Exhibit 10.1
     
 
AMENDED AND RESTATED LOAN AGREEMENT
dated as of August 7, 2009
by and among
BANK OF AMERICA, N.A.,
MSLO EMERIL ACQUISITION SUB LLC,
as Borrower
and
MARTHA STEWART LIVING OMNIMEDIA, INC.,
as Parent Guarantor
     
 

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TABLE OF CONTENTS

              Page  
1. Definitions and Reference Terms
    1  
Other Interpretive Provisions
    11  
 
       
2. Loan
    12  
2.1 Confirmation of Loan
    12  
2.2 Repayment Terms
    12  
2.3 [Reserved]
    13  
2.4 Interest Rate
    13  
2.5 Computations
    13  
2.6 Payment on Non-Business Days
    13  
2.7 Default Rate
    13  
 
       
3. Fees
    13  
3.1 [Reserved]
    13  
3.2 Waiver Fee
    13  
3.3 Late Fee
    13  
 
       
4. Disbursements, Payments and Costs
    14  
4.1 Disbursements and Payments
    14  
4.2 Telecopy or Electronic Mail Instructions
    15  
4.3 Direct Debit
    15  
 
       
5. Conditions Precedent
    15  
5.1 Conditions to Effectiveness
    15  
 
       
6. Representations and Warranties
    16  
6.1 Organization
    17  
6.2 Authority and Consents
    17  
6.3 Binding Agreement
    17  
6.4 Litigation
    17  
6.5 No Conflicts
    17  
6.6 Information
    18  
6.7 Compliance with Laws
    18  
6.8 Permits, Franchises
    18  
6.9 Other Obligations
    18  
6.10 Taxes
    18  
6.11 Investment Company
    18  
6.12 No Default or Event of Default
    19  
6.13 No Material Adverse Change
    19  
6.14 Insurance
    19  
6.15 ERISA Plans
    19  
6.16 Solvency
    19  

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              Page  
7. Affirmative Covenants
    19  
7.1 Use of Proceeds
    19  
7.2 Financial Information
    20  
7.3 Notices
    21  
7.4 Existence; Conduct of Business
    21  
7.5 Compliance with Laws
    22  
7.6 Maintenance of Properties
    22  
7.7 Taxes and Other Obligations
    22  
7.8 Books and Records; Inspection Rights
    22  
7.9 Concentration Account
    22  
7.10 Maintenance of Insurance
    22  
7.11 ERISA
    23  
7.12 Additional Subsidiaries
    23  
7.13 Activities of the SPE
    23  
7.14 [Reserved]
    24  
7.15 Further Assurances
    24  
 
       
8. Financial Covenants
    24  
8.1 Tangible Net Worth
    24  
8.2 Funded Debt to EBITDA Ratio
    24  
8.3 Parent Guarantor Basic Fixed Charge Coverage Ratio
    24  
8.4 Borrower Basic Fixed Charge Coverage Ratio
    24  
8.5 Quick Ratio
    24  
8.6 Total Assets
    24  
8.7 Characterization of Loan for Purposes of Financial Covenants
    24  
 
       
9. Negative Covenants
    25  
9.1 Other Debts
    25  
9.2 Other Liens
    26  
9.3 Dividends and Distributions
    28  
9.4 Investments
    28  
9.5 Loans
    29  
9.6 Asset Sales
    30  
9.7 Capital Expenditures
    31  
9.8 Transactions with Affiliates
    31  
9.9 Additional Negative Covenants
    31  
 
       
10. Default and Remedies
    32  
10.1 Failure to Pay
    32  
10.2 False Information; Representations and Warranties
    32  
10.3 Covenant Default
    32  
10.4 Covenant Default after Cure Period
    32  
10.5 Other Bank Agreements
    32  
10.6 Cross Default
    33  
10.7 Bankruptcy
    33  
10.8 Lien Property
    33  
10.9 Judgments
    33  

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              Page  
10.10 Material Adverse Change
    34  
10.11 Governmental Action
    34  
10.12 ERISA Plans
    34  
10.13 Loan Document Ceases to be Binding
    34  
10.14 Breach under License
    34  
10.15 Change of Control
    34  
 
       
11. Remedies Upon Default
    34  
 
       
12. Notices
    35  
 
       
13. Miscellaneous
    36  
13.1 Fees and Expenses
    36  
13.2 Indemnification
    36  
13.3 Cumulative Rights and No Waiver
    37  
13.4 Applicable Law
    37  
13.5 Successors and Assigns
    37  
13.6 Amendment
    37  
13.7 Entire Agreement
    38  
13.8 Inconsistency
    38  
13.9 Headings
    38  
13.10 Severability; Waivers
    38  
13.11 Survivability
    38  
13.12 Counterparts
    38  
13.13 Dispute Resolution; Waiver of Jury Trial
    38  
13.14 Limitation on Interest and Charges
    40  
13.15 Confidentiality
    41  
13.16 Release
    41  
13.17 No Novation
    41  
 
       
Exhibit A       Form of Reaffirmation of Guaranty
       
Exhibit B       Form of Security Agreement Amendment
       
 
       
Schedule 9.1 Existing Debt
       
Schedule 9.2 Existing Liens
       
Schedule 9.8 Certain Affiliate Transactions
       

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AMENDED AND RESTATED LOAN AGREEMENT
          This Amended and Restated Loan Agreement (this “Agreement”) dated as
of August 7, 2009 is entered into by and among Bank of America, N.A. (together
with its successors and assigns, the “Bank”), located at 767 Fifth Avenue, Floor
12A, New York, New York 10153, and MSLO Emeril Acquisition Sub LLC, a Delaware
limited liability company, the principal place of business of which is located
at 11 West 42nd Street, New York, New York 10026 (the “Borrower”), and Martha
Stewart Living Omnimedia, Inc., a Delaware corporation (“Parent Guarantor”).
          WHEREAS, Parent Guarantor entered into an Asset Purchase Agreement
dated as of February 18, 2008 (the “Purchase Agreement”) among Emeril J.
Lagasse, III (“Lagasse”), Emeril’s Food of Love Productions, L.L.C.,
emerils.com, LLC (collectively, the “Sellers”), Parent Guarantor and MSLO Shared
IP Sub LLC, a Delaware limited liability company (“SPE”), pursuant to which the
Sellers sold to Parent Guarantor and SPE, and Parent Guarantor and SPE
purchased, certain assets used in connection with the Sellers’ business of
licensing, marketing, distributing and selling products and services relating to
Lagasse and his persona, identity and professional services in various form and
media throughout the world (excluding the Restaurant Business (as defined in the
Purchase Agreement)) (the “Acquisition” and, such business, the “Acquired
Business”);
          WHEREAS, assets acquired under the Purchase Agreement are owned by the
Borrower, a wholly owned subsidiary of Parent Guarantor, other than the Shared
Intellectual Property (as defined in the Purchase Agreement), which is owned by
the SPE;
          WHEREAS, pursuant to the Loan Agreement dated as of April 4, 2008
among Parent Guarantor, the Borrower and the Bank (as modified by Waiver and
Omnibus Amendment No. 1 dated as of June 18, 2009, the “Existing Loan
Agreement”), the Bank provided a $30,000,000 term loan to the Borrower to
finance a portion of the purchase price of the Acquired Business provided under
the Purchase Agreement;
          WHEREAS, Parent Guarantor and the Borrower have requested that the
Bank make certain modifications to the Existing Loan Agreement and the Security
Agreement, and the Bank has agreed thereto, subject to the terms and conditions
set forth herein and in the Security Agreement Amendment.
          NOW THEREFORE, in consideration of the financial accommodations
described below and the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the Bank, the
Borrower and Parent Guarantor hereby agree to amend and restate the Existing
Loan Agreement in its entirety as of the Effective Date (as defined below) as
follows:
          1. Definitions and Reference Terms. In addition to any other terms
defined herein, the following terms shall have the meanings set forth with
respect thereto:
          “AAA” has the meaning set forth in Section 13.13(c).

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2

          “Accrued Amount” has the meaning set forth in Section 4.1(e).
          “Acquired Business” has the meaning set forth in the preamble to this
Agreement.
          “Acquisition” has the meaning set forth in the preamble to this
Agreement.
          “Act” has the meaning set forth in Section 13.13(b).
          “Affiliate” of any specified Person means (i) any Person directly or
indirectly owning 10% or more of the voting stock or rights or equity interests
of such Person or of which such Person directly or indirectly owns ten percent
(10%) or more of such voting stock or rights or equity interests or (ii) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of this
Agreement, “control” (including, with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
          “Agreement” has the meaning set forth in the preamble to this
Agreement.
          “Applicable Margin” means (i) 1.50% per annum during the period from
the Effective Date to and including the Cash Collateral Termination Date and
(ii) 2.85% per annum thereafter.
          “Authorized Individual” has the meaning set forth in Section 4.1(b).
          “BBA LIBOR Daily Floating Rate” means the fluctuating rate of interest
equal to the rate per annum equal to the British Bankers Association LIBOR rate
(“BBA LIBOR”), as published by Reuters (or such other commercially available
source providing quotations of BBA LIBOR as selected by the Bank from time to
time) as determined for each Business Day at approximately 11:00 a.m. London
time two (2) Business Days prior to the date in question, for Dollar deposits
(for delivery on the first day of such interest period) with a one month term,
as adjusted from time to time in the Bank’s sole discretion for reserve
requirements, deposit insurance assessment rates and other regulatory costs. If
such rate is not available at such time for any reason, then the rate for that
interest period will be determined by such alternate method as reasonably
selected by the Bank.
          “Bank” has the meaning set forth in the preamble to this Agreement.
          “Billed Amount” has the meaning set forth in Section 4.1(e).
          “Borrower” has the meaning set forth in the preamble to this
Agreement.

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3

          “Business Day” means any day (i) other than a Saturday, Sunday or
other day on which commercial banks in New York City, New York or Charlotte,
North Carolina are authorized or required by law to close, and (ii) for purposes
of determining the BBA LIBOR Daily Floating Rate, that is also a day on which
dealings in Dollar deposits are carried on in London, England.
          “Capital Expenditure Limitation” has the meaning set forth in
Section 9.7.
          “Capital Expenditures” means, for any period, the amount equal to all
expenditures (by the expenditure of cash or the incurrence of indebtedness) made
by Parent Guarantor and its consolidated Subsidiaries during such period in
respect of the purchase or other acquisition or improvement of any fixed or
capital asset and any other amounts which would, in accordance with GAAP, be set
forth as capital expenditures on the consolidated statement of cash flows of
Parent Guarantor and its Subsidiaries for such period.
          “Cash Collateral Account” has the meaning ascribed to such term in the
Security Agreement.
          “Cash Collateral Termination Date” has the meaning ascribed to such
term in the Security Agreement.
          “Cash Equivalents” shall mean (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or insured
by the United States federal government or any agency thereof, (b) certificates
of deposit and time deposits with maturities of one (1) year or less from the
date of acquisition, bankers’ acceptances with maturities not exceeding one
(1) year and overnight bank deposits, in each case with the Bank or any
commercial bank having capital and surplus in excess of $500,000,000,
(c) repurchase obligations for underlying securities of the types described in
clauses (a) and (b) above entered into with the Bank or any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than thirty (30) days with respect to securities issued or fully
guaranteed or insured by the United States federal government, (d) commercial
paper of a domestic issuer rated at least A-1 by S&P or P-1 by Moody’s,
(e) securities with maturities of one (1) year or less from the date of
acquisition backed by standby letters of credit issued by the Bank or any
commercial bank satisfying the requirements of clause (b) of this definition or
(f) shares of money market mutual or similar funds having assets in excess of
$500,000,000 and which invest at least ninety-five percent (95%) of their assets
in the types described in clauses (a) through (f) of this definition.
          “Change of Control” means the occurrence of any of the following:
(i) if a majority of the members of the Board of Directors of Parent Guarantor
are not Continuing Directors; (ii) any entity, “person” (within the meaning of
Section 14(d) of the Exchange Act) or “group” (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than Martha Stewart,
together with any trusts, corporations, partnerships, limited liability
companies or other corporate entities “controlled” (as defined in the definition
of “Affiliate” above) by Martha Stewart (it being agreed that any

