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Sample Business Contracts

Employment Agreement - Martha Stewart Living Omnimedia Inc. and Susan Lyne

Employment Forms

  • Employment Contract. Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
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  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                            EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November 11,
2004 (the "Effective Date"), by and between Martha Stewart Living
Omnimedia, Inc., a Delaware corporation (the "Company"), and Susan Lyne
(the "Executive").

     WHEREAS, the Executive is currently a member of the Board of Directors
of the Company (the "Board"); and

     WHEREAS, the Company desires that the Executive serve as its President
and Chief Executive Officer following the Effective Date, and the Executive
is willing to be so employed, in each case on the terms and conditions set
forth herein;

     NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the sufficiency of which is hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows:

     1.   Employment Term. Subject to the provisions of Section 7 of this
Agreement, the Company hereby agrees to employ the Executive hereunder, and
the Executive hereby agrees to be employed by the Company hereunder, in
each case subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on December 31, 2007
(such period, as it may be extended in accordance with the terms of the
following sentence, the "Employment Term"). Unless the Company or the
Executive has theretofore provided notice in writing to the other party of
its intention not to extend the Employment Term, on June 30, 2007 and on
each succeeding June 30, this Agreement shall automatically be extended for
an additional 12 months from the then scheduled expiration date.

     2.   Duties.
          ------

          (a) During the Employment Term, the Executive shall serve as the
President and Chief Executive Officer of the Company and shall be a member
of the Board. The Executive shall be the senior-most executive officer of
the Company and shall have the duties and responsibilities customarily
exercised by an individual serving in those positions in a corporation of
the size and nature of the Company. In her capacity as President and Chief
Executive Officer, the Executive shall use her best energies and abilities
in the performance of her duties, services and responsibilities for the
Company. In performing such duties, services and responsibilities, the
Executive will report directly to the Board, and no other Company employee
(other than Martha Stewart) shall have a direct reporting relationship to
the Board.

          (b) During the Employment Term, the Executive shall devote
substantially all of her business time and attention to the businesses of
the Company and its subsidiaries and affiliates and shall not engage in any
activity inconsistent with the foregoing, whether or not such activity
shall be engaged in for pecuniary profit, unless approved by the Board;
provided, however, that, to the extent such activities do not violate, or
substantially interfere with her performance of her duties, services and
responsibilities under, this Agreement, the Executive shall be permitted to
manage her personal, financial and legal affairs and serve on civic or
charitable boards and committees of such boards, it being agreed that the
Executive may continue to serve on corporate, civic and charitable boards
on which she sits as of the date of this Agreement. During the Employment
Term, the Executive's principal location of employment shall be at the
Company's executive offices in New York City, New York, except for
customary business travel on behalf of the Company and its subsidiaries and
affiliates.

          (c) Upon any termination of the Executive's employment with the
Company, the Executive shall be deemed to have resigned from all other
positions she then holds as an employee or director or other independent
contractor of the Company or any of its subsidiaries or affiliates, unless
otherwise agreed by the Company and the Executive.

     3.   Base Salary; Bonus.
          ------------------

          (a) During the Employment Term, in consideration of the
performance by the Executive of the Executive's obligations during the
Employment Term (including any service in any position with any subsidiary
or affiliate of the Company), the Company shall pay the Executive a base
salary (the "Base Salary") at an annual rate of $900,000, subject to
increase but not decrease in the discretion of the Board, payable in
accordance with the normal payroll practices of the Company in effect from
time to time.

          (b) During the Employment Term, in addition to the payments of
the Base Salary set forth above, the Executive shall be eligible to
receive, in respect of each calendar year during which the Employment Term
is in effect (pro rata for 2004 and any other partial calendar year), a
performance-based cash bonus of 100% of Base Salary at target and 150% of
Base Salary at maximum based on achievement of goals established with
respect to each calendar year by the Compensation Committee of the Board
after reasonable consultation with the Executive.

