Borrowercovenants and representations herein; (g) is subject to Agent’s business; duly perfected, first priority Lien, and no other Lien (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; other than (x) that is ▇▇▇▇-and-hold inventory any Lien permitted pursuant to PACA or that is evidenced by an account; (xi) as any other similar agricultural law or regulation with respect to which Agent has established a Grower’s Reserve, (y) non-consensual Permitted Liens arising by operation of law which are junior to the Agent’s Lien, on behalf of itself and or (z) any other Lien with respect to which Agent has establish an appropriate reserve its Permitted Discretion); (h) is within the Lenderscontinental United States, therein is not a first priority perfected Lien; in transit (xiiexcept (x) as between locations of Borrowers, or (y) to another location disclosed to Agent with respect to which any of the representations Agent has received an appropriate Lien Waiver or warranties pertaining to Inventory set forth established an appropriate reserve in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that its Permitted Discretion, and is not covered consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver or established an appropriate reserve in its Permitted Discretion; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; (l) is reflected in the details of a current perpetual inventory report; or (m) if it is Inventory owned by casualty insurance acceptable a target acquired in connection with a Permitted Acquisition, an appraisal and field examination with respect to such Inventory have been completed and are reasonably satisfactory to Agent (which appraisal and field examination may be conducted prior to the Agentclosing of such Permitted Acquisition).

Eligible Inventory. Based on The second sentence of the most recent Borrowing Base Certificate definition of Eligible Inventory is hereby deleted and replaced with the following: "Inventory located outside the United States of America that a Revolving Loan Borrower has acquired in accordance with the terms of the purchase arrangements between such Revolving Loan Borrower and a supplier and as to which such Revolving Loan Borrower has obtained legal title and that would otherwise be determined by Lender to be Eligible Inventory in all respects which is in transit to the premises of a Customs Broker in the United States of America which is an Eligible Inventory Location or such other Eligible Inventory Location in the United States of America; provided, that, (a) Lender has a first priority perfected security interest in and lien upon such Inventory, (b) Lender has possession of not less than two (2) of a total of three (3) originals of the documents of title with respect to such Inventory and all of the terms and conditions of Section 8 of the Twenty-Seventh Amendment to Loan Agreement, dated as of October 31, 2003, among Lender, Borrowers and Guarantors shall have been satisfied, (c) Lender shall have received (i) a Notification and Acknowledgment Agreement, duly authorized, executed and delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory either or both of the Borrower shall be Customs Broker and Freight Forwarder, as the case may be, handling the shipping and delivery of such Inventory, (ii) a copy of the certificate of marine cargo insurance in connection therewith in which it has been named as an additional insured and loss payee in a manner acceptable to Lender, and (iii) a copy of the invoice, packing slip and manifest with respect thereto, (d) such Inventory is not subject to any Letter of Credit Accommodation, (e) the aggregate amount of the Value of such Inventory that is deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include at any time exceed $1,000,000, and (f) such Inventory of the Borrower: (i) that is shall not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; for more than sixty (iv60) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentdays."

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any mean all Inventory of other than the Borrowerfollowing: (iA) that Any item of Inventory which is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentgood condition, or (y) Reserves satisfactory to the Agent have been established with respect theretodoes not meet all standards imposed by any governmental agency, or (iii) located at any site if the aggregate book value of Inventory at any department or division thereof, having regulatory authority over such location is less than $100,000; (iii) that is placed on consignmentgoods, is in transit its use or sale, or is otherwise not located on premises owned, leased either currently unusable or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently unsalable in the ordinary course of the Borrower’s 's business, or is not otherwise acceptable to Lender due to age, type, category or quantity; (ixB) that consists Any item of discontinued Inventory which is not located at one of the locations listed on Exhibit 3.3(B) attached hereto, is not subject to and covered by Lender's perfected security interest and is subject to any other lien, claim, encumbrance or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”security interest; (xC) that is ▇▇▇▇-and-hold inventory Any item of Inventory which has been consigned, sold or that is evidenced by an accountleased to any Person; (xiD) as Any item of Inventory unless each of the warranties and representations set forth in Section 9.3 has been reaffirmed with respect such item of Inventory at the date that the most recent Inventory Report was delivered to Lender; and (E) Any item of Inventory which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lienwork in-process; (xiiF) as to which any Any item of the representations or warranties pertaining to Inventory set forth located in this Agreement Canada or the Borrower Security Agreement is untrueUnited Kingdom; (xiiiG) that consists Any item of any costs associated with “freight-in” chargesInventory which is Slow Moving Inventory; (xivH) that consists Any item of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; orInventory which is courseware; (xvI) that Any item of Inventory which is not covered a sort of the FMST Simulator; and (J) Any item of Inventory which was purchased by casualty insurance acceptable to Borrower in or as part of a "bulk" transfer or sale of assets unless Borrower, and the Agentseller of such item, have complied with all applicable bulk sales or bulk transfer laws.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall have the sole right, in its Credit Judgment sole reasonable discretion exercised in accordance with its customary business practices, to determine which Inventory of Borrowers is eligible (the Borrower shall be deemed to be “"Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan"). Without limiting Agent's discretion, the foregoing, Eligible following Inventory shall not include any Inventory of the Borrower: be Eligible Inventory: (i) that Inventory which is obsolete, not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentgood condition, or (y) Reserves satisfactory to the Agent have been established with respect thereto, not either currently usable or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently salable in the ordinary course of the applicable Borrower’s 's business; ; (ixii) that consists Inventory other than blank T-shirt stock, current calendar model year die-cast finished goods and prior calendar model year die-cast finished goods, (iii) Inventory which Agent determines, in the exercise of discontinued or slow-moving items Agent's sole reasonable discretion exercise in accordance with Agent's customary business practices, to be unacceptable due to age, type, category and/or quantity; (over 90 days old), goods iii) Inventory of substandard quality or goods classified as “clearance inventory”; any Person other than Borrowers; (xiv) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as Inventory with respect to which the Agent’s Lien, on behalf of itself and the Lenders, therein is does not have a first priority and valid fully perfected Lien; ; (xiiv) as QVC Inventory or any other Inventory which is stored or placed with a bailee, consignee, warehouseman, supplier, lessor or similar party, unless otherwise deemed to which any be Eligible Inventory by Agent in its sole discretion; provided, that QVC Inventory shall not be deemed ineligible by virtue of the representations or warranties pertaining to Inventory criteria set forth in this Agreement clause (v) so long as (1) such Inventory is held on consignment by QVC at a location owned or the Borrower Security Agreement is untrue; leased by QVC, Inc., (xiii2) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that such Inventory is not covered otherwise ineligible under any of the other criteria set forth in this subsection 3.10, (3) such Inventory is owned by casualty insurance acceptable the applicable Borrower, whose ownership interest in such Inventory is prior to all creditors of QVC, Inc. and has been perfected in accordance with Section 9-114 of the Code (and Borrowers have provided written evidence thereof to Agent), (4) Agent, on behalf of Lenders, shall have a first and valid fully perfected Lien on such Inventory and (5) Agent and QVC, Inc. shall have entered into a bailee letter with respect to all Inventory at such location in form and substance satisfactory to Agent; (vi) Inventory delivered to any Borrower on consignment; (vii) Inventory which is not located at one of the locations designated on Schedule 3.10 hereof or at one of the other locations permitted under subsection 8.10 hereof; (viii) Inventory for which any Borrower has invoiced the customer, whether or not the customer has paid for such Inventory; (ix) Inventory the completion of manufacture or sale of which by Agent following a Default would require the consent of, or royalty payments to, any third party, except for Inventory subject to the Agentrights of licensees under Motor Sports License Agreements entered into in the ordinary course of business; and (x) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Collateral Report in accordance with subsection 3.11 hereof. In the event that previously scheduled Inventory having a value in excess of $200,000 in the aggregate ceases to be Eligible Inventory under the above-described criteria, Borrower Representative shall notify Agent thereof promptly after any Borrower has obtained knowledge thereof.

Eligible Inventory. Based on The following shall constitute the most recent Eligibility Criteria for acceptance of Inventory for inclusion in the Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Base. All Inventory of the Borrower shall be deemed to be “Eligible Inventory” Loan Parties, valued at the lower cost or market in accordance with GAAP, but excluding any Inventory having any of the Borrower for purposes of determining the amountsfollowing characteristics: (a) Inventory that is in-transit; located at any warehouse, if any, to job site or located on any other premises that may be advanced subject to the Borrower under Lien of any person other than the Revolving Credit Loan Collateral Agent; (b) Inventory that is otherwise not subject to a duly perfected first priority Lien in the Collateral Agent’s favor; (c) Inventory that is subject to (x) a Lien in favor of any Person other than the Lender other than the ABDC Lien that is subject to the ABDC Intercreditor Agreement and (y) the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include Lien of a supplier or similar creditor of any Inventory of the Loan Parties that is subject to a Supplier Intercreditor Agreement; (d) Inventory covered by any negotiable or non-negotiable warehouse receipt, ▇▇▇▇ of lading or other document of title; on consignment from any Person; on consignment to any Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Lender; (e) Supplies, packaging, parts or sample Inventory, or customer supplied parts or Inventory; (f) Work-in-process Inventory; (g) Inventory that is damaged, defective, obsolete, slow moving or not currently saleable in the normal course of Borrower:’s operations, or the amount of such Inventory that has been reduced by shrinkage; (h) Inventory that the Borrower has returned, has attempted to return, is in the process of returning or intends to return to the vendor thereof; (i) Inventory that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lendersperishable or live or 30 days from expiration; (iij) Inventory stored at locations outside the United States; (k) Inventory formulated by a Loan Party pursuant to a license unless the applicable licensor has agreed in writing to permit the Collateral Agent to exercise its rights and remedies against such Inventory; and (l) Inventory that is classified as controlled substances, C2 or other controlled substances or pharmaceuticals unless the applicable Loan Party (i) not located on premises ownedpossesses a specialized license from the U.S. Drug Enforcement Agency or other federal, leased state or operated by the Borrower local authority to sell or dispose of same, or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not otherwise prohibited under applicable law from selling or otherwise disposing of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentsame.

Eligible Inventory. Based on Eligible Inventory" shall consist of all of the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of a Borrower, except the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: following: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens work in favor of the Agent, on behalf of itself and the Lenders; process; (ii) that Inventory which is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excessdamaged, obsolete, unsalablenot in good condition, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing not either currently usable or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of such Borrower's business as determined by Lender in its reasonable business discretion; (iii) Inventory which Lender determines, or which in accordance with such Borrower's customary business practices, is unacceptable due to age, type, category and/or quantity, including any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iv) Inventory with respect to which Lender does not have a first and valid, fully perfected Lien except; (v) Inventory consisting of packaging or supplies; (vi) Inventory in the possession of such Borrower but not owned by such Borrower’s business; ; (vii) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (viii) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Borrowing Base Certificate in accordance with Section 11.1(n); (ix) that consists Inventory which is on consignment or is located at a place other than the places of discontinued business and collateral locations of such Borrower listed on Schedule 10.29; provided that, subject to Section 11.24, in the case of leased or slow-moving items (over 90 days old)bailment locations listed on Schedule 10.29, goods of substandard quality no Inventory located at any such location shall be "Eligible Inventory" until the applicable landlord or goods classified as “clearance inventory”; bailee has executed a lien waiver in form and substance satisfactory to Lender) including Inventory in transit; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; Inventory consisting of finished goods which do not meet the specifications of the purchase order for which such Inventory was produced; and (xi) as Inventory which fails to which meet the Agent’s Lienstandards imposed by any governmental agency, on behalf of itself and or department or division thereof, having regulatory authority over such goods, its use and/or sale. In the Lendersevent that Inventory previously scheduled in a Monthly Report or Borrowing Base Certificate ceases to be Eligible Inventory, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentBorrowers shall notify Lender thereof immediately.

