Sample Business Contracts

2002 Executive Severance Pay Plan - Martha Stewart Living Omnimedia Inc.

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                        2002 EXECUTIVE SEVERANCE PAY PLAN

Martha Stewart Living Omnimedia, Inc. hereby adopts this Martha Stewart Living
Omnimedia, Inc. 2002 Executive Severance Pay Plan (the "Plan") effective as of
August 9, 2002.

The purpose of the Plan is to better provide for the retention of key executives
through providing them with a higher degree of financial security, on the terms
and conditions hereinafter stated. The Plan is intended to be a severance pay
plan governed by Title I of the Employee Retirement Income Security Act of 1974,
as amended, primarily for the purpose of providing benefits for a select group
of management or highly compensated employees. All benefits under the Plan will
be paid solely from the general assets of the Company.

                                    ARTICLE I


"Bonus Benefit" has the meaning given in Section 2.06 of this Plan.

"Company" means Martha Stewart Living Omnimedia, Inc.

"Denial Notice" has the meaning set forth in Section 4.03(2) of this Plan.

"Disability" means a Total Disability under the Company's long-term disability
insurance policy, or such comparable term under any successor policy which the
Company may secure after the date hereof, as interpreted by the Plan

"Effective Date" means August 9, 2002.

"Eligible Participant" has the meaning given in Section 2.02 of this Plan.

"Employment Severance Date" means the date of termination of employment of a

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Good Reason" shall have the meaning given in Section 3.01 of this Plan.

"Involuntary Termination for Cause" has the meaning given in Section 3.02 of
this Plan.

"Involuntary Termination for Disability" means any termination of a
Participant's employment with the Company initiated by the Company as a result
of such Participant's disability.

"Participant" means any eligible executive who is made a participant in the Plan
by action of the Plan Administrator as specified herein.

"Plan" means The Martha Stewart Living Omnimedia, Inc. 2002 Executive Severance
Pay Plan.

"Plan Administrator" means the Compensation and Management Development Committee
of the Board of Directors of the Company, or, if such Board of Directors so
determines, another committee of the Board or the Board itself.

"Qualifying Involuntary Termination" means any termination of a Participant's
employment with the


Company initiated by the Company other than an Involuntary Termination for Cause
or an Involuntary Termination for Disability.

"Termination for Cause" has the meaning given in Section 3.02 of the Plan.

"Voluntary Termination for Good Reason" has the meaning given in Section 3.01 of
this Plan.

"Voluntary Termination without Good Reason" means any termination of employment
initiated by a Participant other than a Voluntary Termination for Good Reason.

                                   ARTICLE II

                      Eligibility; Participation; Benefits

Section 2.01.     Participation in the Plan. The Plan Administrator may
                  designate any executive of the Company to be a Participant,
                  and may vary the terms of a Participant's participation on a
                  case by case basis. Promptly following such designation, each
                  Participant shall be notified of his or her participation in a
                  formal communication from the Plan Administrator or the
                  Company, provided that any variation in the terms of a
                  Participant's participation from the default terms of this
                  Plan shall be clearly explained to the Participant in such
                  communication. Participation in the Plan shall be determined
                  in the Plan Administrator's sole discretion. Once participant
                  has commenced, a Participant shall remain a Participant until
                  the first to occur of (i) the termination of his or her
                  employment under circumstances not giving rise to a right to
                  severance benefits under the Plan, (ii) the completion of the
                  delivery of all severance benefits under the Plan following
                  the termination of his or her employment under circumstances
                  giving rise to a right to such benefits, and (iii) the
                  termination or expiration of the Plan pursuant to Article V
                  before termination of the Participant's employment or the
                  giving of notice by a Participant under Section 3.01 hereof.

Section 2.02.     Benefits Eligibility. A Participant shall become entitled to a
                  severance benefit in the event he or she experiences a
                  Voluntary Termination For Good Reason or a Qualifying
                  Involuntary Termination, provided that all of the conditions
                  set forth in Section 2.03 are satisfied and the termination is
                  not described in Section 2.04. Any Participant who becomes so
                  entitled shall be deemed an "Eligible Participant."