     4.   Benefits.
          --------

          (a) During the Employment Term, the Executive shall be entitled
to participate in the employee benefit plans, policies, programs,
perquisites and arrangements, as may be amended from time to time, that are
provided generally to similarly situated employees of the Company
(excluding for this purpose Martha Stewart) to the extent the Executive
meets the eligibility requirements for any such plan, policy, program,
perquisite or arrangement.

          (b) The Company shall reimburse the Executive for all reasonable
business expenses incurred by the Executive in carrying out the Executive's
duties, services and responsibilities under this Agreement during the
Employment Term, including, without limitation, first class transportation
or travel on a private plane of the Company to the extent that such private
plane is available. The Executive shall comply with generally applicable
policies, practices and procedures of the Company with respect to
reimbursement for, and submission of expense reports, receipts or similar
documentation of, such expenses.

          (c) During the Employment Term, the Company shall pay or promptly
reimburse the Executive for annual dues for membership in the American
Society of Magazine Editors, the Television Academy and similar
professional organizations.

          (d) Concurrently with the execution of this Agreement, the
Company shall pay to the Executive in cash the sum of $447,120 in order to
compensate the Executive for the forfeiture of certain equity compensation
awards relating to the Executive's prior employment that result from the
execution and performance of this Agreement by the Executive.

     5.   Vacations. During each calendar year of the Employment Term (pro
rata for partial calendar years), the Executive shall be entitled to four
weeks of paid vacation to be taken in accordance with the applicable policy
of the Company.

     6.   Equity Compensation.
          -------------------

          (a) Contemporaneously with the execution and delivery of this
Agreement by the parties, the Company hereby grants the Executive 200,000
shares of restricted Class A common stock, par value $0.01 per share
("Stock"), of the Company, pursuant to the Restricted Stock Agreement
attached hereto as Exhibit A (the "Restricted Stock Agreement"), and
options to purchase 400,000 shares of Stock of the Company, pursuant to the
Stock Option Agreement attached hereto as Exhibit B (the "Stock Option
Agreement" and, together with the Restricted Stock Agreement, the "Equity
Agreements"). It is expected that, in the discretion of the Board (or the
Compensation Committee of the Board), the Executive may from time to time
be granted additional equity awards during the Employment Term.

          (b) Upon a Change in Control of the Company, all unvested equity
awards held by the Executive shall become fully vested and (in the case of
stock options) exercisable, with outstanding options remaining exercisable
for a period of not less than five years after such Change in Control (but
in no event beyond the original term of the options).

     7.   Termination of the Employment Term.
          ----------------------------------

          (a) The Executive's employment with the Company and the
Employment Term shall terminate upon the earliest to occur of:

               (i) the death of the Executive;

               (ii) the termination of the Executive's employment by the
Company by reason of the Executive's Disability;

               (iii) the termination of the Executive's employment by the
Company for Cause or without Cause;

               (iv) the termination of the Executive's employment by the
Executive for Good Reason or without Good Reason; and

               (v) the expiration of the Employment Term.

          (b) For purposes of this Agreement, the following terms shall
have the following meanings:

               (i) "Cause" shall mean that the Board has made a good faith
determination, after providing the Executive with reasonably detailed
written notice and a reasonable opportunity to be heard on the issues at a
Board meeting, that any of the following has occurred:

                    (1) the willful and continued failure by the Executive
to substantially perform her material duties to the Company (other than due
to mental or physical disability) after written notice specifying such
failure and the manner in which the Executive may rectify such failure in
the future;

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

                    (3) the Executive has been convicted of a felony; or

                    (4) the Executive has engaged in fraud against the
Company or misappropriated Company property (other than incidental
property).

     For purposes of this Agreement, no act or failure by the Executive
shall be considered "willful" if such act is done by the Executive in the
good faith belief that such act is or was in the best interests of the
Company or one or more of its businesses. Nothing in this Section 7(b)(i)
shall be construed to prevent the Executive from contesting the Board's
determination that Cause exists.