Eligible Inventory. Based Upon the delivery by Borrower to Lender of an Inventory Report, Lender shall determine, in its sole and absolute discretion, which items of Inventory listed thereon is Eligible Inventory. In making this determination, Lender will consider the following requirements: (a) The item of Inventory is in good condition, meets all standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, their use or sale, is not obsolete, is in good condition and is either currently useable or currently saleable in the ordinary course of Borrower's business and is not otherwise unacceptable to Lender due to age, type, category or quantity; (b) The item of Inventory is located at one of the locations of Borrower listed on Exhibit D attached hereto or as otherwise hereinafter agreed to by Lender, is subject to and covered by Lender's perfected security interest and is not subject to any other lien, claim, encumbrance or security interest; (c) The item of Inventory has not been consigned, sold or leased to any Person; (d) Each of the warranties and representations set forth in Section 9.3 has been reaffirmed with respect such item of Inventory at the date that the most recent Borrowing Base Certificate Inventory Report was delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the LendersLender; (iie) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value The item of Inventory at any was not purchased by Borrower in or as part of a "bulk" transfer or sale of assets unless Borrower, and the seller of such location is less than $100,000item, have complied with all applicable bulk sales or bulk transfer laws; (iiif) that is placed on consignment, is in transit or is otherwise The item of Inventory does not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document consist of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement partspackaging or supplies; (viig) that consists The item of goods which have been returned by the buyerInventory is not slow moving Inventory, is not out of date Inventory and is not consigned Inventory; (viiih) that The item of Inventory is in the possession of Borrower but is not of a type held for sale in the ordinary course of the owned by Borrower’s business; (ixi) that consists The item of discontinued Inventory does not consist of dock fees (or slow-moving items (over 90 days old"inside margin" as such term is used or referred to by Borrower), goods of substandard quality or goods classified as “clearance inventory”;; and (xj) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf The item of itself and the Lenders, therein Inventory is not stored at a first priority perfected Lien; (xii) as leased or warehouse location, unless in respect to which any of the representations such leased or warranties pertaining to Inventory set forth warehouse location, Lender has received a landlord waiver or bailee letter in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance form and substance acceptable to the AgentLender.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that is not owned by the a Borrower free and clear of all Liens and rights of any other Person that (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (iia) that is (i) not located on premises owned, leased finished goods or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional raw materials, packing and not packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or down payment (but ineligibility shall be limited to the amount of such deposit or down payment); (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien; (h) is located within the continental United States or Canada, subject to the mutual agreement of Agent and Borrower Agent, is not consigned to any Person and is not in transit, other than Inventory in transit between domestic locations of any Borrower as to which Agent’s Liens have been perfected at origin and destination; (i) is not subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; (l) is not subject to a third party’s trademark or other proprietary right, unless Agent is satisfied that it could sell such Inventory during a Default on terms satisfactory to Agent; (m) is reflected in the details of a current perpetual inventory report; (n) is not subject to any unfavorable capitalized variances; (o) is not identified within the “physical inventory reserve” in the Borrowers’ Financial Statements; (p) is not subject to intercompany profits from intercompany sales; (q) is not subject to vendor rebate accruals but, if so, such Inventory, if otherwise Eligible Inventory, shall only be excluded to the extent of such rebate accruals; and (r) is not otherwise deemed ineligible by Agent in its Permitted Discretion; provided, that, before determining any Inventory ineligible pursuant to clause (r), Agent shall provide Borrower Agent with prior notice accompanied by a statement setting forth the basis for Agent’s good faith determination made with reasonable business judgment of such ineligible. Eligible Work-In-Process Inventory: Inventory that would be Eligible Inventory except that such Inventory consists of work-in-process process. Borrowers acknowledge that no Inventory or replacement parts; (vii) that consists of goods which have been returned by shall constitute Eligible Work‑In‑Process Inventory until Agent receives the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old)March 31, goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to 2017 Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentappraisal.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower Upon Borrower's delivery to the Agent and on other information available to the AgentLender of an Inventory Report, the Agent Lender shall determine, in its Credit Judgment determine sole and absolute discretion and in the exercise of good faith, which items of Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, listed thereon are Eligible Inventory shall not include any Inventory and in the exercise of good faith. In making this determination, Lender will consider the Borrowerfollowing requirements: (iA) that The item of Inventory is not owned in good condition, meets all standards imposed by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentgovernmental agency, or (y) Reserves satisfactory to the Agent have been established with respect theretodepartment or division thereof, having regulatory authority over such goods, their use or (iii) located at any site if the aggregate book value of Inventory at any such location sale and is less than $100,000; (iii) that is placed on consignment, is in transit either currently useable or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of the Borrower’s business's (who owns such Inventory) business and is not otherwise unacceptable to Lender due to age, type, category or quantity; (ixB) that consists The item of discontinued Inventory is located at one of the locations listed on Exhibit C attached hereto, is subject to and covered by Lender's perfected security interest and is not subject to any other lien, claim, encumbrance or slow-moving items (over 90 days old)security interest, goods of substandard quality or goods classified as “clearance inventory”except for the Permitted Liens; (xC) that is ▇▇▇▇-and-hold inventory or that is evidenced by an accountThe item of Inventory has not remained on hand for more than three hundred sixty (360) days; (xiD) as The item of Inventory has not been consigned, sold or leased to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lienany Person; (xiiE) as to which any Each of the warranties and representations or warranties pertaining to Inventory set forth in this Agreement or Section 9.3 has been reaffirmed with respect to such items of Inventory at the Borrower Security Agreement is untrue;date that the most recent Inventory Report was delivered to Lender; and (xiiiF) that consists The item of any costs associated Inventory was not purchased by Borrower in or as part of a "bulk" transfer or sale of assets unless Borrower, and the seller of such item, have complied with “freight-in” charges; (xiv) that consists of Hazardous Materials all applicable bulk sales or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentbulk transfer laws.

Eligible Inventory. Based on ELIGIBLE INVENTORY" shall consist of all of the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of Borrower and each Guarantor, except the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: following: (i) that Inventory which is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excessdamaged, obsolete, unsalablenot in good condition, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing not either currently usable or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of such Person's business as determined by Agent; (ii) Inventory which Agent determines, or which in accordance with such Person's customary business practices, is unacceptable due to age, type, category and/or quantity, including any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory with respect to which Agent does not have a first and valid, fully perfected Lien; (iv) Inventory consisting of packaging or supplies; (v) Inventory in the Borrower’s business; possession of such Person but not owned by such Person; (vi) Inventory 52 produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (vii) Inventory with respect to which any disclosure is requireD in the applicable Monthly Report or Borrowing Base Certificate in accordance with clauses (i) through (vi) of Section 9.5; (viii) Inventory which is on consignment or is located at a place other than the places of business and collateral locations of such Person listed on Schedule 11.29; provided that, subject to Section 11.24, in the case of leased or bailment locations listed on Schedule 11.29, no Inventory located at any such location shall be "Eligible Inventory" until the applicable landlord or bailee has executed a lien waiver in form and substance satisfactory to Agent), including Inventory in transit; (ix) that consists Inventory consisting of discontinued or slow-moving items (over 90 days old), finished goods which do not meet the specifications of substandard quality or goods classified as “clearance inventory”; the purchase order for which such Inventory was produced; (x) that is ▇▇▇▇-and-hold inventory Inventory which fails to meet the standards imposed by any governmental agency, or that is evidenced by an account; department or division thereof, having regulatory authority over such goods, its use and/or sale and (xi) as work in process. In the event that Inventory previously scheduled in a Monthly Report or Borrowing Base Certificate ceases to which be Eligible Inventory, Borrower shall notify, or shall cause the Agent’s Lienapplicable Guarantor to notify, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentAgent thereof immediately.

Eligible Inventory. Based on The following shall constitute the most recent Eligibility Criteria for acceptance of Inventory for inclusion in the Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Base. All Inventory of the Borrower shall be deemed to be “Eligible Inventory” Loan Parties, valued at the lower cost or market in accordance with GAAP, but excluding any Inventory having any of the Borrower for purposes of determining the amountsfollowing characteristics: (a) Inventory that is in-transit; located at any warehouse, if any, to job site or located on any other premises that may be advanced subject to the Borrower under Lien of any person other than the Revolving Credit Loan Collateral Agent; (b) Inventory that is otherwise not subject to a duly perfected first priority Lien in the Collateral Agent’s favor; (c) Inventory that is subject to (x) a Lien in favor of any Person other than the Lender other than the ABDC Lien that is subject to the ABDC Intercreditor Agreement and (y) the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include Lien of a supplier or similar creditor of any Inventory of the Loan Parties that is subject to a Supplier Intercreditor Agreement; (d) Inventory covered by any negotiable or non-negotiable warehouse receipt, ▇▇▇▇ of lading or other document of title; on consignment from any Person; on consignment to any Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Lender; (e) Supplies, packaging, parts or sample Inventory, or customer supplied parts or Inventory; (f) Work-in-process Inventory; (g) Inventory that is damaged, defective, obsolete, slow moving or not currently saleable in the normal course of Borrower:’s operations, or the amount of such Inventory that has been reduced by shrinkage; (h) Inventory that the Borrower has returned, has attempted to return, is in the process of returning or intends to return to the vendor thereof; (i) Inventory that is perishable or live or 30 days from expiration; (j) Inventory stored at locations outside the United States; (k) Inventory formulated by a Loan Party pursuant to a license unless the applicable licensor has agreed in writing to permit the Collateral Agent to exercise its rights and remedies against such Inventory; and (l) Inventory that is classified as controlled substances, C2 or other controlled substances or pharmaceuticals unless the applicable Loan Party (i) possesses a specialized license from the U.S. Drug Enforcement Agency or other federal, state or local authority to sell or dispose of same, or (ii) is not owned otherwise prohibited under applicable law from selling or otherwise disposing of same. None. Reference is made to the Amended and Restated Credit Agreement, dated as of December 28, 2010 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among BioScrip, Inc., a Delaware corporation (“Borrower”), the Subsidiary Guarantors, the Lenders, Healthcare Finance Group, LLC, as administrative agent (in such capacity, the “Administrative Agent”), as collateral agent for the Secured Parties and as collateral manager, and other entities party thereto. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 1. (the “Assignor”) hereby irrevocably sells and assigns, without recourse, to _________________ (the “Assignee”), and the Assignee hereby irrevocably purchases and assumes, from the Assignor, without recourse to the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 11.04(c) of the Credit Agreement), the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the Swingline Commitment, Revolving Commitment and the Swingline Loans, Revolving Loans and participations held by the Borrower Assignor in Letters of Credit which are outstanding on the Effective Date. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned hereby free and clear of all Liens any lien, encumbrance or other adverse claim created by the Assignor and rights of any other Person (including the rights of a purchaser that has made progress payments its Commitments, and the rights outstanding balances of a surety that its Loans, without giving effect to assignments thereof which have not become effective, are as set forth in this Assignment and Acceptance and (ii) it has issued a bond all necessary power and authority, and has taken all action necessary, to assure execute and deliver this Assignment and Acceptance and to consummate the Borrower’s performance transactions contemplated hereby; and (b) except as set forth in (a) above, the Assignor makes no representation or warranty and assumes no responsibility with respect to that Inventory)any statements, except warranties or representations made in or in connection with the Liens in favor Credit Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the AgentCredit Agreement, on behalf any other Loan Document or any other instrument or document furnished pursuant thereto, or the financial condition of itself any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto. 3. The Assignee (a) represents and the Lenders; warrants that (i) it is legally authorized to enter into this Assignment and Acceptance and (ii) it has all necessary power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and become a Lender under the Credit Agreement; (b) confirms that is it has received a copy of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ic) agrees that it will, independently and without reliance upon the Assignor, the Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not located taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agents to take such action as agents on premises ownedits behalf and to exercise such powers and discretion under the Credit Agreement, leased the other Loan Documents or operated any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agents by the Borrower or terms thereof, together with such powers as are incidental thereto; and (iie) stored agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a baileeLender. 4. The effective date of this Assignment and Acceptance shall be the Effective Date of Assignment described in Schedule 1 hereto (the “Effective Date”). Following the execution of this Assignment and Acceptance, warehouseman or similar Personit will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, unlesseffective as of the Effective Date (which shall not, commencing ninety unless otherwise agreed to by the Administrative Agent, in its sole discretion, be earlier than three Business Days after the date of such acceptance and recording by the Administrative Agent). This Assignment and Acceptance will be delivered to the Administrative Agent together with (90a) days if the Assignee is a Foreign Lender, the forms specified in Section 2.15(e) of the Credit Agreement, duly completed and executed by such Assignee; (b) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire, and (c) a processing and recordation fee of $3,500, if required under the Credit Agreement. 5. Upon such acceptance and recording, from and after the Effective Date, eitherthe Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, at Borrower’s electioninterest, fees and other amounts) [to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date] [to the Assignee whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.] 6. From and after the Effective Date, (xa) the Assignee shall be a satisfactory bailee letter or landlord waiver has been delivered party to the AgentCredit Agreement and, or (y) Reserves satisfactory to the Agent extent provided in this Assignment and Acceptance, have been established with respect thereto, or (iii) located at any site if the aggregate book value rights and obligations of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated a lender thereunder and under the other Loan Documents and shall be bound by the Borrower; provisions thereof and (ivb) that is covered by a negotiable document of titlethe Assignor shall, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent;extent provided in this Assignment and Acceptance, relinquish its rights (except those surviving the payment in full of the Obligations) and be released from its obligations under the Loan Documents. (v) that 7. This Assignment and Acceptance shall be construed in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned accordance with and governed by the buyer; (viii) that is not of a type held for sale in the ordinary course law of the BorrowerState of New York without regard to conflicts of law principles that would require the application of the laws of another jurisdiction. Effective Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee’s business; (ixAddress for Notices: Percentage Assigned of Applicable Loan/Commitment: Loan/Commitment Principal Amount Assigned all Lenders thereunder) that consists Revolving Loans $ % Letters of discontinued Credit $ % Swingline Loans $ % [Signature Page Follows] The terms set forth above are hereby agreed to: [ as Assignor ] By: Name: Title: as Assignee By: Name: Title: Accepted:* BIOSCRIP, INC., as Borrower By: Name: Title: HEALTHCARE FINANCE GROUP, LLC, as Administrative Agent By: Name: Title: [______________], as [Swingline Lender/Issuing Bank]** * To be completed to the extent consent of Borrower and/or Administrative Agent is required under Section 11.04(b) of the Credit Agreement. ** To be completed to the extent consent of the Swingline Lender or slow-moving items (over 90 days old)Issuing Bank is required under Section 11.04(b) of the Credit Agreement. By: Name: Title: Healthcare Finance Group, goods of substandard quality or goods classified LLC, as “clearance inventory”; (x) that is Administrative Agent for the Lenders referred to below ▇▇▇ ▇▇▇▇-and▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: [Bioscrip Account Manager] Facsimile: (▇▇▇) ▇▇▇-hold inventory ▇▇▇▇ Re: BioScrip, Inc. [Date] Ladies and Gentlemen: Reference is made to the Amended and Restated Credit Agreement, dated as of December 28, 2010 (as amended, restated, supplemented, waived or that is evidenced by an account; otherwise modified from time to time, the “Credit Agreement”), among BioScrip, Inc., a Delaware corporation (xi) as to which “Borrower”), the Agent’s LienSubsidiary Guarantors, on behalf of itself and the Lenders, therein Healthcare Finance Group, LLC, as administrative agent, as collateral agent for the Secured Parties and as collateral manager, and other entities party thereto. Capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Credit Agreement. Borrower hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Revolving Borrowing under the Credit Agreement, and that in connection therewith sets forth below the terms on which such Revolving Borrowing is not a first priority perfected Lien;requested to be made: (xiiA) as Principal amount of Borrowing:1 (B) Date of Borrowing (which is a Business Day): (C) Funds are requested to which any be disbursed to Borrower’s account with: Account No. Borrower hereby represents and warrants that the conditions to lending specified in Sections 4.02(b)-(d) of the representations or warranties pertaining Credit Agreement are satisfied as of the date hereof. 1 See Section 2.02(a) of the Credit Agreement for minimum borrowing amounts. By: Name: Title: BIOSCRIP, INC. BORROWING BASE at 1/31/2010 Manual AR Rebate Receivable Ineligible AR Offset — Shared Rebate Portion Cash Basis account for PBM Estimated Net Value Factor 95 % 95 % 95 % 90 % 92 % 92 % 95 % 95 % 99 % 0 % 94 % Estimated Net Value Credit Balances Month-end Cash intransit 0 Adjusted Net Value of Receivable Advance Rate A/R 85 % 85 % 85 % 85 % 85 % 85 % 85 % 85 % 85 % 0 % 85 % Inventory Availability per Appendix 1 0 Interim CHS availability Borrowing Base $ 0 Revolving Commitment $ 150,000,000 Borrowing Limit $ 0 Other Reserves Loan Activity $ 0 Revolving Advances Since Prior Report — Less Collections — Deposits — Total Interest, Fees, Charges & Expenses — Deposits in Transit — Revolving Loan Balance This Report Net Availability $ 0 The undersigned represents and warrants that the foregoing information is true, complete and correct and that the collateral reflected herein complies with and conforms to Inventory the Eligibility Criteria set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable Annex IV to the Amended and Restated Credit Agreement dated as of December 28, 2010 by and among Bioscrip, Inc., the subsidiaries of Bioscrip, Inc., Healthcare Finance Group, LLC, as Administrative Agent., Collateral Agent and Collateral Manager, and other entities party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”). BioScrip, Inc. promises to pay to Healthcare Finance Group, LLC, as Collateral Manager, the new loan balances reflected above, plus interest, as set forth in the Agreement. By: Date: _______________ Name: Title: I. Inventory per perpetual report $ —

