10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-15395

MARTHA STEWART LIVING OMNIMEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2187059
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
11 West 42nd Street, New York, NY	10036
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) (212) 827-8000

(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Class	Outstanding as of May 6, 2008
Class A, $0.01 par value		27,827,234
Class B, $0.01 par value		26,690,125
Total		54,517,359

Martha Stewart Living Omnimedia, Inc.

Index to Form 10-Q

	Page
Part I. Financial information
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures About Market Risk		21
Item 4. Controls and Procedures		21
Part II. Other Information
Item 1. Legal Proceedings		21
Item 1A. Risk Factors		21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3. Defaults Upon Senior Securities		28
Item 4. Submission of Matters to a Vote of Security Holders		28
Item 5. Other Information		28
Item 6. Exhibits		29
Signatures		30
EX-10.1: SIXTH LEASE MODIFICATION AGREEMENT
EX-10.3: LETTER AGREEMENT
EX-10.4: PUBLICITY RIGHTS AGREEMENT
EX-10.5: LETTER AGREEMENT
EX-10.6: LOAN AGREEMENT
EX-10.7: PLEDGE AGREEMENT
EX-10.8: CONTINUING AND UNCONDITIONAL GUARANTY
EX-10.9: REGISTRATION RIGHTS AGREEMENT
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATION

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MARTHA STEWART LIVING OMNIMEDIA, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)

	March 31,			December 31,
	2008			2007
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	89,607		$	30,536
Short-term investments		490			26,745
Accounts receivable, net		44,255			94,195
Inventories		6,826			4,933
Deferred television production costs		6,289			5,316
Income taxes receivable		430			513
Other current assets		2,780			3,921
Total current assets		150,677			166,159
PROPERTY, PLANT AND EQUIPMENT, net		15,993			17,086
INTANGIBLE ASSETS, net		53,605			53,605
OTHER NON-CURRENT ASSETS		24,328			18,417
Total assets	$	244,603		$	255,267
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	26,423		$	27,425
Accrued payroll and related costs		8,261			13,863
Income taxes payable		1,232			1,246
Current portion of deferred subscription revenue		26,272			25,578
Current portion of other deferred revenue		4,932			5,598
Total current liabilities		67,120			73,710
DEFERRED SUBSCRIPTION REVENUE		8,665			9,577
OTHER DEFERRED REVENUE		14,431			14,482
OTHER NON-CURRENT LIABILITIES		2,553			1,969
Total liabilities		92,769			99,738
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Class A common stock, $.01 par value, 350,000 shares authorized; 27,129 and 26,738 shares outstanding in 2008 and 2007, respectively		271			267
Class B common stock, $.01 par value, 150,000 shares authorized; 26,690 and 26,722 outstanding in 2008 and 2007, respectively		267			267
Capital in excess of par value		272,667			272,132
Accumulated deficit		(120,596	)		(116,362	)
		152,609			156,304
Less: Class A treasury stock - 59 shares at cost		(775	)		(775	)
Total shareholders’ equity		151,834			155,529
Total liabilities and shareholders’ equity	$	244,603		$	255,267

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MARTHA STEWART LIVING OMNIMEDIA, INC.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)

	Three Months Ended March 31,
	2008			2007
REVENUES
Publishing	$	40,792		$	40,619
Merchandising		13,066			13,600
Internet		3,414			3,530
Broadcasting		10,562			8,956
Total revenues		67,834			66,705
OPERATING COSTS AND EXPENSES
Production, distribution and editorial		36,019			39,728
Selling and promotion		18,714			20,230
General and administrative		16,280			17,320
Depreciation and amortization		1,356			1,978
Total operating costs and expenses		72,369			79,256
OPERATING LOSS		(4,535	)		(12,551	)
Interest income, net		483			771
LOSS BEFORE INCOME TAXES		(4,052	)		(11,780	)
Income tax provision		(182	)		(89	)
NET LOSS	$	(4,234	)	$	(11,869	)
LOSS PER SHARE- BASIC AND DILUTED
Net loss per share	$	(0.08	)	$	(0.23	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC AND DILUTED		52,722			52,349

The accompanying notes are an integral part of these condensed consolidated financial statements

4

MARTHA STEWART LIVING OMNIMEDIA, INC.
Consolidated Statement of Shareholders’ Equity
For the Three Months Ended March 31, 2008
(unaudited, in thousands)

	Class A				Class B					Capital in						Class A
	common stock				common stock					excess of par			Accumulated			treasury stock
	Shares		Amount		Shares			Amount		value			Deficit			Shares			Amount			Total
Balance at January 1, 2008		26,738	$	267		26,722		$	267	$	272,132		$	(116,362	)		(59	)	$	(775	)	$	155,529
Net loss		—		—		—			—		—			(4,234	)		—			—			(4,234	)
Shares returned on a net treasury basis		—		—		(32	)		—		—			—			—			—			—
Issuance of shares in conjunction with stock option exercises		2		—		—			—		—			—			—			—			—
Issuance of shares of stock and restricted stock, net of cancellations and tax liabilities		389		4		—			—		(1,415	)		—			—			—			(1,411	)
Non-cash equity compensation		—		—		—			—		1,950			—			—			—			1,950
Balance at March 31, 2008		27,129	$	271		26,690		$	267	$	272,667		$	(120,596	)		(59	)	$	(775	)	$	151,834

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

MARTHA STEWART LIVING OMNIMEDIA, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

	Three Months Ended
	March 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,234	)	$	(11,869	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,356			1,978
Amortization of deferred television production costs		4,563			4,508
Non-cash equity compensation		1,935			8,131
Changes in operating assets and liabilities		35,870			21,675
Net cash provided by operating activities		39,490			24,423
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(263	)		(1,092	)
Purchases of short-term investments		(50	)		(37,693	)
Sales of short-term investments		26,305			33,151
Investment in other non-current assets		(5,000	)		—
Net cash provided by (used in) investing activities		20,992			(5,634	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from stock option exercises		—			132
Issuance of stock and restricted stock, net of cancellations and tax liabilities		(1,411	)		(45	)
Net cash (used in) provided by financing activities		(1,411	)		87
Net increase in cash		59,071			18,876
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		30,536			28,528
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	89,607		$	47,404

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Martha Stewart Living Omnimedia, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. General

     Martha Stewart Living Omnimedia, Inc., together with its subsidiaries, is herein referred to as “we,” “us,” “our,” or the “Company.”

     The information included in the foregoing interim condensed consolidated financial statements is unaudited. In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods do not necessarily indicate the results to be expected for the entire year. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) with respect to the Company’s fiscal year ended December 31, 2007 (“2007 10-K”).

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management does not expect such differences to have a material effect on the Company’s consolidated financial statements.

     The Company’s “Significant Accounting Policies” are discussed in more detail in the Company’s 2007 10-K, especially under the heading “Note 2. Summary of Significant Accounting Policies”, which may be accessed through the SEC’s World Wide Web site at http://www.sec.gov.

2. Recent accounting standards

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which clarifies the definition of fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurement. SFAS 157 does not require any new fair value measurements and eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However, on February 12, 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2 which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This FSP partially defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. The Company adopted SFAS 157 as of January 1, 2008 for financial assets and liabilities. The adoption of SFAS 157 for financial assets and liabilities did not have a material impact on the consolidated financial statements. The Company is currently assessing the impact to the Company’s consolidated financial position, cash flows or results of operations upon adoption of SFAS 157 for nonfinancial assets and nonfinancial liabilities as deferred by FSP FAS 157-2.

     In December 2007, the FASB issued Statement No. 141R, Business Combinations (Revised) (“SFAS 141R”). SFAS 141R replaces the current standard on business combinations and will significantly change the accounting for and reporting of business combinations in consolidated financial statements. This statement requires an entity to measure the business acquired at fair value and to recognize goodwill attributable to any noncontrolling interests (previously referred to as minority interests) rather than just the portion attributable to the acquirer. The statement will also result in fewer exceptions to the principle of measuring assets acquired and liabilities assumed in a business combination at fair value. In addition, the statement will result in payments to third parties for consulting, legal, audit, and similar services associated with an acquisition to be recognized as expenses when incurred rather than capitalized as part of the business combination. Also in December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that accounting and reporting for minority interests be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 141(R) and SFAS 160 are required to be adopted simultaneously and are effective for the Company beginning January 1, 2009, with earlier adoption being prohibited. The Company is currently assessing the impact, if any, to the Company’s consolidated financial position, cash flows or results of operations upon adoption of SFAS 141(R) and SFAS 160.

7

3. Income taxes

     The Company follows SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”). Under the asset and liability method of SFAS 109, deferred assets and liabilities are recognized for the future costs and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company periodically reviews the requirements for a valuation allowance and makes adjustments to such allowances when changes in circumstances result in changes in management’s judgment about the future realization of deferred tax assets. SFAS 109 places more emphasis on historical information, such as the Company’s cumulative operating results and its current year results than it places on estimates of future taxable income. The Company has determined that its deferred tax asset (“DTA”) and valuation allowance have not materially changed in the first three months of 2008. The cumulative balance for both its net DTA and valuation allowance is $63.3 million as of March 31, 2008. The Company intends to maintain a valuation allowance until evidence would support the conclusion that it is more likely than not that the DTA could be realized.

     As of January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which establishes guidance on the accounting for uncertain tax positions. As of March 31, 2008, the Company had a FIN 48 liability balance of $1.3 million, of which $1.0 million represented unrecognized tax benefits, which if recognized at some point in the future would favorably impact the effective tax rate, and $0.3 million is interest. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for the years before 2001 and state examinations for the years before 2003. The Company anticipates that as a result of audit settlements and statute closures over the next twelve months, the liability will be reduced through cash payments of approximately $0.1 million.

4. Equity compensation

     The Company currently has several stock incentive plans that permit the Company to grant various types of share-based incentives to key employees, directors and consultants. The primary types of incentives granted under these plans are stock options and restricted shares of common stock. The Compensation Committee of the Board of Directors may grant up to a maximum of 10,000,000 underlying shares of common stock under the Martha Stewart Living Omnimedia, Inc. Amended and Restated 1999 Stock Incentive Plan (the “1999 Option Plan”), and up to a maximum of 600,000 underlying shares of common stock under the Company’s Non-Employee Director Stock and Option Compensation Plan (the “Non-Employee Director Plan”). In November 1997, the Company established the Martha Stewart Living Omnimedia LLC Nonqualified Class A LLC Unit/Stock Option Plan (the “1997 Option Plan”). The Company has an agreement with Martha Stewart whereby she periodically returns to the Company shares of Class B common stock owned by her or her affiliates in amounts corresponding on a net treasury basis to the number of options exercised under the 1997 Option Plan during the relevant period. Accordingly, options outstanding under this plan are not dilutive. No further awards will be made from this plan.

     The 1999 Option Plan is expiring in 2009, and few shares of common stock remain available under the Non-Employee Director Plan. Instead of renewing or replenishing these plans, the Company’s Board of Directors adopted the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “New Stock Plan”), subject to ratification by the Company’s stockholders at the Company’s 2008 annual meeting. The New Stock Plan would have 10,000,000 shares available for issuance. If adopted, the New Stock Plan would replace the 1999 Option Plan and Non-Employee Director Plan (together, the “Prior Plans”), which together have an aggregate of approximately 1,850,000 shares still available for issuance. Therefore, the total net effect of the replacement of the Prior Plans and adoption of the New Stock Plan is an increase of approximately 8,150,000 shares of Class A Common Stock that will become available for issuance under the Company’s stock plans.

5. Other

     Production, distribution and editorial expenses; selling and promotion expenses; and general and administrative expenses are all presented exclusive of depreciation and amortization which is shown separately within “Operating Costs and Expenses.”

6. Inventories

     Inventory is comprised of paper stock. The inventory balance at March 31, 2008 and December 31, 2007 was $6.8 million and $4.9 million, respectively.

8

7. Investment in Other Noncurrent Assets

     In the first quarter of 2008, the Company entered into a series of transactions with WeddingWire, a localized wedding platform that combines an online marketplace with planning tools and a social community. In exchange for a cash payment from the Company of $5.0 million, the transaction included the acquisition of approximately 40 percent of the equity in WeddingWire and a commercial agreement related to software and content licensing and media sales.

8. Industry segments

     The Company is an integrated media and merchandising company providing consumers with inspiring lifestyle content and well-designed, high-quality products. The Company’s business segments are Publishing, Merchandising, Internet and Broadcasting. The Publishing segment primarily consists of the Company’s magazine operations, and also those related to its book operations. The Merchandising segment primarily consists of the Company’s operations related to the design of merchandise and related promotional and packaging materials that are distributed by its retail and manufacturing licensees in exchange for royalty income. The Internet segment primarily consists of the content-driven website marthastewart.com supported by advertising and, until the middle of the first quarter of 2008, the operations relating to direct-to-consumer floral business. The Broadcasting segment primarily consists of the Company’s television production operations which produce television programming that airs in syndication and on cable, as well as the Company’s radio operations. The third season of The Martha Stewart Show began in September 2007 and is expected to air in syndication until September 2008. The previous two seasons have also run twelve months beginning and ending in the middle of September.

     The accounting policies for the Company’s business segments are discussed in more detail in the Company’s 2007 10-K, especially under the heading “Note 2. Summary of Significant Accounting Policies,” which may be accessed through the SEC’s World Wide Web site at http://www.sec.gov.

     Segment information for the periods ended March 31, 2008 and 2007 is as follows:

(in thousands)	Publishing		Merchandising		Internet			Broadcasting			Corporate			Consolidated
2008
Revenues	$	40,792	$	13,066	$	3,414		$	10,562		$	—		$	67,834
Non-cash equity compensation		651		362		59			238			625			1,935
Depreciation and amortization		99		24		378			109			746			1,356
Operating income/(loss)		1,656		6,596		(2,247	)		175			(10,715	)		(4,535	)
2007
Revenues	$	40,619	$	13,600	$	3,530		$	8,956		$	—		$	66,705
Non-cash equity compensation		784		360		74			5,886			1,027			8,131
Depreciation and amortization		293		96		156			862			571			1,978
Operating income/(loss)		1,300		6,776		(2,503	)		(6,098	)		(12,026	)		(12,551	)

9. Related Party Transactions

     The Company currently has a consulting agreement with CAK Entertainment, Inc. (“CAK Entertainment”), an entity for which Mr. Charles Koppelman serves as Chairman and Chief Executive Officer. Mr. Koppelman has been Chairman of the Board and a Director of the Company since the execution of the agreement. This October 2005 agreement superseded a previous consulting agreement with him, which was entered into while Mr. Koppelman was Vice Chairman and a Director of the Company. During the second quarter of 2007, the Company and Mr. Koppelman agreed to amend the vesting conditions for a portion of the bonus compensation potentially payable to Mr. Koppelman and CAK Entertainment pursuant to the Company’s consulting agreement with CAK Entertainment. The amendment replaced a performance trigger tied to revenue goals with new performance criteria relating to adjusted EBITDA, as defined in the agreement, and acquisition goals. Mr. Koppelman’s vesting is determined by the Company’s Compensation Committee which meets periodically throughout the year but not necessarily at the end of the quarter. Through March 31, 2008, the Compensation Committee has vested Mr. Koppelman in 50% of the potential milestone fee and 25% of the bonus feature tied to adjusted EBITDA and acquisition goals of this consulting agreement. Additional details of the January 2005 and October 2005 agreements and a description of other related party transactions are included in the Company’s 2007 10-K.

9

10. Subsequent Events

     On April 2, 2008, the Company acquired all of the assets related to the business of Chef Emeril Lagasse other than his restaurant business and corporate office in exchange for approximately $45.0 million in cash and $5.0 million in shares of the Company’s Class A Common Stock which equaled 674,854 shares at closing. These shares issued in connection with this acquisition were not covered by the Company’s existing equity plans. The acquisition agreement also includes a potential additional payment of up to $20 million, in 2013, based upon the achievement of certain operating metrics in 2011 and 2012, a portion of which may be payable, at the Company’s election, in shares of the Company’s Class A Common Stock. The Company has engaged a third-party valuation firm to determine the fair value of assets acquired and liabilities assumed and the related allocation of the purchase price. The purchase price paid is expected to exceed the current fair value of the net assets acquired. As a result, a significant portion of the purchase price will likely be allocated to goodwill and other intangible assets, which may result in significant amortization charges in the future.

     On April 4, 2008, the Company and its wholly-owned subsidiary, MSLO Emeril Acquisition Sub LLC (the “Borrower”) entered into a loan agreement with Bank of America, N.A. Pursuant to the loan agreement, on April 7, 2008, the Borrower borrowed a $30 million term loan from Bank of America, the terms of which were disclosed in Company’s Current Report on Form 8-K filed with the SEC on April 8, 2008. The loan is currently secured by cash collateral in an amount no less than the outstanding principal amount of the loan. The cash collateral may be replaced by collateral consisting of substantially all of the assets of the Emeril business. Martha Stewart Living Omnimedia, Inc. and most of its domestic subsidiaries are guarantors of the loan.

     Loan repayments will commence June 30, 2008 with quarterly principal installments of $1.5 million. The interest rate on the loan is equal to a floating rate of 1-month LIBOR plus 1.00% and is expected to increase to 1-month LIBOR plus 2.85% when the cash collateral supporting the loan is replaced with asset collateral related to the acquisition.

     The loan terms include financial covenants, failure of which could result in an acceleration of repayment or a full payment on demand. The loan agreement also contains a variety of customary affirmative and negative covenants that, among other things, limit our and our subsidiaries’ ability to incur additional debt, suffer the creation of liens on their assets, pay dividends or repurchase stock, make investments or loans, sell assets, enter into transactions with affiliates other than on arm’s length terms, make capital expenditures, merge into or acquire other entities or liquidate. The negative covenants expressly permit us to, among other things: incur an additional $15 million of debt to finance permitted investments or acquisitions; incur an additional $15 million of earnout liabilities in connection with permitted acquisitions; spend up to $30 million repurchasing our stock or paying dividends thereon (so long as no default or event of default existed at the time of or would result from such repurchase or dividend payment and we would be in pro forma compliance with the above-described financial covenants assuming such repurchase or dividend payment had occurred at the beginning of the most recently-ended four-quarter period); make investments and acquisitions (so long as no default or event of default existed at the time of or would result from such investment or acquisition and we would be in pro forma compliance with the above-described financial covenants assuming the acquisition or investment had occurred at the beginning of the most recently-ended four-quarter period); make up to $15 million in capital expenditures in fiscal year 2008 and $7.5 million in each subsequent fiscal year, provided that we can carry over any unspent amount to any subsequent fiscal year (but in no event may we make more than $15 million in capital expenditures in any fiscal year); sell one of our investments (or any asset we might receive in conversion or exchange for such investment); and sell assets during the term of the loan comprising, in the aggregate, up to 10% of our consolidated shareholders’ equity, provided we receive at least 75% of the consideration in cash.

10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

EXECUTIVE SUMMARY

     We are an integrated media and merchandising company providing consumers with inspiring lifestyle content and well-designed, high-quality products. Our Company is organized into four business segments: Publishing, Merchandising, Internet and Broadcasting. In the first quarter of 2008, total revenues increased approximately 2% driven by advertising revenue growth in our Publishing, Internet and Broadcasting segments.

Media Update. In the first quarter, all three of our media platforms showed advertising revenue growth driven in part by a change in advertiser category mix as well as an increase in volume.

Publishing

     Our books business increased year-over-year due to the acceptance of a manuscript related to our twelve-book, multi-year agreement with Clarkson Potter/Publishers. The improvements in revenues were partially offset by an increase in certain of our expenses, including compensation, paper and distribution. Based on our current outlook, we expect these unfavorable trends in our raw materials to continue including a postal rate increase in the second half of the year.

Internet

     In the first quarter of 2008, we continued to experience growth from our online audience with page views increasing, on average, over 40% from the prior year.

Broadcasting

     Ongoing efforts to distribute the fourth season of The Martha Stewart Show have resulted in a national clearance of approximately 90% to date. For the current third season of the show, nearly all advertising is sold-out.

Merchandising Update. In the first quarter, we benefited from our new initiatives with Macy’s for our line of Martha Stewart Collection products; EK Success for our line of broadly-distributed crafts products; and Costco for our co-branded assortment of frozen, fresh and prepared foods. We expect these and other new initiatives to continue providing positive operating results for the full-year. For example, our agreement with 1-800-Flowers.com launched in the second quarter of 2008, and is expected to contribute high-margin income. However, we believe that these new initiatives will be more than offset by the decrease in our Kmart minimum guarantees, and we expect total Merchandising revenues and operating profit to be lower in 2008 as compared to 2007.

     Our multi-year agreement with Kmart includes royalty payments based on sales, as well as minimum guarantees. The minimum guarantees have exceeded actual royalties earned from retail sales from 2003 through 2008 primarily due to store closings and historic lower same-store sales trends. For the contract years ending January 31, 2009 and 2010, the minimum guarantees will be substantially lower than prior years. The following are the minimum guaranteed royalty payments (in millions) over the term of the agreement for the respective years ending on the indicated dates:

	1/31/02		1/31/03		1/31/04		1/31/05		1/31/06		1/31/07		1/31/08		1/31/09		1/31/10
Minimum Royalty Amounts	$	15.3	$	40.4	$	47.5	$	49.0	$	54.0	$	59.0	$	65.0	$	20.0	$	15.0	*

* For the contract year ending January 31, 2010 the minimum royalty amount is the greater of $15 million or 50% of the earned royalty for the year ending January 31, 2009.

     For the contract year ended January 31, 2008, our earned royalty based on actual retail sales at Kmart was $24.7 million. Furthermore, $10.0 million of royalties previously paid have been deferred and are subject to recoupment in the periods ending January 31, 2009 and January 31, 2010.

11

Results of Operations

Comparison of Three Months Ended March 31, 2008 to Three Months Ended March 31, 2007

PUBLISHING SEGMENT
(in thousands)

	2008		2007
	(unaudited)		(unaudited)		Variance
Publishing Segment Revenues
Advertising	$	22,096	$	21,370	$	726
Circulation		16,550		18,079		(1,529	)
Books		1,767		646		1,121
Other		379		524		(145	)
Total Publishing Segment Revenues		40,792		40,619		173
Publishing Segment Operating Costs and Expenses
Production, distribution and editorial		22,233		21,493		(740	)
Selling and promotion		15,175		16,596		1,421
General and administrative		1,629		937		(692	)
Depreciation and amortization		99		293		194
Total Publishing Segment Operating Costs and Expenses		39,136		39,319		183
Publishing Segment Operating Income	$	1,656	$	1,300	$	356

     Publishing revenues increased less than 1% for the three months ended March 31, 2008 from the prior year period. Advertising revenue increased $0.7 million despite prior year revenue from Blueprint, a publication that we discontinued at the end of 2007. The increase in advertising revenue was due to higher advertising rates even with a decrease in pages across all our magazine titles. Martha Stewart Living magazine accounted for $0.8 million of the increase while Everyday Food and Body + Soul contributed $0.4 million of the increase to advertising revenue. Circulation revenue decreased $1.5 million due to the prior year contribution of Blueprint as well as lower subscription rate per copy and higher agency commissions in the current period for Martha Stewart Living and Everyday Food. These decreases were partially offset by higher volume of subscription sales for Martha Stewart Living, Body + Soul and Everyday Food. Revenue related to our books business increased $1.1 million primarily due to the acceptance of our fifth manuscript in our 12-book agreement with Clarkson Potter/Publishers.

Magazine Publication Schedule

	Quarter ended March 31,
	2008		2007
Martha Stewart Living	Three Issues		Three Issues
Everyday Food	Three Issues		Three Issues
Body + Soul	Two Issues		Two Issues
Special Interest Publications	Two Issues		Two Issues
Blueprint (a)		N/A	One Issue

(a) Launched in May 2006 and discontinued in 2007 as a stand-alone publication with no future issues planned.

     Production, distribution and editorial expenses increased $0.7 million, primarily due to both higher print order and higher rates related to physical costs to distribute the magazines, partially offset by savings related to the closure of Blueprint. Selling and promotion expenses decreased $1.4 million due to lower circulation marketing costs and more favorable fulfillment rates associated with Martha Stewart Living and Everyday Food partially offset by an increase in circulation marketing costs for Body + Soul. The decrease in selling and promotion expenses is also due to savings from discontinuing Blueprint. General and administrative expenses increased $0.7 million primarily due to higher compensation costs.

12

MERCHANDISING SEGMENT
(in thousands)

	2008		2007
	(unaudited)		(unaudited)		Variance
Merchandising Segment Revenues
Kmart earned royalty	$	4,558	$	5,954	$	(1,396	)
Kmart minimum true-up		3,806		2,648		1,158
Other		4,702		4,998		(296	)
Total Merchandising Segment Revenues		13,066		13,600		(534	)
Merchandising Segment Operating Costs and Expenses
Production, distribution and editorial		3,090		3,272		182
Selling and promotion		1,437		1,649		212
General and administrative		1,919		1,807		(112	)
Depreciation and amortization		24		96		72
Total Merchandising Segment Operating Costs and Expenses		6,470		6,824		354
Merchandising Segment Operating Income	$	6,596	$	6,776	$	(180	)

     Merchandising revenues decreased 4% for the three months ended March 31, 2008 from the prior year period. Actual retail sales of our product at Kmart declined 21% on a comparable store and total store basis due to lower same-store sales trends and decreased assortment of product categories. The pro-rata portion of revenues related to the contractual minimum amounts covering the specified periods, net of amounts subject to recoupment, is listed separately above. For the contract years ending January 31, 2009 and January 31, 2010, the minimum royalty amount is expected to be $20 million and $15 million, respectively. Furthermore, $10 million of royalties previously received have been deferred and are subject to recoupment in the periods ending January 31, 2009 and January 31, 2010. Other revenues included sales from new initiatives such as the Martha Stewart Collection at Macy’s and macys.com and our co-branded food products at Costco. The increases from these new initiatives were offset by the 2007 endorsement and promotional agreement with U.S. affiliates of SVP Worldwide, makers of Singer, Husqvarna Viking and Pfaff sewing machines with no comparable revenue in 2008.

     Total operating costs and expenses decreased $0.4 million primarily due to lower compensation costs.

13

INTERNET SEGMENT
(in thousands)

	2008			2007
	(unaudited)			(unaudited)			Variance
Internet Segment Revenues
Advertising	$	2,310		$	1,766		$	544
Product		1,104			1,764			(660	)
Total Internet Segment Revenues		3,414			3,530			(116	)
Internet Segment Operating Costs and Expenses
Production, distribution and editorial		3,049			3,713			664
Selling and promotion		1,199			1,199			0
General and administrative		1,035			965			(70	)
Depreciation and amortization		378			156			(222	)
Total Internet Segment Operating Costs and Expenses		5,661			6,033			372
Internet Segment Operating Loss	$	(2,247	)	$	(2,503	)	$	256

     Internet revenues decreased 3% for the three months ended March 31, 2008 from the prior year period. Advertising revenue increased $0.5 million due to higher advertising rates and an increase in advertising volume. Product revenue decreased $0.7 million due to the transition of our flowers program from Martha Stewart Flowers, which generated sales through Valentine’s Day, to our new, co-branded agreement with 1-800-Flowers.com which is expected to begin generating revenue in the second quarter for the Merchandising segment.

     Production, distribution and editorial costs decreased $0.7 million due primarily to prior year use of freelancers and consultants and technology costs related to the 2007 re-design of marthastewart.com as well as lower inventory and shipping expenses for our flowers business related to the transition to our new program with 1-800-Flowers.com. These savings are partially offset by an increase in headcount and related compensation costs. Depreciation and amortization expenses increased $0.2 million due to the 2007 launch of the redesigned website and the related depreciation costs.