               (ii) "Change in Control" of the Company shall mean:

                    (1) any "person" (as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) or "group" (as such term is used in Section 14(d)(2) of
the Exchange Act) is or becomes a "beneficial owner" (as such term is used
in Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
Voting Stock of the Company; provided that this clause (1) shall not apply
with respect to a stockholder of the Company who beneficially owns more
than 50% of the Voting Stock of the Company on the Effective Date;

                    (2) all or substantially all of the assets or business
of the Company are disposed of pursuant to a merger, consolidation or other
transaction unless, immediately after such transaction, the stockholders of
the Company immediately prior to the transaction own, directly or
indirectly, in substantially the same proportion as they owned the Voting
Stock of the Company prior to such transaction more than 50% of the Voting
Stock of the company surviving such transaction or succeeding to all or
substantially all of the assets or business of the Company or the ultimate
parent company of such surviving or successor company if such surviving or
successor company is a subsidiary of another entity (there being excluded
from the number of shares held by such stockholders, but not from the
Voting Stock of the combined company, any shares received by affiliates of
such other company in exchange for stock of such other company);

                    (3) a majority of the Board consists of individuals
other than Incumbent Directors, which term means the members of the Board
on the Effective Date or, if any such individual is no longer a member of
the Board, any successor to any such individual (or to any successor to any
such individual) if the election or nomination for election of such
individual or successor was approved by a majority of the directors who
then comprised the Incumbent Directors;

                    (4) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its assets if
such plan of liquidation will result in the winding-up of the business of
the Company;

                    (5) the consummation of any merger, consolidation or
other similar corporate transaction unless, immediately after such
transaction, the stockholders of the Company immediately prior to the
transaction own, directly or indirectly, in substantially the same
proportion as they owned the Voting Stock of the Company prior to such
transaction more than 50% of the Voting Stock of the company surviving such
transaction or its ultimate parent company if such surviving company is a
subsidiary of another entity (there being excluded from the number of
shares held by such stockholders, but not from the Voting Stock of the
combined company, any shares received by affiliates of such other company
in exchange for stock of such other company); or

                    (6) the failure of the Company to have any securities
required to be registered under Section 12 of the Exchange Act.

For purposes of this definition, "the Company" shall include any entity
that succeeds to all or substantially all of the business of the Company;
"Voting Stock" shall mean securities of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies,
to elect the directors of a corporation; and references to ownership of
"more than 50% of the Voting Stock" shall mean the ownership of shares of
Voting Stock that represent the right to exercise more than 50% of the
votes entitled to be cast in the election of directors of a corporation.

               (iii) "Disability" of the Executive shall have occurred if,
as a result of the Executive's incapacity due to physical or mental illness
as determined by a physician selected by the Executive, and reasonably
acceptable to the Company, the Executive shall have been substantially
unable to perform her duties hereunder for six consecutive months, or for
an aggregate of 180 days during any period of twelve consecutive months.

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

                    (1) a material diminution of, or material reduction or
material adverse alteration in, the Executive's positions, titles, duties,
or responsibilities from, or the assignment to the Executive of duties
inconsistent with, those set forth in Section 2(a) (or as subsequently
amended in accordance with Section 18 with the consent of the Executive);

                    (2) a material breach of the Agreement by the Company
or any material and repeated interference by the Board or any Company
employee or stockholder with the Executive's ability or authority to
discharge her duties or responsibilities hereunder that continues after the
reasonable notice and opportunity to cure;

                    (3) the Company's requiring the Executive to be based
at a location in excess of 35 miles from the location of the Executive's
principal job location or office specified in Section 2(b), except for
required travel on the Company's business to an extent substantially
consistent with the Executive's position;

                    (4) a reduction by the Company of the Executive'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;