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4

trust of which Martha Stewart is a co-trustee shall be deemed to be controlled
by her for purposes of this clause (ii) and clause (iii) below) (collectively,
the “MS Entities”), shall have acquired direct or indirect beneficial ownership
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), except that for
purposes of this clause, such “person” or “group” shall be deemed to have
beneficial ownership of all securities that such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time, of twenty-five percent (25%) or more on a fully diluted basis
of the voting interest in Parent Guarantor’s capital stock ordinarily entitled
to vote in an election of directors; (iii) Martha Stewart, together with any MS
Entities, shall fail to have direct or indirect beneficial ownership (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act) of more than fifty percent
(50%) or more on a fully diluted basis of the voting interest in Parent
Guarantor’s capital stock ordinarily entitled to vote in an election of
directors; (iv) Parent Guarantor shall fail to own and control all of the
outstanding equity interests of the Borrower; (v) the Borrower shall fail to own
and control all of the outstanding equity interests of the SPE; or (vi) the
common stock of Parent Guarantor shall cease to be listed on any of the New York
Stock Exchange, the American Stock Exchange or the NASDAQ stock market.
          “Claim” has the meaning set forth in Section 13.13(a).
          “Class Action Waiver” has the meaning set forth in Section 13.13(h).
          “Code” means the Internal Revenue Code of 1986, as amended from time
to time.
          “Collateral” means all property and interests therein (real and
personal, tangible and intangible) in which a lien is now or hereafter granted
to the Collateral Agent by any Person as security for the Obligations, including
the property described in the Security Agreement.
          “Collateral Agent” has the meaning ascribed to such term in the
Security Agreement.
          “Concentration Account” means the deposit account (account number
ending in 1317682) maintained by the Borrower with Bank of America, N.A. (and
any substitute account therefor maintained by the Borrower at the Collateral
Agent).
          “Confidentiality Agreement” has the meaning set forth in
Section 13.15.
          “Continuing Directors” means the directors of Parent Guarantor on the
Original Closing Date, and each other director, if in each case, such other
directors’ nomination for election to the board of directors of Parent Guarantor
is recommended by a majority of the then Continuing Directors in his or her
election by the stockholders of Parent Guarantor.
          “Copyright Grant” means the Grant of Security Interest in Copyrights
dated as of July 31, 2008 made by the Borrower in favor of the Collateral Agent,

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5

substantially in the form of Exhibit A-1 to the Security Agreement, as the same
may be amended, amended and restated, modified or supplemented from time to
time.
          “Default” has the meaning set forth in Section 5.1(o).
          “Designated Account” has the meaning set forth in Section 4.1(a).
          “Dollar” means the lawful money of the United States of America.
          “Domestic Subsidiary” means any Subsidiary of Parent Guarantor that is
organized or existing under the laws of the United States of America, any state
thereof or the District of Columbia.
          “Due Date” has the meaning set forth in Section 4.1(e).
          “EBITDA” means, with respect to any Person for any period, net income
for such period, less income or plus loss from discontinued operations and
extraordinary items for such period, plus income taxes for such period, plus
interest expense for such period, plus depreciation, depletion and amortization
for such period determined on a consolidated basis for such Person, plus
non-cash stock-based compensation expense, plus impairment losses, in each case
to the extent deducted (or included, in the case of income) in the calculation
of net income (without duplication). EBITDA shall be calculated on a pro forma
basis to give effect to the Acquisition and any other acquisitions permitted
pursuant to this Agreement consummated at any time on or after the first day of
the relevant testing period thereof as if the Acquisition or such other
acquisition had been effected on the first day of such testing period; provided
that any such adjustment may be applied solely to the extent that such
adjustments are factually supportable and (i) which would be accounted for as
any adjustment pursuant to Article 11 of Regulation S-X promulgated by the SEC
or (ii) are otherwise determined pursuant to calculations in form and substance
reasonably satisfactory to the Bank.
          “Effective Date” means the date on which all of the conditions
precedent set forth in Section 5.1 have been satisfied or, at the sole
discretion of the Bank, waived.
          “ERISA” means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
          “ERISA Affiliate” means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Code. Any
former ERISA controlled group member of the Borrower or any of its Subsidiaries
shall continue to be considered an ERISA Affiliate with respect to the period
such entity was an ERISA controlled group member of the Borrower or such
Subsidiary and with respect to liabilities arising after such period for which
the Borrower or such Subsidiary could be liable under the Code or ERISA.

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6

          “ERISA Event” means (a) any “reportable event,” as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived by
regulation); (b) with respect to a Plan, the failure to satisfy the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA, whether or
not waived; (c) the failure to make by its due date a required contribution
under Section 412(m) of the Code (or Section 430(j) of the Code, as amended by
the Pension Protection Act of 2006) with respect to any Plan or the failure to
make any required contribution to a Multiemployer Plan; (d) the filing pursuant
to Section 412 of the Code of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence by any ERISA Affiliate of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (f) the receipt by any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or to
appoint a trustee to administer any Plan, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds under ERISA
for the termination of or the appointment of a trustee to administer any Plan;
(g) the incurrence by any ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the
receipt by an ERISA Affiliate of any notice concerning the imposition of
withdrawal liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (i) the “substantial cessation of operations” within the meaning of
Section 4062(e) of ERISA with respect to a Plan; (j) the making of any amendment
to any Plan which could result in the imposition of a lien or the posting of a
bond or other security, (k) the occurrence of a nonexempt prohibited transaction
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) which
could result in liability to the Borrower or any of the Subsidiaries, (l) a Plan
is or becomes subject to “at risk status” under Section 430(i) of the Code or
Section 303(i) of ERISA or (m) a Plan is or becomes subject to the limitations
on accelerated distribution under Section 436(d) of the Code or Section
206(g)(3) of ERISA.
          “Event of Default” has the meaning set forth in Section 10.
          “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time.
          “Existing Loan Agreement” has the meaning set forth in the preamble to
this Agreement.
          “Financial Officer” means, with respect to any Person, the chief
financial officer, treasurer or controller of such Person.
          “Foreign Subsidiary” means any Subsidiary of the Parent Guarantor
other than a Domestic Subsidiary.
          “Funded Debt” means all outstanding liabilities for borrowed money and
other interest-bearing liabilities, including current and long term debt, less
the non-current portion of Subordinated Liabilities.

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7

          “GAAP” means generally accepted accounting principles in the United
States as in effect from time to time.
          “Governmental Authority” means any nation or government, any federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
          “Guarantors” means, collectively, Parent Guarantor, MSO IP Holdings,
Inc., Martha Stewart, Inc., Body & Soul Omnimedia, Inc., MLSO Productions, Inc.,
MLSO Productions — Home, Inc., MLSO Productions — EDF, Inc., Flour Productions,
Inc. and each other Domestic Subsidiary of Parent Guarantor that becomes party
to the Guaranty in accordance with Section 7.12.
          “Guaranty” means the Continuing and Unconditional Guaranty dated as of
April 4, 2008 from the Guarantors to the Bank, as the same may be amended,
amended and restated, modified or supplemented from time to time.
          “Immaterial Foreign Subsidiary” means a Foreign Subsidiary that is
designated by Parent Guarantor in writing as an “Immaterial Foreign Subsidiary”,
but only to the extent that such Subsidiary:
          (i) (A) contributed 5.0% or less of EBITDA of Parent Guarantor and its
Subsidiaries on a consolidated basis for the period of four (4) fiscal quarters
most recently ended for which internal financial statements are available and
(B) when taken together with each other Foreign Subsidiary that has been
designated by Parent Guarantor in writing as an “Immaterial Foreign Subsidiary”,
contributed 10% or less of EBITDA of Parent Guarantor and its Subsidiaries on a
consolidated basis for the period of four (4) fiscal quarters most recently
ended for which internal financial statements are available; and
          (ii) (A) had consolidated assets representing 5.0% or less of Total
Assets determined on a consolidated basis in accordance with GAAP as shown on
the most recent internal balance sheet of Parent Guarantor and (B) when taken
together with each other Foreign Subsidiary that has been designated by Parent
Guarantor in writing as an “Immaterial Foreign Subsidiary”, had consolidated
assets representing 10% or less of Total Assets determined on a consolidated
basis in accordance with GAAP as shown on the most recent internal balance sheet
of Parent Guarantor.
          “Indemnitee” has the meaning set forth in Section 13.2.
          “Interest Rate Agreement” means any interest rate swap, cap, collar or
hedging agreement or any other similar arrangement.
          “IRS” means the United States Internal Revenue Service, and any
successor thereto.

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8

          “Lagasse” has the meaning set forth in the preamble to this Agreement.
          “Loan” has the meaning set forth in Section 2.1.
          “Loan Documents” means this Agreement, the Guaranty, the Reaffirmation
of Guaranty, any Interest Rate Agreements between a Loan Party and the Bank, the
Security Agreement, any Copyright Grant and any Trademark Grant, and any and all
other documents, instruments, certificates and agreements executed and/or
delivered pursuant hereto or thereto.
          “Loan Party” means the Borrower or any Guarantor.
          “Material Adverse Effect” means a material adverse effect on (i) the
business condition (financial or otherwise), operations, properties or prospects
of the Loan Parties taken as a whole, (ii) their ability to perform their
obligations under this Agreement or any other Loan Document or (iii) the rights
and remedies of the Bank under the Loan Documents.
          “MSI” means Martha Stewart, Inc., a Connecticut corporation.
          “Multiemployer Plan” shall mean a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA (i) to which any ERISA Affiliate is then
making or has an obligation to make contributions, (ii) to which any ERISA
Affiliate has within the preceding six plan years made contributions, including
any Person which ceased to be an ERISA Affiliate during such six year period, or
(iii) with respect to which Parent Guarantor or any of its Subsidiaries could
incur liability.
          “Obligations” means all obligations, liabilities and indebtedness of
the Borrower to the Bank, whether now existing or hereafter created, direct or
indirect, due or not, under or with respect to the Loan Documents, including,
without limitation, the principal of and interest on the Loan (including
interest accruing after the maturity of the Loan and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency or
other similar proceeding, relating to the Borrower, whether or not a claim for
post-petition interest is allowed in such proceeding) and the payment or
performance of all other obligations of the Borrower to the Bank, including in
each case, but not limited to, all fees, costs, expenses and indemnity
obligations hereunder and thereunder.
          “Original Closing Date” means April 4, 2008.
          “Payment Date” means the last day of March, June, September and
December of each year.
          “PBGC” means the Pension Benefit Guaranty Corporation.
          “Permitted Investments” has the meaning set forth in Section 9.4.