14

BROADCASTING SEGMENT
(in thousands)

	2008		2007
	(unaudited)		(unaudited)			Variance
Broadcasting Segment Revenues
Advertising	$	7,094	$	3,542		$	3,552
Radio		1,875		1,875			0
Licensing and other		1,593		3,539			(1,946	)
Total Broadcasting Segment Revenues		10,562		8,956			1,606
Broadcasting Segment Operating Costs and Expenses
Production, distribution and editorial		7,647		11,250			3,603
Selling and promotion		903		786			(117	)
General and administrative		1,728		2,156			428
Depreciation and amortization		109		862			753
Total Broadcasting Segment Operating Costs and Expenses		10,387		15,054			4,667
Broadcasting Segment Operating Income / (Loss)	$	175	$	(6,098	)	$	6,273

     Broadcasting revenues increased 18% for the three months ended March 31, 2008 from the prior year period. Advertising revenue increased $3.6 million primarily due to the increase in advertising inventory (related to our revised season 3 distribution agreement), partially offset by a decline in household ratings. Licensing revenue decreased $1.9 million primarily due to the exchange of season 3 license fees for additional advertising inventory. This decrease was partially offset by new international distribution agreements as well as a domestic distribution agreement in the secondary cable market with the Fine Living Network.

     Production, distribution and editorial expenses decreased $3.6 million due principally to a 2007 non-cash charge of $5.7 million associated with the vesting of a portion of a warrant granted in connection with the production of The Martha Stewart Show. This prior-year, one-time charge was partially offset by 2008 distribution costs which were previously reported net of licensing revenues in 2007. We also expect to have continued production cost savings of approximately $2.8 million for season 3 as compared to season 2. Depreciation and amortization decreased $0.8 million as the set for The Martha Stewart Show was fully depreciated as of the second quarter of 2007.

15

CORPORATE
(in thousands)

	2008			2007
	(unaudited)			(unaudited)			Variance
Corporate Operating Costs and Expenses
General and administrative	$	9,969		$	11,455		$	1,486
Depreciation and amortization		746			571			(175	)
Total Corporate Operating Costs and Expenses		10,715			12,026			1,311
Corporate Operating Loss	$	(10,715	)	$	(12,026	)	$	1,311

     Corporate operating costs and expenses decreased 11% for the three months ended March 31, 2008 from the prior year period. General and administrative expenses decreased $1.5 million primarily due to lower non-cash and cash compensation costs as well as lower professional fees.

OTHER ITEMS

Interest Income, net. Interest income, net, was $0.5 million for the quarter ended March 31, 2008 compared to $0.8 million for the prior year quarter. The decrease was attributable primarily to a lower yield from our investments.

Income tax expense. Income tax expense for the quarter ended March 31, 2008 was $0.2 million, compared to a $0.1 million expense in the prior year quarter.

Net Loss. Net loss was $(4.2) million for the quarter ended March 31, 2008, compared to a net loss of $(11.9) million for the quarter ended March 31, 2007, as a result of the factors described above.

16

LIQUIDITY AND CAPITAL RESOURCES

Overview

     During the first quarter of 2008, our overall cash, cash equivalents and short-term investments increased $32.8 million from December 31, 2007 principally from the satisfaction of our 2007 year-end receivable due from Kmart in the amount of $47.6 million. This cash inflow was partially offset by the payment of 2007 bonuses and our investment in WeddingWire. Cash, cash equivalents and short-term investments were $90.1 million and $57.3 million at March 31, 2008 and December 31, 2007, respectively. Subsequent to March 31, 2008, we acquired certain assets related to Emeril Lagasse and paid approximately $45.0 million in cash as well as $5.0 million in shares of our Class A Common Stock. The acquisition agreement also includes a potential additional payment of up to $20 million, in 2013, based upon the achievement of certain operating metrics in 2011 and 2012, a portion of which may be payable, at our election, in shares of our Class A Common Stock. We also borrowed $30.0 million from Bank of America to partially offset the cash payment related to the acquisition. We believe, as described further below, that our available cash balances and short-term investments together with continued positive cash flow from operations will be sufficient to meet our operating and recurring cash needs for the remainder of 2008 inclusive of the acquisition and related debt financing.

Cash Flows from Operating Activities

     Cash flows provided by operating activities were $39.5 million and $24.4 million for the three months ended March 31, 2008 and 2007, respectively. In 2008, cash flow from operations was primarily due to the changes in operating assets and liabilities of $35.9 million, the majority of which was the result of the satisfaction of the 2007 year-end receivable due from Kmart. Operating assets and liabilities also benefited from collections of advertising receivables from the fourth-quarter 2007, typically the strongest quarter for advertising revenue. These inflows were partially offset by the payment of 2007 bonuses and expenses paid in the normal course of business.

Cash Flows from Investing Activities

     Cash flows provided by (used in) investing activities were $21.0 million and $(5.6) million for the three months ended March 31, 2008 and 2007, respectively. Cash flows provided by investing activities in the first quarter of 2008 resulted from significant sales of short-term investments of $26.3 million in advance of our acquisition of the Emeril Lagasse assets partially offset by an investment in WeddingWire of $(5.0) million.

Cash Flows from Financing Activities

     Cash flows (used in) provided by financing activities were $(1.4) million and $0.1 million for the three months ended March 31, 2008 and 2007, respectively. Cash flows used in financing activities during the first quarter of 2008 were due to the cash costs associated with remitting payroll related tax obligations associated with the vesting of certain restricted stock grants.

Debt

     We have a line of credit with Bank of America in the amount of $5.0 million, which is generally used to secure outstanding letters of credit. Under the terms of the credit agreement, we are required to satisfy certain debt covenants, with which we were compliant as of March 31, 2008. We had no outstanding borrowings under this facility as of March 31, 2008. On a total line of $5.0 million, we currently have letters of credit drawn of $2.7 million.

     Subsequent to the quarter ended March 31, 2008, we entered into an agreement with Bank of America for a $30.0 million term loan with principal installments of $1.5 million to be paid quarterly commencing June 30, 2008. In the next 12 months, $6.0 million in principal payments will be due. The interest rate on the loan is equal to a floating rate of 1-month LIBOR plus 1.00% and is expected to increase to 1-month LIBOR plus 2.85% when the cash collateral supporting the loan is replaced with asset collateral related to the acquisition. We expect to pay the principal installments and interest expense with cash from operations. The loan terms include financial covenants, failure of which could result in an acceleration of repayment or a full payment on demand.

     The loan agreement also contains a variety of customary affirmative and negative covenants that, among other things, limit our and our subsidiaries’ ability to incur additional debt, suffer the creation of liens on their assets, pay

17

dividends or repurchase stock, make investments or loans, sell assets, enter into transactions with affiliates other than on arm’s length terms, make capital expenditures, merge into or acquire other entities or liquidate. The negative covenants expressly permit us to, among other things: incur an additional $15 million of debt to finance permitted investments or acquisitions; incur an additional $15 million of earnout liabilities in connection with permitted acquisitions; spend up to $30 million repurchasing our stock or paying dividends thereon (so long as no default or event of default existed at the time of or would result from such repurchase or dividend payment and we would be in pro forma compliance with the above-described financial covenants assuming such repurchase or dividend payment had occurred at the beginning of the most recently-ended four-quarter period); make investments and acquisitions (so long as no default or event of default existed at the time of or would result from such investment or acquisition and we would be in pro forma compliance with the above-described financial covenants assuming the acquisition or investment had occurred at the beginning of the most recently-ended four-quarter period); make up to $15 million in capital expenditures in fiscal year 2008 and $7.5 million in each subsequent fiscal year, provided that we can carry over any unspent amount to any subsequent fiscal year (but in no event may we make more than $15 million in capital expenditures in any fiscal year); sell one of our investments (or any asset we might receive in conversion or exchange for such investment); and sell assets during the term of the loan comprising, in the aggregate, up to 10% of our consolidated shareholders’ equity, provided we receive at least 75% of the consideration in cash.

SEASONALITY AND QUARTERLY FLUCTUATIONS

     Our businesses can experience fluctuations in quarterly performance. Our Publishing segment results can vary from quarter to quarter due to publication schedules and seasonality of certain types of advertising. Revenues from our Merchandising segment can vary significantly from quarter to quarter due to new product launches and the seasonality of certain product lines. In addition, we recognize a substantial portion of the revenue resulting from the difference between the minimum royalty amount under the Kmart contract and royalties paid on actual sales in the fourth quarter of each year, when the amount can be determined. In our Internet segment, revenue from marthastewartflowers.com has been tied to key holidays during the year (although this program was replaced in the first quarter of 2008 by our new program with 1-800-Flowers.com, which launched in the second quarter of 2008 and will be reported in our Merchandising segment), while advertising revenue on marthastewart.com is tied to traffic among other key factors and is typically highest in the fourth quarter of the year. Advertising revenue from our Broadcasting segment is highly dependent on ratings which fluctuate throughout the television season following general viewer trends. Ratings tend to be highest during the fourth quarter and lowest in the summer months.

OFF-BALANCE SHEET ARRANGEMENTS

     We have no off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

General

     Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, deferred production costs, long-lived assets and accrued losses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     We believe that, of our significant accounting policies disclosed in our 2007 10-K, the following may involve the highest degree of judgment and complexity.

Revenue Recognition

     We recognize revenues when realized or realizable and earned. Revenues and associated accounts receivable are recorded net of provisions for estimated future returns, doubtful accounts and other allowances.

18

     The Emerging Issues Task Force reached a consensus in May 2003 on Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”) which became effective for revenue arrangements entered into in the third quarter of 2003. In an arrangement with multiple deliverables, EITF 00-21 provides guidance to determine a) how the arrangement consideration should be measured, b) whether the arrangement should be divided into separate units of accounting, and c) how the arrangement consideration should be allocated among the separate units of accounting. We have applied the guidance included in EITF 00-21 in establishing revenue recognition policies for our arrangements with multiple deliverables. For agreements with multiple deliverables, if we are unable to put forth vendor specific objective evidence required under EITF 00-21 to determine the fair value of each deliverable, then we will account for the deliverables as a combined unit of accounting rather than separate units of accounting. In this case, revenue will be recognized as the earnings process is completed.

     Advertising revenue in the Publishing segment is recorded upon release of magazines for sale to consumers and is stated net of agency commissions and cash and sales discounts. Subscription revenue is recognized on a straight-line basis over the life of the subscription as issues are delivered. Newsstand revenue is recognized based upon assumptions with respect to future returns and net of brokerage and newsstand-related fees. We base our estimates on our historical experience and current market conditions. Revenue earned from book publishing is recorded as manuscripts are delivered to and accepted by our publisher and as sales on a unit basis exceed the advanced royalty.

     Licensing based revenue, most of which is in our Merchandising segment, is accrued on a monthly basis based on the specific terms of each contract. Generally, revenue is recognized based on actual sales while others contain minimum guarantees that are earned evenly over the fiscal year. Revenue related to our agreement with Kmart is recorded on a monthly basis based on actual retail sales, until the last period of the year, when we recognize a substantial majority of the true-up between the minimum royalty amount and royalties paid on actual sales, when such amounts are determinable. Payments are generally made by our partners on a quarterly basis.

     Internet advertising revenue is generally based on the sale of impression-based advertisements, which is recorded in the period in which the advertisements are served.

     Television advertising revenue is recorded when the related commercial is aired and is recorded net of agency commission, estimated reserves for television audience underdelivery and, when applicable, distribution fees. Television product placement revenue is recognized when the segment featuring the related product/brand immersion is initially aired. Revenue from our radio operations is recognized evenly over the four-year life of the contract, with the potential for additional revenue based on certain subscriber and advertising based targets.

     We maintain reserves for all segment receivables, as appropriate. These reserves are adjusted regularly based upon actual results. We maintain allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required.

Television Production Costs

     Television production costs are capitalized and amortized based upon estimates of future revenues to be received and future costs to be incurred for the applicable television product. We base our estimates on existing contracts for programs, historical advertising rates and ratings as well as market conditions. Estimated future revenues and costs are adjusted regularly based upon actual results and changes in market and other conditions.

Intangible Assets

     We are required to analyze our goodwill on an annual basis as well as when events and circumstances indicate impairment may have occurred. Unforeseen events and changes in circumstances and market conditions and material differences in the value of long-lived assets due to changes in estimates could negatively affect the fair value of our assets and result in an impairment charge. In estimating fair value, we must make assumptions and projections regarding items such as future cash flows, future revenues, future earnings and other factors. The assumptions used in the estimate of fair value are generally consistent with the past performance of each reporting unit and are also consistent with the projections and assumptions that are used in current operating plans. Such assumptions are subject to change as a result of changing economic and competitive conditions. If these estimates or their related assumptions change in the future, we may be required to record an impairment loss for any of our

19

intangible assets. The recording of any resulting impairment loss could have a material adverse effect on our financial statements.

     In 2007, we estimated future cash flows, revenues, earnings and other factors based upon individual magazine historical results, current trends and operating cash flows to assess the fair value. No impairment charges were recorded in 2007.

     Upon closing our acquisition of certain assets of Chef Emeril Lagasse, we will have intangibles that will become subject to impairment evaluation.

Long-Lived Assets

     We review the carrying values of our long-lived assets whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Unforeseen events and changes in circumstances and market conditions and material differences in the value of long-lived assets due to changes in estimates of future cash flows could negatively affect the fair value of our assets and result in an impairment charge, which could have a material adverse effect on our financial statements.

Deferred Income Tax Asset Valuation Allowance

     We record a valuation allowance to reduce our deferred income tax assets to the amount that is more likely than not to be realized. In evaluating our ability to recover our deferred income tax assets, we consider all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. Our cumulative pre-tax loss for years ended December 31, 2007 through 2005 represents sufficient negative evidence for us to determine that the establishment of a full valuation allowance against the deferred tax asset is appropriate. This valuation allowance offsets deferred tax assets associated with future tax deductions as well as carryforward items. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes. See Note 3 in the unaudited condensed consolidated financial statements for additional information.

Non-Cash Equity Compensation

     We currently have several stock incentive plans that permit us to grant various types of share-based incentives to key employees, directors and consultants. The primary types of incentives granted under these plans are restricted shares of common stock and stock options. Restricted shares are valued at the market value of traded shares on the date of grant, while stock options are valued using a Black-Scholes option pricing model. The Black-Scholes option pricing model requires numerous assumptions, including expected volatility of our stock price and expected life of the option.

Forward-looking Statements and Risk Factors

     Except for historical information contained in this Quarterly Report, the statements in this Quarterly report are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but instead represent only our current beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. These statements often can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “potential” or “continue” or the negative of these terms or other comparable terminology. Our actual results may differ materially from those projected in these statements, and factors that could cause such differences include the following among others:

o adverse reactions to publicity relating to Martha Stewart or Emeril Lagasse by consumers, advertisers and business partners;

o a loss of the services of Ms. Stewart;

o a loss of the services of other key personnel, including Mr. Lagasse;

o loss or failure of merchandising and licensing programs;

o failure to protect our intellectual property;

o a further softening of the domestic advertising market;

20

o a continued downturn in national or local economies;

o changes in consumer reading, purchasing, Internet and/or television viewing patterns;

o unanticipated increases in paper, postage or printing costs;

o operational or financial problems at any of our contractual business partners;

o the receptivity of consumers to our new product introductions;

o failure to predict, respond to and influence trends in consumer taste; and

o changes in government regulations affecting the Company’s industries.

     These and other factors are discussed in this Quarterly Report on Form 10-Q under the heading “Part II. Other Information, Item 1A. Risk Factors.” We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     None.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

     Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Changes in Internal Control over Financial Reporting

     Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have determined that, during the first quarter of fiscal 2008, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     In April 2008, a complaint was filed against the Company and 23 other defendants in the United States District Court for the Eastern District of Texas, captioned Datatern, Inc. v. Bank of America Corp. et al. (No. 5-08CV-70). The complaint alleges that each defendant is directly or indirectly infringing a United States patent (No. 5,937,402) putatively owned by plaintiff, through alleged use on websites of object oriented source code to employ objects that are populated from a relational database, and seeks injunctive relief and money damages. The matter is currently being evaluated. Due to the early stages of the Company’s review, the merits of plaintiff’s position and the validity of the patents being asserted, among other issues, have not yet been determined.

ITEM 1A. RISK FACTORS

     A wide range of factors could materially affect our performance. In addition to the factors affecting specific business operations identified in connection with the description of these operations and the financial results of these operations elsewhere in this report, the following factors, among others, could adversely affect our operations:

21

     Our success depends in part on the popularity of our brands and the reputation and popularity of our founder, Martha Stewart, and Emeril Lagasse. Any adverse reactions to publicity relating to Ms. Stewart or Mr. Lagasse, or the loss of either of their services, could adversely affect our revenues, results of operations and our ability to maintain or generate a consumer base.

     While we believe there has been significant consumer acceptance for our products as stand-alone brands, the image, reputation, popularity and talent of Martha Stewart and Emeril Lagasse remain important factors.

     Ms. Stewart’s efforts, personality and leadership have been, and continue to be, critical to our success. While we have managed our business without her daily participation at times in the past, the repeated diminution or loss of her services due to disability, death or some other cause, or any repeated or sustained shifts in public or industry perceptions of her, could have a material adverse effect on our business. In addition, our business may be adversely affected by Ms. Stewart’s 2006 settlement with the SEC, which bars her until August 2011 from serving at the Company as a director, or as an officer with financial responsibilities.

     In addition, we recently acquired the assets relating Emeril Lagasse’s businesses other than his restaurants and foundation. The value of these assets is largely related to the ongoing popularity and participation of Mr. Lagasse in the activities related to exploiting these assets. The continued value of these assets would be materially adversely affected if Mr. Lagasse were to lose popularity with the public or be unable to participate in our business, forcing us potentially to write-down a significant amount of the value we paid for these assets.

     Acquiring or developing additional brands or businesses, and integrating acquired assets, poses inherent financial and other risks and challenges.

     We recently acquired certain assets of Chef Emeril Lagasse. We cannot assure that we will be able to adequately manage the acquired businesses. Failure to integrate those assets or exploit the Emeril brand could adversely affect our results of operations and our ability to acquire other brands.

     The process of consolidating and integrating acquired operations and assets takes a significant period of time, places a significant strain on resources and could prove to be more expensive and time consuming than we predicted. We may increase expenditures to accelerate the integration process with the goal of achieving longer-term cost savings and improved profitability. We also may be required to manage multiple relationships with third parties as we expand our product offerings and brand portfolio. These developments may increase expenses as we hire additional personnel to manage our growth. These investments require significant time commitments from our senior management and place a strain on their ability to manage our existing business.

     Part of our strategic plan is to acquire other businesses. These transactions involve challenges and risks in negotiation, execution, valuation, and integration. Moreover, competition for certain types of acquisitions is significant, particularly in the field of interactive media. Even if successfully negotiated, closed, and integrated, certain acquisitions may not advance our business strategy and may fall short of expected return on investment targets.

     Our Merchandising business currently relies heavily on revenue from a single source.

     For the twelve months ended January 31, 2008, we received guaranteed minimum royalty payments of $65.0 million from Kmart. For the contract years ending January 31, 2009 and January 31, 2010 (the final two years of the contract), the minimum guarantees are substantially lower (we anticipate they will be $20.0 million and $15.0 million, respectively). As a result of the substantial decline in minimum guarantees, we expect that the revenue we receive from Kmart will decline significantly because our actual earned royalties have not been in excess of the applicable minimums in prior years. If in future periods we are unable to earn, from sources other than Kmart, revenue in excess of the reduction of guarantees from our Kmart contract, our operating results and business may be materially adversely affected.

22

     We are expanding our merchandising and licensing programs into new areas and products, the failure of any of which could diminish the perceived value of our brand, impair our ability to grow and adversely affect our prospects.

     Our growth depends to a significant degree upon our ability to develop new or expand existing retail merchandising programs. We have entered into several new merchandising and licensing agreements in the past few years and have acquired new agreements through our acquisition of the Emeril Lagasse assets. Some of these agreements are exclusive and may have a duration of many years. While we require that our licensees maintain the quality of our respective brands through specific contractual provisions, we cannot be certain that our licensees, or their manufacturers and distributors, will honor their contractual obligations or that they will not take other actions that will diminish the value of our brands. There is also a risk that our extension into new business areas will meet with disapproval from consumers. We have limited experience in merchandising in some of these business areas. We cannot guarantee that these programs will be fully implemented, or if implemented, that they will be successful. If the licensing or merchandising programs do not succeed, we may be prohibited from seeking different channels for our products due to the exclusive nature and multi-year terms of these agreements. Disputes with new or existing licensees may arise which could hinder our ability to grow or expand our product lines. Such disputes also could prevent or delay our ability to collect licensing revenue we expect in connection with such products. If such developments occur or our merchandising programs are otherwise not successful, the value and recognition of our brands as well as our business, financial condition and prospects could be materially adversely affected.

     Our Merchandising business and licensing programs may suffer from downturns in the health and stability of the general economy or housing market.

     Reduction in the availability of credit, increased heating and gas expenses, slowing housing turnover or a continued downturn in the housing market, all of which have occurred in the past two years, and each of which could become more pronounced in the future, has and could further limit consumers’ discretionary spending or affect their confidence. These and other adverse consumer trends may lead to reduced spending on general merchandise, homes and home improvement projects, categories in which we license our brands. Downturns in consumer spending adversely impact consumer sales generally, resulting in weaker revenues from our licensed products. Continuation of this trend could materially adversely impact our business, financial condition and prospects.

     Our business is largely dependent on advertising revenues in our publications, online operations and broadcasts and failure to attract or retain these advertisers would have a material adverse effect on our business.

     We depend on advertising revenue in our Publishing, Internet and Broadcasting businesses. We cannot control how much or where companies choose to advertise. If advertisers decide to spend less money, or if they advertise elsewhere in lieu of our publications, broadcasts or website, our revenues and business would be materially adversely affected.

     If The Martha Stewart Show fails to maintain a sufficient audience, if adverse trends develop in the television production business generally, or if Martha Stewart were to cease to be able to devote substantial time to our television business, that business would be adversely affected. We also anticipate deriving value from Mr. Lagasse’s television shows, the popularity of which cannot be assured.

     Our television production business is subject to a number of uncertainties. Our business and financial condition could be materially adversely affected by:

     Failure of our television programming to maintain a sufficient audience

     Television production is a speculative business because revenues derived from television depend primarily upon the continued acceptance of that programming by the public, which is difficult to predict. Public acceptance of particular programming depends upon, among other things, the quality of that programming, the strength of stations on which that programming is broadcast, promotion of that programming, the quality and acceptance of competing television programming and other sources of entertainment and information. The Martha Stewart Show television program has experienced a decline in ratings that reflects both the general decline in daytime broadcast television viewers discussed in the paragraph below, as well as the decision by some major market stations to shift the airing of

23

the show. These developments have negatively impacted our television advertising revenues. If ratings for the show were to further decline, it would adversely affect the advertising revenues we derive from television and may result in the television program being broadcast on fewer stations. Ratings decline further than we anticipate could also make it economically inefficient to continue production of the program in the daily one-hour format or otherwise. If production of the television program were to cease, it would result in the loss of a significant marketing platform for us and our products as well as a writedown of our capitalized programming costs. The amount of any writedown would vary depending on a number of factors, including when production ceased and the extent to which we continued to generate revenues from the use of our existing program library.

     The television shows featuring Emeril Lagasse are not produced by us. Nonetheless, Emeril’s failure to maintain or build popularity would result in the loss of a significant marketing platform for us and our products as well as the loss of anticipated revenue and profits from his television shows.

     Adverse trends in the television business generally

     Television revenues may also be affected by a number of other factors, most of which are not within our control. These factors include a general decline in daytime broadcast television viewers, pricing pressure in the television advertising industry, strength of the stations on which our programming is broadcast, general economic conditions, increases in production costs, availability of other forms of entertainment and leisure time activities and other factors. Any or all of these factors may quickly change, and these changes cannot be predicted with certainty. While we currently benefit from our ability to sell advertising on our television programs, if adverse changes occur, we can make no assurance that we will continue to be able to sell this advertising or that our advertising rates can be maintained. Accordingly, if any of these adverse changes were to occur, the revenues we generate from television programming could decline.

     We have placed emphasis on building an advertising-revenue-based website, dependent on high levels of consumer traffic and resulting page views. Failure to fulfill these undertakings would adversely affect our brand and business prospects.

     Our growth depends to a significant degree upon the development of our Internet business. We have had failures with direct commerce in the past, and only limited experience in building an advertising-revenue-based website. In response to initial results from the relaunch of the marthastewart.com site in the second quarter of 2007, which were below expectations, we made changes to the site. We cannot make assurances that those changes will enable us to sustain growth for our site in the long term. In order for our Internet business to succeed, we must, among other things:

• significantly increase our online traffic and advertising revenue;

• attract and retain a base of frequent visitors to our website;

• expand the content, products and tools we offer over our website;

• respond to competitive developments while maintaining a distinct brand identity;

• attract and retain talent for critical positions;

• maintain and form relationships with strategic partners to attract more consumers;

• continue to develop and upgrade our technologies; and

• bring new product features to market in a timely manner.

     We cannot assure that we will be successful in achieving these and other necessary objectives or that our Internet business will be profitable. If we are not successful in achieving these objectives, our business, financial condition and prospects could be materially adversely affected.

     If we are unable to predict, respond to and influence trends in what the public finds appealing, our business will be adversely affected.

     Our continued success depends on our ability to provide creative, useful and attractive ideas, information, concepts, programming and products, which strongly appeal to a large number of consumers. In order to accomplish this, we must be able to respond quickly and effectively to changes in consumer tastes for ideas, information, concepts and products. The strength of our brands and our business units depends in part on our ability to influence

24

these tastes through broadcasting, publishing, merchandising and the Internet. We cannot be sure that our new ideas and content will have the appeal and garner the acceptance that they have in the past, or that we will be able to respond quickly to changes in the tastes of homemakers and other consumers. In addition, we cannot be sure that our existing ideas and content will continue to appeal to the public.

     New product launches may reduce our earnings or generate losses.

     Our future success will depend in part on our ability to continue offering new products and services that successfully gain market acceptance by addressing the needs of our current and future customers. Our efforts to introduce new or integrate acquired products may not be successful or profitable. The process of internally researching and developing, launching, gaining acceptance and establishing profitability for a new product or service, or assimilating and marketing an acquired product, is both risky and costly. New products generally incur initial operating losses. Costs related to the development of new products and services are generally expensed as incurred and, accordingly, our profitability from year to year may be adversely affected by the number and timing of new product launches. For example, we had a cumulative loss of $15.4 million in connection with Blueprint, which we have ceased to publish as a stand-alone title. Other businesses and brands that we may develop also may prove not to be successful.

     We do not have audited GAAP-basis financial information related to the agreement to acquire assets from Emeril Lagasse.

     The acquisition of the Emeril Lagasse businesses and any future acquisitions could have a material impact on the financial information we provide. The business related to the assets of Emeril Lagasse that we acquired did not have GAAP-basis audited financial statements. A subsequent audit of these assets and the business related to them may reveal significant issues related to valuation or otherwise. The purchase price we paid for the assets of Emeril Lagasse likely exceeded the current fair value of the net assets. As a result, material goodwill and other intangible assets may be recorded, which could result in significant amortization charges in the future.

     We face significant competition for advertising and circulation.

