Exhibit 10.1

                                                             EXECUTION COPY




                            EMPLOYMENT AGREEMENT

          AGREEMENT, dated as of September 17, 2004 (the "Effective Date"),
by and between Martha Stewart Living Omnimedia, Inc., a Delaware
corporation (the "Company"), and Martha Stewart (the "Founder").

          WHEREAS, the Founder is a party to an employment agreement, dated
June 22, 1999, as amended (the "Prior Employment Agreement"), which the
Company and the Founder entered into at the time of the Company's initial
public offering and which is scheduled to expire on October 22, 2004; and

          WHEREAS, the Company recognizes that the Founder's talents and
abilities are unique and have been integral to the success of the Company;

          WHEREAS, the Company wishes to secure the ongoing services of the
Founder pursuant to the terms and conditions set forth herein, and
therefore the Founder and the Company intend hereby to enter into a new
employment agreement as set forth herein;

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereby agree as follows:

          1. Employment. From and after the Effective Date, the Company
hereby agrees to employ the Founder as Chief Editorial and Media Director
of the Company, and the Founder hereby accepts such employment, on the
terms and conditions set forth below.

          2. Term. The Founder's employment by the Company hereunder shall
begin on September 17, 2004 (the "Effective Date") and shall end on
September 16, 2009 (the "Employment Period"), but subject to earlier
termination upon termination of the Founder's employment. The Employment
Period may be extended by mutual agreement of the Company and the Founder.

          3. Position and Duties. During the Employment Period, the Founder
shall serve as Founder, Chief Editorial and Media Director of the Company
with the following duties, authority and responsibilities:

               (i) serving as Founding Editorial Director for all
     publications of the Company;

               (ii) serving as an executive producer for television and
     radio productions of the Company; and

               (iii) subject to the oversight of the Board, serving as the
     primary spokesperson for the Company (it being understood, however,
     that the Chief Executive Officer and the Chief Financial Officer of
     the Company shall serve as primary spokespersons to the financial and
     investment community).

The Founder shall report directly to the Board. Unless otherwise authorized
by the Board, the Founder shall devote substantially all of her working
time, attention and energies during normal business hours (other than
absences due to illness or vacation) to the performance of her duties for
the Company. Notwithstanding the above, the Founder shall be permitted, to
the extent such activities do not violate, or substantially interfere with
her performance of her duties and responsibilities under, this Agreement or
any other agreement to which she and the Company are parties, to (i) engage
in motion picture, television, public speaking and publishing activities,
(ii) manage her personal, financial and legal affairs (including writing
her autobiography), (iii) serve on civic or charitable boards or committees
(it being expressly understood and agreed that the Founder's continuing to
serve on any such board and/or committees on which she is serving, or with
which she is otherwise associated, as of the Effective Date, shall be
deemed not to interfere with her performance of her duties and
responsibilities under this Agreement), (iv) serve on boards of other
companies and (v) make personal appearances and lectures, and the Founder
shall be entitled to receive and retain all remuneration received by her
from the items listed in clauses (i) through (v) of this paragraph
(including, without limitation, appearance and speaking fees, book
advances, royalties, residuals and other fees and compensation (including
guild and union payments) payable in connection with any publications,
media appearances, or similar activities).

          4. Place of Performance. During the Employment Period, the
locations of employment of the Founder shall be in New York City, New York,
Bedford, New York and Westport, Connecticut and the Founder shall not be
required to relocate her employment to any other location following her
release from imprisonment and home confinement. During the Employment
Period, the Company shall provide the Founder with the same offices and
staff that she was provided with immediately prior to the Effective Date.
For the portion of the Employment Period during which the Founder is
judicially required to be confined at her home, the Founder may render
services to the Company from her home, and, if during such period the
Founder requires additional staff, the Founder may request the same from
the Board and the Board shall not unreasonably withhold its consent to such
request.