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9

          “Person” means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.
          “Plan” means a pension, profit-sharing or stock bonus plan intended to
qualify under Section 401(a) of the Code, sponsored, maintained or contributed
to by Parent Guarantor or any ERISA Affiliate, including any Multiemployer Plan.
          “Quick Assets” means cash, short-term cash investments (including,
without limitation, Cash Equivalents), net trade receivables and marketable
securities not classified as long-term investments, including any of the
foregoing held in the Cash Collateral Account.
          “Reaffirmation of Guaranty” means the Reaffirmation of Guaranty, in
substantially the form of Exhibit A to this Agreement.
          “Reportable Event” means any of the events set forth in Section
4043(c) of ERISA or the regulations issued thereunder, other than events for
which the thirty (30) day notice period has been waived.
          “SEC” means the United States Securities and Exchange Commission, and
any successor thereto.
          “Security Agreement” means the Security Agreement dated as of July 31,
2008 between the Borrower and the Collateral Agent, as modified by the Waiver
and Omnibus Amendment No. 1 dated as of June 18, 2009 and the Security Agreement
Amendment, as the same may be further amended, amended and restated, modified or
supplemented from time to time.
          “Security Agreement Amendment” means Amendment No. 2 to Security
Agreement, substantially in the form of Exhibit B to this Agreement.
          “Sellers” has the meaning set forth in the preamble to this Agreement.
          “Shared Intellectual Property” means the intellectual property owned
by the SPE, including that assigned by the Sellers to the SPE pursuant to the
Purchase Agreement and set forth on Schedule A to the SPE LLC Agreement.
          “Solvent” means, with respect to any Person on a particular date, that
on such date (i) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation contingent
liabilities, of such Person, (ii) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts and liabilities beyond such Person’s ability to pay as such
debts and liabilities mature and (iv) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would

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10

constitute unreasonably small capital. The amount of contingent liabilities at
any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
          “SPE” has the meaning set forth in the preamble to this Agreement.
          “SPE Borrower License Agreement” means a perpetual royalty-free
license of the SPE’s rights in and to the Shared Intellectual Property from the
SPE to the Borrower, in form and substance reasonably satisfactory to the Bank.
          “SPE LLC Agreement” means the Limited Liability Company Agreement of
the SPE dated as of February 18, 2008.
          “Subordinated Liabilities” means liabilities subordinated to Parent
Guarantor’s and the Borrower’s obligations to the Bank in a manner acceptable to
the Bank in its sole discretion.
          “Subsidiary” means, with respect to any specified Person: (1) any
corporation, association or other business entity of which more than fifty
percent (50%) of the total economic interest or voting power of shares of
capital stock entitled (without regard to the occurrence of any contingency and
after giving effect to any voting agreement or stockholders’ agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees of the corporation, association or other business entity is
at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof).
          “Tangible Net Worth” means the value of total assets (including
leaseholds and leasehold improvements and reserves against assets but excluding
goodwill, patents, trademarks, trade names, organization expense, unamortized
debt discount and expense, capitalized or deferred research and development
costs, deferred marketing expenses, and other like intangibles, and monies due
from affiliates, officers, directors, employees, shareholders, members or
managers) less total liabilities, including but not limited to accrued and
deferred income taxes, but excluding the non-current portion of Subordinated
Liabilities.
          “Termination Date” means December 7, 2012.
          “Total Assets” means, as of any date of determination, the total
amount of all assets of Parent Guarantor and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP as shown on the balance sheet of
Parent Guarantor.

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          “Trademark Grant” means the Grant of Security Interest in Trademarks
dated July 31, 2008 made by the Borrower in favor of the Collateral Agent, as
the same may be amended, amended and restated, modified or supplemented from
time to time.
          “Trademark License Agreement” has the meaning ascribed to such term in
the Purchase Agreement as in effect on the date hereof.
          “Transaction Documents” means, collectively, the Purchase Agreement,
the Trademark License Agreement, the Publicity Rights License Agreement, the
Employment Agreements, the Escrow Agreement, the Registration Rights Agreement,
the IP Assignments, the Bill of Sale and the Assumption Agreement (as each such
term is defined in the Purchase Agreement), and all other agreements and
documents relating thereto, as the same may be amended, restated, supplemented
or otherwise modified to the extent permitted hereunder.
          “WeddingWire” has the meaning set forth in Section 9.6(a).
          “WeddingWire Successor Assets” has the meaning set forth in
Section 9.6(a).
           Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
          (a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
          (b) Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
          (c) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.
               (ii) Section, Exhibit and Schedule references are to the Loan
Document in which such reference appears.
               (iii) The term “including” is by way of example and not
limitation.
               (iv) The term “documents” includes any and all instruments,
documents, agreements, certificates, notices, reports, financial statements and
other writings, however evidenced, whether in physical or electronic form.
          (d) Unless otherwise expressly provided herein, (a) references to
organizational documents, agreements (including the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the

 

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12
extent that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to any
law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such law.
          (e) Except as otherwise stated in this Agreement, all financial
information provided to the Bank (other than any financial statements related to
the Acquired Business provided to the Bank prior to the Original Closing Date)
and all financial covenants and the terms used therein will be calculated or
used in accordance with GAAP consistently applied.
          (f) For purposes of determining “pro forma compliance with the
covenants set forth in Section 8” pursuant to Sections 9.3 and 9.4(e) and clause
(v) of Section 9.6(a), stock purchases, redemptions, retirements, dividends,
distributions, investments, capital contributions, acquisitions, transfers,
sales, assignments, leases and dispositions that have been made by Parent
Guarantor or any of its Subsidiaries subsequent to the applicable four-quarter
reference period (or in the case of the covenants set forth in Sections 8.1, 8.5
and 8.6, subsequent to the applicable reference date) and on or prior to or
simultaneously with the applicable date of determination shall be calculated on
a pro forma basis assuming that all such stock purchases, redemptions,
retirements, dividends, distributions, investments, capital contributions,
acquisitions, transfers, sales, assignments, leases and dispositions (and any
associated change in Funded Debt or fixed charges and the change in EBITDA
resulting therefrom) had occurred on the first day of the reference period (or
in the case of the covenants set forth in Sections 8.1, 8.5 and 8.6, on the
applicable reference date).
          2. Loan.
               2.1 Confirmation of Loan. Each of the Bank, the Borrower and
Parent Guarantor hereby agrees and confirms that on the date hereof $17,500,000
in principal amount remains outstanding in respect of the original $30,000,000
term loan made under the Existing Loan Agreement on April 4, 2008 (the “Loan”).
Any portion of the Loan that is repaid or prepaid may not be reborrowed.
               2.2 Repayment Terms.
                    (a) The Borrower shall pay interest on each Payment Date
until payment in full of any principal outstanding under the Loan.
                    (b) The Borrower shall repay principal in equal installments
of $1,500,000 each on each Payment Date, with a final installment equal to the
amount of any principal remaining then outstanding due on the Termination Date.
In any event, the Borrower will repay in full any principal, interest or other
charges outstanding on the Termination Date.
                    (c) The Borrower may, upon at least three (3) Business Days’
prior written irrevocable notice to the Bank specifying the proposed date and
the

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13

principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Loan in whole or in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid, without penalty or other charges. Any such prepayment shall be
applied to the principal installments due under Section 2.2(b) in the inverse
order of their maturity.
               2.3 [Reserved].
               2.4 Interest Rate. Interest will accrue on the Loan at a rate
equal to the BBA LIBOR Daily Floating Rate plus the Applicable Margin.
               2.5 Computations. All computations of interest and of fees shall
be made by the Bank on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable.
Installments of principal which are not paid when due under this Agreement shall
continue to bear interest until paid. Each determination by the Bank of the
actual amount of each interest payment hereunder shall be conclusive and binding
for all purposes, absent manifest error.
               2.6 Payment on Non-Business Days. Whenever any payment hereunder
or any other Loan Document shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest.
               2.7 Default Rate. Upon the occurrence and during the continuance
of any Default or Event of Default or after maturity or after judgment has been
rendered on any obligation under this Agreement, all amounts outstanding under
this Agreement, including any interest, fees, or costs which are not paid when
due, will at the option of the Bank bear interest at a rate which is four
percent (4.0%) higher than the rate of interest otherwise provided in this
Agreement. This may result in compounding of interest. This will not constitute
a waiver of any Default or Event of Default.
          3. Fees.
               3.1 [Reserved].
               3.2 Waiver Fee. If the Bank, at its discretion, agrees to waive
or amend any terms of this Agreement or any other Loan Document, the Borrower
will, upon written notice from the Bank to the Borrower, pay the Bank a fee for
each waiver or amendment in an amount advised by the Bank at the time the
Borrower requests the waiver or amendment. Nothing in this paragraph shall imply
that the Bank is obligated to agree to any waiver or amendment requested by the
Borrower. The Bank may impose additional requirements as a condition to any
waiver or amendment.
               3.3 Late Fee. To the extent permitted by law, the Borrower agrees
to pay a late fee in an amount not to exceed four percent (4.0%) of any payment

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14

that is more than fifteen (15) days late. The imposition and payment of a late
fee shall not constitute a waiver of the Bank’s rights with respect to the
default.
          4. Disbursements, Payments and Costs.
               4.1 Disbursements and Payments.
                    (a) Each payment by the Borrower will be made in Dollars and
immediately available funds by debit to such of the Borrower’s accounts with the
Bank as the Borrower and the Bank may agree in writing (the “Designated
Account”), as described in this Agreement or otherwise authorized by the
Borrower in writing.
                    (b) The Bank may honor written instructions (which for
purposes of this Section 4.1(b) shall include such instructions received via
electronic mail) for advances or repayments given by any one of the individuals
authorized to sign loan agreements on behalf of the Borrower, or any other
individual designated by any one of such authorized signers (each an “Authorized
Individual”).
                    (c) For any payment under this Agreement made by debit to a
Designated Account, the Borrower will maintain sufficient immediately available
funds in a Designated Account to cover each debit. If there are insufficient
immediately available funds in a Designated Account on the date the Bank enters
any such debit authorized by this Agreement, the Bank may reverse the debit.
                    (d) Each payment by the Borrower will be evidenced by
records kept by the Bank. In addition, the Bank may, at its discretion, require
the Borrower to sign one or more promissory notes, provided that the form of any
such promissory note shall not create any right on the part of the Bank or
impose any obligation on the part of the Borrower that is not set forth in this
Agreement.
                    (e) Prior to the date each payment of principal and interest
and any fees from the Borrower becomes due (the “Due Date”), the Bank will
deliver to the Borrower a written statement of the amounts that will be due on
that Due Date (the “Billed Amount”). The calculations in the bill will be made
on the assumption that no payments will be made between the date of the billing
statement and the Due Date, and that there will be no changes in the applicable
interest rate. If the Billed Amount differs from the actual amount due on the
Due Date (the “Accrued Amount”), the discrepancy will be treated as follows:
                    (i) If the Billed Amount is less than the Accrued Amount,
the Billed Amount for the following Due Date will be increased by the amount of
the discrepancy. The Borrower will not be in default by reason of any such
discrepancy.
                    (ii) If the Billed Amount is more than the Accrued Amount,
the Billed Amount for the following Due Date will be decreased by the amount of
the discrepancy.

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15

Regardless of any such discrepancy, interest will continue to accrue based on
the actual amount of principal outstanding without compounding. The Bank will
not pay the Borrower interest on any overpayment.
               4.2 Telecopy or Electronic Mail Instructions.
                    (a) The Bank may honor telecopy instructions for repayments
given, or purported to be given, by any one of the Authorized Individuals.
                    (b) Repayments will be withdrawn from the Designated
Account, or such other of the Borrower’s accounts with the Bank as the Bank and
the Borrower may agree in writing.
                    (c) The Borrower will indemnify and hold the Bank harmless
from all liability, loss, and costs in connection with any act resulting from
instructions the Bank reasonably believes are made by any Authorized Individual
by telecopy or electronic mail. This paragraph will survive this Agreement’s
termination, and will benefit the Bank and its officers, employees, and agents.
               4.3 Direct Debit. The Borrower agrees that on each Due Date the
Bank will debit the Billed Amount from the Designated Account.
          5. Conditions Precedent.
               5.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the fulfillment of the following conditions precedent to
the satisfaction of the Bank and its counsel:
                    (a) the Bank shall have received counterparts of this
Agreement, duly executed by the Borrower and Parent Guarantor;
                    (b) the Bank shall have received the Reaffirmation of
Guaranty, duly executed by each Guarantor;
                    (c) the Bank shall have received the Security Agreement
Amendment, duly executed by the Borrower and Parent Guarantor, together with
evidence reasonably satisfactory to the Bank that the Borrower shall have
deposited or shall concurrently deposit by wire transfer of immediately
available funds a sufficient amount to cause $17,500,000 in cash and investments
permitted under Section 3.04 of the Security Agreement, as amended by the
Security Agreement Amendment, to be held the Cash Collateral Account;
                    (d) the Bank shall have received evidence satisfactory to it
that the Borrower shall concurrently pay the fees and expenses of Paul, Weiss,
Rifkind, Wharton & Garrison LLP as of the Effective Date required to be paid
under this Agreement;