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered Inventory owned by the a Borrower to the Agent and on other information available to the Agentthat Lender, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed Permitted Discretion, deems to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, no Inventory shall be Eligible Inventory shall unless it (a) is finished goods or raw materials and not include work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any Inventory deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any governmental authority, has not been acquired from an entity subject to any sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any environmental law; (f) conforms with the covenants and representations herein; (g) is subject to Lender’s duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States, is not in transit except between locations of the Borrower: Borrowers, and is not consigned to any Person; (i) that is not owned by the Borrower free and clear of all Liens and rights of subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other Person (including the rights of a purchaser arrangement that has made progress payments and the rights of a surety that has issued a bond to assure the restricts any Borrower’s performance or Lender’s right to dispose of such Inventory, unless Lender has received an appropriate Lien Waiver; (k) is located (i) on a premises containing Eligible Inventory with respect to that Inventory)an aggregate Value of at least $50,000, except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that if such Inventory is (i) not located on a leased premises ownedor in the possession of a warehouseman, leased processor, repairman, mechanic, shipper, freight forwarder or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar other Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) such lessor or such other Person has delivered a satisfactory bailee letter Lien Waiver or landlord waiver an appropriate Reserve has been delivered to established, provided, that, so long as Borrowers maintain Inventory with an aggregate Value of less than $60,000 at the AgentLambda Warehouse, or (y) Reserves satisfactory to the Agent have been established with respect theretono Lien Waiver shall be required for such location, or (iii) located at any site if the aggregate book value of such Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on a premises ownedowned by Borrowers and such premises is subject to a mortgage, leased the mortgagee of such premises has delivered a mortgagee waiver in form and substance satisfactory to Lender. Enforcement Action: any action to enforce any Obligations or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered Loan Documents or to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which realize upon any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentCollateral.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered Inventory owned by the a Borrower to the Agent and on other information available to the Agentthat Lender, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed discretion, deems to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, no Inventory shall be Eligible Inventory shall unless it (a) is finished goods and not include raw materials, or work-in-process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving (i.e. Inventory that has not been sold or shipped within twelve (12) months after the date of production), perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; except, that, Lender may, in its discretion, deem slow-moving Inventory (i.e. Inventory that has not been sold or shipped within twelve (12) months after the date of production) to be eligible for borrowing purposes, subject to the terms and conditions set forth in the definition of Inventory Formula Amount herein; (e) meets all standards imposed by any governmental authority, has not been acquired from an entity subject to any sanction or on any specially designated nationals list maintained by OFAC, and does not constitute hazardous materials under any environmental law; (f) conforms with the covenants and representations herein; (g) is subject to Lender's duly perfected, first priority Lien, and no other Lien; (h) is within the continental United States, is not in transit except between locations of a Borrower: , and is not consigned to any Person, provided, that, upon the request of Borrowers, Lender may, in its sole discretion, deem in-transit Inventory which is held by a shipping company or carrier and “on the water” to be eligible for borrowing purposes so long as Borrowers satisfy Lender’s customary procedures and policies with respect to in-transit Inventory, including, without limitation, delivering customs brokers/freight forwarder waivers, in form and substance satisfactory to Lender, in favor of Lender with respect to such in-transit Inventory and executing an amendment to this Agreement to agree to such customary procedures and policies; (i) that is not owned by the Borrower free and clear subject to any warehouse receipt or negotiable Document; (j) is not subject to any License or other arrangement that restricts a Borrower's or Lender's right to dispose of all Liens and rights such Inventory, unless Lender has received an appropriate Lien Waiver; (k) is located (i) on a premises containing Eligible Inventory with an aggregate Value of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory)at least $50,000, except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that if such Inventory is (i) not located on a leased premises ownedor in the possession of a warehouseman, leased processor, repairman, mechanic, shipper, freight forwarder or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar other Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) such lessor or such other Person has delivered a satisfactory bailee letter Lien Waiver or landlord waiver an appropriate Reserve has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect theretoestablished, or (iii) located at any site if the aggregate book value of such Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on a premises owned, leased or operated by the Borrower; (iv) that is covered owned by a negotiable document Borrower and such premises is subject to a mortgage, the mortgagee of title, unless such document premises has delivered a mortgagee waiver in form and evidence of acceptable insurance covering such Inventory have been delivered substance satisfactory to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentLender.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower Upon Borrower's delivery to the Agent Lender of an Inventory Report, Lender shall, in its reasonable credit judgment, determine which items of Inventory and on other information available Gaming Supply Inventory listed thereon are Eligible Inventory and Gaming Supply Eligible Inventory. Without limiting Lender's discretion to the Agentmake such determination, the Agent following Inventory and Gaming Supply Inventory shall in its Credit Judgment determine which Inventory of the Borrower shall not be deemed to be “Eligible Inventory and Gaming Supply Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (iA) that Any Inventory and any Gaming Supply Inventory which is slow moving, is not owned in good condition, does not meet all standards imposed by the Borrower free and clear of all Liens and rights of any other Person governmental agency, or department or division thereof, having regulatory authority over such goods (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventoryuse or sale thereof), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently useable or currently saleable in the ordinary course of the Borrower’s business's or Gaming Supply's businesses, or is otherwise unacceptable to Lender due to age, type, category or quantity; (ixB) that consists Any Inventory and any Gaming Supply Inventory which (i) is not located at one of discontinued the locations listed on Exhibit 3.2(B) attached hereto, (ii) is in the possession of, or slow-moving items located on the premises of, a bailee, warehouseman, processor, vendor or other third party, unless Borrower has delivered to Lender an appropriate waiver from such party in form and substance satisfactory to Lender, (over 90 days old)iii) is not subject to and covered by Lender's security interest or (iv) is subject to any other lien, goods claim, encumbrance or security interest other than liens, claims, encumbrances or security interests in favor of substandard quality or goods classified as “clearance inventory”NatWest and subject to the terms of the Intercreditor Agreement; (xC) that is ▇▇▇▇-and-hold inventory Any Inventory and any Gaming Supply Inventory which has been consigned, bailed, sold or that is evidenced by an accountleased to any Person; (xiD) as Any Inventory and Gaming Supply Inventory with respect to which the Agent’s Lien, on behalf representations and warranties set forth in Section 9.3 have not been reaffirmed and ratified as of itself and the Lenders, therein is not a first priority perfected Liendate of the most recent Inventory Report delivered to Lender; (xiiE) Any Inventory and any Gaming Supply Inventory which was purchased by Borrower or Gaming Supply in or as to which any part of a "bulk" transfer or sale of assets unless Borrower or Gaming Supply, as applicable, and the representations seller of such Inventory or warranties pertaining to Gaming Supply Inventory set forth in this Agreement or the Borrower Security Agreement is untruehave complied with all applicable bulk transfer laws; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agent.