     We face significant competition from a number of print and website publishers, some of which have greater financial and other resources than we have, which may enhance their ability to compete in the markets we serve. Competition for advertising revenue in publications is primarily based on advertising rates, the nature and scope of readership, reader response to the promotions for advertisers’ products and services and the effectiveness of sales teams. Other competitive factors in publishing include product positioning, editorial quality, circulation, price and customer service, which impact readership audience, circulation revenues and, ultimately, advertising revenues. Because our industry is relatively easy to enter, we anticipate that additional competitors, some of whom have greater resources than we do, may enter these markets and intensify competition.

     Our principal vendors are consolidating and this may adversely affect our business and operations.

     We rely on our principal vendors and their ability or willingness to sell goods and services to us at favorable prices and other terms. Many factors outside our control may harm these relationships and the ability and willingness of these vendors to sell these goods and services to us on such terms. Our principal vendors include paper suppliers, printers, subscription fulfillment houses and national newsstand wholesalers, distributors and retailers. Each of these industries in recent years has experienced consolidation among its principal participants. Further consolidation may result in all or any of the following, which could adversely affect our results of operations:

• decreased competition, which may lead to increased prices;

• interruptions and delays in services provided by such vendors; and

• greater dependence on certain vendors.

     We may be adversely affected by fluctuations in paper and postage costs.

     Our principal raw material is paper. Paper prices have fluctuated over the past several years. We generally purchase paper from major paper suppliers who adjust the price periodically. We have not entered, and do not

25

currently plan to enter, into long-term forward price or option contracts for paper. Accordingly, significant increases in paper prices could adversely affect our future results of operations.

     Postage for magazine distribution is also one of our significant expenses. We primarily use the U.S. Postal Service to distribute magazine subscriptions. We may not be able to recover, in whole or in part, paper or postage cost increases. In recent years, postal rates have increased including a rise in 2007 and an additional increase that is expected to occur in 2008. Accordingly, significant increases in postage prices could adversely affect our future results of operations.

     We may face increased costs for distribution of our magazines to newsstands and bookstores.

     Distribution of magazines to newsstands and bookstores is conducted primarily through four companies, known as wholesalers. Earlier in 2008, one of our wholesalers advised us that they intend to increase the price of their services by approximately 8%. We commenced discussions with this wholesaler regarding this matter and cannot provide assurance as to the outcome. It is possible that other wholesalers likewise may seek to increase the price of their services. An increase in the price of our wholesalers’ services could have a material adverse effect on our results of operations.

     We may be adversely affected by a continued weakening of newsstand sales.

     The magazine industry has seen a weakening of newsstand sales during the past few years. A continuation of this decline could adversely affect our financial condition and results of operations by reducing our circulation revenue and causing us to either incur higher circulation expense to maintain our rate bases, or to reduce our rate bases which could negatively impact our revenue.

     Our websites and networks may be vulnerable to unauthorized persons accessing our systems, which could disrupt our operations and result in the theft of our and our users’ proprietary or personal information.

     Our Internet activities involve the storage and transmission of proprietary information and personal information of our users. We endeavor to protect our proprietary information and personal information of our users from third party access. However, it is possible that unauthorized persons may be able to circumvent our protections and misappropriate proprietary or personal information or cause interruptions or malfunctions in our Internet operations. We may be required to expend significant capital and other resources to protect against or remedy any such security breaches. Accordingly, security breaches could expose us to a risk of loss, or litigation and possible liability. Our security measures and contractual provisions attempting to limit our liability in these areas may not be successful or enforceable.

     Martha Stewart controls our company through her stock ownership, enabling her to elect who sits on our board of directors, and potentially to block matters requiring stockholder approval, including any potential changes of control.

     Ms. Stewart controls all of our outstanding shares of Class B common stock, representing approximately 91% of our voting power. The Class B common stock has ten votes per share, while Class A common stock, which is the stock available to the public, has one vote per share. Because of this dual-class structure, Ms. Stewart has a disproportionately influential vote. As a result, Ms. Stewart has the ability to control unilaterally the outcome of all matters requiring stockholder approval, including the election and removal of our entire board of directors and any merger, consolidation or sale of all or substantially all of our assets, and the ability to control our management and affairs. While her 2006 settlement with the SEC bars Ms. Stewart for the five-year period ending in August 2011 from serving at the Company as a director, or as an officer with financial responsibilities, her concentrated control could, among other things, discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses and stockholders.

     Our intellectual property may be infringed upon or others may accuse us of infringing on their intellectual property, either of which could adversely affect our business and result in costly litigation.

     Our business is highly dependent upon our creativity and resulting intellectual property. We are also susceptible to others imitating our products and infringing our intellectual property rights. We may not be able to successfully protect our intellectual property rights, upon which we are materially dependent. In addition, the laws of many

26

foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Imitation of our products or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our revenues. If we are alleged to have infringed the intellectual property rights of another party, any resulting litigation could be costly, affecting our finances and our reputation. Litigation also diverts the time and resources of management, regardless of the merits of the claim. There can be no assurance that we would prevail in any litigation relating to our intellectual property. If we were to lose such a case, and be required to cease the sale of certain products or the use of certain technology or were forced to pay monetary damages, the results could adversely affect our financial condition and our results of operations.

     A loss of the services of other key personnel could have a material adverse effect on our business.

     Our continued success depends upon our ability to attract and retain key management executives, as well as upon a number of key members of our creative staff. The loss of some of our senior executives or key members of our creative staff, or an inability to attract or retain other key individuals, could materially adversely affect us. Continued growth and success in our business depends, to a large degree, on our ability to retain and attract such employees.

     We operate in four highly competitive businesses: Publishing, Merchandising, Internet and Broadcasting each of which subjects us to competitive pressures.

     We face intense competitive pressures and uncertainties in each of our four businesses: Publishing, Merchandising, Internet and Broadcasting. Please refer to our latest Annual Report on Form 10-K as filed with the SEC on March 17, 2008 for a description of our competitive risks in our applicable business lines as described under the following headings: “Business — Publishing—Competition,” “Business — Merchandising—Competition,” “Business — Internet—Competition” and “Business — Broadcasting—Competition.”

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) None.

(b) None.

(c) Issuer Purchases of Equity Securities

     The following table provides information about our purchases of our Class A Common Stock during each month of the quarter ended March 31, 2008:

	(a)		(b)		(c)	(d)
						Maximum Number (or
					Total Number of	Approximate Dollar
					Shares (or Units)	Value) of Shares (or
	Total Number of				Purchased as Part of	Units) that may yet be
	Shares (or Units)		Average Price Paid		Publicly Announced	Purchased under the
Period	Purchased		per Share (or Unit)		Plans or Programs	Plans or Programs
Quarter ended March 31, 2008:
January 2008(1)		83,937	$	8.68	Not applicable	Not applicable
February 2008(1)		8,909		6.81	Not applicable	Not applicable
March 2008(1)		87,570		7.04	Not applicable	Not applicable
Total for quarter ended March 31, 2008		180,416	$	7.60	Not applicable	Not applicable

(1) Represents shares withheld by, or delivered to, us pursuant to provisions in agreements with recipients of restricted stock granted under our stock incentive plan allowing us to withhold, or the recipient to deliver to us, the number of shares having the fair value equal to tax withholding due.

27

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     During the first quarter of 2008, no matters were submitted to a vote of security holders.

ITEM 5. OTHER INFORMATION.

     On April 2, 2008, the Company acquired all of the assets related to the business of Chef Emeril Lagasse other than his restaurant business and corporate office in exchange for approximately $45.0 million in cash and $5.0 million in shares of the Company’s Class A Common Stock which equaled 674,854 shares at closing. The acquisition agreement also includes a potential additional payment of up to $20 million, in 2013, based upon the achievement of certain operating metrics in 2011 and 2012, a portion of which may be payable, at the Company’s election, in shares of the Company’s Class A Common Stock.

     On April 4, 2008, the Company and its wholly-owned subsidiary, MSLO Emeril Acquisition Sub LLC (the “Borrower”) entered into a loan agreement with Bank of America, N.A. Pursuant to the loan agreement, on April 7, 2008 the Borrower borrowed a $30 million term loan from the Bank, the terms of which were disclosed in Company’s Current Report on Form 8-K filed with the SEC on April 8, 2008. The loan is currently secured by cash collateral in an amount no less than the outstanding principal amount of the loan. The cash collateral may be replaced by collateral consisting of substantially all of the assets of the Emeril business. The loan agreement also includes various financial covenants and other affirmative and negative covenants. Martha Stewart Living Omnimedia, Inc. and most of its domestic subsidiaries are guarantors of the loan.

     On April 21, 2008, the Company entered into a letter agreement with Martha Stewart (the “Letter Agreement”). While the parties are negotiating a potential intangible asset license agreement (the “Intangible Asset License Agreement”) to replace the Location Rental Agreement dated as of September 17, 2004 between the parties (the “Rental Agreement”), the Company, pursuant to the Letter Agreement, agreed to pay Ms. Stewart $100,000 (the “Payment”), which Payment will be credited against any amount that may be due from the Company to Ms. Stewart under the Intangible Asset License Agreement during 2008. Ms. Stewart will owe the Payment back to the Company if the parties fail to execute the Intangible Asset License Agreement in a timely manner as provided in the Letter Agreement. Until such time as the parties enter into the Intangible Asset License Agreement, the Company will be permitted to continue to exercise its rights under the existing terms of the Rental Agreement.

     On May 8, 2008, the Company and Robin Marino entered into a letter agreement dated as of May 6, 2008 whereby the Company agreed to pay Ms. Marino a bonus of $150,000, provided that Ms. Marino shall be obligated to repay $75,000 of such amount in the event that her employment with the Company ends within twelve months.

28

ITEM 6. EXHIBITS.

(a) Exhibits

The following exhibits are filed as part of this report:

Exhibit
Number	Exhibit Title
3.1	Martha Stewart Living Omnimedia, Inc.’s Certificate of Incorporation (incorporated by reference to our Registration Statement on Form S-1, File Number 333-84001 (the “Registration Statement”)).
3.2	Martha Stewart Living Omnimedia, Inc.’s By-Laws (incorporated by reference to the Registration Statement).
3.3	Amendment and Restatement of Article V, Section 5.1 of By-Laws of Martha Stewart Living Omnimedia, Inc. (incorporated by reference to our Current Report on Form 8-K filed on December 7, 2007).
10.1	Sixth Lease Modification Agreement, dated as of June 14, 2007, between 601 West Associates LLC and Martha Stewart Living Omnimedia, Inc.*
10.2	Asset Purchase Agreement dated as of February 19, 2008 among Emeril’s Food of Love Productions, L.L.C., emerils.com, LLC and Emeril J. Lagasse, III, as the Sellers, and Martha Stewart Living Omnimedia, Inc. and MSLO Shared IP Sub LLC, as the Buyers (incorporated by reference to our Current Report on Form 8-K filed February 19, 2008).
10.3	Letter Agreement dated as of April 17, 2008, between Martha Stewart Living Omnimedia, Inc. and Martha Stewart.*
10.4	Publicity Rights Agreement dated as of April 2, 2008 by and among Martha Stewart Living Omnimedia, Inc., MSLO Shared IP Sub LLC and Emeril J. Lagasse, III.*
10.5	Letter Agreement dated as of May 6, 2008 between Robin Marino and Martha Stewart Living Omnimedia, Inc.*†
10.6	Loan Agreement dated as of April 4, 2008 by and among Bank of America, N.A., MSLO Emeril Acquisition Sub LLC and Martha Stewart Living Omnimedia, Inc.*
10.7	Pledge Agreement dated as of April 4, 2008 by and among Bank of America, N.A., as collateral agent.*
10.8	Continuing and Unconditional Guaranty dated as of April 4, 2008 executed by Martha Stewart Living Omnimedia, Inc., MSO IP Holdings, Inc., Martha Stewart, Inc., Body and Soul Omnimedia, Inc., MSLO Productions, Inc., MSLO Productions — Home, Inc., MSLO Productions — EDF, Inc. and Flour Productions, Inc.*
10.9	Registration Rights Agreement dated as of April 2, 2008 by and among Martha Stewart Living Omnimedia, Inc., Emeril’s Food of Love Productions, L.L.C., emerils.com, LLC and Emeril J. Lagasse, III .*
31.1	Certification of Chief Executive Officer*
31.2	Certification of Chief Financial Officer*
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) *

*	filed herewith
†	indicates management contracts and compensatory plans

29

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MARTHA STEWART LIVING OMNIMEDIA, INC.
Date:	May 9, 2008
	/s/ Howard Hochhauser
Name:	Howard Hochhauser
Title:	Chief Financial Officer

30

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED SIXTH LEASE MODIFICATION AGREEMENT

     AMENDED AND RESTATED SIXTH LEASE MODIFICATION AGREEMENT (this “Agreement”) made as of the 14^th day of June, 2007, by and between 601 WEST ASSOCIATES LLC, a New York limited liability company, having an address at 601 West 26th Street, Suite 1260, New York, New York 10001 (“Landlord”), and MARTHA STEWART LIVING OMNIMEDIA, INC., a Delaware corporation, having an address at 601 West 26th Street, 9th Floor, New York, New York 10001 (“Tenant”).

WITNESSETH:

     WHEREAS, Landlord and Tenant entered into a written agreement of lease dated as of August 20, 1999 (the “Original Lease”), as amended by First Lease Modification Agreement dated as of December 17, 1999 (the “First Amendment”). Second Lease Modification Agreement dated as of August, 2000, Third Lease Modification Agreement dated as of July 1, 2002, Fourth Lease Modification Agreement dated as of November 10, 2005 and Fifth Lease Modification Agreement dated as of January 3, 2007 (the “Fifth Amendment”; the lease and all such modification agreements, as amended hereby, collectively, the “Lease”), wherein and whereby Landlord leased to Tenant the entire ninth (9th) floor and a portion of the ninth (9^th) floor roof (collectively, the “Ninth Floor Premises”) and portions of the second (2nd) mezzanine, as more particularly described in the Lease (collectively, the “Second Mezzanine Premises”; the Ninth Floor Premises and the Second Mezzanine Premises are sometimes hereinafter collectively referred to as the “Original Premises”), in the building located at 601 West 26th Street, New York, New York (the “Building”); and

     WHEREAS, Tenant desires, inter alia, to (i) rent a portion of the tenth (10th) floor at the Building from Landlord (the “Additional Space”) as more particularly described on Exhibit A annexed hereto and made a part hereof, and (ii) extend the term of the Lease as to the Original Premises such that the leasing of the Original Premises shall be co-terminus with the leasing of the Additional Space on the Extended Expiration Date (as herein defined).

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

     1. Definitions. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Lease.

     2. Amendments to Lease. Effective as of the date hereof, the Lease shall be deemed amended as follows:

          a. Additional Space. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Additional Space on the same terms and conditions (except as otherwise set forth herein) as are set forth in the Lease applicable to the Original Premises, and (ii) the term “demised premises” or “Premises” as set forth in the Lease shall be deemed to collectively mean the Original Premises and Additional Space. The Additional Space is leased to Tenant for a period commencing on the later of August 1, 2007 (with Landlord’s Additional Space Work [as defined below] substantially

PAGE 1

completed) or that date on which Landlord delivers the Additional Space to Tenant with Landlord’s Additional Space Work substantially completed therein in accordance with the terms hereof (the “Inclusion Date”) and shall expire on the Extended Expiration Date (as defined below) (the “Term”).

          b. Original Premises. The term of Lease applicable to the Original Premises is hereby extended for a period of ten (10) years to commence on the Inclusion Date and end on the Extended Expiration Date. All references in the Lease to the term “Expiration Date” (whether or not capitalized). shall be deemed to mean the Extended Expiration Date set forth in this Agreement and shall apply to the Original Premises and Additional Space.

          c. Use. Tenant shall use and occupy the Additional Space for the uses set forth in Article 2 of the Lease and for no other purpose.

          d. Ninth Floor Premises (Interior) Fixed Rental. Tenant shall pay Fixed Rental to Landlord for the entire Ninth Floor Premises (interior) at an annual rate of:

i.	$4,485,000.00 per annum ($373,750.00 per month) for the period commencing on the Inclusion Date and ending on the day immediately preceding the first (1st) anniversary of the Inclusion Date, both dates inclusive;
ii.	$4,608,337.56 per annum ($384,028.13 per month) for the period commencing on the first (1st) anniversary of the Inclusion Date and ending on the day immediately preceding the second (2nd) anniversary of the Inclusion Date, both dates inclusive;
iii.	$4,735,066.80 per annum ($394,588.90 per month) for the period commencing on the second (2nd) anniversary of the Inclusion Date and ending on the day immediately preceding the third (3rd) anniversary of the Inclusion Date, both dates inclusive;
iv.	$4,865,281.20 per annum ($405,440.10 per month) for the period commencing on the third (3rd) anniversary of the Inclusion Date and ending on the day immediately preceding the fourth (4th) anniversary of the Inclusion Date, both dates inclusive;
v.	$4,999,076.40 per annum ($416,589.70 per month) for the period commencing on the fourth (4th) anniversary of the Inclusion Date and ending on the day Immediately preceding the fifth (5th) anniversary of the Inclusion Date. both dates inclusive:
vi.	$5.435,550.96 per annum ($452,962.58 per month) for the period commencing on the fifth (5th) anniversary of the Inclusion Date and ending on the day immediately preceding the sixth (6th) anniversary of the Inclusion Date, both dates inclusive;

PAGE 2

vii.	$5,585,028.60 per annum ($465,419.05 per month) for the period commencing on the sixth (6th) anniversary or the Inclusion Date and ending on the day immediately preceding the seventh (7th) anniversary of the Inclusion Date; both dates inclusive;
viii.	$5,738,616.84 per annum ($478,218.07 per month) for the period commencing on the seventh (7th) anniversary or the Inclusion Date and ending on the day Immediately precedingg the eighth (8th) anniversary of the Inclusion Date, both dates inclusive;
ix.	$5,896,428.84 per annum ($491,369.07 per month) for the period commencing on the eighth (8th) anniversary of the Inclusion Date and ending on the day immediately preceding the ninth (9th) anniversary of the Inclusion Date, both dates inclusive;
x.	$6,058,580.64 per annum ($504,881.72 per month) for the period commencing on the ninth (9th) anniversary of the Inclusion Date and ending on the day immediately preceding the tenth (10th) anniversary of the Inclusion Date, both dates inclusive (the “Extended Expiration Date”).

               Tenant acknowledges and agrees that it shall continue to remain obligated to pay Fixed Rental and Additional Rental applicable to the interior Ninth Floor Premises as set forth in the Lease at the rates and at the times set forth therein from the date of this Agreement through and including the day immediately preceding the Inclusion Date.

          e. Ninth Floor Premises (Roof) Fixed Rental. Tenant shall pay Fixed Rental to Landlord for the roof portion of the Ninth Floor Premises at an annual rate of:

$80,000.00 per annum ($6,666.67 per month) for the period commencing on the Inclusion Date and ending on the Extended Expiration Date, both dates inclusive.

               Tenant acknowledges and agrees that it shall continue to remain obligated to pay Fixed Rental and Additional Rental applicable to the roof portion of the Ninth Floor Premises as set forth in the Lease at the rates and at the times set forth therein from the date of this Agreement through and including the day immediately preceding the Inclusion Date.

          f. Second Mezzanine Premises Fixed Rental. Tenant shall pay Fixed Rental to Landlord for the entire Second Mezzanine Premises at an annual rate of:

i. $257,757.48 per annum ($21,479.79 per month) for the period commencing on the Inclusion Date and ending on the day immediately preceding the first (1^st) anniversary of the Inclusion Date. both dates inclusive:

PAGE 3

ii.	$264,845.76 per annum ($22,070.48 per month) for the period commencing on the first (1st) anniversary of the Inclusion Date and ending on the day immediately preceding the second (2nd) anniversary of the Inclusion Date, both dates inclusive:
iii.	$272,129.04 per annum ($22.677.42 per month) for the period commencing on the second (2nd) anniversary of the Inclusion Date and ending on the day immediately preceding the third (3rd) anniversary of the Inclusion Date, both dates inclusive:
iv.	$298,023.84 per annum ($24,835.32 per month) for the period commencing on the third (3rd) anniversary of the Inclusion Date and ending on the day Immediately preceding the fourth (4th) anniversary of the Inclusion Date, both dates inclusive;
v.	$306,219.48 per annum ($25,518.29 per month) for the period commencing on the fourth (4th) anniversary of the Inclusion Date and ending on the day immediately preceding the fifth (5th) anniversary of the Inclusion Date, both dates inclusive;
vi.	$314,640.48 per annum ($26,220.04 per month) for the period commencing on the fifth (5th) anniversary of the Inclusion Date and ending on the day immediately preceding the sixth (6th) anniversary of the Inclusion Date, both dates inclusive;
vii.	$341,704.32 per annum ($28,475.36 per month) for the period commencing on the sixth (6th) anniversary of the Inclusion Date and ending on the day immediately preceding the seventh (7th) anniversary of the Inclusion Date, both dates inclusive;
viii.	$351,101.16 per annum ($29,258.43 per month) for the period commencing on the seventh (7th) anniversary of the Inclusion Date and ending on the day immediately preceding the eighth (8th) anniversary of the Inclusion Date, both dates inclusive;
ix.	$360,756.48 per annum ($30,063.04 per month) for the period commencing on the eighth (8th) anniversary of the Inclusion Date and ending on the day immediately preceding the ninth (9th) anniversary of the Inclusion Date, both dates inclusive;
x.	$389,088.48 per annum ($32,424.04 per month) for the period commencing on the ninth (9th) anniversary of the Inclusion Date and ending on the Extended Expiration Date, both dates inclusive.

               Tenant acknowledges and agrees that it shall continue to remain obligated to pay Fixed Rental and Additional Rental applicable to the Second Mezzanine Premises as set forth in the

PAGE 4

Lease at the rates and at the times set forth therein from the date of this Agreement through and including the day immediately preceding the Inclusion Date.

          g. Additional Space Fixed Rental. Tenant shall pay Fixed Rental to Landlord for the Additional Space at an annual rate of:

i.	$971.550.00 per annum ($80,962.50 per month) for the period commencing on the Inclusion Date and ending on the day immediately preceding the first (1st) anniversary or the Inclusion Date, both dates inclusive;
ii.	$998,267.64 per annum ($83,188.97 per month) for the period commencing on the first (1st) anniversary of the Inclusion Date and ending on the day immediately preceding the second (2nd) anniversary of the Inclusion Date, both dates inclusive;
iii.	$1,025,720.04 per annum ($85,476.67 per month) for the period commencing on the second (2nd) anniversary of the Inclusion Date and ending on the day immediately preceding the third (3rd) anniversary of the Inclusion Date, both dates inclusive;
iv.	$1,053,927.36 per annum ($87,827.28 per month) for the period commencing on the third (3rd) anniversary of the Inclusion Date and ending on the day immediately preceding the fourth (4th) anniversary of the Inclusion Date, both dates inclusive;
v.	$1,082,910.36 per annum ($90,242.53 per month) for the period commencing on the fourth (4th) anniversary of the Inclusion Date and ending on the day immediately preceding the fifth (5th) anniversary of the Inclusion Date, both dates inclusive;
vi.	$1,177,460.04 per annum ($98,121.70 per month) for the period commencing on the fifth (5th) anniversary of the Inclusion Date and ending on the day immediately preceding the sixth (6th) anniversary of the Inclusion Date, both dates inclusive;
vii.	$],209,840.24 per annum ($100,820.02 per month) for the period commencing on the sixth (6th) anniversary of the Inclusion Date and ending on the day immediately preceding the seventh (7th) anniversary of the Inclusion Date, both dates inclusive;
viii.	$1,243,110.20 per annum ($103,592.57 per month) for the period commencing on the seventh (7th) anniversary of the Inclusion Date and ending on the day immediately preceding the eighth (8th) anniversary of the Inclusion Date, both dates inclusive;

PAGE 5

ix.	$1,277,296.44 per annum ($106,441.37 per month) for the period commencing on the eighth (8th) anniversary of the Inclusion Date and ending on the day immediately preceding the ninth (9th) anniversary of the Inclusion Date, both dates inclusive;
x.	$1,312,416.96 per annum ($109,368.08 per month) for the period commencing on the ninth (9th) anniversary of the Inclusion Date and ending on the day Extended Expiration Date, both dates inclusive.

               The first monthly installment of Fixed Rental for the Additional Space in the amount of $80,962.50 shall be paid by Tenant to Landlord concurrently herewith, which first monthly installment of Fixed Rental shall be applied by Landlord against Fixed Rental due and owing by Tenant to Landlord hereunder for the fourth (4^th) month following the Inclusion Date.

          h. Additional Space Rent Abatement. Provided that Tenant is not then in default of the terms of the Lease at the time an applicable monthly installment of the Credit (as herein defined) is due, Tenant shall be entitled to a one-time, non-recurring abatement against the obligation to pay Fixed Rental for the Additional Space in the aggregate amount of $499,380.42 (the “Credit”) to be applied as follows: (i) $242,887.50 for the period commencing on the Inclusion Date and ending on the last day of he third (3^rd) month following the Inclusion Date, at the rate of $80,962.50 per month (the “Initial Credit”); (ii) $83,188.97 for (13^th) month of the Term; (iii) $85,476.67 for the twenty-fifth (25^th) month of the Term; and (iv) $87,827.28 for the thirty-seventh (37^th) month of the Term. If the Inclusion Date is a date other than the first day of a month, then the unapplied portion of the Initial Credit shall be prorated, and the balance shall be applied against Fixed Rental due for the fourth (4^th) month of the term of the Lease with respect to the Additional Space. Notwithstanding the foregoing, the Credit shall not be applied against any Additional Rental, electricity charges, or other like sums from time to time payable by Tenant to Landlord pursuant to the Lease, which amounts shall be paid without abatement in accordance with the terms of the Lease.

          i. Renewal Option. Article 44 of the Lease shall be deemed deleted in its entirety an substituted in lieu thereof shall be the following:

     “44.1 Tenant shall have one (1) option (the “Renewal Option”) to renew or extend the Lease for one (1) additional term of five (5) years, provided that at the time of the exercise of the Renewal Option, this Lease is in full force and effect and no monetary default exists hereunder beyond applicable cure, grace and notice periods. Tenant may exercise the Renewal Option by giving written notice (the “Renewal Notice”) to Landlord not less than nine (9) months prior to the Extended Expiration Date.

     44.2 The Renewal Option may not be severed from this Lease nor separately sold or assigned.

     44.3 If Tenant timely exercises the Renewal Option, the term of this Lease will be extended for one (1) additional period of five (5) years commencing on the day immediately following the Extended Expiration Date

PAGE 6

and expiring on the day immediately preceding the fifth (5^th) anniversary of the Extended Expiration Date (the “Renewal Period”), on all of the same terms, covenants and conditions as set forth in this Lease, except that during the Renewal Period: (i) Tenant shall be entitled to no further Renewal Option; (ii) Landlord shall have no obligation to perform Landlord’s Work or any other work in the Premises to ready same for continued occupancy, (iii) Tenant shall not be entitled to an additional credit against Fixed Rental, and (iv) the Fixed Rental during the Renewal Period shall be the greater of (x) the annual Fixed Rental rate per rentable square foot for the one (1) year period ending on the Extended Expiration Date, and (y) ninety-five percent (95%) of the then current Fair Market Rental Rate (as defined and computed below) for the Premises. The Fixed Rental during each year of the Renewal Period following the first year of such Renewal Period shall equal the Fixed Rental for the immediately preceding year multiplied by 102.75%.

