Exhibit 10.3
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of September 17,
2008, by and between Martha Stewart Living Omnimedia, Inc., a Delaware
corporation (the “Company”), and Wenda Harris Millard (the “Executive”).
     WHEREAS, the Executive has been serving as the President — Media of the
Company, and effective June 11, 2008 (the “Effective Date”) was elevated to
Co-Chief Executive Officer (“Co-CEO”), 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
as of the Effective Date and ending on December 31, 2011 (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, 2011 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 — Media of the Company and as the Company’s Co-CEO. The Executive
shall continue to have the Pre-Effective Date Duties and Responsibilities (as
defined in Section 7), and shall also have the duties and responsibilities
customarily exercised by an individual serving in such a position in a
corporation of the size and nature of the Company; provided, however, that
Executive’s Post-Effective Date Duties and Responsibilities (as defined in
Section 7) shall be those duties and responsibilities as the Company’s Board of
Directors (the “Board”), upon notice to Executive, may specify from time to time
in its sole and absolute discretion (which specifications may increase, decrease
or otherwise alter the scope or nature of such duties and responsibilities). In
such capacities, the Executive shall use her best energies and abilities in the
performance of her duties, services and responsibilities for the Company as
further detailed by the Board. In performing such duties, services and
responsibilities, the Executive will report directly to the Chairman of the
Board (the “Chairman”) in his role as principal executive officer of the Company
or, as the Board may direct, to a committee of the Board or to the full Board.
Executive acknowledges and agrees that the Company may determine that (i) the
Chairman (or his successor) is, the “principal executive officer” of the Company
as such term is defined in any applicable laws, rules and regulations
(collectively, “Applicable Law”); or (ii) Executive, alone or jointly with any
other officer(s) of the Company, is the “principal executive officer” of the
Company as such term is defined in any Applicable Law and/or is the “chief
executive officer . . . (or equivalent thereof)” of the Company as such term is
defined in any Applicable Law and/or serves in any similar role with respect to
which a person may have duties under any Applicable Law.
          (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 Chairman or the Board; provided,
however, that, to the extent such activities do not violate, or 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. 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.

 

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          (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.
          (d) The Company will recommend to the Board that the Executive be
appointed to the Board as soon as practicable but in no event later than twelve
(12) months following the Effective Date. The Executive acknowledges that
appointment to the Board shall be determined by the Board in its sole and
absolute discretion and agrees that, provided the Company has made the
recommendation set forth in the immediately preceding sentence, any failure by
the Board to appoint Executive to the Board shall not be deemed a breach of this
Agreement. In no event will the other Co-CEO be appointed to the Board unless
Executive is also appointed to the Board. Following the Effective Date, whether
or not a Board member, Executive shall be invited to and entitled to attend all
meetings of the Board; provided, however, that Executive shall be excluded from
such portions of Board meetings as the Company deems appropriate, including
discussions related to her or the other Co-CEO, or their respective performance,
compensation or related issues.
     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 $650,000, 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, a
performance-based cash bonus of 100% of Base Salary at target (the “Target
Bonus”) and 150% of Base Salary at maximum based on achievement of goals
established each year by the Compensation Committee after reasonable
consultation with Executive; provided that with respect to calendar year 2008,
the Target Bonus shall be $557,000. Such bonus, if any, shall be paid
concurrently with other bonuses paid to senior executives of the Company,
provided you are continuously and actively employed through such date of
payment.
          (c) The Company shall reimburse Executive for reasonable legal fees in
connection with the negotiation and execution of this Agreement in an amount not
to exceed $15,000.
     4. Benefits.
          (a) During the Employment Term, the Executive shall be entitled to
participate in the employee benefit plans, policies, perquisites, programs 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 in accordance with Company policies relating to such expenses; it being
understood that Executive shall be entitled to first-class air travel for
long-haul international or transcontinental flights as necessary. 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.
     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.

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     6. Equity Compensation.
          (a) Promptly after the execution and delivery of this Agreement by
both parties, the Company shall grant the Executive 50,000 shares of restricted
Class A common stock, par value $0.01 per share (the “Stock”) of the Company
pursuant to the Company’s policy on equity issuances (the “Stock Grant”). The
Stock Grant shall vest in three approximately equal tranches on the first,
second and third anniversaries of the date of the Stock Grant pursuant to the
Company’s form of Restricted Stock Agreement attached hereto as Exhibit A (the
“Restricted Stock Agreement”).
          (b) Promptly after the execution and delivery of this Agreement by
both parties, the Company shall grant the Executive a non-qualified option to
acquire 100,000 shares of Stock pursuant to the Company’s policy on equity
issuances; provided, however that the Option Grant shall vest in three
approximately equal tranches on the first, second and third anniversaries of the
date of the Option Grant, with a seven (7) year term pursuant to the Company’s
form of Option Agreement attached hereto as Exhibit B (the “Option Agreement”
and together with the Restricted Stock Agreement, the “Equity Agreements”).
          (c) The Executive will continue to participate in the Company’s annual
stock incentive program, receiving awards as determined by the Compensation
Committee from time to time.
          (d) Upon a Change in Control (as defined hereinafter), all unvested
shares of restricted stock and option awards held by the Executive, other than
the option granted to Executive on approximately March 3, 2008, (the “March 2008
Option Grant”) shall become fully vested and (in the case of Stock Options)
exercisable, with outstanding stock 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 stock options). For the avoidance of doubt, this
Agreement does not alter, and a Change of Control shall not cause to vest the
then-unvested portion of, the March 2008 Option Grant.
     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;

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                    (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) 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;
                    (4) 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
                    (5) 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.