Eligible Inventory. Based (i) Keep all Eligible Inventory only at the locations in the United States; and (ii) keep all Eligible Inventory only at locations identified on the most recent Borrowing Base Certificate delivered by the Schedule E-3 (as amended pursuant to Section 5.2 (and Schedule 5.2 thereof), (iii) keep all Eligible Inventory fully covered at not less than their book value under Borrowers’ “spares” all risk insurance policies, and (iv) keep all Eligible Inventory from being installed or held for installation on an Aircraft or Engine, or otherwise held, by, for, or on behalf an air carrier as defined in 14 CFR 49. Each Borrower shall, and shall cause each other Spare Parts Loan Party to, also keep all Spare Parts that are Collateral and all Eligible Inventory (except to the Agent extent such Spare Parts are the subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)(ii)) in fenced areas with readily visible signage indicating that the Spare Parts located at such location are subject to a Lien in favor of Agent. (b) Keep all Spare Parts and on other information available Inventory (except to the Agent, extent the Agent shall in its Credit Judgment determine which Inventory subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)) of the Borrower shall be deemed Spare Parts Loan Parties not designated as Eligible Inventory only at the locations identified on Schedule E-3 (as amended pursuant to Section 5.2 (and Schedule 5.2 thereof) and not permit any Spare Parts or other Inventory to be “located at the premises of or otherwise put into the possession or control of any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or other Person unless a Collateral Access Agreement has been put in place with such Person), provided that: (i) Borrowers may amend Schedule E-3 pursuant to Section 5.2 (and Schedule 5.2 thereof) to add additional locations so long as: (A) such amendment occurs by written notice to Agent not less than 10 Business Days prior to the date on which any Spare Parts are moved to such new location, and (B) such new location is within the United States; (ii) any Spare Part that is not Eligible Inventory” Inventory may be transported to or from, or be in the possession of or under the Borrower control of, a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person for purposes of determining repair in the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan ordinary course of Borrowers’ business without a Collateral Access Agreement so long as either (A) no Event of Default has occurred and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased continuing or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentwould result therefrom, or (yB) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any all such location is less than Spare Parts in the possession of or under the control of all such Persons, in the aggregate, does not exceed $100,000; 2,000,000; (iii) that is placed on consignment, so long as such transit is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document United States and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of Borrowers’ business, the Borrower’s Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to any location identified on Schedule E-3; (iv) so long as (A) no Event of Default has occurred and is continuing or would result therefrom, (B) such transit is in the ordinary course of Borrowers’ business;, and (C) the aggregate book value of all Spare Parts moved to all such foreign locations, in the aggregate, does not exceed $2,500,000 (provided that Spare Parts at such foreign locations shall not count against the dollar amount of Spare Parts permitted to be maintained with third parties pursuant to Section 5.19(b)(ii)(B)), the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to any location outside the United States (including locations outside the United States where such Spare Parts are in the possession of or under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person); (v) so long as such transit is in the ordinary course of Borrowers’ business, the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory from any location outside the United States to any other location outside the United States; (vi) so long as such transit is in the ordinary course of Borrowers’ business, the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to the location of Aircraft, Engines, flight simulators or other Equipment to complete a Permitted Spare Parts Installation that is permitted pursuant to Section 5.19(e); and (vii) the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory pursuant to pool, exchange or lease transactions permitted pursuant to Section 5.19(e). (ixc) Maintain in effect a Spare Parts Tracking System. (d) Maintain, with respect to Spare Parts, all records, logs, serviceability tags and other documents and materials required by applicable law, including the FARs, or by the Spare Parts Loan Parties’ Maintenance Program. (e) Not permit any Spare Parts to be leased, sold, exchanged, attached or installed on any Aircraft, Engine, flight simulator, or other Equipment, or otherwise disposed of; provided, however, that consists of discontinued (i) so long as no Overadvance is outstanding or slow-moving items would result therefrom (over 90 days oldafter having removed any such Eligible Inventory from the Borrowing Base), goods the Spare Parts Loan Parties may sell Spare Parts that are not Eligible Inventory in the ordinary course of substandard quality Borrowers’ business, (ii) so long as no Overadvance is outstanding or goods classified would result therefrom, Borrowers may make Permitted Spare Parts Installations with Eligible Inventory, (iii) the Spare Parts Loan Parties may make Permitted Spare Parts Installations with Spare Parts (other than Eligible Inventory), and (iv) with respect to Spare Parts that are not Eligible Inventory, the Spare Parts Loan Parties may pool, exchange, or lease such Spare Parts in the ordinary course of business so long as “clearance inventory”; (x) no Event of Default has occurred and is continuing or would result therefrom and (y) the aggregate book value of all such Spare Parts, in the aggregate, does not exceed $1,000,000. (f) Each Borrower, on behalf of each of its Subsidiaries, hereby waives any and all rights that is it has or may have in the future to assert or claim against Agent or any of the Lenders or any transferee pursuant to the exercise of remedies under any of the Loan Documents, any mechanic’s, repairer’s, servicer’s, ▇▇▇▇-and-hold inventory ▇▇’▇ or that is evidenced by an account; (xi) as to which the Agent’s Lienother Lien against any Collateral, on behalf of itself and the Lendersincluding any Spare Parts, therein is not a first priority perfected Lien; (xii) as to which Engines, or Aircraft constituting Collateral. Not permit any of its Spare Parts to be located at the representations premises of or warranties pertaining to Inventory set forth in this Agreement otherwise put into the possession or the Borrower Security Agreement is untrue; (xiii) that consists control of any costs associated with “freight-in” charges; (xiv) bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or similar Person except: that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) any Spare Part that is not covered by casualty insurance acceptable an Eligible Inventory may be in the possession of or under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person to the Agentextent expressly permitted by (but without duplication of) Section 5.19(b).”

Eligible Inventory. Based Any and all raw material and finished goods Inventory of Borrower valued at the lower of cost (determined on the most recent Borrowing Base Certificate delivered a first-in/first-out basis) or market value located at Borrower's places of business shown on Schedule "5.2" attached hereto and made part hereof (and for which location Lender has received a landlord, warehouse or mortgagee waiver as determined by, and in form and substance satisfactory to, Lender), which (i) is not subject to any Lien (other than Liens granted under this Agreement and Permitted Liens, if applicable); (ii) is not slow moving, damaged, obsolete or unmerchantable, as determined by the Borrower to the Agent and on other information available to the Agent, the Agent shall Lender in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amountssole discretion; (iii) meets all standards, if any, imposed by any Governmental Authority; (iv) is not Inventory held on consignment; (v) is not Inventory in-transit unless such Inventory (A) is in transit to be advanced one of Borrower's places of business shown on Schedule "5.2", (B) is owned by Borrower, (C) is insured to the Borrower full value thereof, and (D) is subject to negotiable bills of lading endorsed to, or non-negotiable bills of lading issued in the name of Lender, and covered by a Letter of Credit issued under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: Credit; (ivi) that is situated at a location not owned by Borrower, provided that (x) the Borrower free and clear owner or occupier of all Liens and rights of any other Person (including the rights of a purchaser that such location has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens executed in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with Lender a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, Lien Waiver Agreement or (y) Reserves satisfactory Lender has instituted a reserve to the Agent have been established with respect thereto, or Borrowing Base in an amount equal to three (iii3) located at any site if months’ rent under the aggregate book value of Inventory at any lease for such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists meets such other reasonable specifications and requirements which may from time to time be established by Lender. Environmental Laws – Any and all Federal, foreign, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees and any and all common law requirements, rules and bases of goods which have been returned by the buyer; (viii) that is not liability regulating, relating to or imposing liability or standards of a type held for sale in the ordinary course conduct concerning pollution, protection of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old)environment, goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists impact of pollutants, contaminants or toxic or hazardous substances on human health or the environment, as now or may at any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can time hereafter be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentin effect.

Eligible Inventory. Based on Upon the most recent Borrowing Base Certificate delivered by the Borrower Borrowers' delivery to the Agent and on other information available to the AgentLender of an ------------------ Inventory Report, the Agent shall Lender shall, in its Credit Judgment reasonable discretion, determine which items of Inventory of the Borrower shall be deemed to be “listed thereon are Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, . Unless otherwise agreed to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoingby Lender, Eligible Inventory shall not include any Inventory of shall, at all times, be subject to the Borrowerfollowing requirements for eligibility: (ia) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value The item of Inventory at shall constitute raw materials or finished goods, shall be in good condition, meet all standards imposed by any governmental agency or department or division thereof having regulatory authority over such location is less than $100,000; (iii) that is placed on consignmentgoods or their use or sale, is in transit shall be either currently usable or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of the a Borrower’s business's business and shall not otherwise be unacceptable to Lender due to age, type, category, quality or quantity; (ixb) that consists The item of discontinued Inventory shall be located at one of the locations listed on Exhibit "C" attached hereto, shall be subject to and ----------- covered by Lender's perfected security interest and shall not be subject to any other lien, claim, encumbrance or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”security interest; (xc) that is ▇▇▇▇-and-hold inventory The item of Inventory shall not have been consigned, sold or that is evidenced by an accountleased to any Person; (xid) The item of Inventory shall not have been purchased by a Borrower in or as to which the Agent’s Lienpart of a bulk transfer or sale of assets unless there was compliance, on behalf of itself and the Lendersor an exemption from compliance, therein is not a first priority perfected Lienwith all applicable bulk sales or transfer laws; (xiie) The item of Inventory may have been relieved from a Borrower's Inventory supply and may be accounted for by such Borrower as an "unbilled" Account, provided such Borrower can document the status of such item of Inventory to which any Lender's satisfaction; (f) Each of the warranties and representations or warranties pertaining to Inventory set forth in this Agreement or Section 9.3 shall be reaffirmed with respect to such item of Inventory at ----------- the Borrower Security Agreement is untrue;time that the most recent Inventory Report was delivered to Lender; and (xiiig) that consists The item of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can Inventory shall otherwise be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentLender, in its reasonable discretion.

Eligible Inventory. Based on The term AELIGIBLE INVENTORY@ means all INVENTORY owned by either or both of the most recent Borrowing Base Certificate delivered BORROWERS which is acceptable to the LENDER to be included in the calculation of the BORROWING BASE. The criteria for eligibility may be fixed and revised by the Borrower LENDER from time to the Agent and on other information available to the Agent, the Agent shall time in its Credit Judgment determine which Inventory of the Borrower discretion. INVENTORY in no event shall be deemed to be “Eligible Inventory” of eligible unless: (a) the Borrower for purposes of determining LENDER has a first priority perfected security interest in the amountsINVENTORY; (b) no vender, if any, to be advanced supplier or other PERSON claims any security interest or lien in or to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that INVENTORY which is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered expressly subordinated to the Agent, LENDER'S securities interests or liens therein; (yc) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location it is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document normally and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of business of either or both of the Borrower’s business; BORROWERS; (ixd) that consists it is not raw materials or work in process; (e) it is located on the premises of discontinued either of the BORROWERS; (f) it does not consist of obsolete, returned or slow-repossessed items of INVENTORY or used goods or goods taken in trade; (g) it does not consist of slow moving items or items determined by the LENDER in its sole discretion to be stale or dated merchandise; (over 90 days old)h) it does not consist of packing materials, goods catalogs, promotion materials, items used as demonstrators, prototypes, or salesman=s samples; (i) it does not consist of substandard quality an item consigned to either or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory both of the BORROWERS or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as with respect to which any PERSON claims a lien; (j) it has not been consigned by either or both of the representations BORROWERS to a consignee; (k) it has not been leased by any PERSON; (l) it is not held by any PERSON (other than the BORROWER) or warranties pertaining to Inventory set forth located upon any premises not owned in this Agreement fee simple by the BORROWER unless such PERSON or the Borrower Security Agreement is untrue; owner of such premises has executed a lien waiver agreement in form and substance satisfactory to the LENDER; and (xiiim) that consists it has not been deemed unsatisfactory by the LENDER for any reason, in the LENDER=S sole discretion, by written notice to either or both of the BORROWERS. The value of any costs associated with “freightINVENTORY deemed to meet the criteria for ELIGIBLE INVENTORY shall be determined at the least of: (i) the BORROWERS= net purchase or manufacturing cost; (ii) the lowest then-in” charges; existing market price; (xiviii) the BORROWERS= lowest selling price, less estimated expenses for packing, selling and delivery; or (iv) any price ceiling which may be established by governmental order, regulation, or restriction. The LENDER shall be the discretionary judge of the value of any INVENTORY, based upon such information as it deems in its discretion to be relevant or applicable in making that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentdetermination.

