NOW THEREFORE, in consideration of the premises and the agreements herein, each of theBorrower and the Parent Guarantor hereby agrees with the Bank and the Collateral Agent as follows:1. Definitions. All terms used herein which are defined in the Loan Agreement and nototherwise defined herein are used herein as defined therein.2. Amendments to Loan Agreement. The following amendments shall become effective onthe Effective Date.(a) The definition of “Cash Collateral Termination Date” set forth in Section 1 of the LoanAgreement is hereby amended and restated in its entirety as follows:“‘Cash Collateral Termination Date’ means December 31,2009.”(b) The following definition is hereby added to Section 1 of the Loan Agreement in properalphabetical order:“‘Waiver and Amendment’ means the Waiver and OmnibusAmendment to Loan Documents dated as of December 18, 2009 amongthe Borrower, Parent Guarantor, the Bank and the CollateralAgent.”(c) The first clause of Section 8 of the Loan Agreement prior to Section 8.1 is hereby amendedand restated in its entirety as follows:“Commencing with the last day of Parent Guarantor’s fiscal quarterending on the Cash Collateral Termination Date until the earlierto occur of (i) the Deposit Date (as defined in Exhibit A to theWaiver and Amendment) and (ii) full payment and performance of allObligations:”(d) Clause (iii) of Section 10.3 of the Loan Agreement is hereby amended and restated in itsentirety as follows:“(iii) commencing with the last day of Parent Guarantor’s fiscalquarter ending on the Cash Collateral Termination Date, Section 8of this Agreement, provided, that if Parent Guarantortimely delivers the Compliance Certificate with respect to anyfiscal quarter ending on or after December 31, 2009 pursuant toSection 7.2(c), and Parent Guarantor shall have failed to complywith any one or more of the covenants set forth in Section 8 ofthis Agreement as of the last day of such fiscal quarter, noDefault or Event of Default shall occur with respect to suchfailure if the Borrower complies with Section 4 of the Waiver andAmendment within one (1) Business Day after Parent Guarantordelivers such Compliance Certificate.”
 
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3. Waiver to Section 3.04(d) of the Security Agreement.(a) Effective as of the Effective Date, each of the Bank and the Collateral Agent hereby (i)waives the conditions to the occurrence of the Cash Collateral Termination Date set forth inSection 3.04(d) of the Security Agreement, (ii) agrees that the Cash Collateral Termination Dateshall be December 31, 2009 for all purposes of the Security Agreement and the other Loan Documentsand that the effectiveness of Section 3.04 of the Security Agreement shall terminate on such dateand the Borrower shall no longer be required to comply with the provisions of such Section, and(iii) agrees that the Collateral Agent’s Lien on any Collateral in the Cash Collateral Accountshall be released without any further action of any party.(b) The foregoing waiver shall not constitute (i) except as expressly set forth herein, amodification or alteration of the terms, conditions or covenants of the Security Agreement or anyother Loan Document, (ii) a waiver of, or consent to, any other breach of, any other provision ofthe Security Agreement or any other Loan Document or (iii) except as expressly set forth herein, awaiver, release or limitation upon the exercise by the Bank or the Collateral Agent of any of itsrights, legal or equitable, under the Security Agreement, the other Loan Documents and applicablelaw, all of which are hereby reserved.4. Cure for Failure to Comply with Section 8 of the Loan Agreement. If ParentGuarantor timely delivers the Compliance Certificate with respect to any fiscal quarter ending onor after December 31, 2009 pursuant to Section 7.2(c) of the Loan Agreement, and Parent Guarantorshall have failed to comply with any one or more of the covenants set forth in Section 8 of theLoan Agreement as of the last day of the fiscal quarter ending on December 31, 2009 (collectively,a “Financial Covenant Default”), Section 3.04 of the Security Agreement shall be amendedand restated as set forth on Exhibit A to this Waiver and Amendment and become effective asof the date Parent Guarantor delivers such Compliance Certificate, and such Financial CovenantDefault shall not be a Default or an Event of Default if the Borrower complies with therequirements of the first sentence of Section 3.04 of the Security Agreement as so amended andrestated within one (1) Business Day after Parent Guarantor delivers such Compliance Certificate.5. Conditions to Effectiveness. This Waiver and Amendment shall become effective onDecember 31, 2009 if, and only if, all of the following conditions precedent shall have beensatisfied as of such date (such date, upon the satisfaction of such conditions precedent, the“Effective Date”):(a) the Bank shall have received counterparts of this Waiver and Amendment duly executed bythe Borrower and the Parent Guarantor;
 