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               (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 title (except as may occur in
response to a comment from a regulatory or governmental agency), reporting
status or authority to exercise Pre-Effective Date Duties, and Responsibilities
(as defined below), 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) resulting in a materially
adverse change to the Executive’s duties and responsibilities; provided,
however, that the following shall not constitute Good Reason pursuant to this
Section 7(b)(iv)(1): the assignment to, or exercise by, the Chairman, the
Company’s other Co-CEO and/or any other officer(s) appointed by the Chairman or
the Board, as the case may be, of (and any related diminution, reduction,
alteration or elimination of Executive’s authority to exercise) any
Post-Effective Date Duties and Responsibilities, regardless of whether Executive
has exercised any such Post-Effective Date Duties and Responsibilities; and
provided further that any diminution, reduction or adverse alteration in
Executive’s authority to exercise any Pre-Effective Date Duties and
Responsibilities (the “Reduced Pre-Effective Date Duties and Responsibilities”)
shall be disregarded for the purposes of this Section 7(b)(iv)(1) to the extent
that Executive has authority to exercise any Post-Effective Date Duties and
Responsibilities that are of approximately comparable importance to the Company
as the Reduced Pre-Effective Date Duties and Responsibilities;
                    (2) a material dimunition, material reduction or materially
adverse alteration to Executive’s Post-Effective Date Duties and
Responsibilities as exercised by the Executive in the ordinary course prior to
the date of this Agreement;
                    (3) a material breach of the Agreement by the Company that
continues after the reasonable notice and opportunity to cure;
                    (4) 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; or
                    (5) a reduction by the Company of the Executive’s base
salary as in effect on the Effective Date, or as the same shall be increased
from time to time.
“Pre-Effective Date Duties and Responsibilities” shall mean duties and
responsibilities exercised by Executive in her capacity as President – Media of
the Company prior to the Effective Date with respect to assets owned by the
Company prior to the Effective Date. “Post-Effective Date Duties and
Responsibilities” shall mean duties and responsibilities other than
Pre-Effective Date Duties and Responsibilities, and notwithstanding anything to
the contrary may include, without limitation, any duties and responsibilities
related to any assets or operations that were or may be acquired by the Company
on or after the Effective Date at the discretion of the Board.
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.

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     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. In addition, upon termination of
Executive’s employment without Cause or a termination by Executive with Good
Reason, Executive will be entitled to a pro-rated bonus for the year of
termination (calculated at the end of the fiscal year and then pro rated through
the date of termination) provided that applicable performance targets have been
met and bonuses are paid generally to similarly situated executives at the
Company. Any payments due pursuant to this Section shall be paid in a lump sum
at the time the Company pays other bonuses, subject to Section 18 hereof (if
applicable).
          (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 consisting
of restricted stock and stock options held by the Executive other than the
March 2008 Option Grant shall vest and/or become exercisable, (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 eighteen months 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 18 months’ salary. The
Severance Payment shall be paid no later than 60 days following the Date of
Termination; provided the Executive has executed the release referred to below
and any waiting period with respect to such release has elapsed. Payment of the
Severance Payment shall be conditioned upon the Executive’s execution of a
general release in form satisfactory to the Company and the Executive within
sixty (60) days of the date of termination; provided, however, that such release
shall not contain post-termination restrictions that are more onerous for the
Executive than those contained in this Agreement.
          (c) Executive understands and agrees that she shall, effective upon
the full execution of this Agreement, cease to be a participant in, or eligible
for any benefits or claims under, the Company’s 2008 Executive Severance Pay
Plan.
     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