Eligible Inventory. Based (i) Keep all Eligible Inventory only at the locations in the United States; and (ii) keep all Eligible Inventory only at locations identified on the most recent Borrowing Base Certificate delivered by the Schedule E-3 (as amended pursuant to Section 5.2 (and Schedule 5.2 thereof), (iii) keep all Eligible Inventory fully covered at not less than their book value under Borrowers’ “spares” all risk insurance policies, and (iv) keep all Eligible Inventory from being installed or held for installation on an Aircraft or Engine, or otherwise held, by, for, or on behalf an air carrier as defined in 14 CFR 49. Each Borrower shall also keep all Spare Parts that are Collateral and all Eligible Inventory (except to the Agent extent such Spare Parts are the subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)(ii)) in fenced areas with readily visible signage indicating that the Spare Parts located at such location are subject to a Lien in favor of Agent. (b) Keep all Spare Parts and on other information available Inventory (except to the Agent, extent the Agent shall in its Credit Judgment determine which subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)) of Borrowers not designated as Eligible Inventory of only at the Borrower shall be deemed locations identified on Schedule E-3 (as amended pursuant to Section 5.2 (and Schedule 5.2 thereof) and not permit any Spare Parts or other Inventory to be “located at the premises of or otherwise put into the possession or control of any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or other Person unless a Collateral Access Agreement has been put in place with such Person), provided that: (i) Borrowers may amend Schedule E-3 pursuant to Section 5.2 (and Schedule 5.2 thereof) to add additional locations so long as: (A) such amendment occurs by written notice to Agent not less than 10 Business Days prior to the date on which any Spare Parts are moved to such new location, and (B) such new location is within the United States; (ii) any Spare Part that is not Eligible Inventory” Inventory may be transported to or from, or be in the possession of or under the Borrower control of, a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person for purposes of determining repair in the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan ordinary course of Borrowers’ business without a Collateral Access Agreement so long as either (A) no Event of Default has occurred and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased continuing or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentwould result therefrom, or (yB) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any all such location is less than Spare Parts in the possession of or under the control of all such Persons, in the aggregate, does not exceed $100,000; 2,000,000; (iii) that is placed on consignment, so long as such transit is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document United States and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of Borrowers’ business, Borrowers may move Spare Parts that are not Eligible Inventory to any location identified on Schedule E-3; (iv) so long as (A) no Event of Default has occurred and is continuing or would result therefrom, (B) such transit is in the Borrower’s ordinary course of Borrowers’ business;, and (C) the aggregate book value of all Spare Parts moved to all such foreign locations, in the aggregate, does not exceed $2,500,000 (provided that Spare Parts at such foreign locations shall not count against the dollar amount of Spare Parts permitted to be maintained with third parties pursuant to Section 5.19(b)(ii)(B)), Borrowers may move Spare Parts that are not Eligible Inventory to any location outside the United States (including locations outside the United States where such Spare Parts are in the possession of or under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person); (v) so long as such transit is in the ordinary course of Borrowers’ business, Borrowers may move Spare Parts that are not Eligible Inventory from any location outside the United States to any other location outside the United States; (vi) so long as such transit is in the ordinary course of Borrowers’ business, Borrowers may move Spare Parts that are not Eligible Inventory to the location of Aircraft, Engines, flight simulators or other Equipment to complete a Permitted Spare Parts Installation that is permitted pursuant to Section 5.19(e); and (vii) Borrowers may move Spare Parts that are not Eligible Inventory pursuant to pool, exchange or lease transactions permitted pursuant to Section 5.19(e). (ixc) Maintain in effect a Spare Parts Tracking System. (d) Maintain, with respect to Spare Parts, all records, logs, serviceability tags and other documents and materials required by applicable law, including the FARs, or by Borrowers’ Maintenance Program. (e) Not permit any Spare Parts to be leased, sold, exchanged, attached or installed on any Aircraft, Engine, flight simulator, or other Equipment, or otherwise disposed of; provided, however, that consists of discontinued (i) so long as no Overadvance is outstanding or slow-moving items would result therefrom (over 90 days oldafter having removed any such Eligible Inventory from the Borrowing Base), goods Borrowers may sell Spare Parts that are not Eligible Inventory in the ordinary course of substandard quality Borrowers’ business, (ii) so long as no Overadvance is outstanding or goods classified would result therefrom, Borrowers may make Permitted Spare Parts Installations with Eligible Inventory, (iii) Borrowers may make Permitted Spare Parts Installations with Spare Parts (other than Eligible Inventory), and (iv) with respect to Spare Parts that are not Eligible Inventory, Borrowers may pool, exchange, or lease such Spare Parts in the ordinary course of business so long as “clearance inventory”; (x) no Event of Default has occurred and is continuing or would result therefrom and (y) the aggregate book value of all such Spare Parts, in the aggregate, does not exceed $1,000,000. (f) Each Borrower, on behalf of each of its Subsidiaries, hereby waives any and all rights that is it has or may have in the future to assert or claim against Agent or any of the Lenders or any transferee pursuant to the exercise of remedies under any of the Loan Documents, any mechanic’s, repairer’s, servicer’s, ▇▇▇▇-and-hold inventory ▇▇’▇ or that is evidenced by an account; (xi) as to which the Agent’s Lienother Lien against any Collateral, on behalf of itself and the Lendersincluding any Spare Parts, therein is not a first priority perfected Lien; (xii) as to which Engines, or Aircraft constituting Collateral. Not permit any of its Spare Parts to be located at the representations premises of or warranties pertaining to Inventory set forth in this Agreement otherwise put into the possession or the Borrower Security Agreement is untrue; (xiii) that consists control of any costs associated with “freight-in” charges; (xiv) bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or similar Person except: that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) any Spare Part that is not covered by casualty insurance acceptable an Eligible Inventory may be in the possession of or under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person to the Agentextent expressly permitted by (but without duplication of) Section 5.19(b).

Eligible Inventory. Based on The following shall constitute the most recent Eligibility Criteria for acceptance of Inventory for inclusion in the Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which All Inventory of the Borrower shall be deemed to be “Eligible Inventory” Loan Parties, valued at the lower cost or market in accordance with GAAP, but excluding any Inventory having any of the Borrower for purposes of determining the amountsfollowing characteristics: (a) Inventory that is in-transit; located at any warehouse, if any, to job site or located on any other premises that may be advanced subject to the Borrower under Lien of any person other than the Revolving Credit Collateral Agent; (b) Inventory that is otherwise not subject to a duly perfected first priority Lien in the Collateral Agent’s favor; (c) Inventory that is subject to (x) a Lien in favor of any Person other than the Lender other than the ABDC Lien that is subject to the ABDC Intercreditor Agreement and (y) the Lien of a supplier or similar creditor of any of the Loan and Parties that is subject to a Supplier Intercreditor Agreement; (d) Inventory covered by any negotiable or non-negotiable warehouse receipt, ▇▇▇▇ of lading or other document of title; on consignment from any Person; on consignment to any Person or subject to any bailment unless such consignee or bailee has executed an agreement with the Swing Line Loan. Without limiting Lender; (e) Supplies, packaging, parts or sample Inventory, or customer supplied parts or Inventory; (f) Work-in-process Inventory; (g) Inventory that is damaged, defective, obsolete, slow moving or not currently saleable in the foregoing, Eligible Inventory shall not include any Inventory normal course of the Borrower:’s operations, or the amount of such Inventory that has been reduced by shrinkage; (h) Inventory that the Borrower has returned, has attempted to return, is in the process of returning or intends to return to the vendor thereof; (i) Inventory that is perishable or live or 30 days from expiration; (j) Inventory stored at locations outside the United States; (k) Inventory formulated by a Loan Party pursuant to a license unless the applicable licensor has agreed in writing to permit the Collateral Agent to exercise its rights and remedies against such Inventory; and (l) Inventory that is classified as controlled substances, C2 or other controlled substances or pharmaceuticals unless the applicable Loan Party (i) possesses a specialized license from the U.S. Drug Enforcement Agency or other federal, state or local authority to sell or dispose of same, or (ii) is not owned otherwise prohibited under applicable law from selling or otherwise disposing of same. Reference is made to the credit agreement, dated as of March 25, 2010 (as amended, restated, supplemented, waived or otherwise modified from time to time, the “Credit Agreement”), among BioScrip, Inc., a Delaware corporation (“Borrower”), the Subsidiary Guarantors, the Lenders, Jefferies Finance LLC, as administrative agent (in such capacity, the “Administrative Agent”), as lead arranger, as book manager and as collateral agent for the Secured Parties, ING Capital LLC, as syndication agent, Compass Bank, as a co-documentation agent, General Electric Capital Corporation, a co-documentation agent, HFG Healthco-4, LLC, as swingline lender for the Lenders, and Healthcare Finance Group, LLC, collateral manager and as issuing bank for the Lenders. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 1. (the “Assignor”) hereby irrevocably sells and assigns, without recourse, to the Assignee, and the Assignee hereby irrevocably purchases and assumes, from the Assignor, without recourse to the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 11.04(c) of the Credit Agreement), the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the Swingline Commitment, Revolving Commitment, Term Loan Commitment and the Swingline Loans, Revolving Loans, Term Loans and participations held by the Borrower Assignor in Letters of Credit which are outstanding on the Effective Date. From and after the Effective Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned hereby free and clear of all Liens any lien, encumbrance or other adverse claim created by the Assignor and rights of any other Person (including the rights of a purchaser that has made progress payments its Commitments, and the rights outstanding balances of a surety that its Loans, without giving effect to assignments thereof which have not become effective, are as set forth in this Assignment and Acceptance and (ii) it has issued a bond all necessary power and authority, and has taken all action necessary, to assure execute and deliver this Assignment and Acceptance and to consummate the Borrower’s performance transactions contemplated hereby; and (b) except as set forth in (a) above, the Assignor makes no representation or warranty and assumes no responsibility with respect to that Inventory)any statements, except warranties or representations made in or in connection with the Liens in favor Credit Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the AgentCredit Agreement, on behalf any other Loan Document or any other instrument or document furnished pursuant thereto, or the financial condition of itself any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto. 3. The Assignee (a) represents and the Lenders; warrants that (i) it is legally authorized to enter into this Assignment and Acceptance and (ii) it has all necessary power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and become a Lender under the Credit Agreement; (b) confirms that is it has received a copy of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ic) agrees that it will, independently and without reliance upon the Assignor, the Agents or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not located taking action under the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agents to take such action as agents on premises ownedits behalf and to exercise such powers and discretion under the Credit Agreement, leased the other Loan Documents or operated any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agents by the Borrower or terms thereof, together with such powers as are incidental thereto; and (iie) stored agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a baileeLender. 4. The effective date of this Assignment and Acceptance shall be the Effective Date of Assignment described in Schedule 1 hereto (the “Effective Date”). Following the execution of this Assignment and Acceptance, warehouseman or similar Personit will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, unlesseffective as of the Effective Date (which shall not, commencing ninety unless otherwise agreed to by the Administrative Agent, in its sole discretion, be earlier than three Business Days after the date of such acceptance and recording by the Administrative Agent). This Assignment and Acceptance will be delivered to the Administrative Agent together with (90a) days if the Assignee is a Foreign Lender, the forms specified in Section 2.15(e) of the Credit Agreement, duly completed and executed by such Assignee; (b) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire, and (c) a processing and recordation fee of $3,500, if required under the Loan Documents. 5. Upon such acceptance and recording, from and after the Effective Date, eitherthe Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, at Borrower’s electioninterest, fees and other amounts) [to the Assignor for amounts which have accrued to the Effective Date and to the Assignee for amounts which have accrued subsequent to the Effective Date] [to the Assignee whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.] 6. From and after the Effective Date, (xa) the Assignee shall be a satisfactory bailee letter or landlord waiver has been delivered party to the AgentCredit Agreement and, or (y) Reserves satisfactory to the Agent extent provided in this Assignment and Acceptance, have been established with respect thereto, or (iii) located at any site if the aggregate book value rights and obligations of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated a lender thereunder and under the other Loan Documents and shall be bound by the Borrower; provisions thereof and (ivb) that is covered by a negotiable document of titlethe Assignor shall, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent;extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. (v) that 7. This Assignment and Acceptance shall be construed in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned accordance with and governed by the buyer; (viii) that is not of a type held for sale in the ordinary course law of the BorrowerState of New York without regard to conflicts of law principles that would require the application of the laws of another jurisdiction. Effective Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee’s business; (ixAddress for Notices: Percentage Assigned of Applicable Loan/Commitment: Loan/Commitment Principal Amount Assigned all Lenders thereunder) that consists Term Loans $ % Revolving Loans $ % Letters of discontinued Credit $ % Swingline Loans $ % [Signature Page Follows] The terms set forth above are hereby agreed to: [ ] as Assignor By: Name: Title: as Assignee By: Name: Title: Accepted:* BIOSCRIP, INC. By: Name: Title: JEFFERIES FINANCE LLC, as Administrative Agent By: Name: Title: [ ], as [Swingline Lender/Issuing Bank]** By: Name: Title: * To be completed to the extent consent of Borrower and/or Administrative Agent is required under Section 11.04(b) of the Credit Agreement. ** To be completed to the extent consent of the Swingline Lender or slow-moving items (over 90 days old)Issuing Bank is required under Section 11.04(b) of the Credit Agreement. Jefferies Finance LLC, goods of substandard quality or goods classified as “clearance inventory”; (x) that is Administrative Agent for the Lenders referred to below ▇▇▇ ▇▇▇▇-and▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Account Manager — BioScrip Facsimile: (▇▇▇) ▇▇▇-hold inventory ▇▇▇▇ Re: BioScrip, Inc. [Date] Ladies and Gentlemen: Reference is made to the credit agreement, dated as of March 25, 2010 (as amended, restated, supplemented, waived or that is evidenced by an account; otherwise modified from time to time, the “Credit Agreement”), among BioScrip, Inc., a Delaware corporation (xi) as to which “Borrower”), the Agent’s LienSubsidiary Guarantors, on behalf of itself and the Lenders, therein Jefferies Finance LLC, as administrative agent, as lead arranger, as book manager and as collateral agent for the Secured Parties, ING Capital LLC, as syndication agent, Compass Bank, as a co-documentation agent, General Electric Capital Corporation, a co-documentation agent, HFG Healthco-4, LLC, as swingline lender for the Lenders, and Healthcare Finance Group, LLC, as collateral manager and as issuing bank for the Lenders. Capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Credit Agreement. Borrower hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and that in connection therewith sets forth below the terms on which such Borrowing is not a first priority perfected Lien;requested to be made: (xiiA) as Class of Borrowing: [Revolving Borrowing] [Term Borrowing] (B) Principal amount of Borrowing:1 (C) Date of Borrowing (which is a Business Day): (D) Type of Borrowing: [ABR Borrowing] [Eurodollar Borrowing] (E) Interest Period and the last day thereof:2 (F) Funds are requested to which any be disbursed to Borrower’s account with: Account No. Borrower hereby represents and warrants that the conditions to lending specified in Sections 4.02(b)-(d) of the representations or warranties pertaining to Inventory set forth in this Credit Agreement or are satisfied as of the Borrower Security date hereof. 1 See Section 2.02(a) of the Credit Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentfor minimum borrowing amounts.