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16

                    (e) the Bank shall have received a certificate of good
standing with respect to the each Loan Party, certified as of a recent date by
the appropriate office in such Loan Party’s jurisdiction of organization;
                    (f) the Bank shall have received a certificate of the
Secretary or Assistant Secretary of each of Parent Guarantor, the Borrower and
the SPE, dated the Effective Date and certifying (i) that such Person’s
certificate of incorporation or certificate of formation has not been amended
since the date of the last amendment thereto shown in the certified copy thereof
(certified as of a recent date) attached to such certificate (or has not been
modified since the Original Closing Date), (ii) that attached thereto is a true
and complete copy of such Person’s bylaws or limited liability company operating
agreement, together with all amendments and other modifications thereto, as in
effect on the date of such certificate (or that the same have not been modified
since the Original Closing Date), (iii) in the case of Parent Guarantor and the
Borrower, that attached thereto is a true and complete copy of resolutions
adopted by the directors or other appropriate persons of such Person authorizing
the execution, delivery and performance of this Agreement and the Security
Agreement Amendment and that such resolutions have not been modified, rescinded
or amended and are in full force and effect and (iv) in the case of Parent
Guarantor and the Borrower, as to the incumbency and specimen signature of each
of such Loan Party’s officers executing this Agreement, the Security Agreement
Amendment or any other Loan Document delivered in connection herewith or
therewith;.
                    (g) the representations and warranties contained in
Section 6 hereof and in the Security Agreement shall be true and correct in all
material respects on and as of such date (except to the extent such
representations and warranties expressly relate to an earlier date); provided
that any representation and warranty that is qualified as to “materiality,”
“Material Adverse Effect” or any similar language shall be true and correct in
all respects on such date;
                    (h) there shall not have occurred since December 31, 2007 a
material adverse change in the business condition (financial or otherwise),
operations, properties or prospects of the Loan Parties taken as a whole or
their ability to perform their obligations under this Agreement or any other
Loan Document;
                    (i) no event shall have occurred and be continuing which,
after giving effect to the Effective Date, constitutes an Event of Default under
this Agreement or would constitute an Event of Default but for the requirement
that notice be given or time elapse or both (any such event being a “Default”);
and
                    (j) the Bank shall have received such other certificates,
documents and information with respect to the Borrower or the Guarantors as the
Bank may reasonably request.
          6. Representations and Warranties. In order to induce the Bank to
enter into this Agreement and maintain the Loan provided for herein, each of
Parent Guarantor and the Borrower hereby represents and warrants to the Bank as
follows:

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               6.1 Organization. Each of Parent Guarantor and each of its
Subsidiaries (other than any Immaterial Foreign Subsidiary) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has the corporate or other requisite legal power to own its assets
and to transact the business in which it is presently engaged and is properly
licensed, in good standing, and, where required, in compliance with fictitious
name statutes, in each state in which it does business, in each case, except
where the failure to so qualify or to be so licensed, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
               6.2 Authority and Consents. Each Loan Party has the requisite
power and authority to execute and deliver each of each Loan Document to which
it is a party (including, without limitation, this Agreement) and to incur and
perform the obligations provided for herein and therein. No consent or approval
of or notice to or filing with any Governmental Authority or other third party
is or will be required as a condition to such Loan Party’s execution, delivery
and performance of this Agreement or any other Loan Document to which such Loan
Party is a party, or the validity or enforceability thereof, or the taking by
such Loan Party of any other action contemplated hereby or thereby, other than
such consents which have been obtained, are in full force and effect, and copies
thereof have been delivered to the Bank.
               6.3 Binding Agreement. Each of this Agreement and the other Loan
Documents to which a Loan Party is a party has been duly executed and delivered
by such Loan Party and constitutes its valid and legally binding obligation,
enforceable against the such Loan Party in accordance with its terms, except to
the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws, or by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
               6.4 Litigation. There is no litigation, investigation or
proceeding involving any Parent Guarantor or any of its Subsidiaries pending or,
to the knowledge of Parent Guarantor or the Borrower, threatened by or before
any court or Governmental Authority or arbitration authority, which could
reasonably be expected to have a Material Adverse Effect, except as set forth on
the Parent Guarantor’s most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q filed with the SEC prior to the date hereof.
               6.5 No Conflicts. The execution, delivery and performance by each
Loan Party of this Agreement and any other Loan Document to which it is a party,
and the taking by such Loan Party of all other actions contemplated hereby and
thereby, do not contravene the organizational documents of such Loan Party or
any law, statute, rule, regulation, order, writ, judgment, injunction or decree
applicable to such Loan Party or any of its property, and do not constitute a
default under any existing agreement, mortgage, indenture or contract binding on
such Loan Party or affecting such Loan Party’s property.

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               6.6 Information. All financial information (other than forecasts,
projections and other forward-looking data and statements) that has been or will
be furnished by any Loan Party to the Bank in connection with the transactions
contemplated by the Loan Documents is or will be accurate and complete in all
material respects on the date as of which such information is furnished to the
Bank and not incomplete by the omission of any fact necessary to make such
information not misleading.
               6.7 Compliance with Laws. Each of Parent Guarantor and each of
its Subsidiaries (other than any Immaterial Foreign Subsidiary) is in compliance
in all material respects with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all Governmental Authorities in
respect of the conduct of its business and the ownership of its property. The
proceeds of the Loan were used solely as provided in Section 2.3 of the Existing
Loan Agreement. The use of the proceeds of the Loan did not violate and was not
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System and no part of the proceeds of the Loan
were used to purchase or carry any margin stock or to extend credit for any such
purpose.
               6.8 Permits, Franchises. Each of Parent Guarantor and each of its
Subsidiaries (other than any Immaterial Foreign Subsidiary) possesses all
material permits, memberships, franchises, contracts and licenses required and
all material trademark rights, trade name rights, patent rights, copyrights, and
fictitious name rights reasonably necessary to enable it to conduct the business
in which it is now engaged.
               6.9 Other Obligations. Neither Parent Guarantor nor any of its
Subsidiaries (other than any Immaterial Foreign Subsidiary) is in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation, except as have
been disclosed in writing to the Bank.
               6.10 Taxes. Each of Parent Guarantor and each of its Subsidiaries
(other than any Immaterial Foreign Subsidiary) has filed all tax returns
required to be filed by it and has paid all taxes and assessments payable by it
which have become due, other than those not yet delinquent and except for those
being contested in good faith by appropriate proceedings and adequately
disclosed and fully provided for in the financial statements of Parent Guarantor
in accordance with GAAP. There is no action, suit, proceeding, investigation,
audit or claim now pending or, to the knowledge of the Borrower or Parent
Guarantor, threatened by any Governmental Authority with respect to any taxes
relating to any Loan Party, except that Parent Guarantor and its Subsidiaries
are currently subject to an ongoing audit by the IRS related to fiscal years
2001 through 2004.
               6.11 Investment Company. No Loan Party is required to be
registered an “investment company” or is a company “controlled” by a Person
required to be registered as an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended.

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19

               6.12 No Default or Event of Default. No event has occurred and is
continuing which, before or after giving effect to the Effective Date,
constitutes a Default or an Event of Default.
               6.13 No Material Adverse Change. Since December 31, 2007 there
has occurred no material adverse change in the business condition (financial or
otherwise), operations, properties or prospects of the Loan Parties taken as a
whole or their ability to perform their obligations under this Agreement or any
other Loan Document.
               6.14 Insurance. The Loan Parties have obtained, and maintained in
effect, the insurance coverage required in Section 7.10.
               6.15 ERISA Plans.
                    (a) Each Plan (other than a Multiemployer Plan) is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of Parent Guarantor,
nothing has occurred which would cause the loss of such qualification. Parent
Guarantor has fulfilled its obligations, if any, under the minimum funding
standards of ERISA and the Code with respect to each Plan, and has not incurred
any material liability with respect to any Plan under Title IV of ERISA.
                    (b) There are no claims, lawsuits or actions (including by
any Governmental Authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
                    (c) With respect to any Plan subject to Title IV of ERISA,
no ERISA Event has occurred, or is reasonably expected to occur, that could
reasonably be expected to result in a Material Adverse Effect.
               6.16 Solvency. On and as of the Effective Date, the Loan Parties,
on a consolidated basis, are Solvent.
          7. Affirmative Covenants. Until full payment and performance of all
Obligations, each of Parent Guarantor and the Borrower agrees:
               7.1 Use of Proceeds. The proceeds of the credit extended under
this Loan Agreement may not be used directly or indirectly to purchase or carry
any “margin stock” as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System, or extend credit to or invest in other
parties for the purpose of purchasing or carrying any such “margin stock,” or to
reduce or retire any indebtedness incurred for such purpose.

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               7.2 Financial Information. To provide the following financial
information and statements in form and content reasonably acceptable to the
Bank, and such additional information as reasonably requested by the Bank from
time to time:
                    (a) As soon as available, but in any event within 120 days
following the end of the Parent Guarantor’s fiscal year, audited consolidated
financial statements for Parent Guarantor and its Subsidiaries for such fiscal
year, including a consolidated balance sheet and related statements of
operations, shareholders’ equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Ernst & Young LLP, or other independent
public accountants of recognized national standing and reasonably acceptable to
the Bank (without a “going concern” or like qualification or exception or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly, in all material respects, the financial
condition and results of operations of Parent Guarantor and its Subsidiaries on
a consolidated basis in accordance with GAAP;
                    (b) As soon as available, but in any event with sixty
(60) days following the end of each of the first three fiscal quarters of each
fiscal year of Parent Guarantor, unaudited consolidated financial statements for
Parent Guarantor and its Subsidiaries for such fiscal quarter, including a
consolidated balance sheet and related statements of operations, shareholders’
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods for (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
a Financial Officer of Parent Guarantor as presenting fairly the financial
condition and results of operations of Parent Guarantor and its Subsidiaries on
a consolidated basis in accordance with GAAP, subject to normal year-end
adjustments and the absence of footnotes;
                    (c) If the Cash Collateral Termination Date has occurred,
concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate (a “Compliance Certificate”) of a Financial Officer of
Parent Guarantor certifying (i) that no Event of Default or Default has occurred
or, if an Event of Default or Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto and
setting forth computations in reasonable detail satisfactory to the Bank
demonstrating whether or not Parent Guarantor is in compliance with the
covenants set forth in Section 8 for the applicable period and (ii) that except
as set forth on a schedule thereto, since the date of the last Compliance
Certificate (or the Effective Date, in the case of the first Compliance
Certificate delivered hereunder) (A) no Loan Party has changed its legal name or
form or jurisdiction of organization or acquired or formed a new Subsidiary and
(B) neither the Borrower nor the SPE has acquired or filed a registration or
application for registration for any Copyright, Patent or Trademark (as such
terms are defined in the Security Agreement);
                    (d) Promptly upon sending or receipt, copies of any
management letters sent or received by Parent Guarantor to or from its auditors;
and

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                    (e) Promptly, such other information concerning the
business, operations, properties and condition of Parent Guarantor and its
Subsidiaries as the Bank may from time to time reasonably request.
          Documents required to be delivered pursuant to Section 7.2(a) or
(b) may be delivered electronically and, if so delivered, shall be deemed to
have been delivered on the date on which Parent Guarantor posts such documents,
or provides a link thereto, on Parent Guarantor’s website on the Internet at its
website address provided to the Bank; provided that Parent Guarantor shall
notify the Bank by telecopy or electronic mail of the posting of any such
documents and provide, if requested, to the Bank by electronic mail electronic
versions of such documents; provided, further, however, that Parent Guarantor’s
failure to so notify the Bank shall not give rise to a Default or Event of
Default.
               7.3 Notices. To furnish the Bank prompt written notice of any of
the following:
                    (a) the occurrence of any Default or Event of Default;
                    (b) the filing or commencement of, or any written threat or
notice of intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority or in arbitration, against Parent Guarantor or any of its Subsidiaries
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect; or
                    (c) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
               7.4 Existence; Conduct of Business. That it shall, and shall
cause each of its Subsidiaries (other than any Immaterial Foreign Subsidiary)
to, do or cause to be done all things reasonably necessary to preserve, renew
and keep in full force and effect its legal existence and the rights,
qualifications, licenses, permits, franchises, governmental authorizations and
intellectual property rights (except as such would otherwise reasonably expire,
be abandoned or permitted to lapse in the ordinary course of business),
necessary in the normal conduct of its business, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted; provided, however, that (i) Parent Guarantor from time to time may
cause any one or more of the Loan Parties (other than the Borrower or Parent
Guarantor) to be merged into another Loan Party, (ii) Parent Guarantor may cause
any Subsidiary that is not a Loan Party to be merged into another Subsidiary
that is not a Loan Party and (iii) in the event from time to time that any
Subsidiary (other than the Borrower) has no material assets, Parent Guarantor
may cause such Subsidiary to be dissolved. Parent Guarantor shall give Bank not
less than ten (10) days’ prior written notice of the occurrence of any event
referenced in clauses (i), (ii) or (iii) of the immediately preceding sentence
that involves a Loan Party.

