exv10w2






Exhibit 10.2


AMENDMENT NO. 2 TO SECURITY AGREEMENT




          AMENDMENT NO. 2, dated as of August 7, 2009 (this “Amendment”), relating to the
SECURITY AGREEMENT, dated as of July 31, 2008 (as modified by Waiver and Omnibus Amendment No. 1,
dated as of June 18, 2009, the “Security Agreement”), among MSLO EMERIL ACQUISITION SUB
LLC, a Delaware limited liability company (the “Borrower”), MARTHA STEWART LIVING
OMNIMEDIA, INC., a Delaware corporation (the “Parent Guarantor” and, together with the
Borrower, the “Grantors”), and BANK OF AMERICA, N.A., as collateral agent (in such
capacity, together with any successor collateral agent, the “Collateral Agent”) for the Secured
Parties (as defined in the Security Agreement).




          WHEREAS, the Borrower and the Parent Guarantor have requested Bank of America, N.A. (the
“Bank”) to modify certain terms of the Loan Agreement dated as of April 4, 2008 among the
Borrower, the Parent Guarantor and the Bank as set forth in the Amended and Restated Loan Agreement
being entered into on the date hereof (the “Amended and Restated Loan Agreement”); and




          WHEREAS, it is a condition precedent to the effectiveness of the Amended and Restated Loan
Agreement that the Borrower and Parent Guarantor enter into this Amendment.




          NOW THEREFORE, in consideration of the premises and the agreements herein, each of the
Borrower and the Parent Guarantor hereby agrees with the Bank as follows:




          1. Definitions. All terms used herein which are defined in the Security Agreement and
not otherwise defined herein are used herein as defined therein.




          2. Amendment. The following amendments to the Security Agreement shall become
effective on the Effective Date.




               (a) The following definitions shall be added to Section 1.02 of the Security Agreement in the
appropriate alphabetical order:




‘“Aggregate Cash Collateral Value” has the meaning assigned to
such term in Section 3.04.




“Cash Collateral” means the cash and investments held from time to
time in the Cash Collateral Account.




“Cash Collateral Termination Date” has the meaning assigned to
such term in Section 3.04.




“Collateral Table” has the meaning assigned to such term in
Section 3.04.









 



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“Collateral Value”, with respect to (i) a money market fund, shall
be determined at any given time by multiplying (A) the most recent per
share net asset value of such money market fund obtained from the Wall
Street Journal, or such other reputable reporting service as the
Collateral Agent may reasonably select, times (B) the number of shares of
such money market fund held in the Cash Collateral Account as collateral.
In the event that such net asset value is not available in the Wall Street
Journal, or such other reputable reporting service as the Collateral Agent
may reasonably select, the Collateral Value shall be the value quoted to
the Collateral Agent by a reputable brokerage firm selected by the
Collateral Agent and (ii) with respect to cash, shall be the amount of
such cash.




“Eligible Collateral” has the meaning assigned to such term in
Section 3.04.




“Outstanding Balance” means the outstanding principal balance of
the Loan from time to time.’




“Second Amendment Effective Date” means August 7, 2009.



               (b) The following shall be added as a new Section 3.04 of the Security Agreement:




“3.04 Cash Collateral Maintenance.




(a) On or before the Second Amendment Effective Date, the Borrower has
deposited in the Cash Collateral Account $17,500,000 in cash. If
requested by Borrower, the Collateral Agent may direct the Bank to invest
amounts on deposit in the Cash Collateral Account in one or more money
market funds that the Collateral Agent may approve in its sole discretion;
provided, however, that any such money market fund
investments are permitted pursuant to Parent Guarantor’s board approved
investment policy as previously provided by Parent Guarantor to the
Collateral Agent. At all times from the Second Amendment Effective Date
through the Cash Collateral Termination Date, the Borrower agrees to
maintain in the Cash Collateral Account, as security for the Secured
Obligations, Collateral of a type described on the table set forth below
this paragraph (collectively, the “Collateral Table”) and
otherwise acceptable to the Collateral Agent (“Eligible
Collateral”) with an Aggregate Cash Collateral Value at least equal to
the Outstanding Balance. “Aggregate Cash Collateral Value” means,
as of any date of determination, an amount equal to the product obtained
by multiplying (i) the Collateral Value as of such date by (ii) the Margin
Call Percentage









 



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shown on the following table (the “Collateral Table”) for the
applicable type of Eligible Collateral:



	 	 	 
	Eligible Collateral Type	 	Margin Call Percentage
	Money Market 

Cash
	 	100%

100%







The Collateral Agent shall have no obligation to give any Collateral Value
to any Collateral of a type not shown on the Collateral Table.