                    (5) the failure of the Company after the Effective Date
to provide the Executive with perquisites or employee benefits in
accordance with the terms of this Agreement that continues after reasonable
notice and opportunity to cure;

                    (6) the failure of the Company to require assumption of
this Agreement by a successor, except if such assumption would occur by
operation of law;

                    (7) the occurrence of a "Termination Trigger" under the
Intellectual Property License and Preservation Agreement dated as of
October 22, 1999, as amended, between the Company and Martha Stewart (the
"IP Agreement"), if such occurrence results in the license granted to the
Company pursuant to the IP Agreement becoming non-exclusive; or

                    (8) any Change in Control of the Company if, after
consummation of such Change in Control, the Executive is not the
senior-most executive officer of the Company and its ultimate parent
company.

The Executive's right to terminate employment in a termination for Good
Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. Subject to the requirements set forth above, the
Executive's continued employment shall not constitute a consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.

     8.   Termination Procedures.
          ----------------------

          (a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive during the Employment Term
(other than pursuant to Sections 7(a)(i) and 7(a)(v)) shall be communicated
by written Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice indicating the
specific termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under that provision.

          (b) Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean (i) if the Executive's employment is terminated by
her death, the date of her death, (ii) if the Executive's employment is
terminated pursuant to Section 7(a)(ii), 30 days after the date of receipt
of the Notice of Termination (provided that the Executive does not return
to the substantial performance of her duties on a full-time basis during
such 30-day period), (iii) if the Executive's employment is terminated
pursuant to Section 7(a)(v), the date of expiration of the Employment Term,
and (iv) if the Executive's employment is terminated for any other reason,
the date on which a Notice of Termination is given or any later date
(within 30 days after the giving of such notice) set forth in such Notice
of Termination.

     9.   Termination Payments.
          --------------------

          (a) Upon any termination of the Executive's employment, she shall
be entitled to payment of any earned but unpaid portion of the Base Salary,
bonus, benefits and unreimbursed business expenses, in each case with
respect to the period ending on the Date of Termination.

          (b) In addition to the payments and benefits provided in Section
9(a), if the Executive's employment is terminated (x) by the Company
without Cause or (y) by the Executive for Good Reason, (i) outstanding
equity awards held by the Executive shall vest and/or become exercisable
(with outstanding options remaining exercisable for five years following
the Date of Termination (but not beyond the original term)), (ii) the
Company shall pay the Executive the Severance Payment and (iii) the Company
shall provide the Executive with continued medical coverage at
active-employee rates for two years or, if earlier, until the Executive
receives subsequent employer-provided coverage. For purposes of this
Section 9(b), the "Severance Payment" shall be a lump-sum cash payment
equal to the following (whichever is applicable):

               (i) if the termination occurs on or prior to the first
anniversary of the Effective Date, three times the Base Salary;

               (ii) if the termination occurs after the first anniversary
of the Effective Date , four times the Base Salary.

Notwithstanding clause (i) above, if the Executive is terminated by the
Company without Cause or terminates her employment for Good Reason during
the 6-month period prior to, or the 2-year period following, a Change in
Control, the Executive will receive the severance benefits described in
clause (ii) above.

     Payment of the Severance Pay shall be conditioned upon the Executive's
execution of a general release in form satisfactory to the Company and the
Executive.

     10.  Confidential Information; Noncompetition; Nonsolicitation;
          Nondisparagement.
          ----------------------------------------------------------

          (a) Confidential Information. Except as may be required or
appropriate in connection with her carrying out her duties under this
Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or any legal process, or
as is necessary in connection with any adversarial proceeding against the
Company (in which case the Executive shall cooperate with the Company in
obtaining a protective order at the Company's expense against disclosure by
a court of competent jurisdiction), communicate, to anyone other than the
Company and those designated by the Company or on behalf of the Company in
the furtherance of its business or to perform her duties hereunder, any
trade secrets, confidential information, knowledge or data relating to the
Company, its affiliates or any businesses or investments of the Company or
its affiliates, obtained by the Executive during the Executive's services
to the Company that is not generally available public knowledge (other than
by acts by the Executive in violation of this Agreement).