          5. Compensation and Related Matters.

               (a) Base Salary. During the Employment Period, the Company
shall pay the Founder a base salary at the rate of not less than $900,000
per year ("Base Salary"). The Base Salary shall be paid in approximately
equal installments in accordance with the Company's customary payroll
practices. The Base Salary shall be subject to annual review by the Board
and may be increased in the Board's discretion. If the Base Salary is
increased by the Board, such increased Base Salary shall then constitute
the Base Salary for all purposes under this Agreement.

               (b) Annual Bonus. For each full fiscal year of the Company
that begins and ends during the Employment Period, and for the portion of
the fiscal year of the Company that begins in 2004 and the portion of the
fiscal year that begins in 2009 (each a "Partial Year"), the Founder shall
be eligible to earn an annual cash bonus (the "Annual Bonus") in such
amount as shall be determined by the Compensation Committee of the Board
(the "Compensation Committee") based on the achievement of Company and
individual performance goals as established by the Compensation Committee
for each such fiscal year (or Partial Year), with a target Annual Bonus
equal to 100% of the Base Salary and a maximum Annual Bonus equal to 150%
of the Base Salary, with such Annual Bonus being prorated for any Partial
Year. The Compensation Committee shall establish objective criteria to be
used to determine the extent to which performance goals have been
satisfied. Notwithstanding the foregoing, in no event shall the Annual
Bonus be less than 55% of the Base Salary for any full fiscal year of the
Company or the prorated portion thereof for any Partial Year.

               (c) Exception. Notwithstanding Sections 5(a) and 5(b) of
this Agreement, the Founder shall not be entitled to earn Base Salary or
Annual Bonus in respect of any period during which the Founder is
imprisoned, excluding any period of home confinement. The Founder shall
recommence earning Base Salary and Annual Bonus when the Founder is
released from imprisonment. Notwithstanding the foregoing, the Founder
shall continue to be covered by the Company's benefit plans in accordance
with the terms of this Agreement for any period during which the Founder is
imprisoned.

               (d) Automobiles. During the Employment Period, the Company
shall provide the Founder with automobiles and drivers seven days per week
on a basis no less favorable than in effect immediately prior to the
Effective Date to be used in the Founder's sole discretion.

               (e) Business, Travel and Entertainment Expenses. The Company
shall promptly reimburse the Founder for all business, travel and
entertainment expenses on a basis no less favorable than in effect
immediately prior to the Effective Date and subject to the Company's
current expense reimbursement policies, 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 Founder shall pay the
SIFL rate for any personal use of such private plane.

               (f) Vacation. During the Employment Period, the Founder
shall be entitled to six weeks of vacation per year. Vacation not taken
during the applicable fiscal year (but not in excess of three weeks) shall
be carried over to the next following fiscal year.

               (g) Welfare, Pension and Incentive Benefit Plans. During the
Employment Period, the Founder (and her eligible spouse and dependents)
shall be entitled to participate in all welfare benefit plans and programs
maintained by the Company from time to time for the benefit of its senior
executives, including, without limitation, all medical, hospitalization,
dental, disability, accidental death and dismemberment, travel accident and
life insurance plans, programs and arrangements, on a basis no less
favorable than in effect with respect to the Founder immediately prior to
the Effective Date. In addition, during the Employment Period, the Founder
shall be eligible to participate in all pension, retirement, savings and
other employee benefit plans and programs maintained from time to time by
the Company for the benefit if its senior executives, other than any
equity-based incentive plans, severance plans, retention plans and any
annual cash incentive plan, on a basis no less favorable than in effect
immediately prior to the Effective Date.

               (h) Dues. During the Employment Period, the Company shall
pay or promptly reimburse the Founder for annual dues for membership in the
American Federation of Television and Radio Artists, the Screen Actors
Guild and similar organizations.

               (i) Security Expenses. During the Employment Period, the
Company shall pay or promptly reimburse the Founder for (1) all
installation and maintenance costs and monitoring fees relating to security
at the Founder's residences and (2) all expenses relating to personal
security services for the Founder.

