EACH MONTH AND A BALANCE SHEET AS AT THE END OF THE LAST MONTH IN EACH
FISCAL QUARTER), TOGETHER WITH A SCHEDULE WHICH SETS FORTH EACH OF SMI AND ITS
CONSOLIDATED SUBSIDIARIES PROJECTED FIXED CHARGE COVERAGE RATIO CALCULATIONS FOR
EACH QUARTER, SUCH PROJECTIONS TO BE ACCOMPANIED BY A CERTIFICATE SIGNED BY A
RESPONSIBLE OFFICER TO THE EFFECT THAT SUCH PROJECTIONS HAVE BEEN PREPARED ON
THE BASIS OF SOUND FINANCIAL PLANNING PRACTICE CONSISTENT WITH PAST BUDGETS AND
FINANCIAL STATEMENTS AND THAT SUCH OFFICER HAS NO REASON TO QUESTION THE
REASONABLENESS OF ANY MATERIAL ASSUMPTIONS ON WHICH SUCH PROJECTIONS WERE
PREPARED;
IMMEDIATELY UPON LEARNING THEREOF, A REPORT OF ALL MATTERS MATERIALLY AFFECTING
THE VALUE, ENFORCEABILITY OR COLLECTABILITY OF ANY PORTION OF THE COLLATERAL IN
EXCESS OF $250,000; AFTER THE WITHDRAWAL BY THE ADMINISTRATIVE AGENT OF ITS
AUTHORITY TO DO SO, A LOAN PARTY SHALL NOT, WITHOUT THE ADMINISTRATIVE AGENT'S
PRIOR WRITTEN CONSENT, COMPROMISE OR ADJUST ANY ACCOUNTS (OR EXTEND THE TIME FOR
PAYMENT THEREOF) OR ACCEPT ANY RETURNS OF MERCHANDISE OR GRANT ANY ADDITIONAL
DISCOUNTS, ALLOWANCES OR CREDITS THEREON;
CONCURRENTLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS REFERRED TO IN
SECTION 8.1(A) AND (B), A CERTIFICATE OF SUCH LOAN PARTY SIGNED BY A RESPONSIBLE
OFFICER OF SUCH LOAN PARTY STATING SUCH LOAN PARTY IS IN COMPLIANCE IN ALL
MATERIAL RESPECTS WITH ALL FEDERAL, STATE AND
47
LOCAL LAWS RELATING TO ENVIRONMENTAL PROTECTION AND CONTROL AND OCCUPATIONAL
SAFETY AND HEALTH; TO THE EXTENT THAT SUCH LOAN PARTY IS NOT IN MATERIAL
COMPLIANCE WITH THE FOREGOING LAWS, THE CERTIFICATE SHALL SET FORTH WITH
SPECIFICITY ALL AREAS OF NON-COMPLIANCE AND THE PROPOSED ACTION IT WILL
IMPLEMENT IN ORDER TO ACHIEVE MATERIAL COMPLIANCE;
WRITTEN NOTIFICATION OF ANY LITIGATION IN EXCESS OF $250,000 AT ANY TIME PENDING
IN THE AGGREGATE, AFFECTING SUCH LOAN PARTY, WHETHER OR NOT THE CLAIM IS COVERED
BY INSURANCE, AND OF ANY SUIT OR ADMINISTRATIVE PROCEEDING, WHICH MAY ADVERSELY
AFFECT THE COLLATERAL OR SUCH LOAN PARTY'S BUSINESS, ASSETS, OPERATIONS,
CONDITION OR PROSPECTS (FINANCIAL OR OTHERWISE);
PROMPT WRITTEN NOTIFICATION OF THE OCCURRENCE OF (I) ANY DEFAULT OR EVENT OF
DEFAULT; (II) ANY EVENT, DEVELOPMENT OR CIRCUMSTANCE WHEREBY THE FINANCIAL
STATEMENTS MOST RECENTLY FURNISHED TO THE ADMINISTRATIVE AGENT FAIL IN ANY
MATERIAL RESPECT TO PRESENT FAIRLY, IN ACCORDANCE WITH GAAP CONSISTENTLY
APPLIED, THE FINANCIAL CONDITION AND OPERATING RESULTS OF SUCH LOAN PARTY AS OF
THE DATE OF SUCH FINANCIAL STATEMENTS; (III) ANY ACCUMULATED RETIREMENT PLAN
FUNDING DEFICIENCY UNDER THE INTERNAL REVENUE CODE; (IV) EACH AND EVERY DEFAULT
OR EVENT OF DEFAULT BY SUCH LOAN PARTY WHICH HAS RESULTED IN ACCELERATION OF, OR
WHICH MIGHT RESULT IN THE ACCELERATION OF, THE MATURITY OF ANY INDEBTEDNESS IN
EXCESS OF $500,000 AND THE AMOUNT OF INDEBTEDNESS INVOLVED; AND (V) ANY OTHER
DEVELOPMENT IN THE BUSINESS OR AFFAIRS OF SUCH LOAN PARTY WHICH WOULD REASONABLY
BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT IN EACH CASE DESCRIBING THE NATURE
THEREOF AND THE ACTION SUCH LOAN PARTY PROPOSES TO TAKE WITH RESPECT THERETO;
IMMEDIATE NOTIFICATION IF ANY OF ITS