          (b) Noncompetition. During the Employment Term and (unless this
Agreement terminates pursuant to clause (v) of Section 7(a)) until the
first anniversary of the Executive's Date of Termination, the Executive
shall not engage in or become associated with any Competitive Activity. For
purposes of this Section 10(b), a "Competitive Activity" shall mean any
business or other endeavor that engages in any country in which the Company
has significant business operations to a significant degree in a business
that directly competes with all or any substantial part of any of the
Company's businesses of (i) producing television and other video programs,
(ii) designing, developing, licensing, promoting and selling merchandise
through catalogs, direct marketing, Internet commerce and retail stores of
the product categories in which the Company so participates using Martha
Stewart's name, likeness, image, or voice to promote or market any such
product or service, (iii) the creation, publication or distribution of
regular or special issues of magazines, and (iv) any other business in
which the Company is engaged during the term of this Agreement (it being
understood that a media business shall not be deemed to engage in
Competitive Activity if the content produced by such media business does
not compete with the content of the such programs (in the case of clause
(i)) or magazines (in the case of clause (iii))). The Executive shall be
considered to have become "associated with a Competitive Activity" if she
becomes involved as an owner, employee, officer, director, independent
contractor, agent, partner, advisor, or in any other capacity calling for
the rendition of the Executive's personal services, with any individual,
partnership, corporation or other organization that is engaged in a
Competitive Activity and her involvement relates to a significant extent to
the Competitive Activity of such entity; provided, however, that the
Executive shall not be prohibited from (a) owning less than two percent of
any publicly traded corporation, whether or not such corporation is in
competition with the Company or (b) serving as a director of a corporation
or other entity the primary business of which is not a Competitive
Activity; and provided, further, however, that the Executive shall not be
deemed to have become associated with a Competitive Activity if the
Executive becomes chief executive officer of an organization that engages
in one or more Competitive Activities so long as (i) less than 10% of the
annual revenue of such organization is derived from Competitive Activities
and (ii) the Executive does not actively participate in the management or
operation of the part of such organization that engages in any Competitive
Activity. If, at any time, the provisions of this Section 10(b) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 10(b)
shall be considered divisible and shall become and be immediately amended
to only such area, duration and scope of activity as shall be determined to
be reasonable and enforceable by the court or other body having
jurisdiction over the matter; and the Executive agrees that this Section
10(b) as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.

          (c) Nonsolicitation. During the Employment Term, and for 12
months after the Executive's Date of Termination, the Executive shall not,
directly or indirectly, (1) solicit for employment by other than the
Company any person (other than any personal secretary or assistant hired to
work directly for the Executive) employed by the Company or its affiliated
companies as of the Date of Termination, (2) solicit for employment by
other than the Company any person known by the Executive (after reasonable
inquiry) to be employed at the time by the Company or its affiliated
companies as of the date of the solicitation or (3) solicit any customer or
other person with a business relationship with the Company or any of its
affiliated companies to terminate, curtail or otherwise limit such business
relationship.

          (d) Non-disparagement. During the Employment Term, and for 12
months after the Executive's Date of Termination, (i) the Executive shall
not, directly or indirectly, make or publish any disparaging statements
(whether written or oral) regarding the Company or any of its affiliated
companies or businesses, or the affiliates, directors, officers, agents,
principal stockholders or customers of any of them and (ii) neither the
Company nor any of its affiliated companies or businesses or their
affiliates, directors, or officers shall directly or indirectly, make or
publish any disparaging statements (whether written or oral) regarding the
Executive.

          (e) Injunctive Relief. In the event of a breach or threatened
breach of this Section 10, each party agrees that the non-breaching party
shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the parties
acknowledging that damages would be inadequate and insufficient.

