Document:

EX-10.1

Exhibit 10.1

March 24, 2009         
       

PERSONAL & CONFIDENTIAL

Ms. Kelli Turner

[Address omitted]

Dear Kelli:

     This letter agreement (the “Agreement”) sets forth the terms and conditions of your employment
with Martha Stewart Living Omnimedia, Inc. (the “Company”).

	1.	 	Duties and Responsibilities

(a) You will serve as EVP, Chief Financial Officer of the Company. In this capacity,
you will perform such duties consistent with your position and such other executive
duties customary to your office and as are reasonably necessary to the operations of the
Company or as may be reasonably assigned to you by the Company’s principal executive
officer or the Board of Directors (the “Board”). You will: (i) devote all of your business
time and attention, your best efforts, and all of your skill and ability to promote the
interests of the Company; (ii) carry out your duties in a diligent, competent, faithful and
professional manner; (iii) work with other employees of the Company in a competent and
professional manner; (iv) generally promote the interests of the Company and (v) comply
with all the Company’s policies as in effect from time to time. You will report to the
Company’s principal executive officer.

(b) During the term of your employment, you agree to obtain the prior written
approval of the person to whom you report prior to accepting any appointments of any
kind (including but not limited to appointments to boards of directors) with any third
parties other than the Company; provided, however, you will be permitted to remain on
the board of directors of any charitable organization for which you now serve. It is
understood that if approved, any such appointment, and your activities thereunder, must
not constitute a violation of any provision of this Agreement.

	2.	 	Term
	 
	 	 	Your employment with the Company will be for a term of two (2) years, commencing on March
31, 2009 and ending on the close of business on March 31, 2011, unless terminated earlier
pursuant to the provisions of paragraph 5 below (the “Term”). In the

MARTHA STEWART LIVING OMNIMEDIA

11 West 42nd Street, 25th Floor, New York, NY 10036 phone 212 827 8000 web marthastewart.com

 

 

event either party wishes to commence negotiations for a new employment arrangement that
would become effective following the Term, that party will inform the other party at least
six months prior to the end of the Term. This Agreement will not be deemed to be extended
or renewed beyond April 6, 2011 unless the parties enter into a written agreement
specifically extending this Agreement. In the absence of such an agreement, if your
employment continues beyond the Term, such employment will be terminable at will.

	3.	 	Compensation

	 	(a)	 	The Company shall pay you a base salary at the annual rate of not less than
$375,000 per annum, payable in accordance with the Company’s normal payroll
practices.
	 
	 	(b)	 	In addition to your base salary, you will be eligible to receive an annual
bonus
with a target of 100% of your annual base salary based upon, among other
criteria, the Company’s assessment of your performance and the overall financial
performance of the Company. Such bonus, if any, will be paid concurrently with
bonuses paid to other executives of the Company. Any such bonus deemed
payable for 2009 will not be pro-rated and will be based primarily on the
Company’s assessment of your individual performance. In order to be eligible to
receive any bonus, you must be employed on, and not have given or received
notice of termination prior to, the day of the bonus payment.
	 
	 	(c)	 	You will receive an option to acquire 180,000 shares, and 40,000 PRSUs, which
equity will be issued and priced on the first business day of the calendar month
following your start date in accordance with the Company’s policy on equity
issuances. The grant and exercise of these stock options and PRSUs will be made
subject to the provisions of the Company’s Omnibus Stock and Option
Compensation Plan.

	4.	 	Benefits
	 
	 	 	You will be eligible to participate in all health, dental, disability, life insurance plans
and programs, retirement plans and other fringe benefits made available by the Company for
the benefit of the Company’s employees generally, subject, however, to the terms and
conditions of such benefit plans as in effect from time to time.

	5.	 	Termination

	 	(a)	 	The Company will be entitled to discharge you immediately for cause as defined
in subparagraph (c) below, and in such event, your rights to any unearned, non-vested
or non-accrued compensation hereunder will then terminate.