     44.4 As used herein, the term “Fair Market Rental Rate” shall mean the annual fair market rental value for the Premises prevailing as of six months prior to the commencement of the Renewal Period, for the balance of the lease term, taking into account all relevant factors (whether favorable to Landlord or Tenant).

     44.5 Landlord and Tenant will endeavor to agree on the Fair Market Rental Rate within thirty (30) days after Tenant’s exercise of the Renewal Option. If Landlord and Tenant are unable to do so, then the dispute shall be resolved by arbitration in accordance with the provisions set forth below:

          44.5.1 Each party shall give the other party notice (the “Arbitration Notice”) specifying in said notice the name and address of the person designated to act as an arbitrator on its behalf. Each arbitrator so chosen by the parties shall be a competent person having the qualifications described in subparagraph 44.5.2 below. The two arbitrators so chosen shall meet within ten (10) days after the second arbitrator is appointed and if, within fifteen (15) days after the second arbitrator is appointed, the two arbitrators shall not agree upon the question in dispute, they shall themselves appoint a third arbitrator who shall be a competent and impartial person having the qualifications described in said subparagraph 44.5.2 below. The third arbitrator must choose one of the market values determined by either of the first two arbitrators and such determination shall be binding upon the parties. In the event the arbitrators are unable to agree upon the appointment of the third arbitrator within five (5) days after the time aforesaid, the third arbitrator shall be selected by the parties themselves if they can agree thereon within the further period of five (5) days. If the parties do not so agree, then either party, on behalf of both and on notice to the other, may request such appointment by the American Arbitration Association (“AAA”) in accordance with its rules then prevailing. The date on which the third arbitrator is appointed is referred to herein as the “Appointment Date”. If any arbitrator appointed hereunder shall be unwilling or unable. for any reason to serve, or

PAGE 7

continue to serve, a replacement arbitrator shall be appointed in the same manner as provided herein for the appointment of such arbitrator.

          44.5.2 The arbitration shall be conducted in accordance with the then prevailing rules of the AAA. The arbitrators shall not be affiliated With Landlord or Tenant and shall be (a) MAI appraisers with at least ten (10) years experience in the determination of fair market rentals in office buildings in the City of New York, or (b) real estate brokers or consultants with at least ten (10) years experience in leasing, owning, operating, selling or buying office buildings in the City of New York.

          44.5.3 This provision shall constitute a written agreement to submit any dispute regarding the determination of the Fixed Market Rental Rate to arbitration.

          44.5.4 The arbitration decision, determined as provided in this Article, shall be conclusive and binding on the parties, shall constitute an “award” by the arbitrator within the meaning of the AAA rules and applicable law and judgment may be entered thereon in any court of competent jurisdiction.

          44.5.5 Each party shall pay its own fees and expenses relating to the arbitration under this paragraph (including, without limitation, the fees and expenses of the one of the two original arbitrators appointed by or for such party, of its counsel and of experts and witnesses retained or called by it). Each party shall pay one-half (1/2) of the fees and expenses of the AAA and of the third arbitrator.”

          j. Tenant’s Initial Installations. From and after the Inclusion Date, Tenant, at its sole cost and expense, shall prepare the Additional Space for its use and occupancy in accordance with the applicable provisions of Articles 3, 47 and 69 of the Lease. Landlord shall not unreasonably withhold or delay its consent to Tenant’s use of reputable licensed architects, engineers, contractors and subcontractors to design, plan and perform Tenant’s Initial Installations in the Additional Space. Tenant shall pay to Sterling Realty Enterprises, Landlord’s construction supervisor, a construction supervisory fee in the amount of $8,096.25 payable upon Tenant’s execution of this Lease. The $8,096.25 supervisory fee shall not include Landlord’s actual out-of-pocket costs incurred in connection with the initial review of the plans for Tenant’s Initial Installations in the Additional Space. Failure to pay such fee shall be deemed failure to pay Additional Rental. In consideration for such fee, Landlord’s construction supervisor shall coordinate the construction of Tenant’s Initial Installations in the Additional Space with the Landlord and Building’s services and will work with Tenant’s contractors to facilitate Landlord’s cooperation in connection with the performance of Tenant’s Initial Installations in the Additional Space. This paragraph shall not create any third party or contractual rights between Tenant and Sterling Realty Enterprises. Tenant shall reimburse Landlord for Landlord’s actual out-of-pocket expenses incurred in having Landlord’s consultant’s (e.g., architect. engineer, expediter, code consultant) review Tenant’s drawings, plans and specifications applicable to Tenant’s Initial Installations in the Additional Space, which reimbursement by Tenant shall not exceed $10,000.00 in the aggregate.

PAGE 8

          k. Escalations for Increase in Real Estate Taxes. From and after the Inclusion Date, Tenant shall pay Tenant’s Proportionate Share or Real Estate Taxes applicable to the Premises pursuant to the provisions of Article 48 of the Lease. For the purposes of calculating Tenant’s Additional Rental obligations under Article 44 of the Lease with respect to the Premises. (i) the term “Tenant’s Proportionate Share” shall mean 8.01888%, and (ii) the term “Base Tax” shall mean the Taxes payable in the New York City fiscal year commencing July 1, 2007 and ending June 30, 2008 (which shall be the “Base Tax Year” for the purpose of calculating real estate tax escalations for the Premises). Tenant acknowledges and agrees that the provisions of the second (2^nd) sentence of Section 48.6 of the Original Lease and the provisions of the second (2^nd) sentence of Paragraph 6 of the Second Amendment Shall no longer be applicable to the Ninth Floor Premises from and after November 30, 2008. Tenant further acknowledges and agrees that it shall continue to remain obligated to make Tax Payments to Landlord with respect to the Ninth Floor Premises and the Second Mezzanine Premises as set forth in the Lease from the date of this Agreement through and including the day immediately preceding the Inclusion Date.

1. Additional Space Electric Current. Electricity shall be furnished to the Additional Space on a “submetering” basis as set forth in Article 55 of the Lease. The first sentence of the last paragraph of Section 55.2 shall be deemed deleted in its entirety and substituted in lieu thereof shall be the allowing sentence: “‘Tenant’s Cost’ shall mean an amount equal to the product of (i) the Rate, multiplied by (ii) the Usage, multiplied by (iii) 107%.” Tenant acknowledges and agrees that it shall continue to remain obligated to pay “Tenant’s Cost” to Landlord with respect to the Ninth Floor Premises and the Second Mezzanine Premises as set forth in the Lease through and including the Extended Expiration Date.

          m. Security Deposit. Simultaneously with Tenant’s execution and delivery of this Agreement to Landlord, Tenant shall deliver to Landlord either (i) Tenant’s good, unendorsed bank check made payable to the order of Landlord, in the amount of $485,775.00, or (ii) Tenant’s letter of credit in the aforesaid amount issued for the benefit of Landlord, as additional security to secure Tenant’s full and timely observance and performance of the terms, covenants and conditions on Tenant’s part to be observed and performed under the Lease (the “Additional Security”). Landlord agrees to maintain the Additional Security in accordance with the provisions of Articles 32 and 59 of the Lease.

          n. Condenser Water for Air Conditioning Equipment. In connection with the water-cooled air-conditioning unit(s) to be installed by Tenant in the Additional Space, Tenant shall obtain and utilize condenser water to be provided by Landlord for the purpose of operating such water-cooled air-conditioning unit(s) in the Additional Space, and so long as Tenant is not in default of its obligations hereunder, Landlord shall furnish condenser water to Tenant, twenty-four (24) hours a day, seven (7) days a week, and Tenant shall pay to Landlord, as Additional Rental on the first day of May during each lease year during the term hereof and any renewal term, an annual amount equal to $450.00 per annum per nominal ton (which shall be inclusive of overtime charges and any other maintenance charges in connection with such use or such condenser water) of the air-conditioning unit(s) servicing the Additional Space. Tenant shall pay to Landlord, as Additional Rental hereunder. a one-time condenser water tap-in fee equal to $350.00 per nominal ton of the air- conditioning unit(s) servicing the Additional Space.

          o. Access to the Additional Space. Subject to the Rules and Regulations

PAGE 9

annexed to and made a part of the Lease, as same may be amended from time to time, Tenant shall have access to the Additional Space on a twenty-four (24) hours per day, seven (7) days per week basis.

          p. Right to Terminate As to Second Mezzanine Premises. Tenant shall have the one-time irrevocable right to terminate Tenant’s leasehold right, title and interest in and to the Second Mezzanine Premises, effective as of October 31, 2009 (the “Termination Date”), by delivering written notice (the “Termination Notice”) to Landlord at any time between the date hereof and October 31, 2008 (the “Outside Termination Notice Date”), time being of the essence as to the delivery by Tenant of the Termination Notice to Landlord by the Outside Termination Notice Date. Upon Landlord’s receipt of the Termination Notice, (i) Tenant’s leasehold right, title and interest in and to the Second Mezzanine Premises shall be deemed terminated effective as of the Termination Date, (ii) Tenant shall vacate and surrender the Second Mezzanine Premises to Landlord free and clear of (A) all tenancies and occupancies, and (B) Tenant’s personal property, movable trade fixtures, furniture and equipment, on or before the Termination Date and otherwise in the condition required under the Lease, including without limitation, Articles 4. 23 and 32 thereof, (iii) Tenant shall no longer be obligated to pay Fixed Rental and Additional Rental to Landlord as provided in the Lease from and after the Termination Date, and (iv) Tenant’s Proportionate Share shall be reduced to 9.01% from and after the Termination Date. In the event Tenant fails to timely deliver the Termination Notice to Landlord by the Outside Termination Notice Date, Tenant shall be deemed to have irrevocably waived its right to deliver such Termination Notice to Landlord and this Lease and Tenant’s leasehold right, title and interest shall remain in full force and effect through and including the Extended Expiration Date. In the event Tenant shall have timely delivered the Termination Notice to Landlord and Tenant thereafter fails to vacate and surrender the Second Mezzanine Premises by the Temination Date, Tenant acknowledges and agrees that it shall be obligated to pay monthly Fixed Rental for the Second Mezzanine Premises at the rate of one and one-half (1.5) times the Fixed Rental and Additional Rental payable during the month of October, 2009, subject to all of the other terms of the Lease insofar as the same are applicable to a month-to-month tenancy. Notwithstanding all of the foregoing, if Tenant shall have timely delivered the Termination Notice to Landlord at any time prior to the Outside Termination Notice Date, Tenant acknowledges and agrees that it shall continue to remain obligated to pay Fixed Rental and Additional Rental applicable to the Second Mezzanine Premises through and including the Termination Date. Paragraph 7 of the Fifth Amendment is hereby deleted in its entirety.

     3. “As Is” Condition: Landlord’s Additional Space Work. Tenant acknowledges and agrees that it has thoroughly examined the Additional Space and is fully familiar with the condition thereof, and that neither Landlord nor Landlord’s agents have made any representations, warranties or promises, either express or implied, with regard to the physical condition of the Building, the Ninth Floor Premises, Second Mezzanine Premises or Additional Space or the use or uses to which the Ninth Floor Premises, Second Mezzanine Premises or Additional Space may be put, or the condition of any mechanical, plumbing, electrical, flue, heating, air conditioning, ventilation or exhaust systems servicing the Ninth Floor Premises, Second Mezzanine Premises or Additional Space. It is expressly understood that Landlord shall not be liable for any latent or patent defects in the Ninth Floor Premises, Second Mezzanine Premises or Additional Space, except for Landlord’s Additional Space Work (as hereinafter defined). Tenant agrees to accept the Additional Space “as is and in such condition as the same may be in at the Inclusion Date, except for the work set forth on Exhibit B annexed hereto (“Landlord’s Additional Space Work”), which Landlord shall perform at Landlord’s expense. Landlord shall not be obligated or required to do any work or to make any alterations or decorations or install any fixtures.

PAGE 10

equipment or Improvements, or make any repairs or replacements to or in the Additional Space to prepare or fit the same for Tenant’s use or for any other reason whatsoever. Unless specifically agreed otherwise, all Landlord’s Additional Space Work shall be of material, design, finish and color of the Building standard adopted from time to time by Landlord. Subject to Tenant’s timely compliance with the terms, covenants and conditions of the Lease, including, without limitation Articles 3, 47 and 69, Tenant shall be permitted to perform any and all necessary installations and improvements in the Additional Space to prepare same for Tenant’s occupancy thereof.

     4. Broker. Landlord and Tenant each represent and warrant to the other that it neither consulted nor negotiated with any broker or finder with regard to the Additional Space or this Agreement. Each party agrees to defend, indemnify and save the other harmless from and against any damages, liabilities, settlement payments, costs and expenses (including, without limitation, reasonable legal fees and expenses incurred in defending any action, claim or suit or in enforcing this indemnity) arising out of any claims for fees or commissions from anyone claiming to have dealt with the indemnitor.

     5. Agreement Subject to Lease. Except as otherwise set forth in this Agreement, the Additional Space is being leased pursuant to all of the terms, covenants and conditions of the Lease.

     6. No Concessions. Except as otherwise set forth in this Agreement, Tenant shall not be entitled to any additional free rent, rent credit, rent abatement, Landlord’s work (other than Landlord’s Additional Space Work) or work contribution in connection with this Agreement and/or Tenant’s leasing of the Additional Space.

     7. Landlord’s Compliance. Tenant acknowledges that Landlord has performed all obligations imposed by the Lease upon Landlord to be performed prior to the date hereof.

     8. Ratification of Lease. As modified hereby, the Lease is hereby ratified and confirmed and shall continue in full force and effect.

     9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.

     10. No Recording. Landlord and Tenant agree that this Agreement shall not be recorded.

     11. Entire Agreement. This Agreement, together with the Lease, constitutes the entire agreement of the parties hereto with respect to the matters stated herein, and may not be amended or modified unless such amendment or modification shall be in writing and shall have been signed by the party against whom enforcement is sought.

     12. Governing Law. This Agreement shall be construed and governed by the laws of the State of New York.

     13.Non Waiver. No waiver by either party of any failure or refusal by the other party to comply with its obligations hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.

PAGE 11

     14. Enforceability of Provisions. If any provision of this Agreement shall be invalid or unenforceable, the remainder of this Agreement or the application of such provision other than to the extent that it is invalid or unenforceable shall not be affected, and each provision of this Agreement shall remain in full force and effect notwithstanding the invalidity or unenforceability of such provision, but only to the extent that application and/or enforcement, as the case may be, would be equitable and consistent with the intent of the parties in entering into this Agreement. This Agreement shall not be binding upon the parties hereto until the same shall have been executed and delivered by each of the parties hereto.

     15. Captions. The captions, headings and titles of Paragraphs contained in this Agreement are intended to be descriptive only and shall not be deemed to limit, extend or in any way modify the meaning of the text of such Paragraphs.

     16. Counterparts. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

LANDLORD: 601 WEST ASSOCIATES LLC
By:	SLB MANAGER LLC,

By:	/s/ Mark Karasick
	Name:	Mark Karasick
	Title:	Managing Member

TENANT: MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	CFO

/s/ John R. Cuti  

John R. Cuti 

General Counsel 

PAGE 12

EXHIBIT A

DESCRIPTION OF ADDITIONAL SPACE

     

EXHIBIT B

LANDLORD’S ADDITIONAL SPACE WORK

1.	Deliver the Additional Space vacant and in broom clean condition with all existing improvements demolished.
2.	Furnish and install demising wall(s)/partition(s) to separate the Premises from the balance of the tenth (10th) Floor; all demising wall(s)/partitions shall receive Building standard insulation.
3.	Paint the Additional Space using Building standard paint (one (1) Building standard color [to be selected by Tenant from Building standard color chart/palette]), with one (1) primer coat and two (2) coats of such Building standard paint on all surfaces being painted.
4.	Scrape, patch and deliver floor of the Additional Space reasonably level to receive Tenant’s floor coverings. Landlord shall use commercially reasonable due diligent efforts to remove hydraulic fluid stains on the floor of the Additional Space.
5.	Refurbish all windows in the Additional Space, including replacement of defective panes, application of putty/silicone where necessary and acid clean window glass.
6.	Deliver twelve (12) watts per usable square foot of electric power to a Building standard panel in the Additional Space.
7.	Refurbish core lavatories to be ADA compliant. Landlord shall allow Tenant to construct private ADA compliant lavatories within the Additional Space at Tenant’s cost. Core lavatories shall be refurbished consistent to the Building standard applicable to the core lavatories on the eighth (8th) floor of the Building.
8.	Landlord to provide availability of connection points for Tenant’s strobes, speakers and related Class E connections. All Building fire and safety systems shall be in full service and available for connection to the Additional Space. Landlord shall also install strobes, smoke detectors, speakers and associated equipment as required by law in the common areas and in the core lavatories.
9.	Provide steam heat to the Additional Space. Landlord to install new perimeter radiators in the Additional Space.
10.	Elevator signaling devices to be installed and in good working order and appearance and to code.

EX-10.3

EXHIBIT 10.3

Letter Agreement

April 17, 2008

Martha Stewart

Dear Martha:

I write with respect to that certain Location Rental Agreement (the “Agreement”) by and between Martha Stewart Living Omnimedia, Inc. (“MSLO”), a Delaware corporation, and you, entered into as of September 17, 2004, which Agreement was extended by a letter agreement between you and MSLO dated September 12, 2007.

It has been agreed that the parties will continue to negotiate an Intangible Asset License Agreement, which will replace the Agreement. The Intangible Asset License Agreement will require MSLO to pay an increased fee to you in connection with the use of your properties (the “Properties”), among other things. As a good faith gesture to you during the on-going negotiation of the Intangible License Agreement, MSLO agrees to pay you $100,000 (the “Payment”), which Payment will be credited against any amount that may be due to you during 2008 under the Intangible Asset License Agreement if such Intangible Asset License Agreement is executed. If the Intangible Asset License Agreement is not executed prior to March 31, 2009 or if either party, upon 30 days’ written notice to the other at an earlier date after December 31, 2008 (and prior to execution of such Intangible Asset License Agreement) terminates its negotiations concerning such Intangible Asset License Agreement (under such circumstances, March 31, 2009 or such earlier date, the “Repayment Trigger”), and in either case, unless the parties do not reach another agreement with respect to the matters, you shall repay the Payment to MSLO within 30 days of the Repayment Trigger..

MSLO looks forward to continued good faith negotiations with you regarding the Intangible Asset License Agreement. MSLO considers the Payment a payment to allow for continued access to the Properties pending the finalization and execution of the Intangible Asset License agreement. The Payment shall not be construed as the satisfaction of any other obligations MSLO or you have to the other party under any other agreement or arrangement. Nothing contained herein shall in any way compromise the rights of the parties with respect to future negotiations and/or prior agreements or arrangements.

Please acknowledge your understanding and acceptance of these terms by executing below where indicated and returning a copy to us.
Best regards,

/s/ Susan Lyne

Susan Lyne
Chief Executive Officer

Agreed to, acknowledged and accepted:

/s/ Martha Stewart               
Martha Stewart

EX-10.4

EXHIBIT 10.4

PUBLICITY RIGHTS LICENSE AGREEMENT

     PUBLICITY RIGHTS LICENSE AGREEMENT (this “Agreement”), dated as of April 2, 2008 (the "Effective Date”), among Emeril J. Lagasse, III (“Licensor”), on the one hand, and MARTHA STEWART LIVING OMNIMEDIA, INC., a Delaware corporation (“MSLO”), and MSLO EMERIL SHARED IP SUB LLC, a Delaware limited liability company and wholly-owned subsidiary of Acquisition Sub (“Shared IP Sub” and together with MSLO, “Licensees” and each, a “Licensee”), on the other hand.

RECITALS

     A. Pursuant to the Asset Purchase Agreement, dated as of February 18, 2008 (the “Purchase Agreement”), Licensor, emerils.com, LLC, a Louisiana limited liability company (“emerils.com”), and Emeril’s Food of Love Productions, L.L.C., a Louisiana limited liability company (together with Licensor and emerils.com, the “Sellers”), have agreed to sell to Licensees the Business on the Effective Date.

     B. In consideration for the payment of the Purchase Price (as defined in the Purchase Agreement) and the assumption by Acquisition Sub and Shared IP Sub of certain liabilities and obligations of the Sellers in connection with the Business, Licensor has, among other things, agreed to license the Lagasse Publicity Rights to the Licensees.

     C. It is a condition to the Closing (as defined in the Purchase Agreement) under the Purchase Agreement that Licensor and Licensees execute and deliver a license agreement on the following terms and conditions by which Licensor will grant to Licensees a license to use the Lagasse Publicity Rights and such other rights as are set forth herein.

AGREEMENT

     In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
DEFINITIONS

          Section 1.01 Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Purchase Agreement. The following terms shall have the following meanings when used in this Agreement:

     “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

     “Business” means the business being acquired by the Licensees on the Effective Date of, among other things, licensing, marketing, distributing and selling products and services related to Licensor and his persona, identity and professional services in various forms and media throughout the world; provided, however, that the term “Business” expressly shall exclude the Restaurant Business.

     “Governmental Authority” means any United States or non-United States national, federal, state or local governmental, regulatory or administrative authority, agency or commission or any judicial or arbitral body.

     “Lagasse Employment Agreement” means the employment agreement between Licensor and MSLO, in the form attached as Exhibit D to the Purchase Agreement.

     “Lagasse Publicity Rights” means the name, image, likeness, voice, personal history and other aspects of the persona and identity of Licensor.

     “Law” means any statute, law, ordinance, regulation, rule, code, injunction, judgment, decree or order of any Governmental Authority.

     “Marks” means all intellectual property rights arising from or associated with trade names, trademarks and service marks (registered and unregistered), trade dress and similar rights and applications to register any of the foregoing, whether protected, created or arising under the Laws of the United States or any other jurisdiction.

     “Permitted Activities” or “Permitted Activity” means the following activities: (i) the Restaurant Business, (ii) any events or activities relating to The Emeril Lagasse Foundation and participation in charitable events and service on the boards of directors of other charitable organizations, (iii) the making of real estate investments and Passive Investments, (iv) the Resale Business and (v) personal, non-commercial activities of Licensor; provided, that, during the Relationship Period, if any or all of the Restaurant Business is conducted in a manner that involves moral turpitude or illegal behavior (other than incidental, non-continuing illegal behavior), then the Restaurant Business or portion thereof, as applicable, shall not constitute a Permitted Activity. “Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

     “Relationship Period” means the period from and after the Effective Date through (i) the 13th anniversary of the Effective Date in the event that, prior to the 10th anniversary of the Effective Date, Licensor’s employment pursuant to the Lagasse Employment Agreement is terminated for any reason other than (A) by MSLO without Cause (as defined in the Lagasse Employment Agreement) or (B) by Licensor with Good Reason (as defined in the Lagasse Employment Agreement) or (ii) three years after the end of the Employment Term (as defined in the Lagasse Employment Agreement) in any other circumstance.

     “Relationship Period Business” means the Business as conducted at any time during the Relationship Period, including any business activities of MSLO or any of its Affiliates during the Relationship Period relating to the licensing, marketing, distributing and selling of Business Products, as such activities evolve or expand during (but not after) the Relationship Period.

     “Resale Business” means the business conducted by the Sellers, which business is conducted solely through websites owned and operated by the Sellers or on the premises of the headquarters of Homebase, relating exclusively to the resale of Business Products that are purchased by a Seller from a licensee of Business Intellectual Property or Lagasse Publicity Rights that is obligated (i) under a Contract being assigned to and assumed by the Buyers at the

2

Closing to pay royalties to such Seller in respect of such purchase (and which royalties will be payable to the Buyers following the Closing) or (ii) under a written agreement that Buyers or any of their Affiliates enter into following the Closing to pay royalties to the Buyers or such Affiliate in respect of such purchase; provided such purchase and resale by such Seller is not prohibited under the terms and provisions of any such Contract or any current or future agreements or arrangements of the Relationship Period Business, the Buyers or any of their Affiliates; and provided, further, that the Sellers acknowledge and agree that nothing in this definition of Resale Business shall create any separate or additional rights in the Sellers under any such Contract, agreements or arrangements or any obligation of the Buyers or any of their Affiliates with respect thereto, including with respect to any provisions therein that, directly or indirectly, limit or restrict the resale or distribution of such products, and, for the avoidance of doubt, the Buyers and their respective Affiliates expressly shall be permitted to, in their sole and absolute discretion, enter into agreements or arrangements related to the use or exploitation of Business Products, which agreements would, absent the consent of the counterparty(ies) to such agreements, prohibit parties other than such counterparty(ies) from distributing or reselling such Business Products.

     “Restaurant Business” means (i) the restaurant business and similar businesses which are open to the general public and sell perishable prepared food for consumption on or off the premises, including, but not limited to, fine dining restaurants, coffee shops, fast food restaurants, kiosks and family style restaurants, and (ii) any activities or businesses exclusively related thereto and, in each case, which use or exploit the Lagasse Publicity Rights; provided that for the avoidance of doubt, (1) the marketing and sale on the premises of such restaurants or similar businesses or on the Internet of any merchandise related exclusively to such restaurants or similar businesses and (2) the catering business solely to the extent such business is conducted on a localized basis, shall each be included in this definition of Restaurant Business.

          Section 1.02 Interpretation. The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Terms defined in the singular shall have correlative meanings when used in the plural, and vice versa. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a section, exhibit or schedule, such reference shall be to a Section, Exhibit or Schedule to this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” unless preceded by the word “not.”

ARTICLE II
LICENSE OF LAGASSE PUBLICITY RIGHTS

          Section 2.01 Grant of License. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensees, effective upon the Effective Date, an exclusive, perpetual, irrevocable, royalty-free, fully paid-up, worldwide license to use, copy, display, perform, distribute and otherwise commercially exploit, in any manner and in any medium now known or hereinafter devised or created (including by creating or having created media in which Lagasse Publicity Rights are embodied for use in connection with the marketing or distribution of products and services), the Lagasse Publicity Rights in connection with any and all businesses,

3

products or services, excluding only the Permitted Activities other than the Resale Business and other uses reserved to Licensor under Section 2.04; provided, that with respect to the Resale Business, such license shall be non-exclusive; and provided, further, after the termination or expiration of the Relationship Period, the exclusive license of the Lagasse Publicity Rights granted to the Licensees hereunder shall be limited to the use and commercial exploitation of the Lagasse Publicity Rights solely in connection with the Relationship Period Business that is thereafter conducted by MSLO and its Affiliates. Without limiting the generality of the foregoing, Licensor agrees that, as a result of the exclusive rights granted to the Licensees hereunder, Licensor shall have no right to, and Licensor shall not, directly use, copy, display, perform, distribute or otherwise commercially exploit any Lagasse Publicity Rights, or authorize any other person to use, copy, display, perform, distribute or otherwise commercially exploit any Lagasse Publicity Rights (i) during the Relationship Period, other than in connection with the Permitted Activities, and (ii) in connection with a business that competes, directly or indirectly, with the Relationship Period Business, whether during or after the Relationship Period. The license granted by Licensor herein shall not extend to any use of the Lagasse Publicity Rights that is illegal or libelous or that otherwise would reasonably be expected to substantially diminish the value and goodwill associated with the Lagasse Publicity Rights; provided, that Licensees’ use of the Lagasse Publicity Rights in connection with the Relationship Period Business shall be deemed not to diminish the value and goodwill associated with the Lagasse Publicity Rights.