     11.  Reimbursement of Legal Fees. If any contest or dispute shall arise
between the Company and the Executive regarding any provision of this
Agreement, the Company shall reimburse the Executive for all legal fees and
expenses reasonably incurred by the Executive in connection with such
contest or dispute, but only if the Executive prevails to a substantial
extent with respect to the Executive's claims brought and pursued in
connection with such contest or dispute. Such reimbursement shall be made
as soon as practicable following the resolution of such contest or dispute
(whether or not appealed) to the extent the Company receives written
evidence of such fees and expenses. In addition, the Company shall
reimburse the Executive for all reasonable legal fees and expenses incurred
in connection with the negotiation and execution of this Agreement.

     12.  Indemnification.
          ---------------

          (a) General. The Company agrees that if the Executive is made a
party or is threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that the Executive is or was a
trustee, director or officer of the Company or any of its affiliates or is
or was serving at the request of the Company or any of its affiliates as a
trustee, director, officer, member, employee or agent of another
corporation or a partnership, joint venture, limited liability company,
trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a trustee,
director, officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent
authorized by Delaware law, as the same exists or may hereafter be amended,
against all Expenses incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even
if the Executive has ceased to be an officer, director, trustee or agent,
or is no longer employed by the Company and shall inure to the benefit of
her heirs, executors and administrators.

          (b) Expenses. As used in this Agreement, the term "Expenses"
shall include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys' fees,
accountants' fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.

          (c) Enforcement. If a claim or request under this Section 12 is
not paid by the Company or on its behalf, within thirty (30) days after a
written claim or request has been received by the Company, the Executive
may at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim or request and if successful in whole or in
part, the Executive shall be entitled to be paid also the expenses of
prosecuting such suit. All obligations for indemnification hereunder shall
be subject to, and paid in accordance with, applicable Delaware law.

          (d) Partial Indemnification. If the Executive is entitled under
any provision of this Agreement to indemnification by the Company for some
or a portion of any Expenses, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify the Executive for the
portion of such Expenses to which the Executive is entitled.

          (e) Advance of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, but only in
the event that the Executive shall have delivered in writing to the Company
(i) an undertaking to reimburse the Company for Expenses with respect to
which the Executive is not entitled to indemnification and (ii) a statement
of her good faith belief that the standard of conduct necessary for
indemnification by the Company has been met.

          (f) Notice of Claim. The Executive shall give to the Company
notice of any claim made against her for which indemnification will or
could be sought under this Agreement. In addition, the Executive shall give
the Company such information and cooperation as it may reasonably require
and as shall be within the Executive's power and at such times and places
as are convenient for the Executive.

          (g) Defense of Claim. With respect to any Proceeding as to which
the Executive notifies the Company of the commencement thereof:

                    (i) The Company will be entitled to participate therein
     at its own expense;

                    (ii) Except as otherwise provided below, to the extent
     that it may wish, the Company will be entitled to assume the defense
     thereof, with counsel reasonably satisfactory to the Executive, which
     in the Company's sole discretion may be regular counsel to the Company
     and may be counsel to other officers and directors of the Company or
     any subsidiary. The Executive also shall have the right to employ her
     own counsel in such action, suit or proceeding if she reasonably
     concludes that failure to do so would involve a conflict of interest
     between the Company and the Executive, and under such circumstances
     the fees and expenses of such counsel shall be at the expense of the
     Company.

                    (iii) The Company shall not be liable to indemnify the
     Executive under this Agreement for any amounts paid in settlement of
     any action or claim effected without its written consent. The Company
     shall not settle any action or claim in any manner which would impose
     any penalty that would not be paid directly or indirectly by the
     Company or limitation on the Executive without the Executive's written
     consent. Neither the Company nor the Executive will unreasonably
     withhold or delay their consent to any proposed settlement.

          (h) Non-Exclusivity. The right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 10 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute or certificate of incorporation or by-laws of the Company or any
subsidiary, agreement, vote of shareholders or disinterested directors or
trustees or otherwise.