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(b) the Borrower shall have paid all accrued and unpaid fees and expenses of Paul, Weiss,Rifkind, Wharton & Garrison LLP that are reimbursable under the Loan Documents for which an invoicehas been presented on or before the Effective Date;(c) the Borrower shall have delivered to the Collateral Agent and Bank a certificate of aFinancial Officer of Parent Guarantor dated as of December 31, 2009 (the “Certificate”)certifying (i) that as of the date of the Certificate, no Event of Default or Default exists (whichcertification excludes any reference to Section 8 of the Loan Agreement, which Section is addressedin clause (iii) below), (ii) that attached to such certificate is updated projected consolidatedfinancial information for Parent Guarantor (A) for the fiscal year ending December 31, 2009 and (B)each fiscal quarter of 2010 (together with computations demonstrating projected compliance with thecovenants set forth in Section 8 of the Loan Agreement as the last day of each such fiscalquarter), in each case, prepared as of December 31, 2009 (which financial information shall bepresented in substantially the same format as the preliminary draft projected consolidatedfinancial information for Parent Guarantor for such periods dated as of December 7, 2009 deliveredto the Collateral Agent and the Bank prior to the date hereof) (the “Projected SummaryFinancial Information”), and that such Projected Summary Financial Information has beenprepared by Parent Guarantor in good faith based upon information available to Parent Guarantor asof the draft date of such Projected Summary Financial Information and assumptions believed byParent Guarantor to be reasonable as of the date of the Certificate, (iii) that as of the date ofthe Certificate, if the covenants set forth in Section 8 of the Loan Agreement were effective onsuch date and based on information set forth in the Projected Summary Financial Information, ParentGuarantor would be in compliance with such covenants (according to the computations set forth inthe Projected Summary Financial Information) as of the last day of the fiscal quarter endingDecember 31, 2009 and (iv) that, as of the date of the Certificate, the Loan Parties, on aconsolidated basis, are Solvent;(d) the representations and warranties contained in Section 5 hereof shall be true and correcton and as of the Effective Date (after giving effect to this Waiver and Amendment); and(e) after giving effect to this Waiver and Amendment, no event shall have occurred and becontinuing which constitutes an Event of Default or Default.6. Representations and Warranties. The Borrower hereby represents and warrants to theBank as follows:(a) After giving effect to this Waiver and Amendment, the representations and warranties madeby the Borrower and the Parent Guarantor in the Loan Agreement and in each other Loan Document towhich it is a party are true and correct in all material respects on and as of the Effective Dateas though made on and as of the Effective Date (except (i) to the extent such representations andwarranties expressly relate to an earlier date, (ii) the representation and warranty set forth inSection 4.01(b) of the Security Agreement, as to which the Borrower makes no representation and(iii) that the representation and warranty set forth in Section 6.4 of the Loan Agreement isfurther qualified by any matter set forth in the Parent Guarantor’s most recent Annual Report onForm 10-K and Quarterly Report on Form 10-Q prior to the date hereof).
 