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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 or known within the Company’s industry (other than by
acts by the Executive in violation of this Agreement).
          (b) Noncompetition. The Executive hereby agrees that during her
employment with the Company and (unless this Agreement expires pursuant to
Clause (v) of Section 7(a) hereof) during any Tail Period (as defined below), if
any, Executive shall not engage in or become associated with a Competitive
Activity (as defined below). A “Competitive Activity” shall mean any business
which develops or produces lifestyle-based content aimed primarily at adult
female audiences (e.g., Oprah Magazine, iVillage, the WE Network). Executive
shall be deemed to be “engaged in or associated with a Competitive Activity” if
she is or becomes an owner, employee, officer, director, independent contractor,
agent, partner, advisor, or renders personal services in any other capacity,
with or for any individual, partnership, corporation or other organization
(collectively, an “Enterprise”) that is engaged in a Competitive Activity,
provided, however, that Executive shall not be prohibited from (a) owning less
than five percent of the stock in any publicly traded Enterprise engaging in a
Competitive Activity, or (b) being an employee, independent contractor or
otherwise providing services to an Enterprise that is engaged in a Competitive
Activity so long as Executive’s services relate to (x) an aspect or endeavor of
such Enterprise that is distinct from, and unrelated to, and Executive has no
influence or control over, such Enterprise’s pursuit of a Competitive Activity
or (y) the overall operation or management of the Enterprise (or any portion
thereof) provided that the Competitive Activity is not the primary component of
such Enterprise (or portion thereof). “Tail Period” shall mean the period, if
any, commencing on the Date of Termination and ending on the 18-month
anniversary of such date. If, at any time, the provisions of this paragraph
shall be determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this paragraph 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. The
Executive agrees that this paragraph as so amended shall be valid and binding as
though any invalid or unenforceable provision had not been included herein. The
Executive further agrees that the remedies at law for any breach or threat of
breach by her of this paragraph will be inadequate, and that, in addition to any
other remedy to which the Company may be entitled at law or in equity, the
Company will be entitled to seek a temporary or permanent injunction or
injunctions or temporary restraining order or orders to prevent breaches
thereof. The Executive’s agreement shall not be deemed to prohibit her from
opposing such relief on the basis of a dispute of facts related to any such
application.
          (c) Nonsolicitation. During her employment with the Company, and for
18 months after the 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 employee, customer or other person with an employment or
business relationship with the Company or any of its affiliated companies to
terminate, curtail or otherwise limit such employment or business relationship.
          (d) Non-disparagement. During her employment with the Company, and
thereafter, (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. Executive shall not author, co-author, or assist in the production or
authorship of any story, book, show, script or other work about the Company or
Martha Stewart without the Company’s prior review of such work and the Company’s
written consent as to the production and content thereof.
          (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.

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     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.
     12. Indemnification. The Company shall indemnify the Executive as required
pursuant to the indemnification provisions contained in the Company’s By-laws.
     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 arbitrators 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.

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     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
     With a copy to:
Gavin McElroy, Esq.
Frankfurt, Kurnit, Klein & Selz PC
488 Madison Avenue
New York, NY 10022
Tel: (212) 826-5541
Fax: (347) 438-2111
     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. Section 409A.
(a) The intent of the parties is that payments and benefits under this Agreement
comply with Section 409A of the Code as amended, and the regulations and
guidance promulgated thereunder (collectively “Section 409A”) and, accordingly,
to the maximum extent permitted, all provisions of this Agreement shall be
construed in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A. You are hereby advised to seek independent advice
from your tax advisor(s) with respect to any payments or benefits under this
Agreement. Notwithstanding the foregoing, the Company does not guarantee the tax
treatment of any payments or benefits provided under this Agreement, whether
pursuant to the Code, federal, state, local or foreign tax laws and regulations.
(b) If the Executive is deemed on the date of termination of her “separation
from service” with the Company to be a “specified employee”, each within the
meaning of Section 409A(a)(2)(B) of the Code, then with regard to any payment or
the providing of any benefit under this Agreement, and any other payment or the
provision of any other benefit that is required to be

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delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment or
benefit shall not be made or provided prior to the expiration of the six-month
period measured from the date of the Executive’s separation from service (or, if
earlier, the date of the Executive’s death) if and to the extent such six-month
delay is required to comply with Section 409A(a)(2)(B) of the Code. In such
event, on or promptly after the first business day following the six-month delay
period, all payments delayed pursuant to this Section 18)(ii) (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Executive in a lump
sum, and any remaining payments and benefits due under this Agreement shall be
paid or provided in accordance with the normal payment dates specified for them
herein.
(c) If under this Agreement, an amount is to be paid in installments, each
installment shall be treated as a separate payment for purposes of Treasury
Regulations Section 1.409A-2(b)(2)(iii).
     19. 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; provided, however, that the Board may in its sole and absolute
discretion, upon written notice to Executive, increase, decrease or otherwise
alter the scope or nature of the Post-Effective Date Duties and
Responsibilities; provided however, that such alteration does not override the
definition of “Good Reason” contained in Section 7(b)(iv) of this Agreement. 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.
     20. 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.
     21. 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.
     22. 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 (including without
limitation that agreement between the parties dated as of June 25, 2007),
whether oral or written, by any officer, employee or representative of any party
hereto in respect of such subject matter.
     23. Withholding. All payments hereunder shall be subject to any required
withholding of federal, state and local taxes pursuant to any applicable law or
regulation.
     24. 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.
     25. Governing Law; Survival. 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 action or 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 United States District Court 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 action or 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 action or 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 action or

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proceeding in any such court or that such action or 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 action or 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 action or 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. The provisions of Section 10 that are intended to survive the
Employment Term shall remain in full force and effect for their respective
periods of duration; it being understood that the provisions of Section 10(d)
shall be perpetual.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

            MARTHA STEWART LIVING OMNIMEDIA, INC.
      By:   /s/ Charles Koppleman         Name:   Charles A. Koppelman       
Title:   Chairman of the Board of Directors     

            EXECUTIVE:
         /s/ Wenda Harris Millard         Name:   Wenda Harris Millard         
   

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