               (j) Telephone and Internet Access. During the Employment
Period, the Company shall pay or promptly reimburse the Founder for
customary telephone, computer usage and internet access at her homes for
business use.

               (k) Expense Allowance. The Company shall pay to the Founder
an annual non-accountable expense allowance in the amount of $100,000 per
year, which shall be paid in a lump sum upon the Founder's release from
imprisonment and on each anniversary thereof.

               (l) Talent Compensation. In consideration of the continued
services of the Founder as on-air talent for television and radio programs
of the Company, the Company shall pay to the Founder on the Effective Date
the sum of $200,000. The Company is currently in discussions with a
production company (the "Production Company") to enter into an agreement
(the "Production Agreement") which will provide, among other things, that
the Founder participate in a primetime network television program (the
"Program"). Each edition of the Program will consist of approximately
thirteen episodes. The Company agrees that for each edition of the Program
which features the Founder as on-air talent, the Company shall pay to the
Founder, an amount equal to the greater of (x) $500,000 and (y) two-thirds
(2/3) of all talent fees due to the Company from the Production Company in
respect of such edition, payable within five business days after receipt of
such fees from the Production Company. For any other original network,
cable or syndicated show of the Company produced after the Effective Date
and in which the Founder is the on-air talent ("New Programming"), the
Founder shall be entitled to receive an amount equal to the fair market
value of her talent services, as mutually agreed by the Founder and the
Board, or, if the Founder and the Board are unable to agree upon such fair
market value, by an independent expert selected by mutual agreement between
the Founder and the Board (it being understood that any determination of
fair market value shall take into account the Founder's rights to residual
payments pursuant to the next sentence). In addition, with respect to any
re-run or re-packaging of any New Programming (each, a "Re-run"), the
Founder shall receive an amount equal to ten percent (10%) of the Adjusted
Gross Revenues.

"Adjusted Gross Revenues" means gross revenues of the Company from any
Re-run minus the sum of (i) production costs, (ii) marketing costs and
(iii) distribution costs; provided that if such Re-run includes programming
other than New Programming, the portion of Adjusted Gross Revenues which is
attributable to New Programming shall be determined on a fair and equitable
basis approved by the Founder.

               (m) Equity Awards. The Board shall in its sole discretion
make an annual grant of stock options to Founder.

          6. Termination. The Founder's employment hereunder may be
terminated during the Employment Period under the following circumstances:

               (a) Death. The Founder's employment hereunder shall
terminate upon her death.

               (b) Disability. If, as a result of the Founder's incapacity
due to physical or mental illness as determined by a physician selected by
the Founder, and reasonably acceptable to the Company, (i) the Founder
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 and (ii) within thirty days after written
Notice of Termination is given to the Founder after such six- or
twelve-month period, the Founder shall not have returned to the substantial
performance of her duties on a full-time basis, the Company shall have the
right to terminate the Founder's employment hereunder for "Disability."

               (c) Cause. The Company shall have the right to terminate the
Founder's employment for "Cause." For purposes of this Agreement, the
Company shall have "Cause" to terminate the Founder's employment only upon
the Founder's:

                    (i) willful gross misconduct or conviction of a felony
               after the Effective Date (excluding any conviction after the
               Effective Date that arises out of the circumstances that
               gave rise to the felony conviction of the Founder prior to
               the Effective Date) that, in either case, results in
               material and demonstrable damage to the business or
               reputation of the Company; or

                    (ii) willful and continued failure to perform her
               duties hereunder (other than such failure resulting from the
               Founder's imprisonment or home confinement for conviction of
               a felony prior to the Effective Date or any conviction after
               the Effective Date that arises out of the circumstances that
               gave rise to the felony conviction of the Founder prior to
               the Effective Date, or incapacity due to physical or mental
               illness, legal necessity or after the issuance of a Notice
               of Termination by the Founder for Good Reason) within ten
               business days after the Company delivers to her a written
               demand for performance that specifically identifies the
               actions to be performed.

