exv10w1







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




      










 





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	 




i









 





	 	 	 	 	 
	 	 	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	 




ii








 





	 	 	 	 	 
	 	 	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
	 	 	 	 




iii








 



 


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).










 



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.










 



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










 



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,










 



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.










 



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.










 



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.










 



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.










 



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










 



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.










 



11


          “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





 












 





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









 



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









 



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.









 



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;









 



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:











 



17




               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.









 



18


               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.









 



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.









 



20


               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









 



21


                    (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.









 



22


               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









 



23

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.









 



24


               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









 



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
















 


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;









 



27



          (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:









 



28



               (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;









 



29


                    (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;









 



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;









 



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).









 



32


                    (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









 



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









 



34


               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









 



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












 



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









 



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









 



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.”









 



39



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)









 



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









 



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.









 






          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]