ANNUALLY FOR THE ONE FISCAL YEAR
THEREAFTER, TOGETHER WITH AN EXPLANATION OF THE ASSUMPTIONS ON WHICH SUCH
FORECASTS ARE BASED (INCLUDING DETAIL WITH RESPECT TO LONG-TERM CARE BEDS SERVED
IN EACH STATE IN WHICH THE BORROWER AND ITS SUBSIDIARIES WILL OPERATE,
FORECASTED REVENUES PER BED SERVED AND THE PROJECTED CAPITAL EXPENDITURE AND
WORKING CAPITAL NEEDS OF THE BORROWER AND ITS SUBSIDIARIES);
(I)
INSURANCE REPORT. AS SOON AS PRACTICABLE AND IN ANY EVENT NO
LATER THAN MARCH 31 OF EACH FISCAL YEAR, A REPORT OUTLINING ALL MATERIAL
INSURANCE COVERAGE MAINTAINED AS OF THE DATE OF SUCH REPORT BY BORROWER AND ITS
SUBSIDIARIES AND ALL MATERIAL INSURANCE COVERAGE PLANNED TO BE MAINTAINED BY
BORROWER AND ITS SUBSIDIARIES IN THE IMMEDIATELY SUCCEEDING FISCAL YEAR;
(J)
ENVIRONMENTAL REPORTS AND AUDITS. AS SOON AS PRACTICABLE
FOLLOWING RECEIPT THEREOF, COPIES OF ALL ENVIRONMENTAL AUDITS AND REPORTS WITH
RESPECT TO ENVIRONMENTAL MATTERS AT ANY FACILITY OR WHICH RELATE TO ANY
ENVIRONMENTAL LIABILITIES OF BORROWER OR ITS SUBSIDIARIES WHICH, IN ANY SUCH
CASE, INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO RESULT
IN A MATERIAL ADVERSE EFFECT;
(K)
INFORMATION REGARDING COLLATERAL. (A) BORROWER WILL FURNISH TO THE
COLLATERAL AGENT PROMPT WRITTEN NOTICE OF ANY CHANGE (I) IN ANY LOAN PARTY'S
CORPORATE NAME (OTHER THAN THE CHANGE OF THE BORROWER'S NAME TO "CHEM RX
CORPORATION"), (II) IN ANY LOAN PARTY'S IDENTITY OR CORPORATE STRUCTURE OR
(III) IN ANY LOAN PARTY'S FEDERAL TAXPAYER IDENTIFICATION NUMBER. BORROWER
AGREES NOT TO EFFECT OR PERMIT ANY CHANGE REFERRED TO IN THE PRECEDING SENTENCE
UNLESS ALL FILINGS HAVE BEEN MADE UNDER THE UNIFORM COMMERCIAL CODE OR OTHERWISE
THAT ARE REQUIRED IN ORDER FOR THE COLLATERAL AGENT TO CONTINUE AT ALL TIMES
FOLLOWING SUCH CHANGE TO HAVE A VALID, LEGAL AND PERFECTED SECURITY INTEREST IN
ALL THE COLLATERAL AND FOR THE COLLATERAL AT ALL TIMES FOLLOWING SUCH CHANGE TO
HAVE A VALID, LEGAL AND PERFECTED SECURITY INTEREST AS CONTEMPLATED IN THE
COLLATERAL DOCUMENTS. BORROWER ALSO AGREES PROMPTLY TO NOTIFY THE COLLATERAL
AGENT IF ANY MATERIAL PORTION OF THE COLLATERAL IS DAMAGED OR DESTROYED;
(L)
ANNUAL COLLATERAL VERIFICATION. EACH YEAR, AT THE TIME OF
DELIVERY OF ANNUAL FINANCIAL STATEMENTS WITH RESPECT TO THE PRECEDING FISCAL
YEAR PURSUANT TO SECTION 5.01(C), BORROWER SHALL DELIVER TO THE COLLATERAL AGENT
AN OFFICER'S CERTIFICATE CONFIRMING THAT THERE HAS BEEN NO CHANGE IN SUCH
INFORMATION SINCE THE DATE OF THE COLLATERAL QUESTIONNAIRE DELIVERED ON THE
CLOSING DATE OR THE DATE OF THE MOST RECENT CERTIFICATE DELIVERED PURSUANT TO
THIS SECTION AND/OR IDENTIFYING SUCH CHANGES;
(M)
HEALTH CARE MATTERS.
(I)
COPIES OF ANY WRITTEN RECOMMENDATION FROM ANY GOVERNMENTAL
AUTHORITY OR OTHER REGULATORY BODY THAT BORROWER OR ANY OF ITS SUBSIDIARIES
SHOULD HAVE ANY OF ITS GOVERNMENTAL AUTHORIZATIONS, GOVERNMENTAL THIRD PARTY
PAYOR PROGRAM PROVIDER OR SUPPLIER NUMBERS, OR ACCREDITATIONS SUSPENDED,
REVOKED, OR LIMITED IN ANY WAY, OR ANY PENALTIES OR SANCTIONS IMPOSED;
(II)
NOTICE OF ANY CLAIM TO RECOVER ANY ALLEGED MATERIAL OVERPAYMENTS
WITH RESPECT TO ANY SALES IN EXCESS OF $300,000;
56
(III)
VOLUNTARY DISCLOSURE BY BORROWER OR ANY