For purposes of this Section 6(c), no act or failure to act by the Founder
shall be considered "willful" if such act is done by the Founder in the
good faith belief that such act is or was to be beneficial to the Company
or one or more of its businesses, or such failure to act is due to the
Founder's good faith belief that such action would be materially harmful to
the Company or one of its businesses. Cause shall not exist unless and
until the Company has delivered to the Founder a copy of a resolution duly
adopted by a majority of the Board (excluding the Founder for purposes of
determining such majority) at a meeting of the Board called and held for
such purpose after reasonable (but in no event less than thirty days')
notice to the Founder and an opportunity for the Founder, together with her
counsel, to be heard before the Board, finding that in the good faith
opinion of the Board that "Cause" exists, and specifying the particulars
thereof in detail. This Section 6(c) shall not prevent the Founder from
challenging in any court of competent jurisdiction the Board's
determination that Cause exists or that the Founder has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board's
determination.

               (d) Good Reason. The Founder may terminate her employment
for "Good Reason" after giving the Company detailed written notice thereof,
if the Company shall have failed to cure the event or circumstance
constituting "Good Reason" within ten business days after receiving such
notice. Good Reason shall mean the occurrence of any of the following
without the written consent of the Founder:

                    (i) the assignment to the Founder of duties
               inconsistent with this Agreement or a change in her titles
               or authority;

                    (ii) any failure by the Company to comply with Section
               5 hereof in any material way;

                    (iii) the requirement of the Founder to relocate to
               locations other than those provided in Section 4 hereof;

                    (iv) the failure of the Company to comply with and
               satisfy Section 12(a) of this Agreement; or

                    (v) any material breach of this Agreement by the
               Company.

The Founder's right to terminate her employment hereunder for Good Reason
shall not be affected by her incapacity due to physical or mental illness.
The Founder's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

               (e) Without Cause. The Company shall have the right to
terminate the Founder's employment hereunder without Cause by providing the
Founder with a Notice of Termination.

               (f) Without Good Reason. The Founder shall have the right to
terminate her employment hereunder without Good Reason by providing the
Company with a Notice of Termination.

          7. Termination Procedure.

               (a) Notice of Termination. Any termination of the Founder's
employment by the Company or by the Founder during the Employment Period
(other than pursuant to Section 6(a)) 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 Founder's employment under that provision.

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

          8. Compensation upon Termination or During Disability. In the
event the Founder is disabled or her employment terminates during the
Employment Period, the Company shall provide the Founder with the payments
and benefits set forth below. The Founder acknowledges and agrees that the
payments set forth in this Section 8 constitute liquidated damages for
termination of her employment during the Employment Period.

               (a) Termination by Company without Cause or by Founder for
Good Reason. If the Founder's employment is terminated by the Company
without Cause (other than Disability) or by the Founder for Good Reason:

                    (i) the Company shall pay to the Founder, on or before
               the Date of Termination, a lump sum payment equal to the sum
               of (A) Base Salary and accrued vacation pay through the Date
               of Termination, (B) three times the Base Salary and (C) the
               higher of (1) $5,000,000 or (2) three times the highest
               Annual Bonus paid with respect to any fiscal year beginning
               during the Employment Period;

                    (ii) the Company shall continue to provide the Founder
               and her eligible spouse and dependents for a period equal to
               the greater of (A) the remaining term of the Employment
               Period, or (B) three years following the Date of
               Termination, the medical, hospitalization, dental and life
               insurance programs provided for in Section 5(g), as if she
               had remained employed; provided, that if the Founder, her
               spouse or her eligible dependents cannot continue to
               participate in the Company programs providing such benefits,
               the Company shall arrange to provide the Founder and her
               spouse and dependents with the economic equivalent of the
               benefits they otherwise would have been entitled to receive
               under such plans and programs; and provided, further, that
               such benefits shall terminate on the date or dates the
               Founder becomes eligible to receive equivalent coverage and
               benefits under the plans and programs of a subsequent
               employer at an equivalent cost to the Founder (such coverage
               and benefits to be determined on a coverage-by-coverage, or
               benefit-by-benefit, basis);