          (i) Insurance. The Executive shall be covered by the directors'
and officers' insurance policies maintained by the Company on the same
basis as other directors and officers of the Company.

     13. Dispute Resolution. Except as set forth in Section 10(e), any
controversy or claim arising out of or relating to this Agreement or the
making, interpretation or breach thereof shall be settled by arbitration in
New York City, New York by three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof, and any party to the arbitration may
institute proceedings in any court having jurisdiction for the specific
performance of any such award. The powers of the arbitrator shall include,
but not be limited to, the awarding of injunctive relief.

     14.  Representations.
          ---------------

          (a) The Executive represents and warrants that (i) she is not
subject to any contract, arrangement, policy or understanding, or to any
statute, governmental rule or regulation, that in any way limits her
ability to enter into and fully perform her obligations under this
Agreement and (ii) she is not otherwise unable to enter into and fully
perform her obligations under this Agreement.

          (b) The Company represents and warrants to the Executive that (i)
this Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company and
(ii) subject to the accuracy of the Executive's representation in Section
14(a), the employment of the Executive on the terms and conditions
contained in this Agreement will not conflict with or result in a breach or
violation of the terms of any contract or other obligation or instrument to
which the Company is a party or by which it is bound or any statute, law,
rule, regulation, judgment, order or decree applicable to the Company.

     15.  Successors; Binding Agreement.
          -----------------------------

          (a) Company's Successors. No rights or obligations of the Company
under this Agreement may be assigned or transferred, except that the
Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall include any successor to
its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 15 or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

          (b) Executive's Successors. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the
Executive other than her rights to payments or benefits hereunder, which
may be transferred only by will or the laws of descent and distribution.
Upon the Executive's death, this Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the
Executive's beneficiary or beneficiaries, personal or legal
representatives, or estate, to the extent any such person succeeds to the
Executive's interests under this Agreement. If the Executive should die
following her Date of Termination while any amounts would still be payable
to her hereunder if she had continued to live, all such amounts unless
otherwise provided herein shall be paid in accordance with the terms of
this Agreement to such person or persons so appointed in writing by the
Executive, or otherwise to her legal representatives or estate.

     16. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:

          If to the Executive, at her residence address most recently filed
          with the Company; and

          If to the Company:

          Martha Stewart Living Omnimedia, Inc.
          11 West 42nd Street
          New York, NY 10036
          Attention:  General Counsel
          Tel: (212) 827-8036
          Fax: (212) 827-8188;

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

     17. Mitigation. The Executive shall not be required to mitigate
damages with respect to the termination of her employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in Section 9(b).
Additionally, amounts owed to the Executive under this Agreement shall not
be offset by any claims the Company may have against the Executive, and the
Company's obligation to make the payments provided for in this Agreement,
and otherwise to perform its obligations hereunder, shall not be affected
by any other circumstances, including, without limitation, any
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others.

     18. Modification; Waiver. No provision of this Agreement may be
amended, modified, or waived unless such amendment or modification is
agreed to in writing and signed by the Executive and by a duly authorized
officer of the Company, and such waiver is set forth in writing and signed
by the party to be charged. No waiver by either party hereto at any time of
any breach by the other party hereto of any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.

     19. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.

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

     21. Entire Agreement. This Agreement and the Equity Agreements set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements, promises,
covenants, arrangements, communications, representations and warranties,
whether oral or written, by any officer, employee or representative of any
party hereto in respect of such subject matter.

     22. Withholding. All payments hereunder shall be subject to any
required withholding of federal, state and local taxes pursuant to any
applicable law or regulation.

     23. Section Headings. The section headings in this Agreement are for
convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.

