EX-10.5






Exhibit 10.5




MARTHA STEWART LIVING OMNIMEDIA, INC.




OMNIBUS STOCK AND OPTION COMPENSATION PLAN




RESTRICTED STOCK GRANT AGREEMENT




     This Restricted Stock Grant Agreement (the “Agreement”) is made and entered into as of
October 1, 2008 by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the
“Company”), and Charles Koppelman pursuant to the Martha Stewart Living Omnimedia, Inc.
Omnibus Stock and Option Compensation Plan (the “Plan”). To the extent any capitalized
terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the
Plan, which is attached to, and made a part of, this Agreement. In the event of a conflict between
the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms
and provisions shall prevail.



     In consideration of the mutual agreements herein contained and intending to be legally bound
hereby, the parties agree as follows:



     1. Restricted Shares. Pursuant to the Plan, the Company hereby transfers to you, and
you hereby accept from the Company, a Stock Grant consisting of 425,000 Shares (the “Restricted
Shares”), on the terms and conditions set forth herein and in the Plan.



     2. Vesting of Restricted Shares. So long as your Service continues, the Restricted
Shares shall vest in accordance with the following schedule: (i) 100,000 of the Restricted Shares
shall become vested on the day immediately following a period in which the Fair Market Value of the
Company’s Shares has been at least equal to fifteen (15) dollars a Share on each of the immediately
preceding sixty (60) consecutive trading days (the “Milestone 15”), provided that the
Milestone 15 must be achieved between July 25, 2008 and December 31, 2012 (the “Performance
Period”); (ii) 100,000 of the Restricted Shares shall become vested on the day immediately
following a period in which the Fair Market Value of the Company’s Shares has been at least equal
to twenty-five (25) dollars a Share on each of the immediately preceding sixty (60) consecutive
trading days (the “Milestone 25”), provided that the Milestone 25 must be achieved during
the Performance Period; (iii) 91,667 of the Restricted Shares shall become vested on October 1,
2009; (iv) 66,667 of the Restricted Shares shall become vested on October 1, 2010; (v) and 66,666
of the Restricted Shares shall become vested on October 1, 2011. Notwithstanding Section 3 of this
Agreement, if some or all of the Restricted Shares referred to in subsections (i) and (ii) herein
(together the “Performance Shares”) do not vest in accordance with such subsections above,
all of such Restricted Shares that do not vest as of December 31, 2012 shall be immediately
forfeited without consideration.


Notwithstanding the foregoing, upon the earlier of: (a) a Change in Control (defined below) during
your Service; (b) the Company’s termination of your employment without Cause (defined below); or
(c) your resignation for Good Reason (defined below), all Restricted Shares (other than the
Performance Shares) shall fully vest immediately. For the avoidance of doubt, the


 









 






Performance Shares can only become vested if Milestone 15 and/or Milestone 25 are achieved during
the Performance Period.



For purposes of this Agreement, a Change in Control shall mean:




     (a) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of 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 (as defined below) of the Company (as such term is defined below for purposes of
this definition); provided that this subsection (a) 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 July 25,
2008;



     (b) 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);



     (c) 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;



     (d) 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



     (e) 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


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right to exercise more than 50% of the votes entitled to be cast in the election of directors of a
corporation.



For purposes of this Agreement, Cause shall mean that the Board has made a good faith
determination, after providing you 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:




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



     (b) you have engaged in willful, intentional misconduct that has resulted in material damage
to the Company’s business or reputation;



     (c) you have been convicted of a felony; or



     (d) you have engaged in fraud against the Company or misappropriated Company property (other
than incidental property).


For purposes of this definition, no act or failure by you shall be considered “willful” if such act
is done by you 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 definition shall be construed to prevent
the Executive from contesting the Board’s determination that Cause exists.



For purposes of this Agreement, Good Reason shall mean the occurrence, without your express prior
written consent, of any one or more of the following:




     (a) a material diminution of, or material reduction or material adverse alteration in, your
positions, titles, duties, or responsibilities from, or the assignment to you of duties
inconsistent with, those set forth in your employment agreement dated as of September, 2008 (the
“Employment Agreement”);



     (b) a material breach of your Employment Agreement by the Company that continues after the
reasonable notice and opportunity to cure;



     (c) the Company’s requiring you to be based at a location in excess of 35 miles from the
location of your principal job location or office specified in your Employment Agreement, except
for required travel on the Company’s business to an extent substantially consistent with your
position; or



     (d) a reduction by the Company of your base salary or target annual bonus percentage as in
effect on the effective date of your Employment Agreement, or as the same shall be increased from
time to time.