Eligible Inventory. Based on the most recent Inventory owned by Borrower or a Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the AgentGuarantor; provided that, the Agent shall in its Credit Judgment determine which no Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: unless it (ia) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing suppliesfinished goods, work-in-process Inventory or raw materials, and not packaging or shipping materials, labels, samples, display items, bags, replacement parts; parts or manufacturing supplies; (viib) that consists of goods which have been returned by the buyer; (viii) that is not of a type held on consignment or approval or subject to any deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale in the ordinary course of the Borrower’s business; sale; (ixd) that consists of discontinued or is not slow-moving items moving, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (over 90 days old)e) meets all standards imposed by any Governmental Authority and has not been acquired from an entity subject to Sanctions or any specially designated nationals list maintained by OFAC; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, goods first priority Lien, and no other Lien (other than non-consensual Permitted Liens arising by operation of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as law which are junior to which the Agent’s Lien) unless an appropriate Reserve has been established in Agent’s sole discretion; (h) is within the continental United States or Canada, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; in transit (xii) as except Eligible In-Transit Inventory not to which exceed $20,000,000 at any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that time outstanding), and is not covered by casualty insurance acceptable consigned to any Person; (i) is not subject to any warehouse receipt or negotiable Document unless an appropriate Reserve has been established in Agent’s sole discretion; (j) is not subject to any License or other arrangement that restricts Borrower’s, any Borrowing Base Guarantor’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; and (k) is not located on leased premises or in the possession of a warehouseman, processor, repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Person has delivered a Lien Waiver or an appropriate Availability Reserve has been established in Agent’s sole discretion; provided further, Inventory shall not be Eligible Inventory if it is Inventory which Agent has (i) determined in its Credit Judgment is unacceptable for inclusion in the Aggregate Borrowing Base, Tranche A Borrowing Base and Tranche B Borrowing Base and (ii) provided at least two (2) Business Days’ prior notice to Borrower (including telephonic or electronic notice promptly confirmed in writing) of such determination.

Eligible Inventory. Based on With respect to the most recent Borrowing Base Certificate delivered Borrower and AEL, finished goods and piece goods owned by the Borrower or, ONLY with respect to finished goods and piece goods inventory located in Hong Kong, AEL or the Borrower if the Borrower has taken all steps requested by the Facility Agent to grant to the Agent and on other information available to the Facility Agent, for the Agent shall in its Credit Judgment determine which Inventory benefit of the Agents and the Lenders, a first-priority perfected charge over the assets of the Borrower located in Hong Kong, pursuant to such documentation (including, without limitation, a debenture, corporate authority documentation, and one or more legal opinion(s)) as shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amountssatisfactory, if anyin form and substance, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Facility Agent; PROVIDED that Eligible Inventory shall not include any Inventory of the Borrower: inventory (ia) that is held on consignment, or not otherwise owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights or AEL or of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure type no longer sold by the Borrower’s performance , (b) which has been returned by a customer or is damaged or subject to any legal encumbrance other than Permitted Liens, (c) which (i) if such goods are located in the United States, is not in the possession of the Borrower or any of its Subsidiaries unless the Facility Agent has received a waiver from the party in possession of such inventory in form and substance reasonably satisfactory to the Facility Agent or (ii) if such goods are in transit, with respect to that Inventory), except which all documents of title relating to such Inventory have not been consigned to the Liens Facility Agent in favor of a manner reasonably acceptable to the Agent, on behalf of itself Facility Agent and the Lenders; Facility Agent or an Approved Customs Broker is not in possession of all documents of title relating to such goods, (iid) that which is (i) not located on premises owned, leased or operated held by the Borrower or (ii) stored with any of its Subsidiaries on property leased by the Borrower or any of its Subsidiaries, unless the Facility Agent has received a baileewaiver from the lessor of such leased property and, warehouseman or similar Personif any, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves sublessor thereof in form and substance reasonably satisfactory to the Agent have been established with respect theretoFacility Agent, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xie) as to which the security interest of the Facility Agent has not been duly perfected under applicable local law, (f) which has been shipped to a customer of the Borrower or any of its Subsidiaries regardless of whether such shipment is on a consignment basis, (g) which the Facility Agent reasonably deems to be obsolete or not marketable or otherwise does not consider "Eligible Inventory", (h) which is reasonably deemed by the Facility Agent’s Lien, on behalf based upon reasonable credit, commercial, accounting or other considerations, to be unacceptable for inclusion in Eligible Inventory, or (i) which is owned by the Borrower and located in Hong Kong unless the Borrower has taken all steps requested by the Facility Agent to grant to the Facility Agent, for the benefit of itself the Agents and the Lenders, therein is not a first first-priority perfected Lien; charge over the assets of the Borrower located in Hong Kong, pursuant to such documentation (xiiincluding, without limitation, a debenture, corporate authority documentation, and one or more legal opinion(s)) as to which any of the representations or warranties pertaining to Inventory set forth shall be satisfactory, in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable form and substance, to the Facility Agent.

Eligible Inventory. Based on All of the inventory owned by the Borrower and reflected in the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent Bank shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoingthis Agreement, Eligible Inventory shall not include any Inventory of the BorrowerBorrower that: (ia) that is not owned by the Borrower free and clear of all Liens liens and rights of any other Person person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens liens in favor of the Agent, on behalf of itself Bank and the LendersPermitted Liens; (iib) that is (i) not is located on premises ownedowned or leased by Borrower and is not encumbered by a mortgage or deed of trust, leased or operated by the Borrower in each case in favor of Lender, or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) is located at any site if the aggregate book value an owned or leased location subject to a mortgage in favor of Inventory at any such location is less a person other than $100,000Lender; (iiic) that is placed on consignment, consignment or is in transit or is otherwise not located on premises owned, leased or operated by the Borrowertransit; (ivd) that is covered by a negotiable document obsolete, slow moving (in excess of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agentone year’s reasonable determination, is excess, obsoletesupply), unsalable, shopworn, seconds, damaged, imperfect damaged or unfit for sale; however, Reserve Seed Inventory that otherwise qualifies shall be deemed Eligible Inventory; (vie) that consists of display items, promotional materials, items or packing or shipping materials, manufacturing supplies, work-in-process Inventory stores or replacement parts; (viif) that consists of goods which have been returned by the buyer; (viiig) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ixh) that consists is not subject to a first priority lien in favor of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”Lender; (xi) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which breaches any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrueLoan Documents in any material respect; (xiiij) that consists of any costs associated with “freight-in” charges, except those charges that are customary in, and consistent with, Borrower’s historical accounting practices; (xivk) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or; (xvl) that is not covered by casualty insurance reasonably acceptable to Lender; or (m) is subject to any patent or trademark license requiring the Agentpayment of royalties or fees or requiring the consent of the licensor for a sale thereof by Lender which has not been obtained.

Eligible Inventory. Based on The term ELIGIBLE INVENTORY means, at any date of determination thereof, the most recent Borrowing Base Certificate delivered aggregate amount, as at such time, of INVENTORY owned by any or all of the BORROWERS which is acceptable to the LENDER to be included in the calculation of the BORROWING BASE. The criteria for eligibility may be fixed and revised by the Borrower LENDER from time to time in its reasonable discretion in accordance with its internal credit policies, and any such determinations by the LENDER will be promptly communicated to the Agent and on other information available to the Agent, the Agent shall BORROWERS. INVENTORY in its Credit Judgment determine which Inventory of the Borrower no event shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the BorrowerELIGIBLE INVENTORY unless: (ia) that the LENDER has a first priority perfected security interest in its INVENTORY; (b) it is not owned by the Borrower free normally and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of business of any or all of the Borrower’s business; BORROWERS; (ixc) that consists it is not work in process; (d) it is located on the premises of discontinued a BORROWER; (e) it does not consist of defective, damaged, obsolete, returned or slow-repossessed items of INVENTORY or used goods or goods taken in trade; (f) it does not consist of slow moving items or items determined by the LENDER in its sole discretion to be stale or dated merchandise; (over 90 days old)g) it does not consist of packing or packaging materials, goods general supplies, catalogs, promotion materials, specialty inventory, inventory on loan to any PERSON, items used as demonstrators, prototypes, or salesman's samples; (h) it does not consist of substandard quality an item consigned to any or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory all of the BORROWERS or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as with respect to which any PERSON claims a lien; (i) it has not been consigned by any or all of the representations BORROWERS to a consignee; (j) it is not held by any PERSON (other than a BORROWER) or warranties pertaining to Inventory set forth located upon any premises not owned in this Agreement fee simple by a BORROWER unless such PERSON or the Borrower Security Agreement is untrue; owner of such premises has executed a lien waiver agreement in form and substance satisfactory to the LENDER; and (xiiik) that consists it has not been deemed unmerchantable or otherwise unsatisfactory by the LENDER for any reason, in the LENDERS sole discretion, by written notice to the BORROWERS. The value of any costs associated with “freightINVENTORY deemed to meet the criteria for ELIGIBLE INVENTORY shall be determined at the least of: (i) the BORROWERS net purchase or manufacturing cost; (ii) the lowest then-in” charges; existing market price; (xiviii) the BORROWERS lowest selling price, less estimated expenses for packing, selling and delivery; or (iv) any price ceiling which may be established by governmental order, regulation, or restriction. The LENDER shall be the discretionary judge of the value of any INVENTORY, based upon such information as it deems, in its reasonable discretion, to be relevant or applicable in making that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentdetermination.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered Inventory owned by the a Borrower to the Agent and on other information available to the that Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed Permitted Discretion, deems to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, no Inventory shall be Eligible Inventory shall unless it (a) is finished goods or raw materials, and not include work in process, packaging or shipping materials, labels, samples, display items, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, nor subject to any Inventory retention of title, conditional sale or similar arrangements nor subject to any deposit or down payment; (c) is in new and saleable condition and is not damaged, defective, shopworn or otherwise unfit for sale; (d) is not slow-moving, perishable, obsolete or unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standards imposed by any Governmental Authority, has not been acquired from a Person subject to any Sanction or on any specially designated nationals list maintained by OFAC or similar list maintained by the Borrower: Government of Canada, and does not constitute hazardous materials under any Environmental Law; (f) conforms with the covenants and representations herein; (g) is subject to Agent’s duly perfected, first priority Lien, and no other Lien, other than those permitted pursuant to Section 10.2(b) (iii), (iv), (vi), (vii) and (xi); (h) is within the continental United States or Canada, is not in transit except between locations of Borrowers, and is not consigned to any Person; (i) that is not owned by the Borrower free and clear of all Liens and rights of subject to any other Person warehouse receipt or negotiable Document; (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (iij) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if where the aggregate book value Value of all such Inventory at any such location located thereon is less than $100,000; ; (iiik) is not subject to any License or other arrangement that restricts such Borrower’s or Agent’s right to dispose of such Inventory, unless Agent has received an appropriate Lien Waiver; and (l) is placed on consignment, is in transit or is otherwise not located on leased premises ownedor in the possession of a warehouseman, leased processor, repairman, mechanic, shipper, freight forwarder or operated by the Borrower; (iv) that is covered by a negotiable document of titleother Person, unless the lessor or such document Person has delivered a Lien Waiver or an appropriate Rent and evidence of acceptable insurance covering such Inventory have Charges Reserve has been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentestablished.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower Upon Borrowers' delivery to the Agent and on other information available to the AgentLender of an Inventory Certification Report, the Agent Lender shall determine, in its Credit Judgment determine sole discretion, which Inventory of the Borrower shall be deemed to be “listed thereon is "Eligible Inventory” of ." In making this determination, Lender will consider the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrowerfollowing requirements: (ia) that The Inventory consists of raw material, work in process or finished goods, is in good condition, meets all standards imposed by any governmental agency or department or division thereof having regulatory authority over such goods, is identified to an acceptable purchase order or contract in Lender's sole discretion, and is not owned by the Borrower free and clear of all Liens and rights of any other Person otherwise unacceptable to Lender due to age (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventorymust be less than one year old), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (iib) that The Inventory is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at one of the locations listed on Exhibit D attached hereto, is subject to and covered by Lender's perfected security interest and is not subject to any site if the aggregate book value of other lien, claim, encumbrance or security interest (all Inventory at any such location is less than $100,000other locations shall not be considered to be Eligible Inventory); (iiic) that is placed on consignment, is in transit or is otherwise The Inventory has not located on premises owned, leased or operated by the been consigned to a customer of a Borrower; (ivd) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course Each of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself warranties and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in Section 9.3 of this Agreement or has been reaffirmed with respect thereto at the Borrower Security Agreement is untrue;time the most recent Inventory Certification Report was delivered to Lender; and (xiiie) that consists The Inventory was not purchased by a Borrower in or as part of any costs associated a "bulk" transfer or sale of assets unless such Borrower has complied with “freight-in” charges; (xiv) that consists of Hazardous Materials all applicable bulk sales or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentbulk transfer laws.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower All Eligible Inventory is of good and merchantable quality, free from defects. As to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory each item of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible such Inventory shall not include any Inventory of the Borrower:is (ia) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the than Liens in favor of Lender, (b) either located at one of the Agentlocations set forth on Schedule E-1 or in transit from one such location to another such location, provided, however, that in the case of Eligible In-Transit Inventory, such Inventory (i) is currently in transit from a location not set forth on behalf of itself and the Lenders; Schedule E-1 to a location on Schedule E-1, (ii) that is title to such Inventory has passed to Borrower, and (iiii) such Inventory otherwise conforms with the definition of Eligible In-Transit Inventory, (c) not located on premises ownedreal property leased by Borrower, leased in a contract warehouse, or operated other location that is not owned by Borrower, in each case, unless subject to a Collateral Access Agreement executed by the Borrower or (ii) stored with a baileelessor, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentwarehouseman, or other third party, as the case may be, and unless segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, (yd) Reserves satisfactory to the Agent not goods that have been established with respect thereto, returned or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000;rejected by Borrower's customers, (iiie) not goods that is placed on consignmentare obsolete or slow moving, is in transit restrictive or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display custom items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process process, or that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrower's business, ▇▇▇▇ and hold goods, defective goods, "seconds," or Inventory or replacement parts;acquired on consignment, and (viif) not subject to the rights of other Persons (including rights associated with trademarks, patents, or copyrights) that consists would expose Lender to any liability (including the payment of goods any royalty or other sum) or prevent the sale of such goods, as determined by Lender in its Permitted Discretion; provided that up to $500,000 (of value—which have been returned by shall be the buyer; (viiilower of cost or fair market value) that is not of a type held for sale Inventory on consignment with Atlantic Research Corporation shall be included in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; Eligible Inventory if (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which it satisfies the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to criteria for Eligible Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; definition of Eligible Inventory (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that other than such consigned inventory is not covered by casualty insurance acceptable located at one of the locations set forth on Schedule E-1) and (ii) Borrower has complied with the provisions of Section 9114(1)(a), (b), (c), and (d) of the Code (as in effect prior to July 1, 2001), or Section 9324(b) of the AgentCode (as in effect on and after July 1, 2001).