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               7.5 Compliance with Laws. That it shall, and shall cause each of
its Subsidiaries (other than any Immaterial Foreign Subsidiary) to, comply, in
all material respects with all laws, rules, regulations, orders and requirements
of any Governmental Authority applicable to it or any of its property, including
without limitation, the Collateral.
               7.6 Maintenance of Properties. That it shall, and shall cause
each of its Subsidiaries (other than any Immaterial Foreign Subsidiary) to,
(i) at all times maintain and preserve all material property necessary to the
normal conduct of its business in good repair, working order and condition,
ordinary wear and tear excepted and casualty or condemnation excepted and
(ii) make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto as reasonably necessary in
accordance with prudent industry practice in order that the business carried on
in connection therewith, if any, may be properly conducted at all times.
               7.7 Taxes and Other Obligations. That it shall, and shall cause
each of its Subsidiaries (other than any Immaterial Foreign Subsidiary) to, pay
all of such Person’s taxes and other obligations as the same become due and
payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner and such Person has set aside on
its books adequate reserves with respect thereto in accordance with GAAP.
               7.8 Books and Records; Inspection Rights. (i) That it shall, and
shall cause each of its Subsidiaries to, keep proper books of record and account
and (ii) that it shall, and shall cause each Loan Party to, permit any
representatives designated by the Bank (including employees of the Bank or any
consultants, accountants, attorneys and appraisers retained by the Bank), upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times during normal business hours and as often as reasonably
requested; provided that such Person may require that any such representative
who is not an employee of the Bank first agree in writing to the provisions set
forth in Section 13.15 or confidentiality restrictions that are substantially
similar. If any property, books and records of any Loan Party are in the
possession of a third party, Parent Guarantor and the Borrower hereby authorize,
or agree to cause such other Loan Party to authorize, such third party to permit
the Bank or its representatives to have access to perform inspections or audits
and to respond to the Bank’s requests for information concerning such property,
books and records.
               7.9 Concentration Account. To cause all payments with respect to,
or any proceeds of insurance claims related to, the Collateral to be made
directly to the Concentration Account.
               7.10 Maintenance of Insurance. To maintain insurance reasonably
satisfactory to the Bank as to amount, nature and carrier covering property
damage (including loss of use and occupancy) to each Loan Party’s and the SPE’s

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properties, business interruption insurance, public liability insurance
including coverage for contractual liability, product liability and workers’
compensation, and any other insurance which is usual for the business of Parent
Guarantor or any of its Subsidiaries (other than any Immaterial Foreign
Subsidiary). Each policy with respect to the Parent Guarantor and the Borrower
and its properties shall list the Collateral Agent as a loss payee on property
and casualty policies with respect to the Collateral and as additional insured
with respect to general liability policies and shall provide for at least thirty
(30) days prior notice to the Collateral Agent of any cancellation thereof. Any
key man life insurance policy insuring the life of Lagasse that is procured by
Parent Guarantor or any of its Subsidiaries shall provide that the Borrower is
the beneficiary thereof and list the Collateral Agent as loss payee. The Bank
acknowledges and agrees that the insurance maintained by the Loan Parties on the
date hereof is acceptable to the Bank as of the date hereof.
               7.11 ERISA. Promptly during each year, to pay, and cause its
Subsidiaries to pay, contributions adequate to meet at least the minimum funding
standards under ERISA with respect to each and every Plan that is subject to
Section 412 of the Code; file each annual report required to be filed pursuant
to Section 103 of ERISA in connection with each Plan for each year; and notify
the Bank within ten (10) days of the occurrence of any ERISA Event which could
reasonably be expected to result (alone or in connection with any other event)
in aggregate liability to the Borrower equal to or greater than $2,500,000 and
to comply in all material respects with the applicable provisions of ERISA and
the Code with respect to each Plan and (y) upon request by the Bank to provide
copies of (i) each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by the Borrower or any ERISA Affiliate with the IRS with
respect to each Plan; (ii) the most recent actuarial valuation report for each
Plan; (iii) all notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event;
and (iv) such other documents or governmental reports or filings relating to any
Plan) as the Bank shall reasonably request.
               7.12 Additional Subsidiaries. If any Loan Party forms or acquires
an additional Domestic Subsidiary, to cause such additional Domestic Subsidiary
to (i) become a Guarantor as promptly thereafter as reasonably practicable, but
in any event within twenty (20) days, by executing and delivering to the Bank
such amendments or supplements to the Guaranty as the Bank reasonably deems
necessary or advisable to cause such Subsidiary to become a party to the
Guaranty and (ii) make such deliveries or take such actions of the type required
for Guarantors as of the Original Closing Date by Sections 5.1(b), (e), (f) and
(h) with respect to such new Guarantor, in form and substance reasonably
satisfactory to the Bank.
               7.13 Activities of the SPE. To cause the SPE (i) to comply with
the provisions of the SPE LLC Agreement and (ii) distribute to the Borrower on
not less than a monthly basis all revenues, if any, net of ordinary course
expenses of the SPE, if any, held by the SPE.

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               7.14 [Reserved].
               7.15 Further Assurances. To, and to cause each other Loan Party
to, take any action reasonably requested by the Bank to carry out the intent of
this Agreement.
          8. Financial Covenants. Commencing with the last day of Parent
Guarantor’s fiscal quarter ending immediately preceding the Cash Collateral
Termination Date and until full payment and performance of all Obligations:
               8.1 Tangible Net Worth. Parent Guarantor shall maintain, as of
the last day of each fiscal quarter of Parent Guarantor, on a consolidated basis
Tangible Net Worth equal to at least $40,000,000.
               8.2 Funded Debt to EBITDA Ratio. Parent Guarantor shall not
permit, as of the last day of each fiscal quarter of Parent Guarantor, the ratio
of (i) Funded Debt for the four (4) quarter period ending on such day to
(ii) consolidated EBITDA for Parent Guarantor and its Subsidiaries for the four
(4) quarter period ending on such day, to be greater than 2.0 to 1.0.
               8.3 Parent Guarantor Basic Fixed Charge Coverage Ratio. Parent
Guarantor shall not permit, as of the last day of any fiscal quarter of Parent
Guarantor, the ratio of (i) consolidated EBITDA for Parent Guarantor and its
Subsidiaries for the four (4) quarter period ending on such day to (ii) the sum
of (A) interest expense and (B) the current portion of long term debt, in each
case, on a consolidated basis for Parent Guarantor and its Subsidiaries for the
four (4) quarter period ending on such day, to be less than 2.75 to 1.0.
               8.4 Borrower Basic Fixed Charge Coverage Ratio. The Borrower
shall not permit, as of the last day of any fiscal quarter of the Borrower, the
ratio of (i) consolidated EBITDA for the Borrower and the SPE for the four
(4) quarter period ending on such day to (ii) the sum of (A) interest expense
and (B) the current portion of long term debt, in each case, on a consolidated
basis for the Borrower and the SPE for the four (4) quarter period ending on
such day, to be less than 1.0 to 1.0.
               8.5 Quick Ratio. Parent Guarantor shall maintain, as of the last
day of any fiscal quarter of Parent Guarantor, on a consolidated basis with its
Subsidiaries, a ratio of (i) Quick Assets as of such day to (ii) current
liabilities as of such day of at least 1.0 to 1.0.
               8.6 Total Assets. Parent Guarantor shall maintain, as of the last
day of any fiscal quarter of Parent Guarantor, at least 75% of Total Assets in
Parent Guarantor and its Domestic Subsidiaries.
               8.7 Characterization of Loan for Purposes of Financial Covenants.
For purposes of measuring Parent Guarantor’s and the Borrower’s compliance with
the covenants set forth in Sections 8.3, 8.4 and 8.5, the outstanding

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25

principal amount of the Loan shall not be included in the “current portion of
long term debt” (as used in subclause (B) of Section 8.3(ii) and subclause
(B) of Section 8.4(ii)) or in “current liabilities” (as used in clause (ii) of
Section 8.5).
          9. Negative Covenants. Until full payment and performance of all
Obligations:
               9.1 Other Debts. Parent Guarantor shall not, and shall not permit
any of its Subsidiaries (other than any Immaterial Foreign Subsidiary) to, have
outstanding or incur any direct or contingent liabilities or lease obligations
(other than those to the Bank), or become liable for the liabilities of others,
without the Bank’s written consent. This does not prohibit:
                    (a) acquiring goods, supplies, merchandise or services on
normal trade credit;
                    (b) endorsing negotiable instruments received in the usual
course of business;
                    (c) obtaining surety bonds in the usual course of business;
                    (d) debt or other liabilities of (i) a Loan Party owed to
another Loan Party or (ii) of a Subsidiary that is not a Loan Party (other than
the SPE) to another Subsidiary that is not a Loan Party (other than the SPE);
                    (e) liabilities for taxes not yet due;
                    (f) liabilities arising under the Transaction Documents;
                    (g) lease obligations as lessee arising in the ordinary
course of business;
                    (h) hedging arrangements entered into for purposes of
mitigating interest rate, commodity pricing, currency exchange rate or other
similar risks in the ordinary course of business (so long as such arrangements
are not entered into primarily for speculative purposes)
                    (i) debt in respect of capital lease obligations or incurred
to provide all or a portion of the purchase price or cost of acquiring equipment
or fixtures in the ordinary course of business within the limitations set forth
in clause (a)(xi) of Section 9.2; provided that the aggregate principal amount
of debt outstanding under this Section 9.1(i) shall not exceed $5,000,000 at any
time;
                    (j) debt, lines of credit or letter of credit facilities
existing on the Original Closing Date and described in Schedule 9.1 and
refinancings

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26

thereof or amendments or modifications thereof which do not have the effect of
increasing the principal amount thereof or changing the amortization thereof
(other than to extend the same) and which are otherwise on terms and conditions
no less favorable to such Person or the Bank, as determined by the Bank in its
reasonable discretion, than the terms of the debt being refinanced, amended or
modified;
                    (k) payroll and other liabilities in respect of employees
arising in the ordinary course of business;
                    (l) debt that is assumed in connection with or incurred to
finance an investment, capital contribution, transfer, purchase or acquisition
permitted pursuant to Section 9.4(e) in an aggregate amount not to exceed
$15,000,000 at any time outstanding, and refinancings thereof which do not have
the effect of increasing the principal amount thereof; provided that such debt
may not (i) exceed the amount of such investment or capital contribution or the
purchase price of the assets acquired or (ii) be assumed or incurred by the
Borrower or the SPE;
                    (m) earn-out obligations incurred in connection with
acquisitions permitted by clause (ii) of Section 9.4(e) in an aggregate amount
not to exceed $15,000,000 at any time outstanding (with the amount of such
earn-out obligations for purposes of this subsection (m) to be the maximum
reasonably anticipated liability in respect thereof as determined by Parent
Guarantor from time to time); provided that such earn-out obligations may not be
incurred by the Borrower or the SPE;
                    (n) incurrence of liabilities, other than in respect of debt
(including, without limitation, debt for borrowed money or in respect of hedging
arrangements or letters of credit), incurred in the ordinary course of a Loan
Party’s business; provided that such liabilities, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
and
                    (o) guarantees of any of the foregoing; provided, that (i) a
Loan Party may not guaranty the debt or other obligations of a Subsidiary that
is not a Loan Party and (ii) neither the Borrower nor the SPE may guaranty the
debt or other obligations of any other Person, except that the Borrower may
provide guarantees in favor of the Bank or the Collateral Agent.
               9.2 Other Liens.
                    (a) Parent Guarantor and its Subsidiaries (other than any
Immaterial Foreign Subsidiary) shall not create, assume or allow any security
interest or lien on any of its property, whether now or hereafter acquired,
except:
          (i) liens and security interests in favor of the Bank or the
Collateral Agent;
          (ii) liens for taxes not yet due;

