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Loan Agreement [Amendment No. 2] - Martha Stewart Living Omnimedia LLC and NationsBank NA

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                        AMENDMENT NO. 2 TO LOAN AGREEMENT


            AMENDMENT NO. 2, dated as of March 30, 1999 (the "Amendment"), to
the LOAN AGREEMENT, dated as of February 3, 1997, as amended (the "Loan
Agreement"), between MARTHA STEWART LIVING OMNIMEDIA LLC, a Delaware limited
liability company (the "Borrower"), and NATIONSBANK, N.A. (the "Bank").

            The parties desire to amend the Loan Agreement.

            Therefore, in consideration of the premises and the agreements
herein, the Borrower hereby agrees with the Bank as follows:

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

            2. Amendments.

                  (a) Section I.A of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "A. "Affiliate" of the Bank means any other Person which, directly or
      indirectly, controls or is controlled by or is under common control with
      the Bank and, without limiting the generality of the foregoing, includes
      (i) any Person which beneficially owns or holds 10% or more of any class
      of voting securities of the Bank or 10% or more of the equity interest in
      the Bank, (ii) any Person of which the Bank beneficially owns or holds 10%
      or more of any class of voting securities or in which the Bank
      beneficially owns or holds 10% or more of the equity interest in such
      Person and (iii) any director, officer, member or partner of the Bank."

                  (b) Section I.N. of the Loan Agreement is hereby amended by
(i) deleting the phrase "the Partnership Security Agreement and the Stewart
Security Agreement" and (ii) inserting in place of such deleted phrase "the
Company Security Agreement."

                  (c) The Loan Agreement is hereby amended by inserting the
following after Section I.P.:

      "P-1. "Company Guaranty" means the Continuing and Unconditional Guaranty
      of the Stewart Company, dated February 6, 1997, as the same may be
      amended, modified or supplemented from time to time.
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      P-2 "Company Security Agreement" means the Security Agreement, dated
      February 6, 1997, between the Stewart Company and the Bank, as the same
      may be amended, modified or supplemented from time to time."

                  (d) Section I.U. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "U. "Debt Service Coverage Ratio" means, for any period, the consolidated
      net income of the Borrower and the Subsidiaries for such period plus (to
      the extent such items were deducted in the determination of such
      consolidated net income) the sum for such period of (i) the Borrower's and
      the Subsidiaries' consolidated interest expense, (ii) provision for taxes
      based on or measured by income for the Borrower and the Subsidiaries and
      (iii) the Borrower's and the Subsidiaries' provision for amortization
      (including, without limitation, amortization of intangibles), divided by
      the sum for such period of (w) the current portion of principal and
      interest on Indebtedness and Capital Lease Obligations, (x) the Borrower's
      and the Subsidiaries' consolidated interest expense, (y) Capital
      Expenditures and (z) all distributions, whether in cash, securities or
      other property, declared by the Borrower to be payable to any holder of
      any membership interest, capital stock or other equity security of the
      Borrower in respect of such interest, stock or security ("Dividends")
      (other than Dividends paid pursuant to Section 9.2 of the LLC Agreement as
      in effect on the date hereof )."

                  (e) Section I.EE. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

            "EE.  [intentionally omitted]."

                  (f) Section I.QQ. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "QQ. "Loan Document" means any of this Agreement, the Note, the Security
      Documents, the Company Guaranty and all other documents, instruments,
      guarantees, certificates and agreements executed and/or delivered by the
      Borrower or the Stewart Company in connection with the Loans, and from and
      after such time, if any, that Stewart and the Stewart Partnership execute
      and deliver guaranties and security agreements to the Bank as contemplated
      by Section 4.(j)(iii) of the Note, the term "Loan Documents" shall include
      such guaranties and security agreements."

                  (g) Section I.RR. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "RR. "Loan Parties" mean, collectively, the Borrower and the Stewart
      Company and from and after such time, if any, that Stewart and the Stewart
      Partnership are required to execute and deliver guaranties and security
      agreements to the Bank as contemplated by Section 4.(j)(iii) of the Note,
      the term "Loan Parties" shall include Stewart and the Stewart
      Partnership."
<PAGE>   3
                                                                               3


                  (h) Section I.TT. of the Loan Agreement is hereby amended by
amending and restating clauses (i) and (ii) thereof as follows:

      "(i) the business, assets, liabilities, properties, prospects, operations
      or financial or other condition of the Loan Parties taken as a whole, (ii)
      the ability of the Loan Parties to perform or pay the Obligations in
      accordance with the terms hereof or of any other Loan Document or to
      perform their obligations thereunder or"

                  (i) Section I.UU. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "UU.  "Maturity Date" means June 30, 2000 or such later date that is
      established pursuant to Section II.G."