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the Agent, the Agent Eligible Inventory" shall in its Credit Judgment determine which Inventory consist of all of the Borrower shall be deemed to be “Eligible Inventory” of , except the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrower: following: (i) that Inventory which is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excessdamaged, obsolete, unsalablenot in good condition, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing not currently usable or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of the Borrower’s business; 's business as determined by the Agent; (ii) Inventory which the Agent determines, or which in accordance with the Borrower's customary business practices, is unacceptable due to age, type, category and/or quantity, including, without limitation, any Inventory which is in excess of a one (1) year's supply or is otherwise slow-moving; (iii) Inventory with respect to which the Agent does not have a first and valid, fully perfected Lien; (iv) Inventory consisting of packaging or supplies; (v) Inventory in the possession of the Borrower but not owned by the Borrower; (vi) Inventory produced in violation of the Fair Labor Standards Act and subject to the so-called "hot goods" provision contained in Title 29 U.S.C. ss.215(a)(1); (vii) Inventory with respect to which any disclosure is required in the applicable Monthly Report or Borrowing Base Certificate in accordance with subsection 3.11; (viii) Inventory which is on consignment or is located at a place other than the places of business and collateral locations of the Borrower listed on Exhibit 8.6; provided that, subject to subsection 7.9, in the case of leased or bailment locations listed on Exhibit 8.6, no Inventory located at any such location shall be "Eligible Inventory" until the applicable landlord or bailee has executed a lien waiver in form and substance satisfactory to the Agent) including, without limitation, Inventory in transit; (ix) that consists Inventory consisting of discontinued or slow-moving items (over 90 days old), finished goods which do not meet the specifications of substandard quality or goods classified as “clearance inventory”; the purchase order for which such Inventory was produced; and (x) Inventory which fails to meet the standards imposed by any governmental agency, or department or division thereof, having regulatory authority over such goods, or their use and/or sale. In the event that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) becomes aware that consists of any costs associated Inventory with “freight-in” charges; (xiv) that consists of Hazardous Materials a material value previously scheduled in a Monthly Report or goods that can Borrowing Base Certificate ceases to be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to Eligible Inventory, the AgentBorrower shall notify the Agent thereof immediately.

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered by the Borrower Upon Borrowers' delivery to the Agent and on other information available to the AgentLender of an Inventory Certification Report, the Agent Lender shall determine, in its Credit Judgment determine reasonable business judgment, which Inventory of the Borrower shall be deemed to be “listed thereon is "Eligible Inventory” of ." In making this determination, Lender will consider the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory of the Borrowerfollowing requirements: (iA) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with With respect to that Vita, the Inventory is in good condition, constitutes finished goods or raw fish (excluding, however, ingredients (other than raw fish) used to process finished goods Inventory)), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that is (i) not located on premises owned, leased or operated meets all standards imposed by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentany governmental agency, or (y) Reserves satisfactory to the Agent have been established with respect theretodepartment or division thereof, or (iii) located at any site if the aggregate book value of Inventory at any having regulatory authority over such location is less than $100,000; (iii) that is placed on consignmentgoods, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale currently saleable in the ordinary course of the Borrower’s businessVita's business and is not otherwise unacceptable to Lender due to age, type, category and/or quantity; (ixB) that consists of discontinued With respect to Virginia Honey, the Inventory is in good condition, meets all standards imposed by any governmental agency, or slow-moving items (department or division thereof, having regulatory authority over 90 days old)such goods, goods of substandard quality or goods classified as “clearance inventory”and is not otherwise unacceptable to Lender due to age, type, category and/or quantity; (xC) that The Inventory is ▇▇▇▇-and-hold inventory located at one of the locations listed on Schedule 5.6 attached hereto, is subject to and covered by Lender's perfected security interest and is not subject to any other lien, claim, encumbrance or that is evidenced by an accountsecurity interest other than Permitted Liens (all Inventory at other locations shall not be considered to be Eligible Inventory); (xiD) as The Inventory has not been consigned to a customer of a Borrower (Inventory which is subject to return due to expiration of code dates or due to being deemed "unwholesome" by the Agent’s Lien, on behalf of itself and the Lenders, therein is Account Debtor shall not a first priority perfected Lienbe considered to be consigned Inventory); (xiiE) as to which any Each of the warranties and representations or warranties pertaining to Inventory set forth in Section 9.3 of this Agreement or has been reaffirmed with respect thereto at the Borrower Security Agreement is untrue;time the most recent Inventory Report was delivered to Lender; and (xiiiF) that consists The Inventory was not purchased by a Borrower in or as part of any costs associated a "bulk" transfer or sale of assets unless such Borrower has complied with “freight-in” charges; (xiv) that consists of Hazardous Materials all applicable bulk sales or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentbulk transfer laws.

Eligible Inventory. Based (i) Keep all Eligible Inventory only at the locations in the United States; and (ii) keep all Eligible Inventory only at locations identified on the most recent Borrowing Base Certificate delivered by the Schedule E-3 (as amended pursuant to Section 5.2), (iii) keep all Eligible Inventory fully covered at not less than their book value under Borrower’s “spares” all risk insurance policies, and (iv) keep all Eligible Inventory from being installed or held for installation on an Aircraft or Engine, or otherwise held, by, for, or on behalf an air carrier as defined in 14 CFR 49. Each Borrower shall, and shall cause each other Spare Parts Loan Party to, also keep all Spare Parts that are Collateral and all Eligible Inventory (except to the extent such Spare Parts are the subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)(ii)) in fenced areas with readily visible signage indicating that the Spare Parts located at such location are subject to a Lien in favor of Agent or otherwise segregated and on not commingled with assets that are not Collateral. (b) Keep all Spare Parts and other information available Inventory (except to the Agent, extent the Agent shall in its Credit Judgment determine which Inventory subject of a Permitted Spare Parts Installation permitted pursuant to Section 5.19(e)) of the Borrower shall be deemed Spare Parts Loan Parties not designated as Eligible Inventory only at the locations identified on Schedule E-3 (as amended pursuant to Section 5.2) and not permit any Spare Parts or other Inventory to be “located at the premises of or otherwise put into the possession or control of any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or other Person unless a Collateral Access Agreement has been put in place with such Person), provided that: (i) Borrower may amend Schedule E-3 pursuant to Section 5.2 to add additional locations so long as: (A) such amendment occurs by written notice to Agent not less than 10 Business Days prior to the date on which any Spare Parts are moved to such new location, and (B) such new location is within the United States; (ii) any Spare Part that is not Eligible Inventory” Inventory may be transported to or from, or be in the possession of or under the Borrower control of, a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person for purposes of determining repair in the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, Eligible Inventory shall not include any Inventory ordinary course of the Borrower: (i) that is not owned by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor business without a Collateral Access Agreement so long as either (A) no Event of the Agent, on behalf of itself Default has occurred and the Lenders; (ii) that is (i) not located on premises owned, leased continuing or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agentwould result therefrom, or (yB) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any all such location is less than Spare Parts in the possession of or under the control of all such Persons, in the aggregate, does not exceed $100,000; 2,000,000; (iii) that is placed on consignment, so long as such transit is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document United States and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business;, the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to any location identified on Schedule E-3; (iv) so long as (ixA) no Event of Default has occurred and is continuing or would result therefrom, (B) such transit is in the ordinary course of Borrower’s business, and (C) the aggregate book value of all Spare Parts moved to all such foreign locations, in the aggregate, does not exceed $2,500,000 (provided that consists Spare Parts at such foreign locations shall not count against the dollar amount of discontinued or slow-moving items (over 90 days oldSpare Parts permitted to be maintained with third parties pursuant to Section 5.19(b)(ii)(B)), goods the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to any location outside the United States (including locations outside the United States where such Spare Parts are in the possession of substandard quality or goods classified under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person); (v) so long as “clearance inventory”;such transit is in the ordinary course of Borrower’s business, the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory from any location outside the United States to any other location outside the United States; (vi) so long as such transit is in the ordinary course of Borrower’s business, the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory to the location of Aircraft, Engines, flight simulators or other Equipment to complete a Permitted Spare Parts Installation that is permitted pursuant to Section 5.19(e); and (vii) the Spare Parts Loan Parties may move Spare Parts that are not Eligible Inventory pursuant to pool, exchange or lease transactions permitted pursuant to Section 5.19(e). (c) Maintain in effect a Spare Parts Tracking System. (d) Maintain, with respect to Spare Parts, all records, logs, serviceability tags and other documents and materials required by applicable law, including the FARs, or by the Spare Parts Loan Parties' Maintenance Program. (e) Not permit any Spare Parts to be leased, sold, exchanged, attached or installed on any Aircraft, Engine, flight simulator, or other Equipment, or otherwise disposed of; provided, however, that (i) so long as no Overadvance (as defined under the DIP Revolving Credit Agreement) is outstanding or would result therefrom (after having removed any such Eligible Inventory from the Borrowing Base (as defined under the DIP Revolving Credit Agreement)), the Spare Parts Loan Parties may sell Spare Parts that are not Eligible Inventory in the ordinary course of Borrower’s business, (ii) so long as no Overadvance (as defined under the DIP Revolving Credit Agreement) is outstanding or would result therefrom, Borrower may make Permitted Spare Parts Installations with Eligible Inventory, (iii) the Spare Parts Loan Parties may make Permitted Spare Parts Installations with Spare Parts (other than Eligible Inventory), and (iv) with respect to Spare Parts that are not Eligible Inventory, the Spare Parts Loan Parties may pool, exchange, or lease such Spare Parts in the ordinary course of business so long as (x) no Event of Default has occurred and is continuing or would result therefrom and (y) the aggregate book value of all such Spare Parts, in the aggregate, does not exceed $1,000,000. (f) Each Borrower, on behalf of each of its Subsidiaries, hereby waives any and all rights that is it has or may have in the future to assert or claim against Agent or any of the Lenders or any transferee pursuant to the exercise of remedies under any of the Loan Documents, any mechanic's, repairer's, servicer's, ▇▇▇▇-and-hold inventory ▇▇'▇ or that is evidenced by an account; (xi) as to which the Agent’s Lienother Lien against any Collateral, on behalf of itself and the Lendersincluding any Spare Parts, therein is not a first priority perfected Lien; (xii) as to which Engines, or Aircraft constituting Collateral. Not permit any of its Spare Parts to be located at the representations premises of or warranties pertaining to Inventory set forth in this Agreement otherwise put into the possession or the Borrower Security Agreement is untrue; (xiii) that consists control of any costs associated with “freight-in” charges; (xiv) bailee, warehouseman, FAA repair station, servicer, mechanic, vendor, supplier, or similar Person except: that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) any Spare Part that is not covered by casualty insurance acceptable an Eligible Inventory may be in the possession of or under the control of a bailee, warehouseman, FAA repair station, overhaul or maintenance servicer, mechanic, or similar Person to the Agentextent expressly permitted by (but without duplication of) Section 5.19(b).