          Section 2.02 Pre-Existing Rights. The exclusive rights granted to the Licensees in Section 2.01 are subject to any pre-existing rights granted by Licensor with respect to the Lagasse Publicity Rights to a third party under an agreement relating to the Business that the Sellers are assigning to the Licensees at the Effective Date under the Purchase Agreement.

          Section 2.03 Right to Sublicense. Licensor hereby grants to Licensees the right to sublicense the rights granted by Licensor in Section 2.01 to Affiliates of the Licensees and to any distributors, resellers, business partners or other third parties that are working with the Licensees in connection with the development, manufacture, marketing, sale or distribution of products or services relating to the Relationship Period Business; provided, that such sublicensees agree to comply with all of the restrictions on the Licensees’ use and exploitation of the Lagasse Publicity Rights contained in this Article II.

          Section 2.04 Reservation of Rights. For the avoidance of doubt, nothing in this Agreement shall prevent or limit Licensor from using or otherwise exploiting any of the Lagasse Publicity Rights for or in connection with: (i) the Permitted Activities and (ii) after the Relationship Period, (A) subject to Section 2.05, business activities or other endeavors unrelated to a business that competes, directly or indirectly, with the Relationship Period Business or (B) his employment by, acceptance of a position as dean of, or other affiliation with, any culinary school or other university, college or other academic institution.

          Section 2.05 Consent Rights.

     (a) Except for the engagement by Licensor in the Permitted Activities or, after the Relationship Period, his employment by, acceptance of a position as dean of, or other affiliation with, any culinary school or other university, college or other academic institution, none of which shall be subject to the provisions of this Section 2.05,

4

following the expiration of the Relationship Period, Licensor shall provide MSLO with advance written notice of his intent to engage in any new business activity or other endeavor that is outside the scope of the Restaurant Business (the “Proposed Business”), which notice shall provide in reasonable detail a description of the Proposed Business, and Licensor shall not, without the prior written consent of MSLO, which consent shall not be unreasonably withheld, directly or indirectly use or otherwise exploit any of the Lagasse Publicity Rights in connection with any such Proposed Business if MSLO reasonably determines in good faith that such use or exploitation could reasonably be expected to have a significant chance of causing an Adverse Impact (as defined below) on the Relationship Period Business.

     (b) MSLO shall complete its review of the Proposed Business no later than 30 days following its receipt of the written notice referenced in Section 2.05(a) above. In the event that MSLO reasonably determines in good faith that the Proposed Business could reasonably be expected to have a significant chance of causing an Adverse Impact on the Relationship Period Business, MSLO may, within such 30-day period, so inform Licensee in writing (a “MSLO Objection”), setting forth MSLO’s objections in reasonable detail. If no MSLO Objection is received by Licensor within such 30-day period, then Licensor may use or otherwise exploit any of the Lagasse Publicity Rights in connection with such Proposed Business, as such Proposed Business was described in the notice provided to MSLO by Licensor pursuant to Section 2.05(a), and in accordance with all applicable Laws.

     (c) In the event that Licensor disputes MSLO’s determination that the Proposed Business could reasonably be expected to have a significant chance of causing an Adverse Impact on the Relationship Period Business, Licensor may, no later than 30 days following his receipt of a MSLO Objection, so inform MSLO in writing (a “Lagasse Dispute Notice”). If no Lagasse Dispute Notice is received by MSLO within such 30-day period, then Licensor shall not use or otherwise exploit any of the Lagasse Publicity Rights in connection with such Proposed Business.

     (d) In the event MSLO timely receives a Lagasse Dispute Notice pursuant to Section 2.05(c) above, then within 30 days of MSLO’s receipt of such Lagasse Dispute Notice, each party shall give written notice to the other party identifying its selection of a brand consultant recognized in the industry (each, a “Brand Consultant Notice”). Without limiting the foregoing and by way of example, the following entities would be deemed a “brand consultant recognized in the industry” for purposes of this Section 2.05(d): Public Strategies, Inc. or similar consultants. Within 30 days of the date on which the later of such Brand Consultant Notices is provided, the two brand consultants jointly shall appoint a third brand consultant recognized in the industry who shall, together with the two party-appointed brand consultants (collectively, the “Arbitrators”), determine whether the Proposed Business could reasonably be expected to have a significant chance of causing an Adverse Impact on the Relationship Period Business. Any decision by the Arbitrators shall be final and binding upon the parties. The costs of any dispute resolution pursuant to this Section 2.05(d), shall be paid as follows: each party shall pay the fees and expenses of the Arbitrator appointed by such party, and the parties shall bear equally the fees and expenses of the third Arbitrator.

5

For purposes of this Section 2.05, a business activity or other endeavor could reasonably be expected to have a significant chance of causing an “Adverse Impact” if it involves moral turpitude illegal behavior(other than incidental, non-continuing illegal behavior, (y) has a reasonable prospect of polarizing a substantial segment of the consumer market for the Relationship Period Business or has a reputation for doing so or (z) engages in predatory practices or has a reputation for doing so.

          Section 2.06 Trademarks and Service Marks. Licensor acknowledges that Licensees are acquiring at the Effective Date, and thereafter shall have the sole and exclusive right to file for and obtain, state, federal and foreign registrations for Marks that embody Lagasse Publicity Rights, it being agreed that, if Licensor or any of its Affiliates desire that any new state, federal or foreign registrations for Marks that embody Lagasse Publicity Rights be obtained for use in connection with the Restaurant Business or, following the end of the Relationship Period, any Proposed Business with which Licensor is authorized to use and exploit the Lagasse Publicity Rights pursuant to Section 2.05 hereof, Licensor may request in its reasonable business judgment that Shared IP Sub, at Licensor’s sole cost, file for and obtain any such state, federal or foreign registrations of such Marks, following which such Marks shall be licensed by Shared IP Sub to Food of Love pursuant to the Trademark License Agreement..

          Section 2.07 Irrevocability of License. Except as otherwise provided in this Section 2.07, the license granted by Licensor in Section 2.01 is irrevocable and will remain in effect perpetually. In the event of any breach of any term of this Article II by Licensees during the Relationship Period, the sole remedy of Licensor shall be to bring a claim for monetary damages, and during the Relationship Period, Licensor shall not have, and accordingly irrevocably waives, his right to seek injunctive or equitable relief against Licensees, including any remedy that would involve rescission or other termination of the license granted in Section 2.01 hereof. Following the Relationship Period, Licensor may, in addition to any other remedies available to him, seek injunctive or equitable relief against Licensees without the posting of any bond in connection therewith, in the event of any breach of any term of this Article II by Licensees.

          Section 2.08 Disclaimer. Licensees acknowledge that Licensor makes no representation or warranty to Licensees as to whether (i) the laws of any jurisdiction other than the United States recognize rights by which an individual can control the commercial exploitation of his or her name, likeness, voice or persona or (ii) the Lagasse Publicity Rights can be enforced by Licensor or any Licensee against third parties in any jurisdiction other than the United States. Subject to the representations and warranties by Sellers in the Purchase Agreement, Licensees agree and acknowledge that Licensor makes no representation or warranty in this Agreement as to whether the use or exploitation of any Lagasse Publicity Rights in any jurisdiction other than the United States will infringe or violate any intellectual property rights of any third party.

ARTICLE III
MISCELLANEOUS PROVISIONS

          Section 3.01 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by either party without the prior written consent of the other party, and any such assignment without such prior written consent shall be null and void; provided,

6

however, that Licensees may assign this Agreement to any Affiliate of the Licensees or any purchaser of all or substantially all of the Relationship Period Business without the prior consent of the Sellers. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. Notwithstanding the foregoing, Licensees agree and acknowledge that (i) during the Relationship Period, Licensor is free to use or exploit the Lagasse Publicity Rights in connection with the Permitted Activities in any manner (including through the grant of exclusive licenses or a full or partial assignment to any person, but excluding the grant of any license to any unaffiliated third party with respect to the Resale Business), subject to such use or exploitation not involving the conduct of the Restaurant Business in a manner that involves moral turpitude or illegal behavior (other than incidental and non-continuing illegal behavior), and (ii) after the Relationship Period, Licensor is free to use or exploit the Lagasse Publicity Rights in any manner (including through the grant of exclusive licenses or a full or partial assignment to any person) in connection with the Permitted Activities (subject to such use or exploitation not involving the conduct of the Restaurant Business in a manner that involves moral turpitude or illegal behavior (other than incidental and non-continuing illegal behavior)), any culinary school or other university, college or other academic institution with which Licensor becomes affiliated and any Proposed Business with respect to which Licensor is permitted to exercise the Lagasse Publicity Rights in compliance with the provisions of Section 2.05 (and subject to the requirement that the exploitation of rights not involve a business that competes, directly or indirectly, with the Relationship Period Business). 

          Section 3.02 Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each party and otherwise as expressly set forth herein.

          Section 3.03 Waiver. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of any party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by such party if an individual or a duly authorized officer on behalf of such party if an entity.

          Section 3.04 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first business day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

7

if to Licensor, to:
	Attention:
	Facsimile:
with a copy (which shall not constitute notice) to:
	Lowe, Stein, Hoffman, Allweiss & Hauver L.L.P. One Shell Square 701 Poydras Street, Suite 3600  New Orleans, LA 70139 Attention: Mark Stein, Esq. Facsimile: (504) 581-2461
if to Licensees, to:
	c/o Martha Stewart Living Omnimedia, Inc. 11 W. 42nd Street, 25th Floor  New York, New York 10036 Attention: General Counsel Facsimile: (212) 827-8188
with a copy (which shall not constitute notice) to:
	Gibson, Dunn & Crutcher LLP 200 Park Avenue, 47th Floor  New York, New York 10166 Attention: Barbara L. Becker, Esq. Facsimile: (212) 351-6202

          Section 3.05 Interpretation. When a reference is made in this Agreement to a Section or Article such reference shall be to a Section or Article of this Agreement unless otherwise indicated. The headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation”, unless otherwise specified.

          Section 3.06 Entire Agreement. This Agreement together with the Purchase Agreement constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the parties with respect to the subject matter hereof and thereof. Neither this Agreement nor the Purchase Agreement shall be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any party with respect to the transactions contemplated hereby or thereby other than those expressly set forth herein or therein or in any document required to be

8

delivered hereunder or thereunder, and none shall be deemed to exist or be inferred with respect to the subject matter hereof. Notwithstanding any oral agreement or course of action of the parties or their representatives to the contrary, no party to this Agreement shall be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

          Section 3.07 No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.

          Section 3.08 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal Laws of the State of New York, without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York (other than the conflicts of laws principles set forth in Section 5-1401 of the New York General Obligations Law, which shall apply to this Agreement).

          Section 3.09 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its or his successors or assigns shall be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if no such court has subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself or himself and with respect to its or his property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in New York, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it or he is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or he or its or his property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement or the subject matter hereof, may not be enforced in or by such courts.

          Section 3.10 Enforcement. Except as set forth in Section 2.07, the parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, except as set forth in Section 2.07, each of the parties shall be entitled to specific performance of the terms hereof and thereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this

9

Agreement in any New York State or federal court sitting in the Borough of Manhattan in the City of New York (or, if no such court has subject matter jurisdiction, in any appropriate New York State or federal court), this being in addition to any other remedy to which such party is entitled at law or in equity. Except as set forth in Section 2.07, each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security as a prerequisite to requesting or obtaining equitable relief.

          Section 3.11 Severability.Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

          Section 3.12 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          Section 3.13 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

          Section 3.14 Facsimile Signature. This Agreement may be executed by facsimile signature or by electronic mail and such signature shall constitute an original for all purposes.

          Section 3.15 No Presumption Against Drafting Party. Each of Licensor and Licensees acknowledges that it has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.

[The remainder of this page is intentionally left blank.]

10

     IN WITNESS WHEREOF, Licensor and Licensees have caused this Agreement to be duly executed as of the date first written above.

LICENSOR:
EMERIL J. LAGASSE III
By:	/s/ Emeril J. Lagasse III
LICENSEES:
MSLO SHARED IP SUB LLC
By:	/s/ Susan Lyne Name: Susan Lyne
	Title: President
MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Susan Lyne Name: Susan Lyne
	Title: CEO

11

EX-10.5

EXHIBIT 10.5

Letter Agreement

May 6, 2008

          Dear Robin:

          I am pleased to inform you that the Compensation Committee of the Board of Directors has approved paying you a spot bonus in the amount of $150,000, with the proviso that you be required to repay the Company $75,000 of that amount if you are no longer employed by the Company in 12 months.

          I ask you to sign below to indicate your understanding, agreement and acceptance of this bonus under the terms stated above.

All the best,

/s/ Susan Lyne

Susan Lyne

Acknowledged, Agreed to and Accepted:

/s/ Robin Marino                              
Robin Marino
Date: May 8, 2008

EX-10.6

EXHIBIT 10.6

LOAN AGREEMENT

dated as of April 4, 2008

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	Making the Loan		12
	2.2	Repayment Terms		13
	2.3	Use of Proceeds		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			14
	3.1	Loan Fee		14
	3.2	Waiver Fee		14
	3.3	Late Fee		14
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			16
	5.1	Conditions to Making the Loan		16
	5.2	Conditions to the Collateral Replacement Date		19
6.	Representations and Warranties			21
	6.1	Organization		21
	6.2	Authority and Consents		22
	6.3	Binding Agreement		22
	6.4	Litigation		22
	6.5	No Conflicts		22
	6.6	Information		22
	6.7	Compliance with Laws		23
	6.8	Permits, Franchises		23
	6.9	Other Obligations		23
	6.10	Taxes		23
	6.11	Investment Company		23
	6.12	No Default or Event of Default		23
	6.13	No Material Adverse Change		23
	6.14	Insurance		24
	6.15	ERISA Plans		24
	6.16	Solvency		24

i

			Page
7.	Affirmative Covenants			24
	7.1	Use of Proceeds		24
	7.2	Financial Information		24
	7.3	Notices		26
	7.4	Existence; Conduct of Business		26
	7.5	Compliance with Laws		27
	7.6	Maintenance of Properties		27
	7.7	Taxes and Other Obligations		27
	7.8	Books and Records; Inspection Rights		27
	7.9	Cash Collateral Account		28
	7.10	Maintenance of Insurance		28
	7.11	ERISA		28
	7.12	Additional Subsidiaries		28
	7.13	Activities of the SPE		29
	7.14	Post-Closing Covenant		29
	7.15	Further Assurances		29
8.	Financial Covenants			29
	8.1	Tangible Net Worth		29
	8.2	Funded Debt to EBITDA Ratio		29
	8.3	Parent Guarantor Basic Fixed Charge Coverage Ratio		29
	8.4	Borrower Basic Fixed Charge Coverage Ratio		29
	8.5	Quick Ratio		30
	8.6	Total Assets		30
9.	Negative Covenants			30
	9.1	Other Debts		30
	9.2	Other Liens		32
	9.3	Dividends and Distributions		33
	9.4	Investments		34
	9.5	Loans		35
	9.6	Asset Sales		35
	9.7	Capital Expenditures		36
	9.8	Transactions with Affiliates		36
	9.9	Additional Negative Covenants		37
10.	Default and Remedies			38
	10.1	Failure to Pay		38
	10.2	False Information; Representations and Warranties		38
	10.3	Covenant Default		38
	10.4	Covenant Default after Cure Period		38
	10.5	Other Bank Agreements		38
	10.6	Cross Default		38
	10.7	Bankruptcy		39
	10.8	Lien Property		39
	10.9	Judgments		39
	10.10	Material Adverse Change		39

ii

			Page
	10.11	Governmental Action		39
	10.12	ERISA Plans		39
	10.13	Loan Document Ceases to be Binding		40
	10.14	Breach under License		40
	10.15	Change of Control		40
11.	Remedies Upon Default			40
12.	Notices			40
13.	Miscellaneous			41
	13.1	Fees and Expenses		41
	13.2	Indemnification		42
	13.3	Cumulative Rights and No Waiver		42
	13.4	Applicable Law		43
	13.5	Successors and Assigns		43
	13.6	Amendment		43
	13.7	Entire Agreement		43
	13.8	Inconsistency		43
	13.9	Headings		43
	13.10	Severability; Waivers		43
	13.11	Survivability		44
	13.12	Counterparts		44
	13.13	Dispute Resolution; Waiver of Jury Trial		44
	13.14	Limitation on Interest and Charges		46
	13.15	Confidentiality		46

Exhibit A	Form of Guaranty
Exhibit B	Form of Security Agreement
Schedule 1.1(a)	Designated Consents
Schedule 7.14	Post-closing Covenant
Schedule 9.1	Existing Debt
Schedule 9.2	Existing Liens
Schedule 9.8	Certain Affiliate Transactions

iii

LOAN AGREEMENT

     This Loan Agreement (this “Agreement”) dated as of April 4, 2008 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 has 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 have agreed to sell to Parent Guarantor and SPE, and Parent Guarantor and SPE have agreed to purchase, 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 will be owned by the Borrower, a newly formed subsidiary of Parent Guarantor, other than the Shared Intellectual Property (as defined in the Purchase Agreement), which will be owned by the SPE;

     WHEREAS, Parent Guarantor has requested that the Bank, and the Bank has agreed to, subject to all of the terms and conditions hereunder, provide 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;

     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 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).

     “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.

2

     “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) 1.00% during the period from the Closing Date to and including the Collateral Replacement Date and (ii) 2.85% 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.

     “Borrower FCCR Initial Measurement Date” has the meaning set forth in Section 8.4.

     “Borrower FCCR Second Measurement Date” has the meaning set forth in Section 8.4.

3

     “Borrower FCCR Third Measurement Date” has the meaning set forth in Section 8.4.

     “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 Pledge Agreement or, after the Collateral Replacement Date, 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).

     “Closing Date” means the date on which the Loan is made hereunder after all of the conditions precedent set forth in Section 5.1 have been satisfied or, at the sole discretion of the Bank, waived.

     “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 Pledge Agreement and, after the Collateral Replacement Date, the Security Agreement.

     “Collateral Agent” has the meaning ascribed to such term in the Pledge Agreement or, after the Collateral Replacement Date, the Security Agreement.

     “Collateral Replacement Date” means the date, if any, on which the Security Agreement has been delivered by Parent Guarantor and the Borrower and all of the other conditions precedent set forth in Section 5.2 have been satisfied or, at the sole discretion of the Bank, waived.

     “Confidentiality Agreement” has the meaning set forth in Section 13.15.

     “Continuing Directors” means the directors of Parent Guarantor on the Closing Date, and each other director, if in each case, such other directors’ nomination

5

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 the Collateral Replacement Date made by the Borrower in favor of the Collateral Agent, 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).

     “Designated Consents” means written consents of each party to the contracts and agreements described in Schedule 1.1(a) to the assignment of each such contract or agreement by Parent Guarantor to the Borrower, each such consent to be in form and substance reasonably satisfactory to the Bank; provided, however, that any Required Consent shall be deemed to be a satisfactory Designated Consent if such Required Consent does not require any further consent from the party to the applicable contract or agreement for such contract or agreement to be assigned from Parent Guarantor to the Borrower.

     “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. 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.

6

     “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.

     “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.

7

     “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.

     “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, substantially in the form of Exhibit A hereto, 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 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 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

8

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.

     “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 Pledge Agreement, any Interest Rate Agreements between a Loan Party and the Bank, and, after the Collateral Replacement Date, 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 Fee” has the meaning set forth in Section 3.1.

     “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

9

each case, but not limited to, all fees, costs, expenses and indemnity obligations hereunder and thereunder.

     “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.

     “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.

     “Pledge Agreement” means the Pledge Agreement dated as of April 4, 2008 between the Borrower and the Collateral Agent, as the same may be amended, amended and restated, modified or supplemented from time to time.

     “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.

     “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.

     “Required Consent” has the meaning set forth in the Purchase Agreement.

     “SEC” means the United States Securities and Exchange Commission, and any successor thereto.

     “Security Agreement” means the Security Agreement dated the Collateral Replacement Date between the Borrower and the Collateral Agent, substantially in form of Exhibit B hereto, as the same may be amended, amended and restated, modified or supplemented from time to time.

     “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.

10

     “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 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.

11

     “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.

     “Trademark Grant” means the Grant of Security Interest in Trademarks dated the Collateral Replacement Date made by the Borrower in favor of the Collateral Agent, substantially in the form of Exhibit A-2 to the Security Agreement, 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.

12

          (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 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 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 (except the Acquisition for purposes of the proviso to Section 8.4), 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 Making the Loan. The Bank agrees, on the terms and conditions hereinafter set forth, to make a term loan to the Borrower in a single disbursement on the Closing Date in the principal amount of $30,000,000 (the “Loan”), by delivery of same day funds in Dollars to the account or accounts specified by the Borrower in writing to the Bank prior to the Closing Date. Any portion of the Loan that is repaid or prepaid may not be reborrowed.

13

          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 beginning on June 30, 2008, with a final installment of $3,000,000 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 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. Prior to the Collateral Replacement Date, the Borrower may also prepay the outstanding principal amount of the Loan in accordance with Section 4(b) of the Pledge Agreement. 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 Use of Proceeds. The proceeds of the Loan shall be available (and the Borrower agrees that it shall use such proceeds) to finance a portion of the purchase price of the Acquired Business pursuant to the terms of the Purchase Agreement.

          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

14

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 Loan Fee. The Borrower agrees to pay a fee in the amount of $300,000 (the “Loan Fee”), which shall be fully-earned and shall be due and payable on the Collateral Replacement Date.

          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 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

15

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.

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 advances or repayments given, or purported to be given, by any one of the Authorized Individuals.

               (b) Advances will be deposited in and 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.

16

     5. Conditions Precedent.

          5.1 Conditions to Making the Loan. The obligation of the Bank to make the Loan hereunder 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 Guaranty, duly executed by each Guarantor;

               (c) the Bank shall have received the Pledge Agreement, duly executed by the Borrower, together with the following:

                    (i) the results of Lien searches as of a recent date conducted by a search service reasonably satisfactory to the Bank, and the Bank shall be satisfied that no Liens are outstanding on the assets of Parent Guarantor and its Subsidiaries (other than Immaterial Foreign Subsidiaries), including the Collateral or the Shared Intellectual Property, other than any Permitted Liens (as defined in the form of Security Agreement);

                    (ii) the results of copyright and trademark searches with respect to such of the Collateral and the Shared Intellectual Property as the Bank may elect, and the results of such searches shall be reasonably satisfactory to the Bank;

                    (iii) to the extent reasonably requested by the Bank, copies of proper Uniform Commercial Code financing statements, duly filed or ready for filing in all jurisdictions that the Bank may deem necessary in order to perfect the security interests created by the Pledge Agreement;

                    (iv) evidence reasonably satisfactory to the Bank that the Borrower shall have deposited or shall concurrently deposit by wire transfer of immediately available funds $30,000,000 in the Cash Collateral Account (as defined in the Pledge Agreement); and

                    (v) evidence that all other actions necessary or, in the good faith opinion of the Bank, desirable to perfect and protect the security interests created by the Pledge Agreement have been taken, in form and substance reasonably satisfactory to the Bank;

               (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 Closing Date required to be paid under this Agreement;

17

               (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 and, except with respect to the jurisdictions, if any, set forth on Schedule 7.14 for such Loan Party, from any other jurisdiction in which such Loan Party is required to qualify in order to conduct its business;

               (f) the Bank shall have received a certificate of the Secretary or Assistant Secretary of each Loan Party, dated the Closing Date and certifying (i) that such Loan Party’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, (ii) except in the case of MSI, that attached thereto is a true and complete copy of such Loan Party’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, (iii) that attached thereto is a true and complete copy of resolutions adopted by the directors or other appropriate persons of such Loan Party authorizing the execution, delivery and performance of each Loan Document and Transaction Document to which it is a party and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (iv) as to the incumbency and specimen signature of each of such Loan Party’s officers executing this Agreement or any other Loan Document delivered in connection herewith;

               (g) the Bank shall have received a certificate of the Borrower, dated the Closing Date and certifying (i) that the certificate of formation of the SPE 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, (ii) that attached thereto is a true and complete copy of the SPE’s limited liability company operating agreement, together with all amendments and other modifications thereto, as in effect on the date of such certificate, (iii) as to the matters described in clauses (m), (n) and (o) below, (iv) that attached thereto are true and complete copies of each Transaction Document and (v) that attached thereto is a true and complete copy of the SPE Borrower License Agreement.

               (h) the Bank shall have received an opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the Loan Parties, as to such matters as the Bank may reasonably request (provided that such opinion shall not be required to address the matters set forth in Schedule 7.14 with respect to MSI);

               (i) the Bank shall have received a copy of a consent executed by Lagasse, in form and substance reasonably satisfactory to the Bank, by which Lagasse consents to the pledge of the Publicity Rights License Agreement to the Collateral Agent and the subsequent assignment thereof in connection with an exercise of the Bank’s or the Collateral Agent’s rights and remedies under the Loan Documents (which arise after the occurrence of the Collateral Replacement Date);

18

               (j) the Bank shall have received evidence that prior to or simultaneously with the making the Loan hereunder, (i) the Acquisition shall be consummated in accordance with the terms of the Purchase Agreement, without any amendment or other modification thereof, or waiver of any condition thereto, that has not been consented to by the Bank in writing (such consent not to be unreasonably conditioned, withheld or delayed), (ii) the Sellers shall have delivered to Parent Guarantor (and the Bank shall have received copies of) all Required Consents, except for those the receipt of which has been waived by Parent Guarantor and the Bank in writing (such consent not to be unreasonably conditioned, withheld or delayed), (iii) the other Transaction Documents shall have been executed and delivered in substantially the forms thereof attached as exhibits to the Purchase Agreement, without any amendment or other modification thereof that has not been consented to by the Bank in writing (such consent not to be unreasonably conditioned, withheld or delayed), (iv) the assets acquired under the Purchase Agreement (other than the Shared Intellectual Property) shall be transferred and assigned to Parent Guarantor, in each case pursuant to documentation reasonably satisfactory to the Bank and (v) the Shared Intellectual Property shall be transferred and assigned to the SPE pursuant to documentation reasonably satisfactory to the Bank;

               (k) the Bank shall have received evidence of insurance required to be maintained by Section 7.10;

               (l) the Bank shall have received a written undertaking from the SPE, in form and substance satisfactory to it, that the SPE will comply with the provisions of the SPE LLC Agreement, including the limitations on indebtedness and liens provided therein;

               (m) the representations and warranties contained in Section 6 hereof and in the Pledge Agreement shall be true and correct in all material respects on and as of such 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;

               (n) 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;

               (o) no event shall have occurred and be continuing which, before or after giving effect to the Closing Date, the making of the Loan hereunder and the consummation of the Acquisition, 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”);

               (p) the corporate and capital structure of the Borrower and the SPE and their respective organizational documents shall be reasonably satisfactory to the Bank; and

19

               (q) 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.