                    (iii) the Company shall, consistent with past practice,
               reimburse the Founder pursuant to Section 5(e) for business
               expenses incurred but not paid prior to such termination of
               employment;

                    (iv) until the third anniversary of the Date of
               Termination, the Company shall continue to provide the
               Founder with (A) the benefits set forth in Section 5(d)
               hereof and (B) an office and an assistant in each of New
               York, New York and Westport, Connecticut; and

                    (v) the Founder shall be entitled to any other rights,
               compensation and/or benefits as may be due to the Founder in
               accordance with the terms and provisions of any agreements,
               plans or programs of the Company (other than any
               severance-based plan or program).

The payments and benefits provided for as subclause (A) of clause (i) above
and in clause (iii) above are hereinafter referred to as the "Accrued
Obligations."

               (b) Cause or by Founder without Good Reason. If the
Founder's employment is terminated by the Company for Cause or by the
Founder other than for Good Reason, then the Company shall provide the
Founder with her Accrued Obligations and shall have no further obligation
to the Founder hereunder.

               (c) Disability. During any period that the Founder fails to
perform her duties hereunder as a result of incapacity due to physical or
mental illness ("Disability Period"), the Founder shall continue to receive
her full Base Salary set forth in Section 5(a) until her employment is
terminated pursuant to Section 6(b). In the event the Founder's employment
is terminated for Disability pursuant to Section 6(b), the Company shall
provide the Founder with the excess, if any, of her full Base Salary over
the amount of any long-term disability benefits that she receives under the
Company's welfare benefit plans and programs, payable in accordance with
the normal payroll practices of the Company, for the remainder of the
Employment Period and shall have no further obligations to the Founder
hereunder.

               (d) Death. If the Founder's employment is terminated by her
death, the Company shall provide to the Founder's beneficiary, legal
representatives or estate, as the case may be, the Founder's full Base
Salary (less any long-term disability benefits paid to the Founder under
the Company's welfare benefit plans and programs), payable in accordance
with the normal payroll practices of the Company, for a period equal to the
remaining term of the Employment Period and shall have no further
obligations hereunder.

               (e) Mitigation. The Founder 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 Founder under this Agreement on account
of subsequent employment except as specifically provided in this Section 8.
Additionally, amounts owed to the Founder under this Agreement shall not be
offset by any claims the Company may have against the Founder, 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 Founder or others.

          9. 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 Founder 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 Founder 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 Founder during the Founder's employment by
the Company and MSLO LLC that is not generally available public knowledge
(other than by acts by the Founder in violation of this Agreement.)

               (b) Noncompetition. During the Employment Period and until
the 12-month anniversary of the Founder's Date of Termination if the
Founder's employment is terminated by the Company for Cause or the Founder
terminates employment without Good Reason, the Founder shall not engage in
or become associated with any Competitive Activity. For purposes of this
Section 9(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 the Founder'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 (the activities
described in clauses (i) through (iv), in each case determined as of the
date of the action alleged to be Competitive Activity, (the "Businesses");
provided, that, a Competitive Activity shall not include (i) any speaking
engagement to the extent such speaking engagement does not promote or
endorse a product or service which is competitive with any product or
service of the Company, (ii) the writing of any book or article relating to
subjects other than the Businesses (e.g., nonfiction relating to the
Founder's career or general business advice) or (iii) the television, video
or music business so long as such activity does not relate to the
Businesses. The Founder 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 Founder'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 Founder shall not be prohibited from (a) owning
less than one percent (1%) 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. If, at any time, the provisions of this Section
9(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 9(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 Founder agrees that this
Section 9(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 Period, and for
12 months after the Founder's Date of Termination if the Founder's
employment is terminated by the Company for Cause or the Founder terminates
employment without Good Reason, the Founder will 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 Founder) 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 Founder (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) Injunctive Relief. In the event of a breach or
threatened breach of this Section 9, the Founder agrees that the Company
shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the Founder
acknowledging that damages would be inadequate and insufficient.