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          (iii) existing liens disclosed in writing to the Bank prior to the
Original Closing Date;
          (iv) liens of landlords and banks and rights of set-off, liens of
carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other
similar liens imposed by law, in each case incurred in the ordinary course of
business for amounts not yet overdue;
          (v) liens incurred or deposits made in the ordinary course of business
in connection with workers’ compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds and other
similar obligations (other than obligations for the payment of borrowed money),
so long as no foreclosure, sale or similar proceedings have been commenced with
respect to any portion of the Collateral on account thereof;
          (vi) leases or subleases granted to third parties in the ordinary
course of business and not interfering in any material respect with the business
of Parent Guarantor or any of its Subsidiaries;
          (vii) easements, rights-of-way, restrictions, encroachments, and other
defects or irregularities in title, in each case which do not interfere in any
material respect with the ordinary conduct of the business of Parent Guarantor
or any of its Subsidiaries;
          (viii) licenses of intellectual property rights granted in the
ordinary course of business;
          (ix) liens on property or assets acquired pursuant to Section 9.4(e)
on the property or assets so acquired, to secure debt permitted by
Section 9.1(l); provided that such liens attach only to the property or assets
being financed pursuant to such debt and do not encumber any Collateral or any
other property of Parent Guarantor or any of its Subsidiaries (other than any
Immaterial Foreign Subsidiary);
          (x) liens in existence on the Original Closing Date and summarized in
Schedule 9.2; and
          (xi) liens securing debt permitted under Section 9.1(i); provided that
such liens attach only to the investments or assets the acquisition of which is
financed with such debt and such lien and debt are incurred within ninety
(90) days following such purchase.
                    (b) The Borrower and the SPE shall not create, assume or
allow any security interest or lien (including judicial liens) on any of its
property, whether now or hereafter acquired, except:

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               (i) liens and security interests in favor of the Bank or the
Collateral Agent;
               (ii) liens for taxes not yet due;
               (iii) licenses of intellectual property rights permitted under
the Security Agreement;
               (iv) the Trademark License Agreement; and
               (v) the SPE Borrower License Agreement.
               9.3 Dividends and Distributions. Neither Parent Guarantor nor the
Borrower shall declare or pay any dividends (except dividends paid in capital
stock) or distributions on, or pay any amount account of the purchase,
redemption or retirement of, its equity interests, or any warrants, options or
other rights to purchase or subscribe for its equity interests, whether or not
presently convertible, exchangeable or exercisable; provided, that so long as
(A) no Default or Event of Default then exists or would result from such payment
and (B) if the Cash Collateral Termination Date shall have occurred, after
giving effect to such payment, Parent Guarantor and the Borrower would be in pro
forma compliance with the covenants set forth in Section 8 based on Parent
Guarantor’s most recently ended four (4) fiscal quarter period for which
internal financial statements are available immediately preceding the date on
which such payment is to be made, (i) Parent Guarantor may purchase, redeem or
retire its equity interests, and pay dividends or distributions in respect of
its equity interests, in an aggregate amount of consideration, dividends and
distributions paid under this clause (i) not to exceed $30,000,000 over the term
of this Agreement and (ii) the Borrower may declare and pay dividends and
distributions in respect of its equity interests. This Section 9.3 shall not
prohibit Parent Guarantor from (i) in connection with any tax withholding
obligations that may arise in connection with the vesting of restricted stock of
Parent Guarantor held by the grantee thereof or the exercise of any option to
acquire shares of Parent Guarantor’s stock, withholding certain shares of such
stock from the grantee or optionee in satisfaction of such tax withholding
obligations and (ii) permitting the holder of any options or warrants to acquire
shares of Parent Guarantor’s stock and delivering the exercise price of such
option or warrant, in whole or in part, by use of any “cashless exercise”
feature set forth (including by reference to any related plan) in the applicable
option agreement or warrant.
               9.4 Investments. Parent Guarantor shall not, and shall not permit
any of its Subsidiaries (other than any Immaterial Foreign Subsidiary) to, have
any existing, or make any new investments in, any Person, or make any capital
contributions or other similar transfer of assets to any Person, or acquire or
purchase all or substantially all of the assets any Persons, or of all or
substantially all of the assets that comprise any business unit of any such
Person, except for (collectively, the “Permitted Investments”):
                    (a) existing investments disclosed in writing to the Bank
prior to Original Closing Date;

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                    (b) investments made by (i) Loan Parties in other Loan
Parties that are Subsidiaries of such Loan Parties; (ii) the Borrower in the SPE
pursuant to the Purchase Agreement; and (iii) Subsidiaries that are not Loan
Parties (other than the SPE) in other Subsidiaries that are not Loan Parties
(other than the SPE);
                    (c) investments in Cash Equivalents;
                    (d) investments in securities acquired in exchange for
accounts receivable in connection with a bankruptcy or workout with respect to a
trade creditor; and
                    (e) (i) investments, transfers, capital contributions,
acquisitions and purchases not described in clause (ii) below; provided that
(A) no Default or Event of Default then exists or would result from such
investment and (B) if the Cash Collateral Termination Date shall have occurred,
after giving effect to such investment, Parent Guarantor and the Borrower would
be in pro forma compliance with the covenants set forth in Section 8 based on
Parent Guarantor’s most recently ended four (4) fiscal quarter period for which
internal financial statements are available immediately preceding the date on
which such investment is to be made, and (ii) acquisitions or purchases of all
or substantially all of the assets or all of the stock of one or more Persons,
or of all or substantially all of the assets, or that comprise any business
unit, of any Person, so long as (A) Parent Guarantor shall have provided the
Bank with not less than ten (10) days’ prior written notice describing such
transaction in reasonable detail and, if the Cash Collateral Termination Date
shall have occurred, a certificate of a Financial Officer to the effect that
after giving effect to such acquisition, Parent Guarantor and the Borrower would
be in pro forma compliance with the covenants set forth in Section 8 based on
Parent Guarantor’s most recently ended four (4) fiscal quarter period for which
internal financial statements are available immediately preceding the date on
which such acquisition is to be made, setting forth such pro forma calculations
in reasonable detail, (B) no Default or Event of Default then exists or would
result from such acquisition and (C) the Person or business unit acquired shall
be in business of the same general type as conducted on the Original Closing
Date by Parent Guarantor and its Subsidiaries;
provided, that notwithstanding anything herein to the contrary, after the date
hereof, neither the Borrower nor the SPE shall create or acquire any new
Subsidiary and the Borrower shall not make any additional investments in the
SPE.
               9.5 Loans. Parent Guarantor shall not, and shall not permit any
of its Subsidiaries (other than any Immaterial Foreign Subsidiary) to, make any
loans, advances or other extensions of credit to any Person, except for:
                    (a) existing extensions of credit disclosed to the Bank in
writing prior to the Original Closing Date;

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30

                    (b) extensions of credit made (i) by Loan Parties (other
than the Borrower) to other Loan Parties; and (ii) Subsidiaries that are not
Loan Parties (other than the SPE) to other Subsidiaries that are not Loan
Parties (other than the SPE);
                    (c) advances paid to employees and directors in the ordinary
course of business; and
                    (d) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods and
services or the license of intellectual property in the ordinary course of
business.
               9.6 Asset Sales. Parent Guarantor shall not, and shall not permit
any of its Subsidiaries (other than an Immaterial Foreign Subsidiary) to:
                    (a) sell, assign, lease, transfer or otherwise dispose of
any part of its business or any of its assets or enter into any agreement to do
so, except (i) excluding the Borrower and the SPE, in the ordinary course of
business (including sales of surplus, damaged, worn or obsolete assets, and
sales of Cash Equivalents) for not less than fair market value, (ii) sales of
inventory and Cash Equivalents by the Borrower in the ordinary course of
business for not less than fair market value (iii) licenses of intellectual
property rights permitted by Section 9.2, (iv) sales, assignments, leases,
transfers or other dispositions of assets (A) from Loan Parties (other than the
Borrower) to other Loan Parties and (B) from Subsidiaries that are not Loan
Parties (other than SPE) to other Subsidiaries that are not Loan Parties (other
than the SPE), (v) excluding the Borrower and the SPE, other sales of assets on
arms-length terms, at least 75% of the consideration for which shall be in the
form of cash and the aggregate fair market value of which, in the aggregate for
all such sales permitted under this clause (v) from and after the Original
Closing Date, does not exceed 10% of Parent Guarantor’s consolidated
shareholders’ equity as of the end of the fiscal quarter most recently ended
prior to the date of the proposed sale so long as, in the case of this clause
(v), (A) no Default or Event of Default then exists or would result from such
sale and (B) if the Cash Collateral Termination Date shall have occurred, Parent
Guarantor and the Borrower would be in pro forma compliance with the covenants
set forth in Section 8 based on Parent Guarantor’s most recently ended four
(4) fiscal quarter period for which internal financial statements are available
immediately preceding the date on which such sale is to be made and (vi) the
sale of Parent Guarantor’s investment in WeddingWire, Inc. (“WeddingWire”), the
conversion or exchange of such investment into or for any other asset or assets
(including, without limitation, shares of any Person into which WeddingWire may
be merged, the “WeddingWire Successor Assets”) and the sale of any WeddingWire
Successor Assets; provided, that Parent Guarantor may not sell, assign, lease,
transfer or otherwise dispose of assets comprising the Acquired Business
pursuant to clause (iv) or (v) above other than to the Borrower;
                    (b) enter into any sale and leaseback agreement with respect
to any of its fixed assets, other than transactions in which the value of the
disposed of assets does not exceed $2,000,000 in the aggregate in any fiscal
year;

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31

provided, that notwithstanding anything in the foregoing to the contrary,
neither the Borrower nor the SPE shall be permitted to sell, assign, lease,
transfer or otherwise dispose of any of its assets, other than licenses of
intellectual property rights permitted by Section 9.2.
               9.7 Capital Expenditures. Parent Guarantor and its Subsidiaries
(other than any Immaterial Foreign Subsidiary) shall not make Capital
Expenditures which in the aggregate exceed $7,500,000 during any fiscal year
(each such limitation hereafter referred to as the “Capital Expenditure
Limitation”); provided, that to the extent that Parent Guarantor its
Subsidiaries do not utilize the full Capital Expenditure Limit during the
applicable fiscal year, then Parent Guarantor and its Subsidiaries may carry
over to any subsequent fiscal year the unused portion of such Capital
Expenditure Limit so long as no Event of Default exists or would result
therefrom; provided, further that in no event shall Parent Guarantor and its
Subsidiaries make Capital Expenditures which in the aggregate exceed $15,000,000
in any fiscal year.
               9.8 Transactions with Affiliates. Parent Guarantor shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
pay any management fees to or otherwise deal with, in the ordinary course of
business or otherwise, any Affiliate other than transactions with Affiliates in
the ordinary course of business and pursuant to the reasonable requirements of
Parent Guarantor’s or such Subsidiary’s business and upon fair and reasonable
terms that are no less favorable to Parent Guarantor or such Subsidiary than it
would obtain in a comparable arm’s length transaction with a Person that is not
its Affiliate, other than (i) transactions between any Loan Party and an
Affiliate thereof pursuant to the terms of any agreements or plans described on
the exhibit lists to Parent Guarantor’s Annual Report on Form 10-K for the year
ended December 31, 2008 or Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2009 or any agreements set forth on Schedule 9.8,
(ii) any amendment or modification of, or any substitute or replacement
arrangement (at any time during the term of this Agreement) with the same
Affiliate or Affiliates for, any agreement described in clause (i) above,
(iii) the SPE Borrower License Agreement and (iv) transactions among Loan
Parties (other than the Borrower).
               9.9 Additional Negative Covenants. Parent Guarantor shall not,
and shall not permit any of its Subsidiaries (other than any Immaterial Foreign
Subsidiary, in the case of subsections (a), (c), (d) and (e) below) to, without
the Bank’s written consent:
                    (a) enter into any consolidation, merger or other
combination, or, except for Permitted Investments, become a partner in a
partnership, a member of a joint venture or a member of a limited liability
company, and except that (i) any Loan Party (other than the Borrower and Parent
Guarantor) may merge into any other Loan Party (other than the Borrower) and
(ii) any Subsidiary that is not a Loan Party (other than the SPE) may merge into
any other Subsidiary that is not a Loan Party (other than the SPE).