          5.2 Conditions to the Collateral Replacement Date. The occurrence of the Collateral Replacement Date shall be subject to the fulfillment of the following conditions precedent to the satisfaction of the Bank and its counsel:

               (a) the Bank shall have received the Security Agreement, duly executed by the Borrower and Parent Guarantor, together with:

                    (i) the results of Lien searches as of a recent date updating the lien searches provided pursuant to Section 5.1(c)(i) conducted by a search service reasonably satisfactory to the Bank, and the Bank shall be satisfied that no Liens are outstanding on the assets of Parent Guarantor and its Subsidiaries (other than Immaterial Foreign Subsidiaries), including the Collateral or the Shared Intellectual Property, other than any Permitted Liens (as defined in the Security Agreement);

                    (ii) the results of copyright and trademark searches updating the searches conducted pursuant to Section 5.1(c)(ii) with respect to such of the Collateral and the Shared Intellectual Property as the Bank may elect, and the results of such searches shall be reasonably satisfactory to the Bank;

                    (iii) to the extent reasonably requested by the Bank, copies of proper Uniform Commercial Code financing statements, duly filed or ready for filing in all jurisdictions that the Bank may deem necessary in order to perfect the security interests created by the Security Agreement;

                    (iv) each of the Copyright Grant and the Trademark Grant, duly executed by the Borrower;

                    (v) confirmation that the Collateral Agent has received assignments of the Copyrights and Trademarks included in the Collateral, in the form attached to the Security Agreement as Exhibits B-1 and B-2, duly executed by the Borrower and in proper form for filing in the United States Copyright Office and the United Stated Patent and Trademark Office;

                    (vi) confirmation that the Collateral Agent has received certificates representing the outstanding equity interests in the Borrower accompanied by appropriate powers executed in blank; and

                    (vii) evidence that all other actions necessary or, in the good faith opinion of the Bank, desirable to perfect and protect the

20

security interests created by the Security Agreement have been taken, in form and substance reasonably satisfactory to the Bank;

               (b) the Bank shall have received evidence satisfactory to it that the Borrower shall concurrently pay to the Bank the Loan Fee and the accrued and unpaid fees and expenses of Paul, Weiss, Rifkind, Wharton & Garrison LLP as of the Collateral Replacement Date required to be paid under this Agreement;

               (c) the Bank shall have received a certificate of good standing with respect to each of Parent Guarantor and the Borrower, certified as of a recent date by the appropriate office in such Loan Party’s jurisdiction of organization;

               (d) 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 Collateral Replacement 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 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 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 each Loan Document and Transaction Document to which it is a party and that such resolutions have not been modified, rescinded or amended and are in full force and effect (or that the resolutions attached to the certificate delivered pursuant to Section 5.1(f) with respect to such Person have not been modified, rescinded or superseded as to the subject matter thereof 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 the Security Agreement or any other Loan Document delivered in connection therewith;

               (e) the Bank shall have received an opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the Loan Parties, as to such matters as the Bank may reasonably request;

               (f) the Bank shall have received a certificate of Parent Guarantor certifying that (i) the consent of Lagasse delivered to the Bank pursuant to Section 5.1(i) on the Closing Date has not been modified since the Closing Date and remains in full force and effect, (ii) since the Closing Date, Parent Guarantor has complied in all material respects with the covenants set forth in Section 3.02(h) and 5.03 of the form of Security Agreement as if such covenants were effective and binding on Parent Guarantor with respect to the relevant agreements and intellectual property rights included in the Acquired Business from and after the Closing Date and (iii) as to the matters described in clauses (i), (j) and (k) below;

21

               (g) the Bank shall have received evidence that prior to the Collateral Replacement Date, (i) Parent Guarantor shall have obtained (and the Bank shall have received copies of) all Designated Consents and such Designated Consents shall be in full force and effect, (ii) the assets comprising the Acquired Business (other than (A) the Shared Intellectual Property and (B) any contract or agreement that is not set forth on Schedule 1.1(a) and that requires the consent of any party to the assignment of such contract or agreement) shall be transferred and assigned by Parent Guarantor to the Borrower pursuant to documentation reasonably satisfactory to the Bank and (iii) the Shared Intellectual Property shall be transferred and assigned to the SPE pursuant to documentation reasonably satisfactory to the Bank;

               (h) the Bank shall have received evidence of insurance required to be maintained by Section 7.10;

               (i) 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 as if made on such date (except to the extent that such representations and warranties relate to a particular date in which case such representations and warranties shall be true and correct in all material respects on and as of such date);

               (j) 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;

               (k) no event shall have occurred and be continuing which, before or after giving effect to the Collateral Replacement Date, constitutes a Default or an Event of Default; and

               (l) 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 make the Loan provided for herein, each of Parent Guarantor and the Borrower hereby represents and warrants to the Bank as follows:

          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 (except with respect to the jurisdictions, if any, set forth on Schedule 7.14 for such Loan Party), in each case, except where the failure to so qualify or to be so licensed,

22

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.

          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.

23

          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 will be used solely as provided in Section 2.3. Neither the making of the Loan, nor the use of the proceeds thereof, will violate or be 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 will 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.

          6.12 No Default or Event of Default. No event has occurred and is continuing which, before or after giving effect to the Closing 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

24

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 Closing Date, on a pro forma basis after giving effect to the borrowing of the Loan hereunder and the consummation of the Acquisition, 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. To use the proceeds of the Loan only as specified in Section 2.3. 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.

          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

25

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) As soon as available, but in any event with sixty (60) days following the end of each fiscal quarter of the Borrower, submit to the Bank unaudited consolidated financial statements for the Borrower and the SPE 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 the Borrower as presenting fairly the financial condition and results of operations of the Borrower and the SPE on a consolidated basis in accordance with GAAP, subject, in the case of financial statements delivered for the first three fiscal quarters of each fiscal year, to normal year-end adjustments and the absence of footnotes;

               (d) 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 Closing Date, in the case of the first Compliance Certificate delivered hereunder) (A) no Loan Party has changed its legal name or form or

26

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);

               (e) Promptly upon sending or receipt, copies of any management letters sent or received by Parent Guarantor to or from its auditors; and

               (f) 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

27

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.

          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.

28

          7.9 Cash Collateral Account. After the occurrence of the Collateral Replacement Date, to cause all payments with respect to, or any proceeds of insurance claims related to, the Collateral to be made directly to the Cash Collateral 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 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). On and after the Collateral Replacement Date, 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 Closing Date

29

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.

          7.14 Post-Closing Covenant. To, and to cause each Loan Party to, take all necessary actions to satisfy the requirements set forth on Schedule 7.14 within the time frames specified on Schedule 7.14 unless waived or extended by the Bank in its sole discretion.

          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 second fiscal quarter in 2008 (except as provided in Section 8.4) 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 (x) 2.50 to 1.0 as of the last day of the second and third fiscal quarters of 2008 and (y) 2.75 to 1.0 thereafter.

          8.4 Borrower Basic Fixed Charge Coverage Ratio. Commencing with the last day of the of the first full fiscal quarter of the Borrower after the Collateral Replacement Date (such date, the “Borrower FCCR Initial Measurement Date”), 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

30

Borrower and the SPE for the four (4) quarter period ending on such day, to be less than 1.0 to 1.0; provided, however, that for purposes of the foregoing, the amount of consolidated EBITDA for the Borrower and the SPE for: (A) the four (4) consecutive fiscal quarter period ending on the Borrower FCCR Initial Measurement Date shall be deemed to be the amount of consolidated EBITDA for the Borrower and the SPE for the fiscal quarter of the Borrower ending on the Borrower FCCR Initial Measurement Date multiplied by four, (B) the four (4) consecutive fiscal quarter period ending on the last day of the fiscal quarter of the Borrower immediately following the Borrower FCCR Initial Measurement Date (such day, the “Borrower FCCR Second Measurement Date”) shall be deemed to be the amount of consolidated EBITDA for the Borrower and the SPE for the two (2) consecutive fiscal quarters of the Borrower ending on the Borrower FCCR Second Measurement Date multiplied by two and (C) the four (4) consecutive fiscal quarter period ending on the last day of the fiscal quarter of the Borrower immediately following the Borrower FCCR Second Measurement Date (such day, the “Borrower FCCR Third Measurement Date”) shall be deemed to be the amount of consolidated EBITDA for the Borrower and the SPE for the three (3) consecutive fiscal quarters of the Borrower ending on the Borrower FCCR Third Measurement Date multiplied by 4/3.

          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.

     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;

31

               (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) existing debt, lines of credit or letter of credit facilities described in Schedule 9.1 and refinancings 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;

32

               (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;

                    (iii) existing liens disclosed in writing to the Bank prior to the date hereof;

                    (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;

33

                    (viii) licenses of intellectual property rights granted in the ordinary course of business; provided, that prior to the Collateral Replacement Date, any such license of intellectual property rights included in the Acquired Business (A) would otherwise be permitted under the Security Agreement if the Security Agreement were then effective and such intellectual property rights constituted Collateral and (B) shall not prohibit or restrict Parent Guarantor from assigning such license to the Borrower;

                    (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 date hereof 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:

                    (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 (or prior to the Collateral Replacement Date, would be permitted under the Security Agreement if the Security Agreement were then effective and such intellectual property rights constituted Intellectual Property (as defined in the form of 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

34

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) 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) full fiscal quarters 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 the date hereof;

               (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) 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

35

Guarantor’s most recently ended four (4) full fiscal quarters 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 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) full fiscal quarters 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 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 date hereof;

               (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

36

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, including, without limitation, the transfer of the Acquired Business from Parent Guarantor to the Borrower contemplated in connection with the Collateral Replacement Date 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 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) after giving effect to such sale, 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) full fiscal quarters 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;

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 (i) exceed $15,000,000 during the 2008 fiscal year, or (ii) exceed $7,500,000 during any fiscal year thereafter (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

37

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 described on the exhibit list to Parent Guarantor’s Annual Report on Form 10-K for the year ended December 31, 2007 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).

               (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.

38

     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 Section 2.3, 7.1, 7.2, 7.3, 7.8, 7.12, 7.14, 8 or 9 of this Agreement, Section 4(b) of the Pledge Agreement or, after the Collateral Replacement Date, Section 3.02(a) of the Security 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 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

39

          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

          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:

40

               (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 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

41

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
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

42

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 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 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.

43

          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 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: (a) 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

44

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.” 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.

45

               (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) 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.

46

     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 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.

[This space left intentionally blank.]

     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/ Howard Hochhauser
	Name: Jane R. Heller		Name: Howard Hochhauser
	Title: Senior Vice President		Title: Vice President

PARENT GUARANTOR: MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	CFO

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 Loan Agreement]

EX-10.7

EXHIBIT 10.7

PLEDGE AGREEMENT

     PLEDGE AGREEMENT dated as of April 4, 2008 between MSLO Emeril Acquisition Sub LLC, a Delaware limited liability company (“Pledgor”), and Bank of America, N.A., as collateral agent (in such capacity, together with any successor collateral agent, the “Collateral Agent”) for the Secured Parties (as defined below).

     Reference is made to the Loan Agreement dated as of April 4, 2008 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), between the Borrower and Bank of America, N.A. (together with any successor or assigns, the “Lender”). The Lender has agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Loan Agreement. The obligations of the Lender to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. Accordingly, the parties hereto agree as follows:

     1. Definitions.

          (a) Loan Agreement. Capitalized terms used in this Agreement and not otherwise defined herein have the meanings specified in the Loan Agreement. All terms defined in the New York UCC (as defined herein) and not defined in this Agreement have the meanings specified therein; the term “instrument” shall have the meaning specified in Article 9 of the New York UCC. “UCC” means the New York UCC; provided that, if perfection or the effect of perfection or non-perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. The rules of construction specified in Article I of the Loan Agreement also apply to this Agreement.

          (b) Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

     “Accounts” has the meaning set forth in Section 2.

     “Aggregate Collateral Value” has the meaning set forth in Section 4.

     “Agreement” means this Pledge Agreement, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.

     “Bank” has the meaning set forth in Section 2.

     “Cash Collateral Account” has the meaning set forth in Section 2.

     “Collateral” has the meaning set forth in Section 2.

2

     “Collateral Agent” has the meaning set forth in the preamble to this Agreement.

     “Collateral Table” has the meaning set forth in Section 4.

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

     “Eligible Collateral” has the meaning set forth in Section 4.

     “Guaranty” means the Continuing and Unconditional Guaranty dated as of April 4, 2008 made by each Guarantor in favor of the Collateral Agent, as the same may be, amended, amended and restated, modified or supplemented from time to time.

     “Indemnitees” has the meaning set forth in Section 14(b).

     “Lender” has the meaning set forth in the preamble to this Agreement.

     “Loan Agreement” has the meaning set forth in the preamble to this Agreement.

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

     “Pledgor” has the meaning set forth in the preamble to this Agreement.

     “Secured Obligations” means, collectively, (i) the “Obligations” as defined in the Loan Agreement, (ii) the “Guaranteed Obligations” as defined in the Guaranty and (iii) all obligations and liabilities of Pledgor hereunder.

     “Secured Parties” means, collectively, the Bank, the Collateral Agent and all other Guarantied Parties (as defined in the Guaranty).

     “Securities Intermediary” has the meaning set forth in Section 13.

     “Security Interest” has the meaning set forth in Section 2.

     2. Grant of Security Interest. As security for the payment or performance, as the case may be, in full of the Secured Obligations, including without limitation, obligations under the Guaranty, Pledgor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) and right of set-off against, all right, title and interest in or to all of the following assets

3

and properties now owned or at any time hereafter acquired by Pledgor or in which Pledgor now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”):

          (a) (i) Account number ending in 1406537 held by Bank of America, N.A. (the “Bank”) as agent or custodian for Pledgor under an agreement for custody, safekeeping, investment management, investment advisory or similar services between Pledgor and Bank (the “Cash Collateral Account”);

               (ii) All successor and replacement accounts, regardless of the numbers of such accounts or the offices at which such accounts are maintained; and

               (iii) Any linked or related accounts or subaccounts held by any affiliate of Bank of America Corporation or any entity acting as clearing broker for any of the accounts (the accounts described in clauses (i), (ii) and (iii), collectively, the “Accounts”);

          (b) All rights of Pledgor in connection with the Accounts, including any rights against any securities intermediary, any affiliate of Bank of America Corporation or any clearing broker in connection with the Accounts;

          (c) All investment property, security entitlements, financial assets, certificated securities, uncertificated securities, money, deposit accounts, instruments, certificates of deposit, general intangibles, and all other investments or property of any sort now or hereafter held, maintained or administered in, or credited to, the Accounts; but excluding collective investment funds managed by Bank of America, N.A., including without limitation any interest in variable amount notes, commonly known as “master notes”; and

          (d) All present and future income, proceeds, earnings, increases, and substitutions from or for the Collateral of every kind and nature, including without limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock dividends, stock splits, stock rights, regulatory dividends, subscriptions, monies, claims for money due and to become due, proceeds of any insurance on the Collateral, shares of stock of different par value or no par value issued in substitution or exchange for shares included in the Collateral, and all other property Pledgor is entitled to receive on account of such Collateral, including accounts, documents, instruments, chattel paper, and general intangibles.

     3. Maintaining the Cash Collateral Account. Notwithstanding any other term or condition to the contrary in any other agreement relating to the Cash Collateral Account or any other Account, Pledgor (a) hereby grants “control” (within the meaning of Sections 9-106 and 8-106 of the UCC) of the Cash Collateral Account, the other Accounts and the other Collateral to the Collateral Agent and authorizes the Bank to accept instructions and entitlement orders from the Collateral Agent with respect to the Collateral without the further consent of Pledgor, (b) agrees that so long as this Agreement is in effect, Pledgor shall not be entitled to give instructions or entitlement orders to the Bank or any other Person with respect to the Collateral (except that Pledgor may request the Collateral Agent to give instructions to the Bank with respect to the Collateral in accordance with the terms of this Agreement) and Pledgor shall not grant “control” (within the meaning of Sections 9-106 and 8-106 of the UCC) of the Collateral

4

Account and the other Collateral to any other Person and (c) except as provided by the provisions of Sections 4(c) and 17(k), no asset or amount in the Accounts shall be paid or released to or for the account of Pledgor.

     4. Collateral Maintenance.

          (a) On the date hereof, Pledgor has deposited in the Cash Collateral Account $30,000,000 in cash. If requested by Pledgor, the Collateral Agent may direct the Bank to invest amounts on deposit in the Cash Collateral Account in one or more money market funds that the Collateral Agent may approve in its sole discretion; provided, however, that any such money market fund investments are permitted pursuant to Parent Guarantor’s board approved investment policy as previously provided by Parent Guarantor to the Collateral Agent. At all times during the term of this Agreement, Pledgor agrees to maintain in the Cash Collateral Account, as security for the Secured Obligations, Collateral of a type described on the table set forth below this paragraph (collectively, the “Collateral Table”) and otherwise acceptable to the Collateral Agent (“Eligible Collateral”) with an Aggregate Collateral Value at least equal to the Outstanding Balance. “Aggregate Collateral Value” means, as of any date of determination, an amount equal to the product obtained by multiplying (i) the Collateral Value as of such date by (ii) the Margin Call Percentage shown on the following table (the “Collateral Table”) for the applicable type 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 a type not shown on the Collateral Table.

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

          (c) Subject to the other provisions of this Section 4 and any written agreement to the contrary with the Collateral Agent, if no Default or Event of Default has occurred and is continuing or would result from such action, upon any repayment or prepayment of the outstanding principal amount of the Loan, upon the request of Pledgor, the Collateral Agent shall release Collateral from the Cash Collateral Account having Collateral Value up to the lesser of (i) the principal amount of the Loan so repaid or prepaid and (ii) the amount by which the Aggregate Collateral Value exceeds the Outstanding Balance at the date of request (and direct the sale or trade of investments in the Cash Collateral Account to the extent necessary to do so);

5

provided that, after giving effect to any such release of Collateral, the Outstanding Balance is less than or equal to the Aggregate Collateral Value.

     5. Pledgor’s Covenants, Representations and Warranties. Pledgor covenants, represents and warrants that unless compliance is waived by the Collateral Agent in writing:

          (a) Pledgor is the legal and beneficial owner of all the Collateral free and clear of any and all liens, encumbrances, or interests of any third parties other than the security interest of Collateral Agent, for the benefit of the Secured Parties, and will keep the Collateral free of all liens, claims, security interests and encumbrances of any kind or nature, whether voluntary or involuntary, except the security interest of Collateral Agent, for the benefit of the Secured Parties.

          (b) Pledgor shall, at Pledgor’s expense, take all actions necessary or advisable from time to time to maintain the first priority and perfection of the security interest of the Collateral Agent in the Collateral and shall not take any actions that would alter, impair or eliminate said priority or perfection.

          (c) Pledgor agrees to pay prior to delinquency all taxes, charges, liens and assessments against the Collateral, and upon the failure of Pledgor to do so, the Collateral Agent at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same.

          (d) If any of the Collateral is margin stock as defined in Regulation U promulgated by the Board of Governors of the Federal Reserve System of the United States, Pledgor will provide Collateral Agent a properly executed Form U-1 Purpose Statement. Pledgor will comply with the requirements and restrictions imposed by Regulation U.

          (e) Pledgor’s exact legal name is correctly set forth on the signature page hereof. Pledgor will notify the Collateral Agent in writing at least twenty (20) days prior to any change in Pledgor’s name or identity.

          (f) Pledgor’s chief executive office is, and has been for the entire period of the existence of Pledgor, located, in the State of New York. Pledgor is organized under the laws of the State of Delaware. Pledgor shall give the Collateral Agent at least twenty (20) days’ prior written notice before changing the location of its chief executive office, type of organization, business structure or state of organization.

          (g) Pledgor’s organizational identification number assigned by the State of Delaware is correctly set forth on the signature page hereof. Pledgor shall promptly notify the Collateral Agent of any change of its organizational identification number.

     6. Collateral Agent Appointed Attorney-in-Fact. Pledgor hereby appoints the Collateral Agent the attorney-in-fact of Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after an Event of Default has occurred and is continuing, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the

6

right, upon the occurrence and during the continuance of an Event of Default (except in the case of clauses (b), (g) and (j), which right may be exercised at any time), with full power of substitution either in the Collateral Agent’s name or in the name of Pledgor (but subject to any applicable terms of this Agreement): (a) to endorse, receive, accept and collect all checks, drafts, other payment orders and instruments representing or included in the Collateral or representing any payment, dividend or distribution relating to any Collateral or to take any other action to enforce, collect or compromise any of the Collateral and to transfer any Collateral (including converting physical certificates to book-entry holdings) into the name of the Collateral Agent or its nominee or any broker-dealer (which may be an affiliate of the Collateral Agent); (b) to execute any control agreement covering any Collateral on Pledgor’s behalf and as attorney-in-fact for Pledgor in order to perfect the Collateral Agent’s first priority and continuing security interest in the Collateral and in order to provide the Collateral Agent with control of the Collateral, and Pledgor’s signature on this Agreement or other authentication of this Agreement shall constitute an irrevocable direction by Pledgor to any bank, custodian, broker dealer, any other securities intermediary or commodity intermediary holding any Collateral or any issuer of any letters of credit to comply with any instructions or entitlement orders of the Collateral Agent with respect to the Collateral without further consent of Pledgor; (c) to participate in any recapitalization, reclassification, reorganization, consolidation, redemption, stock split, merger or liquidation of any issuer of securities which constitute Collateral, and in connection therewith Collateral Agent may deposit or surrender control of the Collateral, accept money or other property in exchange for the Collateral, and take such action as it deems proper in connection therewith, and any money or property received on account of or in exchange for the Collateral shall be applied to the Indebtedness or held by the Collateral Agent thereafter as Collateral pursuant to the provisions hereof; (d) to exercise any right, privilege or option pertaining to any Collateral, but the Collateral Agent has no obligation to do so; (e) to file any claims, take any actions or institute any proceedings which Collateral Agent determines to be necessary or appropriate to collect or preserve the Collateral or to enforce the Collateral Agent’s rights with respect to the Collateral; (f) to execute in the name or otherwise authenticate on behalf of Pledgor any record reasonably believed necessary or appropriate by the Collateral Agent for compliance with laws, rules or regulations applicable to any Collateral, or in connection with exercising the Collateral Agent’s rights under this Agreement; (g) to file any financing statement relating to this Agreement electronically, and Collateral Agent’s transmission of Pledgor’s signature on and authentication of the financing statement shall constitute Pledgor’s signature on and authentication of the financing statement; (h) to make any compromise or settlement it deems desirable or proper with reference to the Collateral; (i) to do and take any and all actions with respect to the Collateral and to perform any of Pledgor’s obligations under this Agreement; and (j) to execute any documentation reasonably believed necessary by the Collateral Agent for compliance with Rule 144 or any other restrictions, laws, rules or regulations applicable to any Collateral hereunder that constitutes restricted or control securities under the securities laws. The foregoing appointments are irrevocable and coupled with an interest and shall not be revoked without the Collateral Agent’s prior written consent. To the extent permitted by law, Pledgor hereby ratifies all said attorney-in-fact shall lawfully do by virtue hereof.

     7. Voting Rights.

          (a) So long as no Event of Default shall have occurred and is continuing, Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to

7

the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or any document or agreement executed in connection herewith.

          (b) Upon the occurrence and during the continuance of an Event of Default, all rights of Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to subsection (a) above shall cease, and the Collateral Agent shall thereupon have the sole right to exercise such voting and other consensual rights.

     8. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may do any one or more of the following, to the extent permitted by law:

          (a) Exercise as to any or all of the Collateral all the rights, powers and remedies of an owner.

          (b) Enforce the security interest given hereunder pursuant to the UCC and any other applicable law.

          (c) Sell all or any part of the Collateral at any public or private sale in accordance with the UCC, without advertisement, in such manner and order as Collateral Agent may elect. Collateral Agent may purchase the Collateral for its own account at any such sale. The Collateral Agent shall give Pledgor such notice of any public or private sale as may be required by the UCC, provided that to the extent notice of any such sale is required by the UCC or other applicable law, Pledgor agrees that at least 10 (ten) days notice to Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and provided further that, if the Collateral Agent fails to comply with this sentence in any respect, its liability for such failure shall be limited to the liability (if any) imposed on it as a matter of law under the UCC or other applicable law. Pledgor acknowledges that Collateral may be sold at a loss to Pledgor, and that, in such event, the Collateral Agent shall have no liability or responsibility to Pledgor for such loss. Pledgor further acknowledges that a private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that no such private sale shall, to the extent permitted by applicable law, be deemed not to be “commercially reasonable” solely as a result of such prices and other sale terms. Upon any such sale, the Collateral Agent shall have the right to deliver, assign and transfer to the buyer thereof the Collateral so sold. Each buyer at any such sale shall hold the Collateral so sold absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that Pledgor has or may have under any law now existing or hereafter adopted. Without limiting any other rights and remedies available to the Collateral Agent, Pledgor expressly acknowledges and agrees that with respect to Collateral consisting of notes, bonds or other securities which are not sold on a recognized market, the Collateral Agent shall be deemed to have conducted a commercially reasonable sale of such Collateral if (i) such sale is conducted by any nationally recognized broker-dealer (including any affiliate of the Collateral Agent), investment banker or any other method common in the securities industry, and (ii) if the purchaser is the Collateral Agent or any Secured Party, the sale price received by such Person in connection with such sale is reasonably supported by

8

quotations received from one or more other nationally recognized broker-dealers, investment bankers or other financial institutions.

          (d) Enforce the security interest of Collateral Agent in any deposit account which is part of the Collateral by applying such account to the Secured Obligations.

          (e) Exercise any other remedy provided under this Agreement or by any applicable law.

          (f) Comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and such compliance will not be considered to affect adversely the commercial reasonableness of any sale or other disposition of the Collateral.

          (g) Sell the Collateral without giving any warranties as to the Collateral. Collateral Agent may specifically disclaim any warranties of title or the like. This procedure will not be considered to affect adversely the commercial reasonableness of any sale or other disposition of the Collateral.

     Pledgor agrees that the Collateral may be sold as provided for in this Pledge Agreement and expressly waives any rights of notice of sale, advertisement procedures, or related provisions granted under applicable law, including the New York Lien Law. All cash proceeds received by or on behalf of the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, following the payment of the fees and expenses of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied in whole or in part by the Collateral Agent to, the Secured Obligations in such order as the Collateral Agent may elect in accordance with the provisions of the Loan Documents. Any surplus of such cash or cash proceeds held by or on behalf of the Collateral Agent and remaining after payment in full of all the Secured Obligations shall be paid to Pledgor. If the proceeds of sale, collection or other realization of or upon the Collateral pursuant to this Section 8 are insufficient to cover the costs and expenses of such realization and the payment in full of all Secured Obligations, Pledgor and the Guarantors shall remain liable for any deficiency to the extent Pledgor and such Guarantors are obligated therefor under the other documents executed in connection with the Secured Obligations and this Agreement, as well as the fees and expenses of any Person employed by the Collateral Agent or any other Secured Party to collect such deficiency in accordance with Section 14.

     9. Right to Cure; Limitation on Collateral Agent’s Duties. If Pledgor fails to perform any agreement contained herein, the Collateral Agent may perform or cause performance of such agreement and the expenses of the Collateral Agent incurred in connection therewith shall be payable by Pledgor under Section 14. Any powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment

9

substantially equal to that which the Collateral Agent accords its own property, it being understood that the Collateral Agent shall not have any responsibility for (a) ascertaining, exercising or taking other action or giving Pledgor notice with respect to subscription rights, calls, conversions, exchanges, maturities, lenders or other matters relative to any Collateral, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Collateral. the Collateral Agent shall not be liable for any loss to the Collateral resulting from acts of God, war, civil commotion, fire, earthquake, or other disaster or for any other loss or damage to the Collateral except to the extent such loss is determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the Collateral Agent’s gross negligence or willful misconduct.

