WAIVER AND OMNIBUS AMENDMENT NO.
1 TO LOAN AGREEMENT
WAIVER
AND OMNIBUS AMENDMENT NO. 1, dated as of June 18, 2009 (this
“ Waiver and Amendment ”), relating to the LOAN
AGREEMENT, dated as of April 4, 2008 (the “ Loan
Agreement ”), among MSLO EMERIL ACQUISITION SUB LLC, a
Delaware limited liability company (the “ Borrower
”), MARTHA STEWART LIVING OMNIMEDIA, INC., a Delaware
corporation (the “ Parent Guarantor ”), and BANK
OF AMERICA, N.A., in its individual capacity (the “
Bank ”) and as collateral agent (in such capacity,
together with any successor collateral agent, the “
Collateral Agent ”) for the Secured Parties (as
defined in the Security Agreement).
WHEREAS,
the Borrower and the Parent Guarantor have requested the Bank to
modify certain financial covenants set forth in the Loan
Agreement;
WHEREAS,
the Borrower and the Parent Guarantor have requested the Bank and
the Collateral Agent clarify a covenant in the Security Agreement
and waive the application of such covenant prior to the
clarification thereof set forth herein;
WHEREAS,
subject to the terms and conditions set forth herein, the Bank and
the Collateral Agent have agreed to such request;
NOW
THEREFORE, in consideration of the premises and the agreements
herein, each of the Borrower 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 not otherwise defined herein are used herein as
defined therein.
2.
Amendment . The following amendments shall become effective
on the Effective Date.
(a) Section 1
of the Loan Agreement is hereby amended by adding the following
definitions in proper alphabetical order:
“
First Amendment Effective Date ” means June 18,
2009.”
“
Short Term Cash Equivalents ” means Cash Equivalents
of the type described in (i) clause (a) or (b) of
the definition thereof with maturities of 90 days or less from
the date of acquisition or (ii) clause (f) of the
definition thereof.”
(b) Section 1
of the Loan Agreement is hereby further amended by amending and
restating the definition of “EBITDA” to read in its
entirety as follows:
2
“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 respect of goodwill and intangible assets, 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; provided
further, however, that this sentence shall not apply to the
calculation of the consolidated EBITDA of the Borrower and the SPE
for purposes of the proviso to Section 8.4.
(c) Section 8.1
of the Loan Agreement is hereby amended and restated in its
entirety as follows:
“8.1
Tangible Net Worth . Parent Guarantor shall maintain, as of
the last day of each of the following fiscal quarters of Parent
Guarantor, on a consolidated basis Tangible Net Worth equal to at
least (i) $40,000,000 as of the last day of any fiscal quarter to
and including the first fiscal quarter of 2009, (ii) $35,000,000 as
of the last day of the second fiscal quarter of 2009 and (iii)
$40,000,000 as of the last day of any fiscal quarter ending
thereafter.”
(d) Section 8.2
of the Loan Agreement is hereby amended and restated in its
entirety as follows:
“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
3
EBITDA for
Parent Guarantor and its Subsidiaries for the four (4) quarter
period ending on such day, to be greater than (a) 2.0 to 1.0
as of the last day of any fiscal quarter to and including the first
fiscal quarter of 2009, (b) 2.75 to 1.0 as of the last day of
the second fiscal quarter of 2009 and (c) 2.0 to 1.0 as of the
last day of any fiscal quarter ending thereafter.”
(e) Section 8
of the Loan Agreement is hereby amended by adding the following as
a new Section 8.7:
“8.7
Unencumbered Cash and Short Term Cash Equivalents . Parent
Guarantor shall maintain, at all times on and after the First
Amendment Effective Date to and including the day on which Parent
Guarantor shall have delivered a Compliance Certificate in
accordance with Section 7.2(d) in respect of the third fiscal
quarter of 2009 which Compliance Certificate certifies that no
Default or Event of Default has occurred, cash and Short Term Cash
Equivalents (excluding assets of any retirement plan) which are not
(i) subject to any lien, security interest or other
encumbrance (other than bankers’ liens, rights of setoff and
similar Liens incurred on deposits in favor of banks and securities
intermediaries in the ordinary course of business) or
(ii) held by Parent Guarantor in order to comply with any
other liquidity or other similar covenant under any agreement in
respect of indebtedness or other obligations of Parent Guarantor or
any of its Subsidiaries (other than the Obligations), having an
aggregate market value of not less than an amount equal to 125% of
the aggregate outstanding principal amount of the
Loan.”
(f) For
purposes of measuring the Parent Guarantor’s and the
Borrower’s compliance with the covenants set forth in
Sections 8.3, 8.4 and 8.5 of the Loan Agreement, the
outstanding 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).
(g) The
second sentence of Section 4.07 of the Security Agreement is
hereby amended and restated in its entirety as follows:
“(i)
Within thirty (30) days after Borrower files an application to
register a Copyright, Mark or Patent, or an Affiliate of Borrower
files such an application on Borrower’s behalf,
(ii) if
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