Your right to terminate employment in a termination for Good Reason shall not be affected by your
incapacity due to physical or mental illness. Subject to the requirements set forth above, your
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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     3. Termination of Service. Except as set forth in Section 2 above, in the event of
the termination of your Service for any reason, all unvested Restricted Shares, including (without
limitation) the Performance Shares, shall be immediately forfeited without consideration. For
purposes of facilitating the enforcement of the provisions of this Section 3, you agree that the
Company may issue stop-transfer instructions on the Restricted Shares to the Company’s transfer
agent, may require that Restricted Shares be held by a broker designated by the Company, or may
otherwise hold the Restricted Shares in escrow, until the Restricted Shares have vested and you
have satisfied all applicable obligations with respect to the Restricted Shares, including any
applicable tax obligations set forth in Section 5 below. Any new, substituted or additional
securities or other property which is issued or distributed with respect to the unvested Restricted
Shares shall be subject to the same terms and conditions as are applicable to the unvested
Restricted Shares under this Agreement and the Plan.



     4. Election to Recognize Income in the Year of Grant. Under Section 83 of the Code,
the Fair Market Value of the Restricted Shares on the date the Restricted Shares vest will be
taxable as ordinary income at that time. You understand and acknowledge that you may elect to be
taxed at the time the Restricted Shares are acquired in an amount equal to the Fair Market Value of
the Restricted Shares at that time, rather than the date the Restricted Shares vest, by filing an
election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days
after the date of this Agreement. YOU ACKNOWLEDGE AND AGREE THAT IT IS YOUR SOLE RESPONSIBILITY,
AND NOT THE COMPANY’S RESPONSIBILITY, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF
YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF.



     5. Taxes. You agree to make arrangements satisfactory to the Company for the
satisfaction of any applicable tax obligations that arise in connection with the Restricted Shares
which, at the sole discretion of the Committee, may include (i) having the Company withhold Shares
from the Restricted Shares held in escrow, or (ii) tendering Shares to the Company, in either case,
equal in value to the amount necessary to satisfy any such tax obligation. The Company shall not
be required to release the Restricted Shares from the stop-transfer instructions or escrow unless
and until such obligations are satisfied.



     6. Tax Advice. You represent, warrant, and acknowledge that the Company has made no
warranties or representations to you with respect to the income tax consequences of the
transactions contemplated by this Agreement, and you are in no manner relying on the Company or the
Company’s representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING ANY
STOCK GRANT AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED,
FOR THE PURPOSE OF AVOIDING TAXPAYER PENALTIES.



     7. Non-Transferability of Restricted Shares. Restricted Shares which have not vested
pursuant to Section 2 above shall not be anticipated, assigned, attached, garnished, optioned,
transferred, or made subject to any creditor’s process, whether voluntarily or involuntarily or by
the operation of law. Notwithstanding the foregoing, you may at any time



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designate a beneficiary or enter into a will or any similar arrangement which, in each case,
provides for the transfer of vested Restricted Shares upon your death.



     8. Restriction on Transfer. Regardless of whether the transfer or issuance of the
Restricted Shares has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose additional restrictions upon the
sale, pledge, or other transfer of the Restricted Shares (including the placement of appropriate
legends on stock certificates, if any, and the issuance of stop-transfer instructions to the
Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such
restrictions are necessary in order to achieve compliance with the provisions of the Securities
Act, the securities laws of any state, or any other law.



     9. Stock Certificate Restrictive Legends. Stock certificates evidencing the
Restricted Shares, if any, may bear such restrictive legends as the Company and the Company’s
counsel deem necessary under applicable law or pursuant to this Agreement.



     10. Representations, Warranties, Covenants, and Acknowledgments. You hereby agree
that in the event the Company and the Company’s counsel deem it necessary or advisable in the
exercise of their discretion, the transfer or issuance of the Restricted Shares may be conditioned
upon you making certain representations, warranties, and acknowledgments relating to compliance
with applicable securities laws.



     11. Voting and Other Rights. Subject to the terms of this Agreement, you shall have
all the rights and privileges of a stockholder of the Company while the Restricted Shares are held
in escrow, including the right to vote and to receive dividends (if any).