                  (j) Section I.WW. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "WW. "Note" means the promissory note of the Borrower , in the form of
      Exhibit A to the Amendment No. 2 to this Agreement, dated as of March
      31, 1999, as such promissory note may be modified or extended from time
      to time, and any promissory note or notes issued in exchange or
      replacement thereof."

                  (k) Section I.YY. of the Loan Agreement is hereby amended by
inserting the phrase "to the Bank or its Affiliates" (i) following the phrase
"from time to time owing by it" in clause (i) thereof and (ii) following the
phrase "such Loan Party's other obligations" in clause (ii) thereof.

                  (l) Section I.MMM. of the Loan Agreement is hereby amended by
(i) deleting the phrase the Borrower Security Agreement, the Partnership
Security Agreement, the Stewart Security Agreement" therein and (ii) inserting
in place of such deleted phrase the following: "the Borrower Security Agreement,
the Company Security Agreement".

                  (m) The Loan Agreement is hereby amended by inserting the
following after Section I.OOO:

      "OOO-1.  "Stewart Company" means Martha Stewart, Inc., a Connecticut
      corporation."

                  (n) Section I.VVV.(iii) of the Loan Agreement is hereby
amended by inserting the phrase "(other than the LLC Agreement)" following the
phrase "in connection therewith".

                  (o) Section IV.F. of the Loan Agreement is hereby amended and
restated by deleting the balance of such Section following the phrase "assets or
rights" contained therein and inserting in place thereof the following:
<PAGE>   4
                                                                               4


      ", except as such as could not reasonably be expected to cause a
      Material Adverse Effect."

                  (p) Section IV.H. of the Loan Agreement is hereby amended by
deleting the phrase "All taxes and assessments" and inserting in its place the
phrase "All material taxes and assessments".

                  (q) Section IV.L. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "L.   ERISA.  With respect to the provisions of ERISA:

            (1) Each Plan has complied with and has been administered in all
      material respects in accordance with applicable provisions of ERISA and
      the Code other than any non-compliance which would not be reasonably
      expected to have a Material Adverse Effect.

            (2) No Reportable Event has occurred with respect to any Plan that
      resulted or is reasonably likely to result in any unpaid liability that
      would be reasonably expected to have a Material Adverse Effect.

            (3) The present value of all accrued benefits under each Single
      Employer Plan maintained by the Borrower or any ERISA Affiliate (based on
      then current assumptions used to fund such Plan as of the last annual
      valuation date applicable thereto), did not, as of such valuation date,
      exceed the value of the assets of each such Plan allocable to such
      benefit, except where such event would not reasonably be expected to have
      a Material Adverse Effect and, to Borrower's knowledge, no material change
      has occurred to such funded status as of the valuation date.

            (4) Neither the Borrower nor any ERISA Affiliate has received notice
      that any Multiemployer Plan is in reorganization or insolvent where such
      reorganization or insolvency has resulted, or would be reasonably likely
      to result in an unpaid liability that would be reasonably expected to have
      a Material Adverse Effect nor, to the best knowledge of the Borrower, is
      any such reorganization or insolvency (which would be reasonably expected
      to have a Material Adverse Effect) reasonably likely to occur. Neither the
      Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal
      liability, or is reasonably expected to incur any withdrawal liability, to
      any Multiemployer Plan (which in any such case would be reasonably
      expected to have a Material Adverse Effect)."

                  (r) Section IV.N. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "N.   [intentionally omitted]."
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                                                                               5


                  (s) Section IV.Q. of the Loan Agreement is hereby amended by
(i) deleting the phrase "and its Affiliates" in each of the places it appears
therein and (ii) amending and restating clause 1(ii) thereof in its entirety as
follows:

      "(ii) developed a plan for becoming Year 2000 complaint in all material
      respects in a timely manner, the implementation of which is on schedule in
      all material respects."

                  (t) Section V.A.(3) of the Loan Agreement is hereby amended
and restated in its entirety as follows:

      "(3)  [intentionally omitted];"

                  (u) Section V.A(6) of the Loan Agreement is hereby amended by
(i) deleting the phrase "November 30" contained therein and replacing it with
the phrase "December 15" and (ii) deleting the phrase "and within 45 days after
the end of each fiscal quarter, an update or revision to such plan," and
replacing it with the following:

      "and within 45 days after the end of each fiscal quarter either (i) notify
      the Bank that the Borrower has not updated or revised such plan or (ii)
      furnish the Bank with an update or revision to such plan if it has been
      revised or updated,".