(b) If, at any time from the Second Amendment Effective Date through the
Cash Collateral Termination Date, the Outstanding Balance exceeds at any
time the Aggregate Collateral Value, then the Borrower shall have two (2)
Business Days from the date notification (whether oral or written) of such
noncompliance is delivered to the Borrower, to either deposit cash into
the Cash Collateral Account, or prepay the principal of the Loan such
that, after giving effect thereto, the Outstanding Balance is less than or
equal to the Aggregate Cash Collateral Value as of the date on which such
action is taken. Any such prepayment of the Loan shall be applied to the
principal installments due under Section 2.2(b) of the Loan Agreement in
the inverse order of their maturity.




(c) Subject to the other provisions of this Section 3.04 and any written
agreement to the contrary with the Collateral Agent, if no Default or
Event of Default has occurred and is continuing or would result from such
action, upon any repayment or prepayment of the outstanding principal
amount of the Loan, upon the request of the Borrower, the Collateral Agent
shall release Cash Collateral from the Cash Collateral Account having
Collateral Value up to the lesser of (i) the principal amount of the Loan
so repaid or prepaid and (ii) the amount by which the Aggregate Cash
Collateral Value exceeds the Outstanding Balance at the date of request
(and direct the sale or trade of investments in the Cash Collateral
Account to the extent necessary to do so); provided that, after
giving effect to any such release of Cash Collateral, the Outstanding
Balance is less than or equal to the Aggregate Cash Collateral Value.




(d) If the Borrower submits to the Collateral Agent and Bank a written
request under this Section 3.04(d) and delivers to the Collateral Agent
and Bank a certificate of a Financial Officer of Parent Guarantor
certifying (i) that as of such date, no Event of









 



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Default or Default exists, (ii) that as of the last day of the most
recently ended fiscal quarter of Parent Guarantor with respect to which
Parent Guarantor shall have delivered financial statements in accordance
with Section 7.2(a) or (b) of the Loan Agreement, if the covenants set
forth in Section 8 of the Loan Agreement had been effective, Parent
Guarantor would have been in compliance with such covenants (setting forth
computations in reasonable detail satisfactory to the Bank demonstrating
such compliance for the applicable period), and (iii) as of such date, the
Loan Parties, on a consolidated basis, are Solvent, (A) the Bank will
promptly acknowledge in writing that the conditions set forth in this
Section 3.04(d) have been satisfied and that, on the date of such written
acknowledgment (the “Cash Collateral Termination Date”), the
effectiveness of this Section 3.04 shall be terminated and the Borrower
shall no longer be required to comply with the provisions of this Section
3.04 and (B) the Collateral Agent will promptly acknowledge in writing
that its Lien on any Collateral in the Cash Collateral Account is
released.



          3. Condition to Effectiveness. This Amendment shall become effective on and as of the
Effective Date (as defined in the Amended and Restated Loan Agreement).




          4. Continued Effectiveness of the Security Agreement. The Security Agreement, as
amended by this Amendment is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that on and after the date hereof (i) all references
in the Security Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like
import referring to the Security Agreement shall mean the Security Agreement as amended by this
Amendment and (ii) all references in the other Loan Documents to the “Security Agreement”,
“thereto”, “thereof”, “thereunder” or words of like import referring to the Security Agreement
shall mean the Security Agreement as amended by this Amendment.




          5. Counterparts. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement.




          6. Headings. Section headings herein are included for convenience of reference only
and shall not constitute a part of this Amendment for any other purpose.




          7. Governing Law. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York.




          8. Waiver and Amendment as Loan Document. Each of the Borrower and the Parent
Guarantor hereby acknowledges and agrees that this Amendment constitutes a “Loan Document.”










 







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          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first above written.







	 	 	 	 	 	 	 	 	 	 	 
	COLLATERAL AGENT:	 	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BANK OF AMERICA, N.A., as
Collateral Agent	 	 	 	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	 	 






[Signature page to Security Agreement Amendment]