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                    (b) engage in any business activities substantially
different from that engaged in by Parent Guarantor and its Subsidiaries on the
date hereof;
                    (c) wind up, liquidate or dissolve its affairs, or sell or
otherwise dispose of all or substantially all of its assets, or agree to do any
of the foregoing at any future time; provided that a Subsidiary (other than the
Borrower ) with no material assets may be dissolved upon not less than ten
(10) days’ prior written notice to the Bank;
                    (d) amend or otherwise modify the SPE LLC Agreement, the
organizational documents of the Borrower, the SPE Borrower License Agreement or
any of the Transaction Documents, each as in effect on the date hereof; or
                    (e) change its fiscal year or its accounting methods except
for changes in accounting policies required under GAAP.
          10. Default and Remedies.
     The occurrence of any of the following events (each an “Event of Default”)
shall constitute a default under this Agreement and under each of the other Loan
Documents:
               10.1 Failure to Pay. The Borrower fails to make a payment of
principal under this Agreement when due, or fails to make a payment of interest,
any fee or other sum under this agreement within three (3) days after the date
when due; or
               10.2 False Information; Representations and Warranties. The
Borrower or any other Loan Party has given the Bank materially false or
misleading information. Any representation or warranty made by the Borrower or
the Guarantor under or in connection with any Loan Document shall prove to have
been incorrect in any material respect at the time when made; or
               10.3 Covenant Default. Any Loan Party shall fail to perform or
observe any agreement, covenant or obligation set forth in (i) Section 7.1, 7.2,
7.3, 7.8, 7.12, 7.14 or 9 of this Agreement or Section 3.02(a) of the Security
Agreement, (ii) before the Cash Collateral Termination Date, Section 3.04 of the
Security Agreement or (iii) after the Cash Collateral Termination Date,
Section 8 of this Agreement; or
               10.4 Covenant Default after Cure Period. Any Loan Party shall
fail to timely and properly observe, keep or perform any term, covenant or
agreement contained in any Loan Document to which it is a party (other than
those described in Sections 10.1 to 10.3 above), if such default shall continue
unremedied for a period of fifteen (15) days; or
               10.5 Other Bank Agreements. Parent Guarantor or any or its
Subsidiaries shall be in default of or fail to perform any other agreement,
obligation, liability or indebtedness of Parent Guarantor or such Subsidiary to
the Bank or to any

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33

affiliate of Bank with respect to a monetary obligation in excess of $10,000,
and such default or failure continues past any cure period provided therein; or
               10.6 Cross Default. (i) Parent Guarantor or any of its
Subsidiaries (other than any Immaterial Foreign Subsidiary) shall default in any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any other indebtedness (other
than the Loan or indebtedness described in Section 10.5) in an aggregate
outstanding principal amount in excess of $2,500,000 beyond the period of grace
(not to exceed thirty (30) days), if any, provided in the instrument or
agreement under which such indebtedness was created; or (ii) any breach, default
or event of default shall occur and be continuing, or any other condition shall
exist under any instrument or agreement pertaining to any such indebtedness, if
the effect thereof is to cause an acceleration of such indebtedness, or during
the continuance of such breach, default or event of default, permit the holders
of such indebtedness to accelerate the maturity of any such indebtedness or
require a redemption or other repurchase of such indebtedness; or
               10.7 Bankruptcy. Parent Guarantor or any of its Subsidiaries
(other than any Immaterial Foreign Subsidiary) shall (i) make a general
assignment for the benefit of creditors; (ii) admit in writing its inability to
pay or fails to pay its debts generally as they become due; (iii) file a
petition for relief under any chapter of the Federal Bankruptcy Code or any
other bankruptcy or debtor relief law, domestic or foreign, as now or hereafter
in effect, or seeking the appointment of a trustee, receiver, custodian,
liquidator or similar official for it or any Collateral or any of its other
property; or any such action is commenced against it and it admits, acquiesces
in or does not contest diligently the material allegations thereof, or the
action results in entry of an order for relief against it, or it does not obtain
permanent dismissal and discharge thereof before the earlier of trial thereon or
sixty (60) days after commencement of the action; or (iv) make a transfer or
incur an obligation which is fraudulent under any applicable law as to any
creditor; or
               10.8 Lien Property. The Collateral Agent fails to have an
enforceable first lien (except for Permitted Liens) on or security interest in
any Collateral to the extent provided in the Loan Documents (other than as a
result of any action or inaction on the part of the Collateral Agent that is not
in respect of any obligations of the Loan Parties under the Loan Documents); or
               10.9 Judgments. Any judgment or order for the payment of money in
excess of $2,500,000 (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) shall be rendered
against Parent Guarantor or any of its Subsidiaries (other than any Immaterial
Foreign Subsidiary) and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of thirty (30) consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or

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               10.10 Material Adverse Change. A material adverse change occurs,
or is reasonably likely to occur, in (i) the business condition (financial or
otherwise), operations, properties or prospects of the Loan Parties taken as
whole, (ii) the ability of the Loan Parties to repay the Obligations, (iii) the
value of the Collateral or the Bank determines that it is insecure for any other
reason; or
               10.11 Governmental Action. Any Governmental Authority takes
action that the Bank reasonably believes materially adversely affects the
Borrower’s and the other Loan Parties’ financial condition or ability to repay
the Obligations, taken as a whole; or
               10.12 ERISA Plans. Any one or more of the following events occurs
with respect to a Plan of Parent Guarantor or any of the other Loan Parties or
ERISA Affiliates subject to Title IV of ERISA, provided such event or events
could reasonably be expected, in the judgment of the Bank, to subject Parent
Guarantor or any of its Subsidiaries to any tax, penalty or liability (or any
combination of the foregoing) which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect:
                    (a) a Reportable Event shall occur under Section 4043(c) of
ERISA with respect to a Plan;
                    (b) any Plan termination (or commencement of proceedings to
terminate a Plan) or the full or partial withdrawal from a Plan by Parent
Guarantor, such other Loan Party or any ERISA Affiliate; or
                    (c) any other ERISA Event.
               10.13 Loan Document Ceases to be Binding. Any Loan Document after
delivery thereof pursuant to Section 4 shall for any reason not caused by the
Bank or any successor thereof cease to be valid and binding on any Loan Party
that is a party to such Loan Document.
               10.14 Breach under License. (i) The Borrower or any of its
Affiliates shall breach any provision of the Trademark License Agreement and
shall have failed to cure such breach within thirty (30) days, (ii) the Shared
Intellectual Property shall be otherwise required to be assigned to the
licensees under the Trademark License Agreement pursuant to Section 5.03 of the
Trademark License Agreement or otherwise or (iii) any of the Sellers shall
obtain injunctive relief that adversely affects the SPE’s right to use the
Shared Intellectual Property.
               10.15 Change of Control. A Change of Control shall occur.
          11. Remedies Upon Default. If an Event of Default shall occur,
               11.1 At the Bank’s option, the Loan, all interest accrued thereon
and all other amounts payable by the Borrower to the Bank under any of the Loan

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35

Documents shall become immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an Event of Default
specified under Section 10.7 above, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower; and
               11.2 The Bank shall have all rights, powers and remedies
available under each of the Loan Documents, or afforded by law, including,
without limitation, the right to resort to any or all of the Collateral and to
exercise any or all of the rights of a secured party pursuant to applicable law.
All rights, powers and remedies of the Bank in connection with each of the Loan
Documents may be exercised at any time by the Bank and from time to time after
the occurrence and during the continuance of any Event of Default, are
cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.
          12. Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the following addresses, or sent by
facsimile to the fax numbers listed below, or to such other addresses as the
Bank and the Borrower may specify from time to time in writing:

     
Any Loan Party:
  Martha Stewart Living Omnimedia, Inc.
 
  11 West 42nd Street
 
  New York, NY 10036
 
  Attention: Chief Financial Officer
 
  Telecopy: 212-827-8551
 
   
with copies to:
  Orrick Herrington & Sutcliffe LLP
 
  The Orrick Building
 
  405 Howard Street
 
  San Francisco, CA 94105-2669
 
  Attention: Dolph Hellman
 
  Telecopy: 415-773-5759
 
   
Bank:
  Bank of America, N.A.
 
  767 Fifth Avenue, Floor 12A
 
  New York, New York 10153
 
  Attention: Jane R. Heller
 
  Telecopy: 212-407-5402

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36

     
with a copy to:
  Paul, Weiss, Rifkind, Wharton & Garrison LLP
 
  1285 Avenue of the Americas
 
  New York, New York 10019-6064
 
  Attention: Stephen K. Koo
 
  Telecopy: 212-757-3990

Notices and other communications shall be effective (i) if mailed, upon the
earlier of receipt or five (5) days after deposit in the U.S. mail, first class,
postage prepaid, (ii) if telecopied, when transmitted, or (iii) if
hand-delivered, by courier or otherwise (including telegram, lettergram or
mailgram), when delivered.
          13. Miscellaneous. The Borrower and the Bank further covenant and
agree as follows, without limiting any requirement of any other Loan Document:
               13.1 Fees and Expenses. The Borrower shall reimburse the Bank for
any reasonable and documented costs and attorneys’ fees incurred by the Bank in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, including without limitation, any due
diligence conducted with respect to Parent Guarantor and its Subsidiaries and
the Transaction, the enforcement or preservation of any rights or remedies under
this Agreement and any other Loan Documents, and in connection with any
amendment, waiver, “workout” or restructuring under this Agreement. The Borrower
agrees to reimburse the Bank for the reasonable and documented costs of periodic
field examinations of the Borrower’s books, records and Collateral, and
appraisals of the Collateral, at such intervals as the Bank may reasonably
require, which may be performed by employees of the Bank or by independent
appraisers. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys’ fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys’ fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
“attorneys’ fees” includes the allocated costs of a party’s in-house counsel. In
addition, the Borrower agrees to, upon reasonable notice from the Bank, pay any
and all stamp and other taxes or fees payable or determined to be payable in
connection with the execution and delivery of the Loan Documents and the other
documents to be delivered hereunder, and agrees to save the Bank harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes or fees.
               13.2 Indemnification. The Borrower shall indemnify and hold the
Bank, its parent, Subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys, and assigns (collectively, the “Indemnitees”)
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
other Loan Document, (b) any credit extended or committed by the Bank to the
Borrower hereunder, and (c) any litigation or proceeding