     10. Waivers. The Collateral Agent shall be under no duty or obligation whatsoever and Pledgor waives any right to require the Collateral Agent to (a) make or give any presentment, demands for performances, notices of nonperformance, protests, notices of protest or notices of dishonor in connection with any obligations or evidences of indebtedness held by the Collateral Agent as Collateral, or in connection with any obligation or evidences of indebtedness which constitute in whole or in part the Secured Obligations, (b) proceed against any Person, (c) proceed against or exhaust any collateral, or (d) pursue any other remedy in the Collateral Agent’s power; and Pledgor waives any defense arising by reason of any disability or other defense of any Loan Party or any other Person, or by reason of the cessation from any cause whatsoever of the liability of any Loan Party or any other Person. Until the Secured Obligations are paid in full, Pledgor waives any right of subrogation, reimbursement, indemnification, and contribution (contractual, statutory or otherwise), including without limitation any claim or right of subrogation under the Bankruptcy Code (Title 11 of the U.S. Code) or any successor statute, arising from the existence or performance of this Agreement, and Pledgor waives any right to enforce any remedy which the Collateral Agent or any Secured Party now has or may hereafter have against any Loan Party or against any other Person and waives any benefit of and any right to participate in any Collateral or security whatsoever now or hereafter held by the Collateral Agent or any Secured Party. Pledgor agrees that it is solely responsible for keeping itself informed as to all circumstances which bear upon the risk of nonpayment or the risk of a margin call or liquidation of the Collateral.

     11. Transfer, Delivery and Return of Collateral.

          (a) Pledgor shall immediately deliver or cause to be delivered to the Collateral Agent (or the Securities Intermediary, if any) (i) any certificates or instruments now or hereafter representing or evidencing Collateral and such certificates and instruments shall be in suitable form for transfer without restriction or stop order by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank in form and substance reasonably satisfactory to the Collateral Agent, and (ii) after an Event of Default has occurred and is continuing, in the same form as received (with any necessary endorsement), all dividends and other distributions paid or payable in cash in respect of any Collateral and any such amounts, if received by Pledgor, shall be received in trust for the benefit of the Collateral Agent, for the benefit of the Secured Parties, and be segregated from the other property or funds of Pledgor.

10

          (b) The Collateral Agent may at any time deliver the Collateral or any part thereof to Pledgor and the receipt by Pledgor shall be a complete and full acquittance for the Collateral so delivered, and the Collateral Agent shall thereafter be discharged from any liability or responsibility therefor.

     12. Continuing Agreement and Powers.

          (a) This is a continuing Agreement and all the rights, powers and remedies hereunder shall, unless otherwise limited herein, apply to all past, present and future Secured Obligations, including that arising under successive transactions which shall either continue the Secured Obligations, increase or decrease it, and notwithstanding the cessation of business, dissolution or bankruptcy of any Loan Party, or any other event or proceeding affecting any Loan Party.

          (b) Until all Secured Obligations shall have been paid in full, the power of sale and all other rights, powers and remedies granted to the Collateral Agent hereunder shall continue to exist and may be exercised by the Collateral Agent at the time specified hereunder irrespective of the fact that the Secured Obligations or any part thereof may have become barred by any statute of limitations. Pledgor waives the benefit of any statute of limitations as applied to this Agreement.

     13. Securities Intermediary. If permitted by the Collateral Agent, some or all of the Collateral may be held at a broker or other securities intermediary (the “Securities Intermediary”). Pledgor shall pay to the Securities Intermediary any charges or costs imposed by the Securities Intermediary. Pledgor at no time shall request that the Securities Intermediary release any Collateral to Pledgor, except as expressly permitted by the Collateral Agent. The Collateral Agent may require that Pledgor obtain a control agreement, signed by the Securities Intermediary, in form and substance reasonably acceptable to the Collateral Agent. The Collateral Agent may, at any time but in accordance with the terms of this Agreement and any control agreement, require the Securities Intermediary to do any or all of the following: (a) disburse any or all of the Collateral to the Collateral Agent; (b) allow the Collateral Agent (and not Pledgor) to exercise any rights relating to the Collateral; (c) sell some or all of the Collateral and remit the sales proceeds (less the Securities Intermediary’s normal sales charge) to the Collateral Agent; and (d) buy and sell Collateral only upon the instructions of the Collateral Agent (and not Pledgor). If the Collateral Agent assigns or transfers its rights under this Agreement and the Collateral Agent is the Securities Intermediary for any or all of the Collateral, Pledgor agrees that the Collateral Agent, in such capacity, is irrevocably directed by Pledgor to comply with instructions or entitlement orders with respect to such Collateral originated by any assignee or transferee of this Agreement without further consent of Pledgor.

     14. Costs; Indemnification.

          (a) Pledgor agrees to pay or reimburse (i) all costs and reasonable attorney’s fees incurred by the Collateral Agent and the Secured Parties in connection with the enforcement, collection or protection of its rights in connection with this Agreement and the other Loan Documents to which Pledgor is party, including its rights under this Section and (ii) all reasonable costs and expenses incurred by the Collateral Agent in the administration of

11

this Agreement and the other Loan Documents to which Pledgor is a party. As used in this paragraph, “attorneys’ fees” includes the allocated costs of in-house counsel. In addition, Pledgor agrees to, upon reasonable notice from the Collateral Agent, pay any and all stamp and other taxes or fees payable or determined to be payable in connection with the execution and delivery of this Agreement and the other documents to be delivered hereunder, and agrees to save the Collateral Agent 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.

          (b) Pledgor agrees to indemnify and hold the Collateral Agent and the other Secured Parties and their parent entities, 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 (i) this Agreement or any other Loan Document, the Security Interest or the Collateral and (ii) any litigation or proceeding related to or arising out of this Agreement, any such document, the Security Interest or the Collateral, 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). Under no circumstances shall any of the Indemnitees 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.

          (c) Any such amounts payable as provided hereunder shall be additional Secured Obligations secured hereby. The provisions of this Section 14 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 14 shall be payable upon demand.

     15. Notices. All notices and other communications hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 12 of the Loan Agreement, and (a) if given to Pledgor shall be sent to the address or fax number listed in Section 12 of the Loan Agreement, or to such other addresses or fax numbers as Pledgor may specify from time to time in writing and (b) if given to the Collateral Agent, shall be sent to the following address, or sent by facsimile to the fax number listed below, or to such other addresses as the Collateral Agent may specify from time to time in writing:

Collateral Agent:	Bank of America, N.A.
	767 Fifth Avenue, Floor 12A
	New York, New York 10153
	Attention: Jane R. Heller
	Telecopy: 212-407-5402

12

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

     16. Dispute Resolution Provision. The Dispute Resolution Provision as set forth in Section 13.13 of the Loan Agreement shall apply. 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.

     17. Miscellaneous.

          (a) Cumulative Rights and No Waiver. Each and every right granted to the Collateral Agent and the Secured Parties 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 Collateral Agent or the Secured Parties, and no delay in exercising any right shall operate as a waiver thereof, nor shall any single or partial exercise by the Collateral Agent or the Secured Parties of any right preclude any other or future exercise thereof or the exercise of any other right. Pledgor 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 Pledgor in any case shall, of itself, entitle Pledgor to any other or future notice or demand in similar or other circumstances.

          (b) 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 Collateral Agent or any Secured Party has greater rights or remedies under federal law, whether as a national bank or otherwise, this paragraph shall not be deemed to deprive such Person of such rights and remedies as may be available under federal law.

          (c) Successor and Assigns. This Agreement is binding on Pledgor and its successors and assignees and shall inure to the benefit of the Collateral Agent and each other Secured Party and their successors and assigns; provided that Pledgor may not assign any of its rights or obligations under this Agreement without the Collateral Agent’s prior written consent (and any purported assignment in violation of this Section 16(c) shall be null and void).

          (d) Amendment. No modification, consent, amendment or waiver of any provision of this Agreement, nor consent to any departure by Pledgor therefrom, shall be effective unless the same shall be in writing and signed by the Collateral Agent and Pledgor.

13

          (e) Headings. Section and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Agreement.

          (f) Severability. If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced.

          (g) Survivability. All covenants, agreements, representations and warranties made by Pledgor herein or in the other Loan Documents to which Pledgor is a party shall survive the making of the Loan and shall continue in full force and effect so long as the Secured Obligations, or any portion thereof, are outstanding.

          (h) 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 or in PDF format via electronic mail and signature delivered by such means shall be deemed originals for all purposes.

          (i) Right of Set-Off. In addition to any rights and remedies of the Secured Parties provided by applicable law, upon the occurrence and during the continuance of any Event of Default, each Secured Party is authorized at any time and from time to time, without prior notice to Pledgor, any such notice being waived by Pledgor to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Secured Party to or for the credit or the account of the respective Loan Parties and their Subsidiaries against any and all Secured Obligations owing to such Secured Party hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not such Secured Party or Affiliate shall have made demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each Secured Party agrees promptly to notify Pledgor and the Collateral Agent in writing after any such set off and application made by such Secured Party; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Collateral Agent and each Secured Party under this Section 17(i) are in addition to other rights and remedies (including other rights of setoff) that the Collateral Agent and such Secured Party may have.

          (j) Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest and all obligations of Pledgor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Loan Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any increase in, or any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Loan Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Secured Obligations or (d) subject to the terms of Section 17(k), any other circumstance that

14

might otherwise constitute a defense available to, or a discharge of, Pledgor in respect of the Secured Obligations or this Agreement.

          (k) Termination or Release. (i) This Agreement and the Security Interest shall terminate with respect to the Collateral on the earlier to occur of (A) the Collateral Delivery Date and (B) the date on which all the outstanding Secured Obligations have been indefeasibly paid in full and the Secured Parties have no further commitment under the Loan Agreement or other agreements evidencing the Secured Obligations.

               (ii) If any funds are released from the Cash Collateral Account pursuant to Section 4(c), the security interest in such funds shall be automatically released.

               (iii) In connection with any termination or release pursuant to paragraph (i) above, the Collateral Agent shall execute and deliver to Pledgor, at Pledgor’s expense, all documents that Pledgor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 17(k) shall be without recourse to or warranty by the Collateral Agent.

     (l) General Authority of the Collateral Agent. By acceptance of the benefits of this Agreement and any other Loan Documents, each Secured Party (whether or not a signatory hereto) shall be deemed irrevocably (a) to consent to the appointment of the Collateral Agent as its agent hereunder and under such other Loan Documents, (b) to confirm that the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for the enforcement of any provisions of this Agreement and such other Loan Documents against Pledgor, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or Pledgor’s obligations with respect thereto, (c) to agree that it shall not take any action to enforce any provisions of this Agreement or any other Loan Document against Pledgor, to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in this Agreement or any other Loan Document and (d) to agree to be bound by the terms of this Agreement and any other Loan Documents. The Collateral Agent may resign at any time by giving written notice thereof to the Secured Parties and Pledgor. Upon any such resignation, the Lender shall appoint a successor Collateral Agent who shall be willing to accept, and accepts, such appointment within thirty (30) days after the retiring Collateral Agent shall have given notice of resignation (such appointment to be subject to the prior written approval of Pledgor, which approval may not be unreasonably withheld or delayed and shall not be required upon the occurrence and during the continuance of an Event of Default). Upon the acceptance of such appointment by the successor Collateral Agent, such successor Collateral Agent shall succeed to and become vested with all the rights, powers and privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents (but shall continue to have the benefit of Sections 14, 16 and 17(i) hereof).

     (m) Financing Statements. Pledgor hereby irrevocably authorizes the Collateral Agent to file one or more financing statements describing all or part of the Collateral, and continuation statements, or amendments thereto, relative to all or part of the Collateral as authorized by applicable law. Such financing statements, continuation statements and

15

amendments will contain any other information required by the UCC for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including the type of organization Pledgor is and any organizational identification number issued to Pledgor. Pledgor agrees to furnish any such information to the Collateral Agent promptly upon request. Pledgor also ratifies its authorization for the Collateral Agent to have filed any initial financing statement or amendments thereto filed prior to the date hereof.

     (n) Further Assurances. From time to time, Pledgor shall, at the request of the Collateral Agent, execute such other agreements, documents or instruments or take any other actions in connection with this Agreement as the Collateral Agent may reasonably deem necessary to evidence or perfect the security interests granted herein, to maintain the first priority of the security interests, or to effectuate the rights granted to the Collateral Agent herein, but their failure to do so shall not limit or affect any security interest or any other rights of the Collateral Agent in and to the Collateral. Pledgor will execute and deliver to the Collateral Agent any stock powers, instructions to any securities intermediary, issuer or transfer agent, proxies, or any other documents of transfer that the Collateral Agent requests in order to perfect, obtain control or otherwise protect the Collateral Agent’s security interest in the Collateral or to effect the Collateral Agent’s rights under this Agreement. Such powers or documents may be executed in blank or completed prior to execution, as reasonably requested by the Collateral Agent.

[This space left intentionally blank.]

Pledgor’s Chief Executive Office:	PLEDGOR:
11 West 42nd Street	MSLO EMERIL ACQUISITION SUB LLC
New York, NY 10036

By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	Vice President

Pledgor’s organizational identification number
assigned by the State of Delaware:

4523889

COLLATERAL AGENT: BANK OF AMERICA, N.A., as Collateral Agent
By:	/s/ Jane R. Heller
	Name:	Jane R. Heller
	Title:	Senior Vice President

Acknowledged and Agreed
this 4th day of April, 2008:

BANK OF AMERICA, N.A.
By:	/s/ Jane R. Heller
	Name:	Jane R. Heller
	Title:	Senior Vice President

[Signature page to pledge Agreement]

EX-10.8

Exhibit 10.8

CONTINUING AND UNCONDITIONAL GUARANTY

     1. The Guaranty. FOR VALUE RECEIVED, and to induce Bank of America, N.A. (together with any successors and assigns under the Loan Agreement (as hereinafter defined), the “Bank”) to make the loans or advances contemplated by the Loan Agreement, each of the undersigned (collectively, the “Guarantors”) hereby, jointly and severally, irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to Bank of America, N.A., as collateral agent for the Bank under the Collateral Agreement (as hereinafter defined) (together with any successor collateral agent, the “Collateral Agent” and, together with the Bank, the “Guarantied Parties”), for the benefit of the Guarantied Parties, the full and prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and the faithful, prompt and complete compliance, by MSLO Emeril Acquisition Sub LLC, a Delaware limited liability company (the “Borrower”), of and with any and all Guarantied Obligations (as hereinafter defined). This Guaranty is intended to provide a continuing guaranty of the payment and performance of the Guarantied Obligations, without limitation as to amounts guarantied hereunder.

     The undertakings and obligations of each Guarantor hereunder are independent of the obligations of the Borrower and a separate action or actions for payment, damages or performance may be brought or prosecuted against such Guarantor, regardless of whether (a) an action is brought against the Borrower or any other guarantor of the Guarantied Obligations or to realize upon any security for the Guarantied Obligations, (b) the Borrower is joined in any such action or actions or (c) notice is given or demand is made upon the Borrower.

     The Bank shall not be required to proceed first against the Borrower, or any other Person, whether primarily or secondarily liable, or against any collateral held by it, before proceeding against any Guarantor for payment.

     2. Definitions. As used in this Guaranty, the following terms shall have the following meanings and shall be subject to the rules of construction set forth in Section 1 of the Loan Agreement.

     (a) “AAA” has the meaning set forth in Section 24(c).

     (b) “Act” has the meaning set forth in Section 24(b).

     (c) “Borrower” has the meaning set forth in Section 1.

     (d) “Claim” has the meaning set forth in Section 24(a).

     (e) “Class Action Waiver” has the meaning set forth in Section 24(h).

     (f) “Collateral Agent” has the meaning set forth in Section 1.

2

     (g) “Collateral Agreement” means (i) on or prior to the Collateral Replacement Date, the Pledge Agreement dated as of April 4, 2008 by and between the Borrower and Bank of America, N.A., as collateral agent, as such agreement may be amended, amended and restated, supplemented or otherwise modified from time to time, or (ii) after the Collateral Replacement Date, the Security Agreement dated as of the Collateral Replacement Date by and among the Borrower, Martha Stewart Living Omnimedia, Inc. and Bank of America, N.A., as collateral agent, as such agreement may be amended, amended and restated, supplemented or otherwise modified from time to time.

     (h) “Guarantied Obligations” means, collectively, all liabilities, indebtedness, and obligations of the Borrower (and any successor to the Borrower) arising under the Loan Documents, whether direct or indirect, absolute or contingent, secured or unsecured, due or not due, contractual or tortious, liquidated or unliquidated, arising by operation of law or otherwise, now or hereafter existing, whether created directly, indirectly or acquired by assignment or otherwise, whether or not from time to time reduced, extinguished in part or hereafter increased or incurred, whether or not recovery may be or hereafter may become barred by any statute of limitations, whether or not enforceable against the Borrower, and whether due or to become due, including, but not limited to, all extensions or renewals thereof, and all sums payable under or by virtue thereof, including, without limitation, all amounts of principal and interest (including interest accruing after the maturity of any Guarantied Obligations 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), fees, expenses and indemnities provided thereunder, all Swap Obligations, and all costs and expenses of collection with respect to this Guaranty.

     (i) “Guarantied Parties” has the meaning set forth in Section 1.

     (j) “Guarantors” has the meaning set forth in Section 1 and shall include any Person who assumes the obligations under this Guaranty.

     (k) “Loan Agreement” means the Loan Agreement dated as of April 4, 2008 by and among the Borrower, Martha Stewart Living Omnimedia, Inc. and Bank of America, N.A., as such agreement may be amended, amended and restated, supplemented or otherwise modified from time to time.

     (l) “Obligations” shall have the meaning set forth in the Loan Agreement.

     (m) “Swap Obligations” means all obligations of the Borrower arising under any interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, securities puts, calls, collars, options or forwards or any combination of, or option with respect to, these or similar transactions now or hereafter entered into between the Borrower and any Guarantied Party.

     (n) All capitalized terms used herein without definition shall have the meaning set forth in the Loan Agreement.

3

     3. Rights of Guarantied Parties. Each Guarantor authorizes the Guarantied Parties, without notice or demand and without affecting its liability hereunder, from time to time to:

     (a) renew, compromise, extend, accelerate, or otherwise change the time for payment, or otherwise change the terms, of the Guarantied Obligations or any part thereof, including increase or decrease of the amount thereof or the rate of interest thereon, or otherwise change the terms of any Loan Documents or other documents evidencing the Guarantied Obligations; provided that any Loan Document may only be amended in accordance with its terms;

     (b) receive and hold security for the payment of this Guaranty or any Guarantied Obligations and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security;

     (c) apply such security and direct the order or manner of sale thereof as the Guarantied Parties in their discretion may determine in accordance with the Loan Documents and applicable law;

     (d) release or substitute any Guarantor or any one or more of any endorsers or other guarantors of any of the Guarantied Obligations; and

     (e) permit the Guarantied Obligations to exceed such Guarantor’s liability under this Guaranty, and each Guarantor agrees that any amounts received by any Guarantied Party from any source other than such Guarantor shall be deemed to be applied first to any portion of the Guarantied Obligations not guarantied by such Guarantor.

     4. Guaranty to be Absolute. Each Guarantor agrees that until the Guarantied Obligations have been paid in full and any commitments of the Guarantied Parties or facilities provided by the Guarantied Parties with respect to the Guarantied Obligations have been terminated, such Guarantor shall not be released by or because of the taking, or failure to take, any action that might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or that, but for this paragraph, might discharge or otherwise reduce, limit, or modify such Guarantor’s obligations under this Guaranty. Each Guarantor waives and surrenders any defense to any liability under this Guaranty based upon any such action, including but not limited to any action of any Guarantied Party described in the immediately preceding paragraph of this Guaranty. It is the express intent of each Guarantor that such Guarantor’s obligations under this Guaranty are and shall be absolute and unconditional.

     5. Guarantors’ Waivers of Certain Rights and Certain Defenses. Each Guarantor waives:

     (a) any right to require any Guarantied Party to proceed against the Borrower, proceed against or exhaust any security for the Guarantied Obligations, or pursue any other remedy in such Guarantied Party’s power whatsoever;

     (b) any defense arising by reason of any disability or other defense of Borrower, or the cessation from any cause whatsoever of the liability of the Borrower;

4

     (c) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower; and

     (d) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder.

No provision or waiver in this Guaranty shall be construed as limiting the generality of any other waiver contained in this Guaranty.

     6. Waiver of Subrogation and Contribution. Until the Guarantied Obligations have been paid in full and any commitments of the Guarantied Parties or facilities provided by the Guarantied Parties with respect to the Guarantied Obligations have been terminated, even though the Guarantied Obligations may be in excess of such Guarantor’s liability hereunder, each Guarantor waives to the extent permitted by applicable law any right of subrogation, reimbursement, indemnification, and contribution (contractual, statutory, or otherwise) including, without limitation, any claim or right of subrogation under the Bankruptcy Code (Title 11, United States Code) or any successor statute, arising from the existence or performance of this Guaranty, and each Guarantor waives to the extent permitted by applicable law any right to enforce any remedy that any Guarantied Party now has or may hereafter have against the Borrower, and waives any benefit of, and any right to participate in, any security now or hereafter held by any of the Guarantied Parties.

     7. Waiver of Notices. Each Guarantor waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of intent to accelerate, notices of acceleration, notices of any suit or any other action against the Borrower or any other Person, any other notices to any party liable on any Loan Document or other document evidencing any Guarantied Obligation (including such Guarantor), notices of acceptance of this Guaranty, notices of the existence, creation, or incurring of new or additional Guarantied Obligations to which this Guaranty applies, and notices of any fact that might increase such Guarantor’s risk.

     8. Subordination. Any obligations of the Borrower to any Guarantor, now or hereafter existing, including but not limited to any obligations to such Guarantor as subrogee of the Guarantied Parties or resulting from such Guarantor’s performance under this Guaranty, are hereby subordinated to the Guarantied Obligations. In addition to such Guarantor’s waiver of any right of subrogation as set forth in this Guaranty with respect to any obligations of the Borrower to such Guarantor as subrogee of the Guarantied Parties, each Guarantor agrees that, if the Collateral Agent or any other Guarantied Party so requests, such Guarantor shall not demand, take, or receive from the Borrower, by setoff or in any other manner, payment of any other obligations of the Borrower to such Guarantor until the Guarantied Obligations has been paid in full and any commitments of the Guarantied Parties or facilities provided by the Guarantied Parties with respect to the Guarantied Obligations have been terminated. If any payments are received by any Guarantor in violation of such waiver or agreement, such payments shall be received by such Guarantor in trust for the Guarantied Parties and shall be paid over to the Collateral Agent, for the benefit of the Guarantied Parties on account of the Guarantied Obligations, but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty. Any security interest, lien, or other

5

encumbrance that any Guarantor may now or hereafter have on any property of the Borrower is hereby subordinated to any security interest, lien, or other encumbrance that the Guarantied Parties may have on any such property. Notwithstanding the foregoing, so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may make, and any Guarantor is entitled to accept and receive, payments on any indebtedness owing by the Borrower or to any such Guarantor provided that such indebtedness and payment is permitted under the Loan Agreement.

     9. Partial Invalidity and/or Enforceability of Guaranty. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of any Loan Document or other agreement evidencing the Guarantied Obligations as it may apply to any Person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other Persons or circumstances.

     10. Limitation of Guaranty. The liability of each Guarantor that is a Subsidiary of the Borrower shall not exceed at any one time the largest amount during the period commencing with such Guarantor’s execution of this Guaranty and thereafter that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any applicable state law.

     11. Reinstatement of Guaranty. In the event that any Guarantied Party is required to relinquish or return any payments, any collateral securing the Guarantied Obligations or the proceeds thereof, in whole or in part, which had been previously applied to or retained for application against the Guarantied Obligations, by reason of a proceeding arising under any applicable bankruptcy or insolvency law, or for any other reason, this Guaranty shall automatically continue to be effective or be reinstated notwithstanding any previous cancellation or release effected by the Guarantied Parties.

     12. Stay of Acceleration. In the event that acceleration of the time for payment of any of the Guarantied Obligations is stayed upon the insolvency, bankruptcy, or reorganization of the Borrower or otherwise, all such Guarantied Obligations guarantied by any Guarantor shall nonetheless be payable by such Guarantor immediately if requested by the Collateral Agent.

     13. Representations, Warranties and Covenants in Loan Agreement. Each Guarantor (other than the Parent Guarantor) hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Section 6 of the Loan Agreement as they relate to such Guarantor and the Loan Documents to which such Guarantor is a party, each of which is incorporated herein by reference, are true and correct on and as of the date hereof, and the Guarantied Parties are entitled to rely on each of them as if they were fully set forth herein; provided, that each reference in each such representation and warranty to the Borrower’s or Parent Guarantor’s knowledge shall, for the purposes of this Section 13, be deemed to be a reference to such Guarantor’s knowledge. Each Guarantor agrees to comply with the covenants set forth in the Loan Agreement to the extent they govern such Guarantor.

6

     14. No Setoff or Deductions: Taxes.

     (a) Each Guarantor represents and warrants that it is organized in the United States of America. All payments by such Guarantor hereunder shall be paid in full, without setoff or counterclaim or any deduction or withholding whatsoever, including, without limitation, for any and all present and future taxes. If any Guarantor must make a payment under this Guaranty, such Guarantor represents and warrants that it will make the payment from one of its U.S. offices to the Guarantied Parties so that no withholding tax is imposed on the payment. Notwithstanding the foregoing, if any Guarantor makes a payment under this Guaranty to which withholding tax applies or if any taxes (other than taxes on net income and franchise taxes in lieu of net income taxes (i) imposed by the country or any subdivision of the country in which a Guarantied Party’s principal office or actual lending office is located and (ii) measured by the United States taxable income a Guarantied Party would have received if all payments under or in respect of this Guaranty were exempt from taxes levied by such Guarantor’s country) are at any time imposed on any payments under or in respect of this Guaranty including, but not limited to, payments made pursuant to this paragraph, such Guarantor shall pay all such taxes to the relevant authority in accordance with applicable law such that such Guarantied Party receives the sum it would have received had no such deduction or withholding been made (or, if any Guarantor cannot legally comply with the foregoing, such Guarantor shall pay to such Guarantied Party such additional amounts as will result in such Guarantied Party receiving the sum it would have received had no such deduction or withholding been made). Further, such Guarantor shall also pay to each Guarantied Party, on demand, all additional amounts as necessary to preserve the after-tax yield such Guarantied Party would have received if such taxes had not been imposed.

     (b) Each Guarantor shall promptly provide the Collateral Agent with an original receipt or certified copy issued by the relevant authority evidencing the payment of any such amount required to be deducted or withheld.

     15. Information Relating to Borrower. Each Guarantor acknowledges and agrees that it has made such independent examination, review, and investigation of the Guarantied Obligations and the Loan Documents and other documents governing the Guarantied Obligations as such Guarantor deems necessary and appropriate, including, without limitation, any covenants pertaining to such Guarantor contained therein, and shall have sole responsibility to obtain from the Borrower any information required by such Guarantor about any modifications thereto. Each Guarantor further acknowledges and agrees that it shall have the sole responsibility for, and has adequate means of, obtaining from the Borrower such information concerning the Borrower’s financial condition or business operations as such Guarantor may require, and that no Guarantied Party has any duty, and such Guarantor is not relying on any Guarantied Party, at any time to disclose to such Guarantor any information relating to the business operations or financial condition of the Borrower.

     16. Borrower’s Authorization. It is not necessary for any Guarantied Party to inquire into the powers of the Borrower or of the officers, members or agents acting or purporting to act on its behalf, and any Guarantied Obligations made or created in reliance upon the professed exercise of such powers shall be guarantied hereunder, subject to any limitations on any Guarantor’s liability set forth herein.