Section 2.03.     Conditions. As conditions to entitlement of each Participant
                  to severance benefits under this Plan, such Participant must,
                  following the Employment Severance Date, (i) execute, and not
                  revoke, a Waiver and Release of Claims Form pursuant to
                  Section 6.01 of the Plan; (ii) return to the Company all
                  property of the Company held by such Participant, (iii)
                  reaffirm in writing such Participant's agreement to abide by
                  the confidentiality agreement entered into by such Participant
                  in connection with such Participant's employment with the
                  Company or, if no such agreement exists, enter into an
                  agreement in form and substance comparable to that typically
                  entered into by comparably situated executives upon commencing
                  employment with the Company, (iv) reasonably cooperate with
                  the Company to complete the transition of matters with which
                  such Participant is familiar or responsible to other
                  executives or employees and to make himself or herself
                  reasonably available to answer questions or assist in matters
                  which may require attention after such Participant's
                  Employment Severance Date, and (v) execute and deliver to the
                  Company a certificate attesting to the satisfaction of such of
                  the foregoing conditions as the Plan Administrator may, in its
                  sole discretion, require.

Section 2.04.     Ineligible Terminations of Employment. A Participant will not
                  be eligible for a severance benefit under this Plan if his or
                  her employment with the Company terminates for any one of the
                  following reasons:


                  1) death of the Participant;

                  2) Involuntary Termination for Disability;

                  3) Voluntary Termination without Good Reason; or

                  4) Involuntary Termination for Cause.

Section 2.05.     Amount of Severance Payment. An Eligible Participant shall
                  receive (i) continued payment of his or her base salary during
                  the period from the Employment Severance Date until the second
                  anniversary of his or her Employment Severance Date, at the
                  rate in effect as of his or her Employment Severance Date;
                  provided, that during the twelve-month period beginning on the
                  first anniversary of his or her Employment Severance Date the
                  amount of such continued base salary shall be reduced (but not
                  below zero) by the amount of the base salary earned and any
                  other guaranteed cash compensation (including any guaranteed
                  bonus) earned, if any, from other employment during such
                  twelve-month period (regardless of when paid) and (ii) a
                  one-time bonus payment equal to 100% of such Eligible
                  Participant's target annual bonus in effect as of his or her
                  Employment Severance Date.

                  For purposes of this Section, no reduction in salary or target
                  annual bonus of a Participant shall be taken into account in
                  determining his or her severance benefits, if such change or
                  reduction formed the basis of a claim for Voluntary
                  Termination for Good Reason or was instituted just prior to,
                  or after, the giving of an employment termination notice by
                  the Company or the Participant.

Section 2.06.     Form and Times of Payment. All severance benefits that
                  take the form of continuation of base salary shall be paid
                  according to the Company's regular payroll procedure.
                  Severance benefits that take the form of payment of an
                  Eligible Participant's target annual bonus (a "Bonus Benefit")
                  shall be paid in a lump sum in accordance with the Company's
                  general annual bonus payment schedule first following the
                  Eligible Participant's Employment Severance Date, provided
                  that, if the Company does not pay bonuses generally with
                  respect to the calendar year in which the Employment Severance
                  Date occurs, then such Eligible Participant's Bonus Benefit
                  shall be paid during February of the year following the year
                  in which the Employment Severance Date occurred.

Section 2.07.     Benefit Continuation Provisions. An Eligible Participant
                  shall also be entitled to the following severance benefits:

                  1)    Health and Life Insurance. The Eligible Participant
                        shall continue to be covered by the Company's health and
                        life insurance plans on the same terms and conditions as
                        apply to similarly situated active employees of the
                        Company, until the earlier of (i) the end of the period
                        during which the Eligible Participant is entitled to
                        salary continuation under Section 2.06 above (without
                        regard to any Offset), and (ii) the date on which the
                        Participant first becomes eligible for benefits of the
                        same type under a plan or plans provided by a subsequent

                  2)    Equity Awards. The Eligible Participant shall become
                        immediately vested in, and restrictions shall lapse on,
                        any and all outstanding equity awards of such Eligible
                        Participant, including stock options and restricted
                        stock grants.

                  3)    Outplacement benefits. Eligible Participants shall be
                        entitled to reimbursement for outplacement services of
                        his or her choice if utilized in good faith of up to a
                        maximum of $30,000.