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(b) Each of the Borrower and the Parent Guarantor has all limited liability company orcorporate power and authority to execute and deliver this Waiver and Amendment and to perform theobligations provided for herein and in the Loan Agreement and Security Agreement, each as modifiedhereby.(c) The execution, delivery and performance by each of the Borrower and the Parent Guarantorof this Waiver and Amendment and the performance by each of the Borrower and the Parent Guarantorof its obligations under the Loan Agreement and the Security Agreement, each as modified hereby, donot contravene the certificate of formation or limited liability company agreement of the Borroweror the certificate of incorporation or bylaws of the Parent Guarantor or any law applicable toeither of them, or any judgment or order applicable to or binding on either of them, and do notconstitute a default under any existing agreement, mortgage, indenture or contract binding oneither of them or affecting either of their property.(d) This Waiver and Amendment has been duly executed and delivered by each of the Borrower andthe Parent Guarantor, and each of this Waiver and Amendment, and the Loan Agreement and theSecurity Agreement, each as modified hereby, constitutes the legal, valid and binding obligation ofeach of them, enforceable in accordance with its terms.7. Release. In consideration of the agreements of the Bank and the Collateral Agentcontained herein and for other good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, each of the Borrower and the Parent Guarantor, on behalf of itselfand its successors, assigns and other legal representatives, hereby absolutely, unconditionally andirrevocably releases, remises and forever discharges the Bank and the Collateral Agent and theirsuccessors and assigns, and their present and former shareholders, affiliates, subsidiaries,divisions, predecessors, directors, officers, attorneys, employees, agents and otherrepresentatives (the Bank, the Collateral Agent and all such other Persons being hereinafterreferred to collectively as the “Releasees” and individually as a “Releasee”), ofand 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 (individually, a“Claim” and collectively, “Claims”) 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 haveagainst the Releasees or any of them for, upon, or by reason of any circumstance, action, cause orthing whatsoever which arises at any time on or prior to the day and date of this Waiver andAmendment for or on account of, or in relation to, or in any way in connection with any of the LoanAgreement, any of the other Loan Documents or any transactions thereunder or related thereto.
 
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8. Continued Effectiveness of the Loan Documents. Except as otherwise expresslyprovided herein, the Loan Agreement and the other Loan Documents to which the Borrower or theParent Guarantor is a party are, and shall continue to be, in full force and effect and are herebyratified and confirmed in all respects except that on and after the date hereof (i) all referencesin the Loan Agreement to “this Agreement”,“hereto”, “hereof”, “hereunder” or words of like import referring to the Loan Agreement shallmean the Loan Agreement as modified by this Waiver and Amendment, (ii) all references in theSecurity Agreement to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like importreferring to the Security Agreement shall mean the Security Agreement as modified by this Waiverand Amendment, (iii) all references in the other Loan Documents to the “Loan Agreement”, “thereto”,“thereof”, “thereunder” or words of like import referring to the Loan Agreement shall mean the LoanAgreement as modified by this Waiver and Amendment and (iv) all references in the other LoanDocuments to the “Security Agreement”, “thereto”, “thereof”, “thereunder” or words of like importreferring to the Security Agreement shall mean the Security Agreement as modified by this Waiverand Amendment.9. Counterparts. This Waiver and Amendment may be executed in any number ofcounterparts and by different parties hereto in separate counterparts, each of which shall bedeemed to be an original, but all of which taken together shall constitute one and the sameagreement.10. Headings. Section headings herein are included for convenience of reference onlyand shall not constitute a part of this Waiver and Amendment for any other purpose.11. Governing Law. This Waiver and Amendment shall be governed by, and construed inaccordance with, the laws of the State of New York.12. Waiver and Amendment as Loan Document. Each of the Borrower and the ParentGuarantor hereby acknowledges and agrees that this Waiver and Amendment constitutes a “LoanDocument.”[*The remainder of this page is left intentionally blank*]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver and Amendment to be executedand delivered as of the date first above written.       BANK: BORROWER:       **BANK OF AMERICA, N.A.** **MSLO EMERIL ACQUISITION SUB LLC**       By: /s/ Jane R. Heller By: /s/ Kelli Turner         Name: Jane R. Heller   Name: Kelli Turner  Title: Managing Director   Title: Vice President       COLLATERAL AGENT: PARENT GUARANTOR:       **BANK OF AMERICA, N.A.,**as **MARTHA STEWART LIVING OMNIMEDIA,**Collateral Agent **INC.**       By: /s/ Jane R. Heller By: /s/ Kelli Turner         Name: Jane R. Heller   Name: Kelli Turner  Title: Managing Director   Title: Vice President
 