     12. Authorization to Release Necessary Personal Information. You hereby authorize and
direct your employer to collect, use and transfer in electronic or other form, any personal
information (the “Data”) regarding your employment, the nature and amount of your
compensation and the facts and conditions of your participation in the Plan (including, but not
limited to, your name, home address, telephone number, date of birth, social security number (or
any other social or national identification number), salary, nationality, job title, number of
shares held and the details of all Awards or any other entitlement to shares awarded, cancelled,
exercised, vested, unvested or outstanding) for the purpose of implementing, administering and
managing your participation in the Plan. You understand that the Data may be transferred to the
Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties assisting in the
implementation, administration and management of the Plan, including any requisite transfer to a
broker or other third party assisting with the administration of this Stock Grant under the Plan or
with whom shares acquired pursuant to this Stock Grant or cash from the sale of such shares may be
deposited. You acknowledge that recipients of the Data may be located in different countries, and
those countries may have data privacy laws and protections different from those in the country of
your residence. Furthermore, you acknowledge and understand that the transfer of the Data to the
Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties is necessary for
your participation in the Plan. You may at any time withdraw the consents herein by contacting
your local human resources representative in writing. You further acknowledge that withdrawal of
consent may affect your ability to realize benefits from this Stock Grant, and your ability to
participate in the Plan.



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     13. No Entitlement or Claims for Compensation.



          (a) Your rights, if any, in respect of or in connection with this Stock Grant or any other
Award is derived solely from the discretionary decision of the Company to permit you to participate
in the Plan and to benefit from a discretionary Award. By accepting this Stock Grant, you
expressly acknowledge that there is no obligation on the part of the Company to continue the Plan
and/or grant any additional Awards to you. This Stock Grant is not intended to be compensation of
a continuing or recurring nature, or part of your normal or expected compensation, and in no way
represents any portion of a your salary, compensation, or other remuneration for purposes of
pension benefits, severance, redundancy, resignation or any other purpose.




          (b) Neither the Plan nor this Stock Grant or any other Award granted under the Plan shall be
deemed to give you a right to become or remain an Employee, Consultant or director of the Company,
a Parent, a Subsidiary, or an Affiliate. The Company and its Parents and Subsidiaries and
Affiliates reserve the right to terminate your Service at any time, with or without cause, and for
any reason, subject to applicable laws, the Company’s Articles of Incorporation and Bylaws and a
written employment agreement (if any), and you shall be deemed irrevocably to have waived any claim
to damages or specific performance for breach of contract or dismissal, compensation for loss of
office, tort or otherwise with respect to the Plan, this Stock Grant or any outstanding Award that
is forfeited and/or is terminated by its terms or to any future Award.




     14. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient when delivered personally or sent by telegram or fax or forty-eight
(48) hours after being deposited in the mail, as certified or registered mail, with postage
prepaid, and addressed to the Company at its principal corporate offices and to you at the address
maintained for you in the Company’s records.



     15. Entire Agreement; Enforcement of Rights. This Agreement, together with the Plan,
sets forth the entire agreement and understanding of the parties relating to the subject matter
herein and therein and merges all prior discussions between the parties. Except as contemplated
under the Plan, no modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.
The failure by either party to enforce any rights under this Agreement shall not be construed as a
waiver of any rights of such party.



     16. Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed, and interpreted in
accordance with the laws of the State of Delaware, without giving effect to principles of conflicts
of law.



     17. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of



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this Agreement shall be interpreted as if such provision were so excluded, and (iii) the
balance of this Agreement shall be enforceable in accordance with its terms.



     18. Successors and Assigns. The rights and benefits of this Agreement shall inure to
the benefit of and be enforceable by the Company’s successors and assigns. Your rights and
obligations under this Agreement may not be assigned without the prior written consent of the
Company.



     19. Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to this Stock Grant under the Plan and participation in the Plan or future
Awards that may be granted under the Plan by electronic means or to request your consent to
participate in the Plan by electronic means. You hereby consent to receive such documents by
electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.



     20. Language. If you have received this Agreement or any other document related to
the Plan translated into a language other than English and if the translated version is different
than the English version, the English version will control.



     21. Acceptance of Agreement. You must expressly accept the terms and conditions of
your Stock Grant as set forth in this Agreement by signing and returning to the Company within 90
days after the Company sends this Agreement to you. If you do not accept your Stock Grant in the
manner instructed by the Company, your Stock Grant will be subject to cancellation.



     22. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.



* * * *




(Signature Page Follows)




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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this day of October 1,
2008.



MARTHA STEWART LIVING OMNIMEDIA, INC.




	 	 	 
	By: /s/ Howard Hochhauser
	 	 
	 

                          (Signature)

	 	 
	 
	 	 
	Name:   Howard Hochhauser
	 	 
	 


	 	 
	 
	 	 
	Title:   Chief Financial Officer
	 	 
	 


	 	 






RECIPIENT: Charles Koppelman




	 	 	 
	By: /s/ Charles Koppelman
	 	 
	 

                          (Signature)

	 	 
	 
	 	 
	Address:
	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	Telephone Number:
	 	 
	 


	 	 
	 
	 	 
	E-mail Address:
	 	 
	 


	 	 







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