                                   ARTICLE III

                            Termination Of Employment

Section 3.01      Voluntary Termination For Good Reason. If a Participant
                  terminates his or employment with the Company pursuant to the
                  following terms, such termination shall be deemed a "Voluntary
                  Termination for Good Reason":

                  1)    Within ninety (90) days after the Participant first
                        learns of an event that constitutes "Good Reason" (as
                        defined below), the Participant gives the Company ninety
                        (90) calendar days' advance written notice of his or her
                        intent to terminate in a Voluntary Termination for Good
                        Reason, which notice sets forth in reasonable detail the
                        facts and circumstances giving rise to the Good Reason
                        on which such termination shall be based; and

                  2)    The Company fails to remedy the facts and circumstances
                        giving rise to such Good Reason in a prompt and
                        responsive fashion taking into account such facts and
                        circumstances, but in any rate within such ninety-day
                        period, provided that (i) if a fact, event or
                        circumstance is by its nature not subject to remedy, the
                        discontinuance of such fact, event or circumstance on a
                        prospective basis shall be deemed a cure thereof, and
                        (ii) in the event the Company takes deliberate actions
                        with respect to a Participant that repeatedly give rise
                        to Good Reasons which the Company subsequently cures,
                        the Company shall forfeit the ability to cure such Good
                        Reasons with respect to such Participant.

                  "Good Reason" shall mean, without the Participant's express
                  prior written consent, the occurrence of any one or more of
                  the following:

                  (a)   a material reduction or material adverse alteration in
                        the Participant's position, title, duties, or
                        responsibilities from those in effect as of the
                        Effective Date (or as subsequently amended with the
                        consent of the Participant);

                  (b)   the Company's requiring the Participant to be based at a
                        location in excess of thirty-five (35) miles from the
                        location of the Participant's principal job location or
                        office as of the Effective Date, except for required
                        travel on the Company's business to an extent
                        substantially consistent with the Participant's present
                        business obligations, provided that any re-assignment
                        from the Company's Westport, CT facilities to its New
                        York City facilities, or vice versa, shall not violate
                        this provision if there is a reasonable business
                        justification for the re-assignment;

                  (c)   a reduction by the Company of the Participant's Base
                        Salary or target annual bonus percentage as in effect on
                        the Effective Date, or as the same shall be increased
                        from time to time;

                  (d)   the failure of the Company to provide the Participant
                        with employee benefits that are at least as favorable as
                        those provided to other similarly situated executives of
                        the Company from time to time; and

                  (e)   the failure of the Company to comply with the
                        requirements of Section 5.03 below.

                  The Participant's right to terminate employment in a Voluntary
                  Termination for Good Reason shall not be affected by the
                  Participant's incapacity due to physical or mental illness.
                  Subject to the requirements set forth above, the Participant's


                  employment shall not constitute a consent to, or a waiver of
                  rights with respect to, any circumstance constituting Good
                  Reason herein.

Section 3.02.     Involuntary Termination For Cause. If the Plan Administrator,
                  in the exercise of good faith and reasonable judgment, and
                  after giving the Participant notice and an opportunity to be
                  heard by the Plan Administrator, determines that any of the
                  following has occurred, and the Participant is terminated
                  accordingly, it shall be deemed a "Termination for Cause":

                  1)    the Participant has failed to perform his or her
                        material duties to the Company after written notice and
                        a reasonable opportunity to cure;

                  2)    the Participant has engaged in willful, intentional
                        misconduct that has resulted in material damage to the
                        Company's business or reputation;

                  3)    the Participant has been convicted of a felony;

                  4)    the Participant has engaged in fraud against MSO or
                        misappropriated MSO property (other than incidental
                        property); or

                  5)    the Participant has failed to comply with the Company's
                        employment policies and rules after written notice and a
                        reasonable opportunity to cure, provided that, pursuant
                        to the standard policies of the Company in effect at the
                        time, whether or not such policies are written, and any
                        disciplinary procedures set forth therein or commonly
                        followed, such failure to comply with such employment
                        policies and rules would otherwise give rise to

                                   ARTICLE IV

                           Administration of the Plan

Section 4.01.     Administrator. The general administration of the Plan and the
                  responsibility for carrying out the provisions of the Plan
                  will be placed with the Plan Administrator. The Plan
                  Administrator may be notified at the following address:

                  Martha Stewart Living Omnimedia, Inc.
                  11 West 42nd Street
                  New York, New York  10036
                  Attention: Plan Administrator
                      c/o General Counsel