 

 
EXHIBIT A**Section 3.04 of the Security Agreement**3.04 Cash Collateral Maintenance.(a) Within one (1) Business Day after the date on which this Section 3.04 becomes effectivepursuant to the Waiver and Amendment, Borrower shall (i) deposit in the Cash Collateral Account anamount in cash equal to the aggregate principal amount of the Loan then outstanding (the date suchdeposit is made, the “Deposit Date”) and (ii) deliver to the Bank a certificate of theSecretary or Assistant Secretary of Borrower, dated the Deposit Date and certifying (i) thatattached thereto is a true and complete copy of resolutions adopted by the directors or otherappropriate persons of such Person authorizing such deposit of cash collateral in the CashCollateral Account in accordance with this Section 3.04 and that such resolutions have not beenmodified, rescinded or amended and are in full force and effect. If requested by Borrower, theCollateral Agent may direct the Bank to invest amounts on deposit in the Cash Collateral Account inone or more money market funds that the Collateral Agent may approve in its sole discretion;provided, however, that any such money market fund investments are permittedpursuant to Parent Guarantor’s board approved investment policy as previously provided by ParentGuarantor to the Collateral Agent. At all times from and after the Deposit Date, the Borroweragrees to maintain in the Cash Collateral Account, as security for the Secured Obligations,Collateral of a type described on the table set forth below this paragraph (collectively, the“Collateral Table”) and otherwise acceptable to the Collateral Agent (“EligibleCollateral”) with an Aggregate Cash Collateral Value at least equal to the Outstanding Balance.“Aggregate Cash Collateral Value” means, as of any date of determination, an amount equalto the product obtained by multiplying (i) the Collateral Value as of such date by (ii) the MarginCall Percentage shown on the following table (the “Collateral Table”) for the applicabletype of Eligible Collateral:     **Eligible Collateral Type** **Margin Call Percentage** Money Market  100%Cash  100%The Collateral Agent shall have no obligation to give any Collateral Value to any Collateral of atype not shown on the Collateral Table.
 
 

 
(b) If, at any time from and after the Deposit Date, the Outstanding Balance exceeds at anytime the Aggregate Collateral Value, then the Borrower shall have two (2) Business Days from thedate notification (whether oral or written) of such noncompliance is delivered to the Borrower, toeither deposit cash into the Cash Collateral Account, or prepay the principal of the Loan suchthat, after giving effect thereto, the Outstanding Balance is less than or equal to the AggregateCash Collateral Value as of the date on which such action is taken. Any such prepayment of theLoanshall be applied to the principal installments due under Section 2.2(b) of the Loan Agreementin the inverse order of their maturity.(c) Subject to the other provisions of this Section 3.04 and any written agreement to thecontrary with the Collateral Agent, if no Default or Event of Default has occurred and iscontinuing or would result from such action, upon any repayment or prepayment of the outstandingprincipal amount of the Loan, upon the request of the Borrower, the Collateral Agent shall releaseCash Collateral from the Cash Collateral Account having Collateral Value up to the lesser of (i)the principal amount of the Loan so repaid or prepaid and (ii) the amount by which the AggregateCash Collateral Value exceeds the Outstanding Balance at the date of request (and direct the saleor trade of investments in the Cash Collateral Account to the extent necessary to do so);provided that, after giving effect to any such release of Cash Collateral, the OutstandingBalance is less than or equal to the Aggregate Cash Collateral Value.