Eligible Inventory. Based on the most recent Borrowing Base Certificate delivered With respect to S&H, finished goods owned by the Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining the amounts, if any, to be advanced to the Borrower under the Revolving Credit Loan and the Swing Line Loan. Without limiting the foregoing, such Borrower; PROVIDED that Eligible Inventory shall not include any Inventory of the Borrower: inventory (i) that held on consignment, or not otherwise owned by such Borrower, or of a type no longer sold by such Borrower; (ii) which has been returned by a customer or is damaged or subject to any legal encumbrance other than Permitted Liens; (iii) which is not owned in the possession of such Borrower unless (A) such inventory is subject to a documentary letter of credit issued by a lender approved by the Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments Administrative Agent and the rights Administrative Agent has possession of and a surety that has issued a bond first priority, perfected security interest in the documents of title relating to assure such inventory, (B) such inventory is in transit from one Permitted Inventory Location of such Borrower within the Borrower’s performance United States of America to another Permitted Inventory Location of such Borrower within the United States of America or (C) the aggregate gross book value of such inventory does not exceed $6,000,000 with respect to that Inventory)inventory located at such Borrower's distribution center and warehouse located at 8145 ▇▇▇▇▇▇ ▇▇▇▇▇, except Florence, Kentucky and operated by The Discovery Channel Store, Inc. pursuant to the Liens in favor of the AgentCooperation and Services Agreement between The Discovery Channel Store, on behalf of itself Inc. and such Borrower, and $1,750,000 with respect to all other inventory locations and the Lenders; (ii) that is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, Administrative Agent has received (x) a waiver in form and substance satisfactory bailee letter or landlord waiver to the Administrative Agent from the possessor of such inventory, (y) financing statements in form and substance satisfactory to the Administrative Agent executed and delivered by such Borrower as secured party/bail▇▇ ▇▇▇ the possessor of such inventory as debtor/bailee, for filing in the appropriate jurisdictions PROVIDED, HOWEVER, that the Administrative Agent may in its sole discretion, waive the foregoing requirement with respect to financing statements, and (z) an assignment in form and substance satisfactory to the Administrative Agent by the secured party/bail▇▇ ▇▇ the Administrative Agent of the aforementioned financing statements; (iv) in which the Administrative Agent does not have a valid and perfected first priority security interest; (v) which has been delivered shipped to a customer of such Borrower regardless of whether such shipment is on a consignment basis; (vi) which is not located at a Permitted Inventory Location of such Borrower within the United States of America, unless (A) such inventory is subject to a documentary letter of credit issued by a lender approved by the Administrative Agent and the Administrative Agent has possession of and a first priority, perfected security interest in the documents of title relating to such inventory or (B) such inventory is in transit from one Permitted Inventory Location of such Borrower within the United States of America to another Permitted Inventory Location of such Borrower within the United States of America; (vii) which the Majority Lenders reasonably deem to be obsolete or not marketable; (viii) which is located in California unless the Administrative Agent has received a legal opinion in form and substance satisfactory to the AgentAdministrative Agent that the Loan Documents comply with the provisions of ss.9102(5)(b) of the Uniform Commercial Code as in effect in California, or (yix) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignment, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that which consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the Agentlive plantings.

Eligible Inventory. Based on All of the Inventory owned by the Borrowers and reflected in the most recent Borrowing Base Certificate delivered by the each Borrower to the Agent and on other information available to the Agent, the Agent shall in its Credit Judgment determine which Inventory of the Borrower shall be deemed to be “Eligible Inventory” of the Borrower for purposes of determining this Agreement, except Inventory that Agent, in its reasonable credit judgment and upon prior notice to Borrower Representative, has determined is not Eligible Inventory. Agent shall have the amountsright to establish, if anymodify or eliminate Reserves against Eligible Inventory from time to time in its reasonable credit judgment, in each case, upon prior notice to Borrower Representative. In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to be advanced adjust any of the criteria set forth below and to establish new criteria, in its reasonable credit judgment and upon prior notice to Borrower Representative, subject to the Borrower under approval of each Lender in the Revolving Credit Loan and case of adjustments or new criteria which have the Swing Line Loaneffect of making more credit available. Without in any way limiting the foregoingdiscretion of Agent to deem or not deem any Inventory as Eligible Inventory, Eligible Inventory shall not include any Inventory of the Borrowerany Borrower that: (ia) that is not owned by the such Borrower free and clear of all Liens and rights of any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the such Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and Lenders, and Permitted Encumbrances in favor of landlords and bailees to the Lendersextent permitted in Section 5.9 hereof (subject to Reserves established by Agent in accordance with Section 5.9 hereof); provided, that, Inventory subject to the Rolex Security Agreement shall not be deemed to be ineligible solely because of the provisions of this clause (a); provided, further, that, the Congress Rolex Inventory shall not be deemed to be ineligible solely because of the provisions in this clause (a) so long as the Congress Rolex Intercreditor is in full force and effect; (iib) that is (i) is not located on premises owned, leased or operated rented by such Borrower and set forth in Disclosure Schedule (3.2) (as the Borrower same may be updated from time to time), or (ii) is stored with at a baileeleased location, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, unless Agent has given its prior consent thereto and unless either (x) a reasonably satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves reasonably satisfactory to the Agent have been established with respect thereto or (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee letter has been received by Agent and Reserves reasonably satisfactory to Agent have been established with respect thereto, or (iiiiv) is located at any site if the aggregate book value an owned location subject to a mortgage in favor of Inventory at any such location is less a lender other than $100,000Agent unless a reasonably satisfactory mortgagee waiver has been delivered to Agent; (iiic) that is placed on consignment, consignment or is in transit, except for Inventory in transit or is otherwise not located on premises owned, leased or operated by the Borrowerbetween domestic locations of Credit Parties; (ivd) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have has been delivered to the AgentAgent with all necessary endorsements, free and clear of all Liens except those in favor of Agent and Lenders; (ve) that in the Agent’s reasonable determinationis obsolete, is excess, obsoleteslow moving, unsalable, shopworn, seconds, damaged, imperfect damaged or unfit for sale; (vif) that consists of display items, promotional materials, items or packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (viig) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the such Borrower’s business; (ixh) that consists is not subject to a first priority lien in favor of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, Agent on behalf of itself and the Lenders, therein is not a first priority perfected Liensubject to Permitted Encumbrances as set forth in clause (e) of the definition thereof (subject to reserves satisfactory to Agent); (xiii) as to which breaches any of the representations or warranties pertaining to Inventory set forth in this Agreement or the Borrower Security Agreement is untrueLoan Documents; (xiiij) that consists of any costs associated with “freight-in” charges; (xivk) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or; (xvl) that is not covered by casualty insurance reasonably acceptable to Agent; or (m) is subject to any patent or trademark license requiring the payment of royalties or fees or requiring the consent of the licensor for a sale thereof by Agent; provided, however, that, there shall be included as Eligible Inventory (i) all Rolex Inventory and (ii) certain Inventory subject to the DAR License Agreement with an aggregate cost value of $500,000.

Eligible Inventory. Based on the most recent Upon Borrower’s delivery to Lender of a Borrowing Base Certificate delivered by the Borrower to the Agent and on other information available to the AgentCertificate, the Agent Lender shall determine, in its Credit Judgment determine sole discretion, which Inventory of the Borrower shall be deemed to be listed thereon is “Eligible Inventory” ”. In making this determination, Lender will consider the following requirements: (a) the Inventory consists solely of raw materials or finished goods (but not work-in-progress); (b) the Inventory is in good and merchantable condition, is not slow-moving, obsolete or discontinued; (c) the Inventory is located on premises listed in Exhibit C attached hereto; (d) the Inventory is not covered by or subject to a seller’s right to repurchase, or any consensual or nonconsensual lien or security interest, other than in favor of Lender; (e) the Inventory does not consist of packaging or supplies; (f) the Inventory was not produced in violation of the Borrower for purposes of determining the amounts, if any, to be advanced Fair Labor Standards Act and subject to the Borrower under “hot goods” provisions contained in Title 29 U.S.C. §215; (g) the Revolving Credit Loan and Inventory is not subject to any agreement or license which would restrict the Swing Line Loan. Without limiting Lender’s ability to sell or otherwise dispose of such Inventory; (h) the foregoing, Eligible Inventory shall is not include identified to any Inventory of purchase order or contract to the Borrower:extent progress or advance payments are received with respect to such Inventory; and (i) the Lender shall not have determined in its reasonable discretion that the Inventory is not owned by the Borrower free and clear of all Liens and rights of unacceptable due to age, type, category, quality, quantity and/or any other Person (including the rights of a purchaser that has made progress payments and the rights of a surety that has issued a bond to assure the Borrower’s performance with respect to that Inventory), except the Liens in favor of the Agent, on behalf of itself and the Lenders; (ii) that reason whatsoever. Inventory which is (i) not located on premises owned, leased or operated by the Borrower or (ii) stored with a bailee, warehouseman or similar Person, unless, commencing ninety (90) days after the Effective Date, either, at Borrower’s election, (x) a satisfactory bailee letter or landlord waiver has been delivered to the Agent, or (y) Reserves satisfactory to the Agent have been established with respect thereto, or (iii) located at any site if the aggregate book value of Inventory at any such location is less than $100,000; (iii) that is placed on consignmenttime Eligible Inventory, is in transit or is otherwise not located on premises owned, leased or operated by the Borrower; (iv) that is covered by a negotiable document of title, unless such document and evidence of acceptable insurance covering such Inventory have been delivered but which subsequently fails to the Agent; (v) that in the Agent’s reasonable determination, is excess, obsolete, unsalable, shopworn, seconds, damaged, imperfect or unfit for sale; (vi) that consists of display items, promotional materials, packing or shipping materials, manufacturing supplies, work-in-process Inventory or replacement parts; (vii) that consists of goods which have been returned by the buyer; (viii) that is not of a type held for sale in the ordinary course of the Borrower’s business; (ix) that consists of discontinued or slow-moving items (over 90 days old), goods of substandard quality or goods classified as “clearance inventory”; (x) that is ▇▇▇▇-and-hold inventory or that is evidenced by an account; (xi) as to which the Agent’s Lien, on behalf of itself and the Lenders, therein is not a first priority perfected Lien; (xii) as to which meet any of the representations or warranties pertaining foregoing requirements, shall forthwith cease to Inventory set forth in this Agreement or the Borrower Security Agreement is untrue; (xiii) that consists of any costs associated with “freight-in” charges; (xiv) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (xv) that is not covered by casualty insurance acceptable to the AgentEligible Inventory.