Nonqualified Stock Option Agreement - Martha Stewart Living Omnimedia Inc. and Susan Lyne
1999 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT
This NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), made and
entered into as of the 11th day of November, 2004 (the "Grant Date"), by
and between Susan Lyne (the "Participant") and Martha Stewart Living
Omnimedia, Inc., a Delaware corporation (the "Company"), sets forth the
terms and conditions of Stock Options issued pursuant to the Company's
Amended and Restated 1999 Stock Incentive Plan (the "Plan") and this
Agreement. Any capitalized terms used but not defined herein shall have the
meaning prescribed in the Plan.
1. Grant of Stock Option. Subject to the provisions of this Agreement,
the Plan and the Employment Agreement, dated November 11, 2004, by and
between the Participant and the Company (the "Employment Agreement"), the
Company hereby grants to the Participant non-qualified options to purchase
400,000 shares of Common Stock (the "Stock Options"). The Stock Options are
granted as of the Grant Date pursuant to, and subject to the terms and
conditions of, the Plan.
2. Exercise Price. The exercise price per share of Common Stock
subject to the Stock Options is $18.57.
3. Vesting. Subject to Section 4 hereof, the Stock Options shall vest
and become exercisable in three equal annual installments on the first,
second and third anniversaries of the Grant Date, so long as the
Participant has remained continuously employed by the Company from the
Grant Date through such dates. The Stock Options shall be exercisable on
any date to the extent vested and outstanding on such date. For purposes of
this Agreement, employment with the Company shall include employment with
the Company's affiliates and its successors. Nothing in this Agreement or
the Plan shall confer upon the Participant any right to continue in the
employ of the Company or any of its affiliates or interfere in any way with
the right of the Company or any such affiliates to terminate the
Participant's employment at any time.
4. Termination of Employment; Change in Control. (a) In the event of
the Participant's Termination of Employment by the Company without Cause
(as defined in the Employment Agreement), by the Participant for Good
Reason (as defined in the Employment Agreement), or by reason of the
Participant's death or Disability (as defined in the Employment Agreement),
any portion of the Stock Options that has not vested as of the date of the
Participant's Termination of Employment shall immediately vest, and the
vested Stock Options shall expire as set forth in Section 5 of this
Agreement.
(b) In the event of the Participant's Termination of Employment by the
Company for Cause (as defined in the Employment Agreement) or by the
Participant without Good Reason (as defined in the Employment Agreement),
any portion of the Stock Options that has not vested as of the date of the
Participant's Termination of Employment shall immediately be forfeited, and
the vested Stock Options shall expire as set forth in Section 5 of this
Agreement.
(c) In the event of a Change in Control (as defined in the Employment
Agreement), any unvested and outstanding portion of the Stock Options shall
immediately and fully vest, and the vested Stock Options shall expire as
set forth in Section 5 of this Agreement.
5. Stock Option Term. Vested Stock Options shall expire on the
earliest to occur of:
(i) the fifth anniversary of the Participant's Termination of
Employment by the Company without Cause, by the
Participant for Good Reason, or by reason of the
Participant's death or Disability;
(ii) the later of (A) the expiration of 30 days from the
Participant's Termination of Employment by the Company for
Cause or by the Participant without Good Reason and (B)
the fifth anniversary of a Change in Control that occurs
while the Participant is employed by the Company; and
(iii) the tenth anniversary of the Grant Date.
6. Method of Stock Option Exercise. The Stock Options may be exercised
during its term, in whole or in part, to the extent it has become vested
and exercisable pursuant to Section 3 or 4 and has not yet been forfeited
or expired, by giving written notice of exercise to the Director of Human
Resources of the Company (or to such other party as the Company may
designate from time to time) specifying the number of shares of Common
Stock subject to the Stock Options to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by certified or bank
check or such other instrument as the Company may accept. Stock Options may
also be exercised by any other means permitted by the Plan that the
Committee may designate from time to time. Shares of Common Stock issued
upon exercise of the Stock Option shall be registered on a Registration
Statement on Form S-8 (or other available form). To the extent permitted by
applicable law, the Participant may discharge any withholding obligation in
respect of this Agreement by directing the Company to withhold shares of
Common Stock delivered upon exercise of the Stock Option that have a value
on the date of exercise equal to the Company's minimum withholding
obligation.
7. Transferability. The Stock Options shall not be transferable by the
Participant other than by will or by the laws of descent and distribution
or as otherwise permitted by the Committee from time to time. The Stock
Options shall be exercisable, subject to the terms of the Plan, only by the
Participant, the Participant's estate or beneficiary, the guardian or legal
representative of the Participant, or any person to whom such option is
transferred pursuant to this Section 7, it being understood that the term
"Participant" includes such guardian, legal representative and other
permitted transferee.
8. Successors, Assigns and Transferees. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and each of
their respective successors, assigns and permitted transferees (including,
upon the death of the Participant, the Participant's estate).
9. Administration. The authority to manage and control the operation
and administration of this Agreement shall be vested in the Committee, and
the Committee shall have all powers with respect to this Agreement as it
has with respect to the Plan; provided that nothing herein or in the Plan
shall prevent or limit the Participant from contesting any interpretation
or determination made by the Committee; and provided, further, that
notwithstanding the stated authority of the Committee under the Plan, the
terms "Cause," "Good Reason," "Disability" and "Change in Control" shall be
determined pursuant to the Employment Agreement and not pursuant to this
Agreement, and the interpretation of such terms pursuant to the Employment
Agreement shall be final, binding and conclusive for purposes of this
Agreement.
10. Incorporation of Plan. Subject to the limitations contained in
Section 9 of this Agreement, all terms and conditions of the Plan are
incorporated herein and made part hereof as if stated herein. The
Participant may obtain a copy of the Plan from the Director of Human
Resources of the Company.
11. Not an Employment Contract. Neither this Agreement nor any Stock
Option shall confer on the Participant any right with respect to
continuance of employment or other service with the Company or any
Subsidiary, nor shall they interfere in any way with any right the Company
or any Subsidiary would otherwise have to terminate or modify the terms of
the Participant's employment or other service (subject to the terms of the
Employment Agreement) at any time.
12. Integration. This Agreement and the other documents referred to
herein, including without limitation the Plan and the Employment Agreement,
or delivered pursuant hereto, which form a part hereof contain the entire
understanding of the parties with respect to their subject matter. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other
than those expressly set forth herein. This Agreement, including without
limitation the Plan, supersedes all prior agreements and understandings
between the parties with respect to its subject matter.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
constitute one and the same instrument. Notwithstanding the foregoing, any
duly authorized officer of the Company may execute this Agreement by
providing an appropriate facsimile signature, and any counterpart or
amendment hereto containing such facsimile signature shall for all purposes
be deemed an original instrument duly executed by the Company.
14. 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 Participant 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.
IN WITNESS WHEREOF, the Participant has executed this Agreement on the
Participant's own behalf, thereby representing that the Participant has
carefully read and understands this Agreement and the Plan as of the day
and year first written above, and the Company has caused this Agreement to
be executed in its name and on its behalf, all as of the date first written
above.
By: /s/ Susan Lyne
Name: Susan Lyne
MARTHA STEWART LIVING
OMNIMEDIA, INC.
By: /s/ Jay L. Dubiner
Name: Jay L. Dubiner
Title: Executive Vice President, Corporate
Development & General Counsel