     24. Governing Law. Except as otherwise provided in Section 12, the
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New York without regard to
its conflicts of law principles. Each of the parties agrees that if any
dispute is not resolved by the parties pursuant to Section 13, such dispute
shall be resolved only in the courts of the State of New York sitting in
the County of New York or the United States District Court for the Southern
District of New York and the appellate courts having jurisdiction of
appeals in such courts. In that context, and without limiting the
generality of the foregoing, each of the parties irrevocably and
unconditionally (a) submits for itself in any Proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive jurisdiction of the courts of the State of New
York sitting in the County of New York, the court of the United States of
America for the Southern District of New York, and appellate courts having
jurisdiction of appeals from any of the foregoing, and agrees that all
claims in respect of any such Proceeding shall be heard and determined in
such New York State court or, to the extent permitted by law, in such
federal court; (b) consents that any such Proceeding may and shall be
brought in such courts and waives any objection that it may now or
thereafter have to the venue or jurisdiction of any such Proceeding in any
such court or that such Proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (c) waives all right to trial by
jury in any Proceeding (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement, or its performance under or
the enforcement of this Agreement; (d) agrees that service of process in
any such Proceeding may be effected by mailing a copy of such process by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address as provided in Section 16;
and (e) agrees that nothing in this Agreement shall affect the right to
effect service of process in any other manner permitted by the laws of the
State of New York.

     25.  Additional Payments.
          -------------------

          (a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution in the
nature of compensation (within the meaning of Section 280G(b)(2) of the
Code) to or for the benefit of the Executive, whether paid or payable
pursuant to this Agreement (including, without limitation, the accelerated
vesting of equity awards held by the Executive), the Equity Agreements or
otherwise, would be subject to the excise tax imposed by Section 4999 of
the Code, then the Executive shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that, after payment by
the Executive of all taxes (and any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the payments. The
Company's obligation to make Gross-Up Payments under this Section 25 shall
not be conditioned upon the Executive's termination of employment.

          (c) All determinations required to be made under this Section 25,
including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a nationally recognized accounting
firm that does not have a material relationship with either of the parties
that is selected by mutual agreement (the "Accounting Firm"). The
Accounting Firm shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 25, shall be paid by the Company to the Executive
within 15 days of the receipt of the Accounting Firm's determination.
Absent manifest error, any determination by the Accounting Firm shall be
binding upon the Company and the Executive.

          (d) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall
be given as soon as practicable, but no later than ten business days after
the Executive is informed in writing of such claim. The Executive shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of
such period that the Company desires to contest such claim, the Executive
shall:

                    (i) give the Company any information reasonably
requested by the Company relating to such claim,

                    (ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company,

                    (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and

                    (iv) permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 25, the Company shall control all
proceedings taken in connection with such contest, and, at its sole
discretion, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing authority
in respect of such claim and may, at its sole discretion, either pay the
tax claimed to the appropriate taxing authority on behalf of the Executive
and direct the Executive to sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company pays such claim and
directs the Executive to sue for a refund, the Company shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties) imposed with respect to such
payment or with respect to any imputed income in connection with such
payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which the
Gross-Up Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt by the Executive of a Gross-Up Payment
or payment by the Company of an amount on the Executive's behalf pursuant
to this Section 25, the Executive becomes entitled to receive any refund
with respect to the Excise Tax to which such Gross-Up Payment relates or
with respect to such claim, the Executive shall promptly pay to the Company
the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after payment by the Company
of an amount on the Executive's behalf pursuant to this Section 25, a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then the amount of
such payment shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

          (e) Notwithstanding any other provision of this Section 25, the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit
of the Executive, all or any portion of any Gross-Up Payment, and the
Executive hereby consents to such withholding and payment.

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

                                  MARTHA STEWART LIVING
                                  OMNIMEDIA, INC.



                                  By: /s/  Jay L. Dubiner

                                  Name:  Jay L. Dubiner
                                  Title: Executive Vice President, Corporate
                                  Development & General Counsel

                                  /s/  Susan Lyne

                                  Susan Lyne