7

     17. Remedies. Upon the failure of any Guarantor to fulfill its duty to pay and perform the Guaranteed Obligations as required hereunder, the Collateral Agent, on behalf of the Guarantied Parties, shall have available all of the remedies of a creditor of such Guarantor under all applicable law and without limiting the generality of the foregoing, the Collateral Agent may, at its option and without notice or demand: (a) declare any Guarantied Obligations to be immediately due and payable, at which point such Guarantied Obligations shall become immediately due and payable; and (b) set-off against any or all liabilities of such Guarantor all money owed by any Guarantied Party or any of its agents or affiliates in any capacity to such Guarantor whether or not due, and if exercised by such Guarantied Party, the Guarantied Party shall be deemed to have exercised such right of set-off and to have made a charge against any such money immediately upon the occurrence of such default although made or entered on the books subsequent thereto.

     18. Notices. Unless otherwise provided in this Guaranty or in another agreement between the Collateral Agent and the Guarantors, all notices required under this Guaranty shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses set forth on the signature page to this Guaranty, or sent by facsimile to the fax numbers listed on the signature, or to such other addresses as the Collateral Agent or any Guarantor may specify from time to time in writing. 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.

     19. Successors and Assigns. This Guaranty (a) binds each Guarantor and such Guarantor’s successors, and assigns, provided that no Guarantor may assign its rights or obligations under this Guaranty without the prior written consent of the Collateral Agent (except that any Guarantor may merge into or consolidate with another Guarantor or the Borrower to the extent permitted by the Loan Agreement) and (b) inures to the benefit of the Guarantied Parties and their indorsees, successors, and assigns. Notwithstanding anything to the contrary in this Section 19, any assignment of a Guarantor’s rights and obligations under this Guaranty through a merger or consolidation of such Guarantor into or with (as applicable) another Guarantor or the Borrower that is permitted under the Loan Agreement shall not require the Collateral Agent’s prior written consent. The Guarantied Parties may, without notice to any Guarantor and without affecting any Guarantor’s obligations hereunder, sell, assign, grant participations in, or otherwise transfer to any other Person the Guarantied Obligations and this Guaranty, in whole or in part. Each Guarantor agrees that the Guarantied Parties may disclose to any assignee or purchaser, or any prospective assignee or purchaser, of all or part of the Guarantied Obligations any and all information in the Guarantied Parties’ possession concerning such Guarantor, this Guaranty, and any security for this Guaranty, provided that such party first agrees in writing to abide by the confidentiality provisions of Section 13.15 of the Loan Agreement or confidentiality restrictions that are substantially similar.

     20. Amendments, Waivers, and Severability. No provision of this Guaranty may be amended or waived except in a written agreement executed by the Collateral Agent and each Guarantor. No failure by any Guarantied Party to exercise, and no delay in exercising, any of its rights, remedies, or powers shall operate as a waiver thereof, and no single or partial

8

exercise of any such right, remedy, or power shall preclude any other or further exercise thereof or the exercise of any other right, remedy, or power. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision of this Guaranty.

     21. Costs and Expenses. Each Guarantor agrees, jointly and severally, to pay on demand all costs of collection and reasonable attorney’s fees, including allocated costs of in-house counsel to the extent permitted by applicable law, and all other costs and expenses that may be incurred by the Collateral Agent and each of the other Guarantied Parties in connection with (a) the enforcement of this Guaranty or (b) the preservation, protection, or enforcement of any rights of the Guarantied Parties in any case commenced by or against any Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States Code) or any other bankruptcy, insolvency or similar law.

     22. Governing Law and Jurisdiction. This Guaranty shall be governed by and construed and enforced in accordance with the law 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 any Guarantied Party of such rights and remedies as may be available under federal law. Jurisdiction and venue for any action or proceeding to enforce this Guaranty shall be the forum appropriate for such action or proceeding against the Borrower, to which jurisdiction each Guarantor and Guarantied Party irrevocably submits and to which venue such Guarantor and Guarantied Party waives to the fullest extent permitted by law any defense asserting an inconvenient forum in connection therewith. It is provided, however, that if any Guarantor owns property in another state, notwithstanding that the forum for enforcement action is elsewhere, the Bank may commence a collection proceeding in any state in which such Guarantor owns property for the purpose of enforcing provisional remedies against such property. Service of process in connection with such action or proceeding shall be binding if sent by registered or certified mail to a party to this Guaranty at such party’s address listed on the signature page to this Guaranty or to such other addresses as the Collateral Agent or any Guarantor may specify from time to time in writing in accordance with Section 18.

     23. Waiver of Consequential Damages. Each Guarantor hereby irrevocably and unconditionally waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, punitive, indirect or consequential damages relating to this Guaranty or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date).

     24. Dispute Resolution. This paragraph, including the subparagraphs below, is referred to as the “Dispute Resolution Provision.” 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 between 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 Guaranty (including any renewals, extensions or modifications); or (ii) any document related to this Guaranty (collectively a “Claim”). For the purposes of this Dispute Resolution Provision only,

9

the term “parties” shall include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by this Guaranty.

     (b) At the request of any party to this Guaranty, 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 Guaranty provides that it is governed by the law of the State of New York.

     (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 Guaranty. 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 paragraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this Guaranty.

     (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.

10

     (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 Guaranty 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.

     (i) 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 the 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 DISPUTE RESOLUTION PROVISION IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

     THIS WRITTEN GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[This space left intentionally blank.]

     25. Counterparts. This Guaranty 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.

     Executed this 4th day of April, 2008.

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	CFO
MSO IP HOLDINGS, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer
MARTHA STEWART, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	Treasurer and Secretary
BODY AND SOUL OMNIMEDIA, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer

[Signature page to Guaranty]

 

MSLO PRODUCTIONS, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer
MSLO PRODUCTIONS — HOME, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer
MSLO PRODUCTIONS — EDF, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer
FLOUR PRODUCTIONS, INC.
By:	/s/ Howard Hochhauser
	Name:	Howard Hochhauser
	Title:	EVP, Treasurer

Address for notices to each	Address for notices to each Guarantor:
Guarantied Party:
	Martha Stewart Living Omnimedia, Inc.
767 Fifth Avenue, Floor 12A	11 West 42nd Street
New York, NY 10153	New York, NY 10036
Attention: Jane R. Heller	Attention: Chief Financial Officer
Telecopy: 212-407-5402	Telecopy: 212-827-8551

[Signature page to Guaranty]

EX-10.9

EXHIBIT 10.9

FORM OF REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of April 2, 2008 among MARTHA STEWART LIVING OMNIMEDIA, INC., a Delaware corporation (the “Company”), EMERIL’S FOOD OF LOVE PRODUCTIONS, L.L.C., a Louisiana limited liability company (“Food of Love”), EMERILS.COM, LLC, a Louisiana limited liability company (“emerils.com”), and Emeril J. Lagasse, III (“Lagasse” and together with Food of Love and emerils.com, the “Original Holders”).

RECITALS

     A. Pursuant to the Asset Purchase Agreement, dated as of February 18, 2008 (the “Purchase Agreement”), the Original Holders agreed to sell to the Company and MSLO Shared IP Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “Shared IP Sub” and together with the Company, the “Buyers”), the Business (as defined in the Purchase Agreement), and the transactions contemplated by the Purchase Agreement are being consummated as of the date hereof. Capitalized terms used herein but not otherwise defined shall have the respective meanings set forth in the Purchase Agreement.

     B. As part of the consideration to be paid in connection with the sale of the Business, the Company is, at the Closing, issuing to the Original Holders the amount of shares of Common Stock specified in the Purchase Agreement (the “Closing Shares”), and the Original Holders also will have the opportunity to earn additional shares of Common Stock (the “Continent Shares”) through Contingent Payments upon the achievement of certain EBITDA targets by the Business.

     C. In connection with the issuance of the Closing Shares and, if issuable, the Contingent Shares, the Company has agreed to provide the registration rights set forth in this Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
DEFINITIONS

     Section 1.1 Certain Definitions. As used in this Agreement, capitalized terms not otherwise defined herein shall have the meanings ascribed to them below:

          ”Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

          ”Common Stock” means the Class A Common Stock, par value $0.01 per share, of the Company.

          ”Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

          ”Holder” or “Holders” means any Original Holder and any Person who shall acquire and hold Registrable Securities in accordance with the terms of this Agreement; provided that except for the Original Holders, no Person shall be deemed a “Holder” for purposes of this Agreement unless such Person acquires and holds at least 100,000 Registrable Securities.

          ”Person” means any individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity or any governmental or regulatory body or other agency or authority or political subdivision thereof, including any successor, by merger or otherwise, of any of the foregoing.

          ”Registrable Securities” means (a) shares of Common Stock issued to the Original Holders as Closing Shares or Contingent Shares pursuant to the Purchase Agreement and (b) shares or other units of any equity securities issued or issuable, directly or indirectly, in exchange for or with respect to the Common Stock referenced in clause (a) above by way of a stock dividend, stock split or combination of shares or in connection with a reclassification, recapitalization, merger, consolidation or other reorganization or otherwise. Any particular Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) such securities shall have been sold to the public pursuant to Rule 144 (or any successor provision) under the Securities Act or (iii) the resale of such securities is no longer subject to any current public information, volume or method of sale restrictions pursuant to Rule 144 (or any successor provision) under the Securities Act.

          ”Registration Expenses” means all fees and expenses incurred by the Company in connection with its performance of or compliance with the provisions of Article II, including: (i) SEC, stock exchange or NASD registration, filing fees and listing fees and fees with respect to the inclusion of securities on the New York Stock Exchange or on any securities market on which the Common Stock is listed or quoted; (ii) fees and expenses of compliance with state securities or “blue sky” laws, if any; (iii) printing and copying expenses; (iv) messenger and delivery expenses; (vi) fees and disbursements of counsel for the Company; and (vii) with respect to the registration, the fees and disbursements of one counsel for the Holders selected by Lagasse; provided, however, that any such fees and disbursements with respect to such counsel in excess of $25,000 shall not constitute “Registration Expenses” hereunder, and the Company shall have no liability to any Person with respect thereto.

          ”SEC” means the Securities and Exchange Commission.

          ”Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

2

ARTICLE II
REGISTRATION RIGHTS

     Section 2.1 Mandatory Registration.

          (a) Subject to Section 2.1(b) and applicable Law, the Company shall use its commercially reasonable best efforts:

               (i) to file an automatic shelf registration statement, as defined in Rule 405 under the Securities Act, on Form S-3, or any applicable successor or other available form, covering such aggregate number of Registrable Securities which represents all of the Registrable Securities then issued or determined by the Company to be due to the Original Holders pursuant to clause (B) of this Section 2.1(a)(i) (the “Registration Rights”), as applicable, as promptly as practicable upon any of the following:

                    (A) six months after the Closing Date, if at such time there remain outstanding any Closing Shares that are not freely tradeable by the Original Holders without any of the requirements, limitations and restrictions of Rule 144 of the Securities Act that apply to “affiliates” (as such term is defined in that Rule); and

                    (B) the date (the “Filing Date”) that is 30 days after the earlier of (A) the date by which the Company first determines, in its reasonable discretion, that the Average EBITDA exceeds the Threshold and any portion of the Contingent Payments will be payable to the Original Holders in Common Stock under the Purchase Agreement, or (B) the date upon which the Original Holders agree to pay all expenses in connection with the registration of the Contingent Shares, including the fees of the Company’s attorneys and accountants, if Contingent Shares do not become due to the Original Holders under the Purchase Agreement; and

               (ii) as promptly as practicable following any such filing referenced in clause (i) above, to cause such registration statement to become effective and remain in effect for a period of 180 days, or such longer period until all Registrable Securities covered by such registration statement have been sold or withdrawn (the “Registration Period”); provided, that if at any time during such initial 180-day period, all Registrable Securities covered by such registration statement have been sold, withdrawn or become freely tradeable by the Original Holders without any of the requirements, limitations and restrictions of Rule 144 of the Securities Act that apply to “affiliates” (as such term is defined in that Rule), the Company’s obligations to keep such registration statement in effect shall cease and terminate. If the Company is not eligible to file a registration statement on Form S-3, then it shall file a registration statement on Form S-1, or any applicable successor form.

     The registration statement filed pursuant to Section 2.1(a)(i)(B) will (i) if the Filing Date occurs sufficiently in advance of the date (the “Delivery Date”) on which the Contingent Shares are deliverable to the Original Holders pursuant to the Purchase Agreement to permit the registration statement to become effective prior to the Delivery Date, be a primary registration of the transaction pursuant to which the Contingent Shares are issued to the Original Holders or (ii) if the Filing Date is not sufficiently in advance to so permit, or if a primary registration statement is

3

filed but has not become effective by the Delivery Date, be a resale shelf registration statement with respect to the Contingent Shares, which registration statement will be filed as soon as is practicable.

          (b) Notwithstanding anything to the contrary contained in this Agreement, the Company will not be required to file any registration statement pursuant to this Agreement, file any amendment thereto, furnish any supplement to a prospectus included in any registration statement, make any other filing with the SEC required pursuant to this Agreement, cause any registration statement or other filing with the SEC to become effective, or take any similar action, and may withdraw the filing of any such registration statement or related filing if, in the opinion of outside counsel to the Company, (i) an event has occurred and is continuing as a result of which any registration statement, prospectus or other filing relating to the Registration Rights would contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) such actions would require the disclosure of material non-public information which the Company has a bona fide business purpose for preserving as confidential and which the Company would not otherwise be required to disclose ((i) and (ii) each, a “Valid Business Reason”), until such Valid Business Reason no longer exists; provided, however, that in no event shall the Company avail itself of such right for more than 45 consecutive days or 90 days, in the aggregate, in any period of 360 consecutive days; and the Company shall give notice to the Holders of its determination to take any action pursuant to this Section 2.1(b) and of the fact that the Valid Business Reason for such action no longer exists, in each case, promptly after the occurrence thereof.

     If the Company shall give any notice of the taking of any action pursuant to the foregoing paragraph, the Company shall not register any equity security of the Company during the period such action remains in effect. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company that the Company has determined to take any action pursuant to the foregoing paragraph, such Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement. If the Company shall give any notice of the taking of any action pursuant to the foregoing paragraph, at such time as the Valid Business Reason that caused such action no longer exists (but in no event more than 90 days after the date of the taking of such action), the Company shall promptly use its commercially reasonable best efforts to effect the registration under the Securities Act of all of the Registrable Securities the registration of which has thereby been delayed or, as the case may be, to take all action required to permit sales of the Registrable Securities to resume.

     Section 2.2 Registration Procedures. In connection with the registration of Registrable Securities under the Securities Act as provided in this Agreement, the Company as expeditiously as possible:

          (a) shall prepare and file with the SEC the requisite registration statements, which shall comply as to form in all material respects with the requirements of the applicable form and shall include all financial statements required by the SEC to be filed therewith, and use commercially reasonable best efforts to cause such registration statements to become and remain effective for the duration of the Registration Period; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Company will furnish to one

4

counsel for the Holders selected by Lagasse copies of all such documents proposed to be filed (including all exhibits thereto);

          (b) shall prepare and file with the SEC such amendments and supplements to such registration statements and the prospectus used in connection therewith as may be necessary to keep such registration statements effective for such period as any seller of Registrable Securities pursuant to such registration statements shall request and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such registration statements in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statements;

          (c) shall furnish, without charge, to each seller of such Registrable Securities such number of copies of such registration statements, each amendment thereto, the prospectus included in such registration statements and each preliminary prospectus, all in conformity with the requirements of the Securities Act, and such other documents as such seller reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller, and shall consent to the use in accordance with all applicable law of such registration statements, each amendment thereto and each such prospectus or preliminary prospectus by each such seller of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by such registration statements or prospectus;

          (d) if required by law, shall use commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statements under such other securities or “blue sky” laws of such jurisdictions as any sellers of Registrable Securities reasonably shall request, and do any and all other acts and things that may be required by law in order to enable such sellers to consummate the disposition of the Registrable Securities in such jurisdictions, except that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 2.2(d), it would not be required to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

          (e) shall promptly notify each Holder selling Registrable Securities covered by each such registration statement:

               (i) when the registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or any post-effective amendment to the registration statement has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective;

               (ii) of any request by the SEC or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information;

               (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose;

5

               (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; and

               (v) if, for a Valid Business Purpose, the Company has determined that it would be inadvisable to continue to use the registration statement or the prospectus related thereto or the information conveyed to any purchaser at the time of sale to such purchaser in connection with the sale of any Registrable Securities; and

          (f) shall cause all such Registrable Securities covered by such registration statement to be listed on the New York Stock Exchange or the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange;

          (g) shall provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

          (h) shall use commercially reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement; and

          (i) shall cooperate with the sellers of Registrable Securities to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such in accordance with the instructions of the sellers of Registrable Securities at least three Business Days prior to any sale of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof.

     The Company may require as a condition precedent to the Company’s obligations under this Section 2.2 that each seller of Registrable Securities as to which any registration is being effected furnish the Company such information in writing regarding such seller and the distribution of such Registrable Securities as the Company from time to time reasonably may request to comply with Items 507 and 508 of Regulation S-K under the Securities Act; provided that such information is necessary or desirable for the Company to consummate such registration and shall be used only in connection with such registration.

     Each seller of Registrable Securities agrees that upon receipt of any notice from the Company under Section 2.2(e)(v), such seller will discontinue such seller’s disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such seller’s receipt of copies of the supplemented or amended prospectus.

     If any such registration statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not

6

imply that such Holder will assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

     Section 2.3 Registration Expenses.

          (a) The Company shall pay all Registration Expenses with respect to any registration effected hereunder.

          (b) Notwithstanding the foregoing, (i) the provisions of this Section 2.3 shall be deemed amended to the extent necessary to cause these expense provisions to comply with “blue sky” laws of each state in which the offering is made and (ii) the Company shall, in the case of all registrations under this Article II, be responsible for all its internal expenses.

     Section 2.4 No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder to sell any Registrable Securities pursuant to any effective registration statement.

     Section 2.5 Indemnification.

          (a) In the event of any registration of any securities of the Company under the Securities Act pursuant to this Article II, the Company will, and hereby agrees to, indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities, its directors, officers, fiduciaries, employees, agents, affiliates, consultants, representatives, general and limited partners, stockholders, successors, assigns (and the directors, officers, employees and stockholders thereof), and each other Person, if any, who controls such Holder within the meaning of the Securities Act, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel and any amounts paid in any settlement effected with the Company’s consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect thereof (collectively, “Losses”), insofar as such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the registration statement under which such securities were registered under the Securities Act or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Loss as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Loss arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or

7

alleged omission of a material fact made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary, final or summary prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified party specifically for use therein. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.

          (b) Each Holder of Registrable Securities that are included in the securities as to which the registration under Section 2.1 is being effected shall, jointly and severally as to the Original Holders and any of their Affiliates, and severally but not jointly as to any other Holders, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.5) to the extent permitted by law the Company, its officers and directors and each Person controlling the Company within the meaning of the Securities Act and all other prospective sellers and their respective directors, officers, fiduciaries, employees, agents, affiliates, consultants, representatives, general and limited partners, stockholders, successors, assigns and respective controlling Persons with respect to any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Holder specifically for use therein and reimburse such indemnified party for any legal or other expenses reasonably incurred in connection with investigating or defending any such Loss as such expenses are incurred. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.

          (c) Any Person entitled to indemnification under this Agreement promptly shall notify the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.5, but the failure of any such Person to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 2.5, except to the extent the indemnifying party is materially prejudiced thereby and shall not relieve the indemnifying party from any liability that it may have to any such Person otherwise than under this Article II. In case any action or proceeding is brought against an indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party that it so chooses, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within 20 days after receiving notice from such indemnified party, (ii) if such indemnified party who is a defendant in any action or proceeding that is also brought against the

8

indemnifying party reasonably shall have concluded that there may be one or more legal defenses available to such indemnified party that are not available to the indemnifying party or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have concluded that there may be legal defenses available to such party or parties that are not available to the other indemnified parties or to the extent representation of all indemnified parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct), and the indemnifying party shall be liable for any expenses therefor. Without the written consent of the indemnified party, which consent shall not be unreasonably withheld, no indemnifying party shall effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder, whether or not the indemnified party is an actual or potential party to such action or claim, unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

          (d) If for any reason the foregoing indemnity is unavailable or is insufficient to hold harmless an indemnified party under Section 2.5(a), (b) or (c), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such offering of securities. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 2.5(d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 2.5(d). The amount paid or payable in respect of any Loss shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Loss. No Person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

          (e) The indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless

9

of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party.

          (f) The indemnification and contribution required by this Section 2.5 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

ARTICLE III
GENERAL

     Section 3.1 Rule 144. The Company covenants that (i) it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act or, if it is not required to file such reports, upon the request of any Holder it shall make publicly available other information so long as necessary to permit sales of such Registrable Securities in compliance with any applicable “current public information” requirements of Rule 144 under the Securities Act and (ii) it will take such further action as any Holder of Registrable Securities reasonably may request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (B) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

     Section 3.2 Nominees for Beneficial Owners. If Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its option, be treated as the Holder of such Registrable Securities for purposes of any request or other action by any Holder or Holders of Registrable Securities pursuant to this Agreement or any determination of any number or percentage of shares constituting Registrable Securities held by any Holder or Holders of Registrable Securities contemplated by this Agreement; provided that the Company shall have received assurances reasonably satisfactory to it of such beneficial ownership.

     Section 3.3 Representations and Warranties of the Holders. The Holders hereby agree and acknowledge that (i) at the time of issuance, (A) the Registrable Securities that relate to Closing Shares will not be and (B) the Registrable Securities that relate to Contingent Shares may or may not be, registered under the Securities Act or under the securities laws of any other country or jurisdiction and, except as provided herein, none of the Buyers or the Company is under any obligation to, and does not currently intend to, register or qualify the Registrable Securities for resale by the Holders or assist the Holders in complying with any exemption under the Securities Act or the securities laws of any jurisdiction; (ii) an offer or sale of the Registrable Securities in the absence of registration under the Securities Act will require the availability of an exemption thereunder; and (iii) a restrictive legend in form and substance reasonably satisfactory to the Company shall be placed on the certificates representing the Registrable Securities.

     Section 3.4 Affiliate Status. Assuming that the Original Holders and their “affiliates” (as defined in Rule 144 of the Securities Act) do not, individually or in the aggregate, own, beneficially or of record, any shares of Common Stock other than shares that are issued or may

10

become issuable to the Original Holders pursuant to the Purchase Agreement, the Company represents and warrants that it has no reason to believe that any of the Original Holders is an affiliate of the Company. In addition, the Company represents and warrants that, on the Closing Date under the Purchase Agreement, it meets the “current public information” requirements of Rule 144(c) of the Securities Act.

ARTICLE IV
MISCELLANEOUS

     Section 4.1 Amendment and Waiver.

          (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and Lagasse or, in the case of a waiver, by the party or parties against whom the waiver is to be effective; provided, however, that waiver by the Holders shall require the consent of Lagasse.

          (b) No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of any party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by such party if an individual or a duly authorized officer on behalf of such party if an entity.

     Section 4.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

if to any Holder, to:

829 St. Charles Avenue
New Orleans, LA 70130
Attention: Anthony Cruz
Facsimile: (504) 558-3932

with a copy (which shall not constitute notice) to:

11

Lowe, Stein, Hoffman, Allweiss & Hauver L.L.P.
One Shell Square
701 Poydras Street, Suite 3600
New Orleans, LA 70139
Attention: Mark Stein, Esq.
Facsimile: (504) 581-2461

if to the Company, to:

Martha Stewart Living Omnimedia, Inc.
11 W. 42nd Street, 25th Floor
New York, New York 10036
Attention: General Counsel
Facsimile: (212) 827-8188

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP
200 Park Avenue, 47th Floor
New York, New York 10166
Attention: Barbara L. Becker, Esq.
Facsimile: (212) 351-6202

     Section 4.3 Interpretation. When a reference is made in this Agreement to a Section or Article, such reference shall be to a Section or Article of this Agreement unless otherwise indicated. The headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation”, unless otherwise specified.

     Section 4.4 Entire Agreement. This Agreement and the Purchase Agreement (and any related agreements referred to therein) constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the parties with respect to the subject matter hereof and thereof. This Agreement shall not be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any party with respect to the transactions contemplated hereby other than those expressly set forth herein or in any document required to be delivered hereunder, and none shall be deemed to exist or be inferred with respect to the subject matter hereof.

     Section 4.5 No Third-Party Beneficiaries. Except as provided in Section 2.5, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.

     Section 4.6 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed

12

by, and construed in accordance with, the internal Laws of the State of New York, without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York (other than the conflicts of laws principles set forth in Section 5-1401 of the New York General Obligations Law, which shall apply to this Agreement).

     Section 4.7 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its or his successors or assigns shall be brought and determined in any New York State or federal court sitting in the Borough of Manhattan in The City of New York (or, if no such court has subject matter jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself or himself and with respect to its or his property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in New York, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it or he is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it or he or its or his property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement or the subject matter hereof, may not be enforced in or by such courts.

     Section 4.8 Assignment; Successors. This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns; provided that such successors and assigns acquire at least 100,000 Registrable Securities. If any Person shall acquire at least 100,000 Registrable Securities from any Holder in any manner, whether by operation of law or otherwise, such Person shall promptly notify the Company, and such Registrable Securities acquired from such Holder shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. Any such successor or assign shall agree in writing to acquire and hold the Registrable Securities acquired from such Holder subject to all of the terms hereof. If any Holder shall acquire additional Registrable Securities, such Registrable Securities shall be subject to all of the terms, and entitled to all of the benefits, of this Agreement. The number of shares shall be adjusted to reflect stock splits, dividends, reverse splits and comparable events.

     Section 4.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to

13

prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any New York State or federal court sitting in the Borough of Manhattan in the City of New York (or, if no such court has subject matter jurisdiction, in any appropriate New York State or federal court), this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security as a prerequisite to requesting or obtaining equitable relief.

     Section 4.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

     Section 4.11 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 4.12 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

     Section 4.13 Facsimile Signature. This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original for all purposes

     Section 4.14 Time of Essence. Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement.

     Section 4.15 No Presumption Against Drafting Party. Each of the parties hereto acknowledges that it has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.

[The remainder of this page is intentionally left blank.]

14

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Susan Lyne
	Name:	Susan Lyne
	Title:	CEO
EMERIL’S FOOD OF LOVE PRODUCTIONS, L.L.C.
By:	/s/ Emeril J. Lagasse III
	Name:	Emeril J. Lagasse III
	Title:	Member
EMERILS.COM, LLC
By:	/s/ Emeril J. Lagasse III
	Name:	Emeril J. Lagasse III
	Title:	Member
EMERIL J. LAGASSE
/s/ Emeril J. Lagasse III

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Susan Lyne, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Martha Stewart Living Omnimedia, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008

/s/ Susan Lyne  

Susan Lyne 

President and Chief Executive Officer 

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Howard Hochhauser, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Martha Stewart Living Omnimedia, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008

/s/ Howard Hochhauser  

Howard Hochhauser 

Chief Financial Officer 

EX-32

EXHIBIT 32

CERTIFICATION
PURSUANT TO 18 U.S.C. Section 1350

In connection with the Quarterly Report of Martha Stewart Living Omnimedia, Inc. (the “registrant”) on Form 10-Q for the period ending March 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “report”), we, Susan Lyne and Howard Hochhauser, Chief Executive Officer and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, that:

(1)	The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Dated: May 9, 2008	/s/ Susan Lyne
	Susan Lyne
	President and Chief Executive Officer
Dated: May 9, 2008	/s/ Howard Hochhauser
	Howard Hochhauser
	Chief Financial Officer