                  (v) Section V.A.(8) of the Loan Agreement is hereby amended by
(i) deleting the phrase in clause (a) thereof "the breach by" and replacing such
deleted phrase with the phrase "the material breach by" and (ii) deleting the
phrase "the Borrower, the Subsidiaries or any other Loan Party" in clause (g)
thereof and replacing such deleted phrase with the phrase "the Loan Parties".

                  (w) Section V.A.(8)(c) of the Loan Agreement is hereby amended
by deleting the phrase "the adverse determination of" contained therein.

                  (x) Section V.A.(8)(e) and (f) of the Loan Agreement are
hereby amended by adding at the end of each thereof the phrase "within 10
Business Days thereof".

                  (y) Section V.H. of the Loan Agreement is hereby amended by
inserting the following prior to the phrase ";provided, however": "where the
failure to so pay or discharge would reasonably be expected to result in a
Material Adverse Effect".

                  (z) Section V.M. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "M.   [intentionally omitted]."

                  (aa) Section VI.B. of the Loan Agreement is hereby amended and
restated in its entirety as follows:
<PAGE>   6
                                                                               6


      "B. [intentionally omitted]."

                  (bb) Section VI.C. of the Loan Agreement is hereby amended by
(i) amending and restating clause (v) thereof as follows: "(v) Investments not
to exceed $5,000,000 in the aggregate for the Borrower and the Subsidiaries,"
and (ii) adding the following at the end of such Section:

      ", (ix) other Investments consented to by the Bank, which consent will not
      be unreasonably withheld and (x) advances to employees made in the
      ordinary course of business."

                  (cc) Section VI.D. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "D.   [intentionally omitted]."

                  (dd) Section VI.E. of the Loan Agreement is hereby amended and
restated in its entirety as follows:

      "E.   [intentionally omitted]."

                  (ee) Section VI.F. of the Loan Agreement is hereby amended by
deleting the phrase "voluntarily or by operation of law, or otherwise dispose of
any of its assets" contained therein and replacing it with the following:

      "voluntarily or by operation of law, or otherwise dispose (except for
      licenses entered into in the ordinary course of business and dispositions
      of inventory in the ordinary course of business) of any of its material
      assets"

                  (ff) Section VI.H. of the Loan Agreement is hereby amended by
inserting the following at the end thereof: "and the Term Agreement (as such
term is defined in Amendment No. 2 to this Agreement, dated as of March 31,
1999)."

                  (gg) Section VI.N. of the Loan Agreement is hereby amended by
(i) deleting the phrase "15%" contained therein and substituting it with the
phrase "25%" and (ii) adding the following at the end thereof:

      ", (iv) customary fees to Persons serving as a director of the Borrower
      who are not officers or employees of the Borrower or any Subsidiary and
      (v) indemnification, insurance and similar arrangements for directors and
      officers of the Borrower or any Subsidiary."

                  (hh) Section VI.O. of the Loan Agreement is hereby amended and
restated in its entirety as follows:
<PAGE>   7
                                                                               7


      "O.   ERISA.  Except where any such action or failure to act would not
      reasonably be expected to result in a Material Adverse Effect:

                        (1) engage in any transaction in connection with which
      the Borrower or any ERISA Affiliate is reasonably likely to be subject to
      either a material civil penalty assessed pursuant to the provisions of
      Section 502 of ERISA or a material tax imposed under the provisions of
      Section 4975 of the Code;

                        (2) terminate any Pension Plan in a "distress
      termination" under Section 4041 of ERISA or take any other action which
      could result in a material liability of the Borrower or any ERISA
      Affiliate to the PBCG;

                        (3) fail to make payment when due of all amounts which,
      under the provisions of any Plan, the Borrower or any ERISA Affiliate is
      required to pay as contributions thereto, or, with respect to any Pension
      Plan, permit to exist any material "accumulated funding deficiency"
      (within the meaning of Section 302 of ERISA and Section 412 of the Code),
      whether or not waived, with respect thereto; or

                        (4) adopt an amendment to any Pension Plan requiring the
      provision of security under Section 307 of ERISA or Section 401(a)(29) of
      the Code."