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37

related to or arising out of this Agreement, any such document, or any such
credit, in each case other than arising as a result of any such Indemnitee’s
gross negligence or willful misconduct.. This indemnity includes but is not
limited to reasonable attorneys’ fees (including the allocated cost of in-house
counsel). This indemnity shall survive repayment of the Borrower’s obligations
to the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand. Under no circumstances
shall any Indemnitee have any liability for any special, punitive, indirect or
consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Original Closing Date).
               13.3 Cumulative Rights and No Waiver. Each and every right
granted to the Bank under any Loan Document, or allowed it by law or equity
shall be cumulative of each other and may be exercised in addition to any and
all other rights of the Bank, and no delay in exercising any right shall operate
as a waiver thereof, nor shall any single or partial exercise by the Bank of any
right preclude any other or future exercise thereof or the exercise of any other
right. The Borrower expressly waives any presentment, demand, protest or other
notice of any kind, including but not limited to notice of intent to accelerate
and notice of acceleration, except in the event and to the extent that any such
notice is expressly required by the terms of any Loan Document. No notice to or
demand on the Borrower in any case shall, of itself, entitle the Borrower to any
other or future notice or demand in similar or other circumstances.
               13.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. To the extent
that the Bank has greater rights or remedies under federal law, whether as a
national bank or otherwise, this paragraph shall not be deemed to deprive the
Bank of such rights and remedies as may be available under federal law.
               13.5 Successors and Assigns. This Agreement is binding on and
inures to the benefit of the Borrower’s and the Bank’s successors and assignees.
Each of Parent Guarantor and the Borrower agrees that it may not assign this
Agreement without the Bank’s prior written consent (and any purported assignment
in violation of this Section 13.5 shall be null and void). The Bank may sell
participations in or assign the Loan, and may exchange information about the
Borrower (including, without limitation, any information regarding any hazardous
substances) with actual or potential participants or assignees; provided that
such Person shall agree in writing to the provisions set forth in Section 13.15
or confidentiality restrictions that are substantially similar. If a
participation is sold or the Loan is assigned, the purchaser shall have the
right of set-off against the Borrower.
               13.6 Amendment. No modification, consent, amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an Assistant Vice President or higher level officer of the Bank and by the
Borrower, and

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38

then shall be effective only in the specific instance and for the purpose for
which given. There is no third party beneficiary of this Agreement.
               13.7 Entire Agreement. This Agreement and any other Loan
Document, collectively: represent the sum of the understandings and agreements
between the Bank and the Loan Parties concerning this credit;
                         (b) replace any prior oral or written agreements
between the Bank and the Loan Parties concerning this credit; and
                         (c) are intended by the Bank and the Loan Parties as
the final, complete and exclusive statement of the terms agreed to by them.
               13.8 Inconsistency. In the event of any conflict between this
Agreement and any other agreements required by this Agreement, this Agreement
will prevail. Any reference in any related document to a “promissory note” or a
“note” executed by the Borrower and dated as of the date of this Agreement shall
be deemed to refer to this Agreement, as now in effect or as hereafter amended,
renewed, or restated.
               13.9 Headings. Section and paragraph headings are for reference
only and shall not affect the interpretation or meaning of any provisions of
this Agreement.
               13.10 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
               13.11 Survivability. All covenants, agreements, representations
and warranties made by Parent Guarantor or the Borrower herein or in the other
Loan Documents to which Parent Guarantor or the Borrower is a party shall
survive the making of the Loan and shall continue in full force and effect so
long as the Obligations, or any portion thereof, are outstanding. In addition,
the covenants and agreements, made by the Bank (i) in Section 13.13 shall
continue in full force and effect so long as the Obligations, or any portion
thereof, are outstanding and (ii) in Section 13.15 shall continue until the
second anniversary of the date on which the Obligations shall have been paid in
full.
               13.12 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement. Signatures may be delivered via telecopy of in PDF format via
electronic mail and signatures delivered by such means shall be deemed originals
for all purposes.
               13.13 Dispute Resolution; Waiver of Jury Trial. This paragraph,
including the subparagraphs below, is referred to as the “Dispute Resolution
Provision.”

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This Dispute Resolution Provision is a material inducement for the parties
entering into this Agreement.
                    (a) This Dispute Resolution Provision concerns the
resolution of any controversies or claims among the parties, whether arising in
contract, tort or by statute, including but not limited to controversies or
claims that arise out of or relate to: (i) this Agreement (including any
renewals, extensions or modifications); or (ii) any other Loan Document
(collectively a “Claim”). For the purposes of this Dispute Resolution Provision
only, the term “parties” shall include any parent corporation, subsidiary or
affiliate of Bank involved in the servicing, management or administration of any
obligation described or evidenced by this Agreement.
                    (b) At the request of any party to this Agreement, any Claim
shall be resolved by binding arbitration in accordance with the Federal
Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though
this Agreement provides that it is governed by the law of a specified state.
                    (c) Arbitration proceedings will be determined in accordance
with the Act, the then-current rules and procedures for the arbitration of
financial services disputes of the American Arbitration Association or any
successor thereof (“AAA”), and the terms of this Dispute Resolution Provision.
In the event of any inconsistency, the terms of this Dispute Resolution
Provision shall control. If AAA is unwilling or unable to (i) serve as the
provider of arbitration or (ii) enforce any provision of this arbitration
clause, the Bank may designate another arbitration organization with similar
procedures to serve as the provider of arbitration.
                    (d) The arbitration shall be administered by AAA and
conducted, unless otherwise required by law, in any U.S. state where real or
tangible personal property collateral for this credit is located or if there is
no such collateral, in the state specified in the governing law section of this
Agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed Five Million Dollars ($5,000,000), upon the request of any party, the
Claims shall be decided by three arbitrators. All arbitration hearings shall
commence within ninety (90) days of the demand for arbitration and close within
ninety (90) days of commencement and the award of the arbitrator(s) shall be
issued within thirty (30) days of the close of the hearing. However, the
arbitrator(s), upon a showing of good cause, may extend the commencement of the
hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide
a concise written statement of reasons for the award. The arbitration award may
be submitted to any court having jurisdiction to be confirmed and have judgment
entered and enforced.
                    (e) The arbitrator(s) will give effect to statutes of
limitation in determining any Claim and may dismiss the arbitration on the basis
that the Claim is barred. For purposes of the application of any statutes of
limitation, the service on AAA under applicable AAA rules of a notice of Claim
is the equivalent of the filing of a lawsuit. Any dispute concerning this
arbitration provision or whether a Claim is arbitrable shall be determined by
the arbitrator(s), except as set forth at subparagraph (h)

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40

of this Dispute Resolution Provision. The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this Agreement.
                    (f) This paragraph does not limit the right of any party to:
(i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or non-judicial foreclosure against any real or personal
property collateral; (iii) exercise any judicial or power of sale rights, or
(iv) act in a court of law to obtain an interim remedy, such as but not limited
to, injunctive relief, writ of possession or appointment of a receiver, or
additional or supplementary remedies.
                    (g) The filing of a court action is not intended to
constitute a waiver of the right of any party, including the suing party,
thereafter to require submittal of the Claim to arbitration.
                    (h) Any arbitration or trial by a judge of any Claim will
take place on an individual basis without resort to any form of class or
representative action (the “Class Action Waiver”). Regardless of anything else
in this Dispute Resolution Provision, the validity and effect of the
Class Action Waiver may be determined only by a court and not by an arbitrator.
The parties to this Agreement acknowledge that the Class Action Waiver is
material and essential to the arbitration of any disputes between the parties
and is nonseverable from the agreement to arbitrate Claims. If the Class Action
Waiver is limited, voided or found unenforceable, then the parties’ agreement to
arbitrate shall be null and void with respect to such proceeding, subject to the
right to appeal the limitation or invalidation of the Class Action Waiver. The
parties acknowledge and agree that under no circumstances will a class action be
arbitrated.
          By agreeing to binding arbitration, the parties irrevocably and
voluntarily waive any right they may have to a trial by jury in respect of any
Claim. Furthermore, without intending in any way to limit this Agreement to
arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of
such Claim. This waiver of jury trial shall remain in effect even if the
Class Action Waiver is limited, voided or found unenforceable. WHETHER THE CLAIM
IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND
UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE
RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.
               13.14 Limitation on Interest and Charges. If, at any time, the
rate of interest, together with all amounts which constitute interest and which
are reserved, charged or taken by the Bank as compensation for fees, services or
expenses incidental to the making, negotiating or collection of the loan
evidenced hereby, shall be deemed by any competent court of law, governmental
agency or tribunal to exceed the maximum rate of interest permitted to be
charged by the Bank to the Borrower under applicable law, then, during such time
as such rate of interest would be deemed excessive, that portion of each sum
paid attributable to that portion of such interest rate that exceeds the maximum
rate of interest so permitted shall be deemed a voluntary prepayment of
principal. As

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41

used herein, the term “applicable law” shall mean the law in effect as of the
date hereof; provided, however, that in the event there is a change in the law
which results in a higher permissible rate of interest, then this Agreement
shall be governed by such new law as of its effective date.
               13.15 Confidentiality. The Bank and Parent Guarantor are parties
to a certain confidentiality agreement dated as of January 10, 2008 (the
“Confidentiality Agreement”). The parties agree that the terms of the
Confidentiality Agreement, excluding the last paragraph on the third page of the
Confidentiality Agreement and subject to Section 13.11, shall apply with respect
to all Confidential Information (as defined in the Confidentiality Agreement)
that may be disclosed to the Bank pursuant to this Agreement; and in connection
with information disclosed pursuant to this Agreement, each Loan Party shall be
considered one of the “Covered Parties” as such term is defined in the
Confidentiality Agreement.
               13.16 Release. In consideration of the agreements of the Bank
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of the Borrower and the Parent
Guarantor, on behalf of itself and its successors, assigns and other legal
representatives, hereby absolutely, unconditionally and irrevocably releases,
remises and forever discharges the Bank (in its individual capacity and in its
capacity as Collateral Agent) and its successors and assigns, and its present
and former shareholders, affiliates, subsidiaries, divisions, predecessors,
directors, officers, attorneys, employees, agents and other representatives (the
Bank and all such other Persons being hereinafter referred to collectively as
the “Releasees” and individually as a “Releasee”), of and from all demands,
actions, causes of action, suits, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
of every name and nature, known or unknown, both at law and in equity, the
Borrower or the Parent Guarantor, or any of their successors, assigns or other
legal representatives may now or hereafter own, hold, have or claim to have
against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this Agreement for or on account of, or in relation
to, or in any way in connection with any of the Existing Loan Agreement, any of
the other Loan Documents or any transactions thereunder or related thereto.
               13.17 No Novation. This Agreement amends and restates in its
entirety the Existing Loan Agreement. Notwithstanding the foregoing, it is
expressly understood and agreed by the parties hereto that this Agreement is in
no way intended to constitute a novation of the obligations and liabilities
existing under the Existing Loan Agreements or evidence payment of all or any of
such obligations and liabilities. All references to the Existing Loan Agreement
(or to any amendment or any amendment and restatement thereof) in the Loan
Documents shall be deemed to refer to this Agreement.

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          THIS AGREEMENT is executed as of the date stated at the top of the
first page.

                      BANK:       BORROWER:    
 
                    BANK OF AMERICA, N.A.       MSLO EMERIL ACQUISITION SUB LLC
   
 
                   
By:
  /s/ Jane R. Heller       By:   /s/ Charles Koppelman    
 
 
 
Name: Jane R. Heller          
 
Name: Charles Koppelman    
 
  Title: Managing Director           Title: President    
 
                                PARENT GUARANTOR:    
 
                                MARTHA STEWART LIVING OMNIMEDIA, INC.    
 
                   
 
          By:   /s/ Charles Koppelman    
 
             
 
Name: Charles Koppelman    
 
              Title: Executive Chairman
          Principal Executive Officer    

USA Patriot Act Notice. Federal law requires all financial institutions to
obtain, verify and record information that identifies each Person who opens an
account or obtains a loan. The Bank will ask for the Borrower’s legal name,
address, tax ID number or social security number and other identifying
information. The Bank may also ask for additional information or documentation
or take other actions reasonably necessary to verify the identity of the
Borrower, the Guarantors or other related Persons.
[Signature page to Amended and Restated Loan Agreement]