          10. Indemnification.

               (a) General. The Company agrees that if the Founder 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 Founder is or was a trustee,
director or officer of the Company, MSLO LLC, or any predecessor to MSLO
LLC (including any sole proprietorship owned by the Founder) or any of
their affiliates or is or was serving at the request of the Company, MSLO
LLC, any predecessor to MSLO LLC (including any proprietorship owned by the
Founder), or any of their 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
Founder 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
Founder in connection therewith, and such indemnification shall continue as
to the Founder even if the Founder 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. In addition, the
Company shall indemnify and hold harmless the Founder from any and all
Expenses incurred or suffered by the Founder in connection with any claim
for indemnification under clause (bb) of paragraph 11 (a) of the Production
Agreement.

               (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 10
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 Founder
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 Founder 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 Founder 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 Founder for the
portion of such Expenses to which the Founder is entitled.

               (e) Advance of Expenses. Expenses incurred by the Founder in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Founder that the Company pay such Expenses, but only in the
event that the Founder shall have delivered in writing to the Company (i)
an undertaking to reimburse the Company for Expenses with respect to which
the Founder 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 Founder 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 Founder shall give
the Company such information and cooperation as it may reasonably require
and as shall be within the Founder's power and at such times and places as
are convenient for the Founder.

               (g) Defense of Claim. With respect to any Proceeding as to
which the Founder 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 Founder, 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 Founder 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 Founder, 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
     Founder 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 Founder without the Founder's written
     consent. Neither the Company nor the Founder 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 Founder 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.

          11. Legal Fees and Expenses. If any contest or dispute shall
arise between the Company and the Founder regarding any provision of this
Agreement, the Company shall reimburse the Founder for all legal fees and
expenses reasonably incurred by the Founder in connection with such contest
or dispute, but only if the Founder prevails to a substantial extent with
respect to the Founder'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 to the foregoing, the Company shall reimburse the
Founder for all reasonable legal fees and expenses incurred in connection
with the negotiation and execution of this Agreement.

          12. 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 12 or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

               (b) Founder's Successors. No rights or obligations of the
Founder under this Agreement may be assigned or transferred by the Founder
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
Founder's death, this Agreement and all rights of the Founder hereunder
shall inure to the benefit of and be enforceable by the Founder's
beneficiary or beneficiaries, personal or legal representatives, or estate,
to the extent any such person succeeds to the Founder's interests under
this Agreement. If the Founder 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 Founder, or otherwise to her legal
representatives or estate.

          13. 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 Founder:

                  At her residence address most recently filed with the Company.


                  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 any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

          14. Miscellaneous. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is
agreed to in writing signed by the Founder 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. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this Agreement.
The respective rights and obligations of the parties hereunder of this
Agreement shall survive the Founder's termination of employment and the
termination of this Agreement to the extent necessary for the intended
preservation of such rights and obligations. Except or otherwise provided
in Section 10 hereof, 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.

          15. 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.

          16. 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.

          17. Entire Agreement. This Agreement and the Intellectual
Property License and Preservation Agreement, dated as of October 22, 1999,
as amended, 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 or
warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter
including, without limitation, the Prior Employment Agreement. The parties
agree that the Prior Employment Agreement has been terminated effective as
of 11.59 PM on the day immediately preceding the Effective Date.

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

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


<PAGE>


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

                                       MARTHA STEWART LIVING OMNIMEDIA, INC.


                                       By:  /s/ Sharon L. Patrick
                                          --------------------------------------
                                          Sharon L. Patrick
                                          President and Chief Executive Officer

                                            /s/ Martha Stewart
                                          --------------------------------------
                                          Martha Stewart