Section 4.02.     Duties and Powers. The Plan Administrator will have all powers
                  necessary and or helpful to administering the Plan in all its
                  details. This authority includes, but is not limited to,
                  determining eligibility for participation and, where clearly
                  stated in the designation of Plan participation and
                  subsequently in the notice to a Participant of Plan
                  participation, varying the terms of the Plan with respect to a
                  particular Participant; making rules and regulations for the
                  administration of the Plan that are consistent with the terms
                  and provisions of the Plan; construing all terms, provisions,
                  conditions, and limitations of the Plan, and resolving
                  ambiguities, correcting deficiencies, and supplying omissions;
                  determining all questions arising out of, or in connection
                  with, cases in which the Plan Administrator deems such a
                  determination advisable. The Plan Administrator shall have the
                  full discretion to exercise the powers conferred by this Plan,
                  and all such acts and determinations will be final, binding,
                  and conclusive upon all interested parties. The Plan
                  Administrator shall also have the authority to designate other
                  individuals to exercise the powers of the Plan Administrator
                  on its behalf.


Section 4.03.     Claims Procedures.

                  1)    All claims for benefits shall be in writing and shall be
                        filed with the Plan Administrator.

                  2)    The Plan Administrator shall determine whether or not to
                        accept a claim for benefit within 60 days after
                        receiving it. If the Plan Administrator wholly or
                        partially denies a Participant's claim for benefits, the
                        Plan Administrator shall as promptly as practicable give
                        the claimant written notice of such denial (a "Denial
                        Notice"), setting forth:

            (a)   The specific reason(s) for the denial;

            (b)   Specific reference to pertinent Plan provisions on which the
                  denial is based;

            (c)   A description of any additional material or information which
                  must be submitted to perfect the claim, and an explanation of
                  why such material or information is necessary; and

            (d)   An explanation of the Plan's review procedure as set forth in
                  Section 4.03(3) below.

                  3)    If a Participant wishes to contest the denial or partial
                        denial of a claim for benefits under the Plan, he or she
                        shall so notify the Plan Administrator in writing within
                        30 days after receiving the Denial Notice. The
                        Participant shall have a period of 60 days from the date
                        he or she receives the Denial Notice to submit to the
                        Plan Administrator written materials or information in
                        support of his or her claim (which shall include any
                        materials or information requested in the Denial
                        Notice), and if the Participant so requests, the Plan
                        Administrator shall afford the Participant the
                        opportunity, before the end of such 60-day period, to
                        meet with the Plan Administrator to discuss his or her
                        claim. The Plan Administrator shall make a final
                        determination with respect to such claim within 30 days
                        following the end of such 60-day period, and shall
                        notify the Participant of such decision as promptly as

                                    ARTICLE V

                   Plan Amendment and Termination; Successors

Section 5.01.     Amendment and Termination. The Plan, and any part thereof, is
                  subject to amendment, waiver, or individual adjustment by the
                  Plan Administrator at any time and from time to time, for any
                  reason, provided that no such amendment, waiver, adjustment or
                  termination shall decrease or otherwise adversely affect the
                  rights or entitlements possessed by a Participant, whether
                  prior to or after such Participant's Employment Severance
                  Date, and whether with respect to benefits under the Plan to
                  which a Participant is then entitled or with respect to which
                  such Participant may become entitled upon a Voluntary
                  Termination for Good Reason of a Qualifying Involuntary
                  Termination, without such Participant's written consent.

Section 5.02.     Plan Expiration. The Plan shall expire on December 31,
                  2004. No terminations of employment for Participants occurring
                  after such expiration shall give rise to any rights to
                  severance benefits under the Plan, but such expiration shall
                  have no effect on severance payments and benefits to which an
                  Eligible Participant whose Employment Severance Date occurs on
                  or prior to such date are entitled.

Section 5.03      Successors. The Company shall cause this Plan to be
                  assumed by any successor of the Company, whether such
                  succession occurs by merger, asset acquisition, or otherwise.


Section 5.04      Governing Law. This Plan shall be governed by the laws of the
                  State of Delaware.

                                   ARTICLE VI

                        Waiver and Release of Claims Form

Section 6.01.     Signing the Waiver and Release Form. To receive severance
                  benefits under the Plan, an Eligible Participant must sign,
                  and not revoke, a Waiver and Release of Claims in the form
                  attached hereto as Exhibit A, with such changes thereto as the
                  Company shall reasonably provide.

                               [Exhibit A Omitted]