                  (ii) Section VI.P. of the Loan Agreement is hereby amended by
(i) inserting the phrase "or the Term Agreement" in clause (1) thereof following
the phrase "Loan Document" and (ii) deleting the phrase "if the effect thereof
could" in clause (2) thereof and replacing such deleted phrase with the phrase
"if the effect thereof would reasonably be expected to".

                  (jj) Section VI.Q of the Loan Agreement is hereby amended by
inserting the following at the beginning of the text: "other than in connection
with the Term Agreement".

                  (kk) Section VIII. of the Loan Agreement is hereby amended by
(i) deleting the references therein to "David Steward" and Telecopy No. "(212)
522-7875" and replacing such references with Barry Pincus" and Telecopy No.
"(212) 827-8330" and (ii) deleting the references therein to "Credit Services
Center" and "Tom Fruge" and replacing such references with "Private Lending
Center" and "Jackie Tatikus".

            3. Representations and Warranties. The Borrower hereby represents
and warrants to the Bank as follows:

                  (a) The representations and warranties made by the Borrower in
the Loan Agreement, as amended hereby, and in each other Loan Document to which
it is a party delivered to the Bank on or prior to the date hereof are true and
correct on and as of the date
<PAGE>   8
                                                                               8


hereof as though made on and as of the date hereof (except to the extent such
representations and warranties expressly relate to an earlier date).

                  (b) The Borrower has all requisite power and authority to
execute, deliver and perform the Note in the form attached hereto and this
Amendment and to perform the Loan Agreement, as amended hereby.

                  (c) The execution, delivery and performance by the Borrower of
the Note in the form attached hereto and this Amendment, and the performance by
the Borrower of the Loan Agreement, as amended hereby, (i) do not and will not
contravene any law or any contractual restriction binding on or affecting the
Borrower or any of its properties, and (ii) do not and will not result in or
require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties, other than in favor
of the Bank.

                  (d) Each of the Note in the form attached hereto and this
Amendment and the Loan Agreement, as amended hereby, constitutes the legal,
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with its terms.

            4. Terminated Documents. Upon the execution and delivery of this
Amendment by the parties hereto, the Guaranty, the Partnership Guaranty, the
Stewart Security Agreement and the Partnership Security Agreement (as such terms
are defined in the Loan Agreement prior to the date of this Amendment) shall be
of no further force or effect and shall be deemed terminated and cancelled and
all Liens purported to be created by the Stewart Security Agreement and the
Partnership Security Agreement shall be fully and effectively discharged and
terminated.

            5. Continued Effectiveness of the Loan Agreement. Except as
otherwise expressly provided herein, the Loan Agreement and the other Loan
Documents are, and shall continue to be, in full force and effect and are hereby
ratified and confirmed in all respects except that on and after the date hereof
(i) all references in the Loan Agreement to "this Agreement," "hereto,"
"hereof," "hereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended by this Amendment, (ii) all references
in the other Loan Documents to the "Loan Agreement," "thereto," "thereof,"
"thereunder" or words of like import referring to the Loan Agreement shall mean
the Loan Agreement as amended by this Amendment and (iii) all references in the
Loan Documents to the "Note," "thereto," "thereof," "thereunder" or words of
like import referring to the Note shall mean the Note in the form attached
hereto.

            6. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
<PAGE>   9
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            7. Headings. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.

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

            9. Amendment as Loan Document. The Borrower hereby acknowledges and
agrees that this Amendment constitutes a "Loan Document." To the extent there is
a conflict between the representations, warranties and covenants contained in
Sections IV, V and VI (or, where appropriate, the definitions contained in
Section I) of the Loan Agreement, dated as of March 30, 1999 (the "Term
Agreement"), between the Borrower and the Bank and the representations,
warranties and covenants contained in Sections IV, V and VI (and the appropriate
definitions contained in Section I) of the Loan Agreement (other than those
relating to the revolving nature of the Loans, the Borrowing Base, the
Availability and the Maturity Date), the provisions of Sections IV, V and VI
(and, where appropriate, Section I) of the Term Agreement shall govern.

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

                                    MARTHA STEWART OMNIMEDIA LLC


                                    By: /s/ Martha Stewart
                                        ---------------------------------------
                                        Name: Martha Stewart
                                        Title: CEO

                                    NATIONSBANK, N.A.


                                    By: /s/ Jane R. Heller
                                        ---------------------------------------
                                        Name:  Jane R. Heller
                                        Title:  Senior Vice President