 

 

	 	(b)	 	The Company will also be entitled to terminate you immediately without cause.
In such event, you will be eligible to continue to receive your then-current base
salary (in accordance with normal payroll practices) as severance payments for
the remainder of the Term (the “Severance Period”); provided, however, that in
the event you obtain alternate employment after the first three (3) months of the
Severance Period, any income earned by you in respect to such employment will
reduce your severance payments under this paragraph 5(b) on a “dollar for dollar”
basis. As used herein, “alternate employment” will include full or part-time
employment, consulting services, freelance services and self-employment. In
order for the Company to determine each payment it is obligated to make to you
after the first three (3) months of the Severance Period, you will at the end of each
month after the first three (3) months of the Severance Period provide the
Company in writing the compensation from sources other than the Company that
you earned during the preceding month, together with copies of any invoices
issued by you for your services, any checks you received from such employment
and any other evidence in your possession reflecting compensation you earned.
In addition, upon request from the Company, you agree to provide the Company
with other written verification (earnings stubs, tax returns, new employer
verification) of the compensation you receive or are entitled to receive after the
first three (3) months of the Severance Period. In addition, in the event you are
terminated by the Company without cause, you 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 such bonus payment will be paid in a lump sum
at the time the Company pays other bonuses, subject to Section 15 hereof (if
applicable). The making of any payments under this paragraph 5(b) is
conditioned upon you signing and not revoking the Company’s standard form of
separation agreement and general release. Such severance is deemed to be in lieu
of any other entitlements to severance, salary bridging or other similar benefits
upon termination that may be made available to employees in accordance with the
Company’s policies.
	 
	 	(c)	 	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:

	 	(i)	 	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;

 

 

	 	(ii)	 	you have engaged in willful, intentional
misconduct that has resulted in material damage to the Company’s
business or reputation;
	 
	 	(iii)	 	you have been convicted of a felony; or
	 
	 	(iv)	 	you have engaged in fraud against the
Company or misappropriated Company property (other than incidental
property).

For purposes of this Agreement, 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 Section 5(c) shall be construed to prevent you from contesting
the Board’s determination that cause exists.

	 	(d)	 	In the event you are unable to perform your duties hereunder by virtue of
illness or physical or mental incapacity or disability (from any cause or causes
whatsoever) in substantially the manner and to the extent required hereunder prior
to the commencement of such disability (all such causes being herein referred to as
“disability”) and you fail to perform such duties for periods aggregating 120 days,
whether or not continuous, in any continuous period of 365 days, the Company will
have the right to terminate your employment hereunder as at the end of any calendar
month upon 30 days’ prior written notice to you. In case of your death, your
employment hereunder will terminate as of the date of death.

	6.	 	Non-Competition, Non-Solicitation; Non-Disparagement and Confidentiality
Obligations

	 	(a)	 	You agree that your services hereunder are of a special, unique,
extraordinary and intellectual character, and your position with the Company places
you in a position of confidence and trust with the Company. You further acknowledge
that the rendering of services to the Company necessarily requires the disclosure
of confidential information and trade secrets of the Company. You consequently
agree that it is reasonable and necessary for the protection of the goodwill and
business of the Company that you make the covenants contained herein; and
accordingly, you agree that during your employment with the Company and during any
Tail Period (as defined below), you shall not engage in or become associated with a
Competitive Activity (as defined below). A “Competitive Activity” shall mean any
business which designs, manufactures, licenses, sells or develops products based on
or related to either lifestyle-based content aimed primarily at adult female
audiences (e.g., Oprah Magazine, iVillage, Better Homes and Garden) or a national
celebrity or designer (e.g., Calvin Klein, Ralph Lauren, Oprah Winfrey) in a
similar product line as offered or marketed by the Company during

 

 

the Term. By way of example, home goods, linens, furniture or carpet for a designer or
lifestyle brand would be a Competitive Activity as of the date hereof, whereas fashion
would not be a Competitive Activity unless or until the Company pursues fashion products
during the Term. You shall be deemed to be “engaged in or associated with a Competitive
Activity” if you are or become an owner, employee, officer, director, independent
contractor, agent, partner, advisor, or render 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 you
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 your services relate to (x) an aspect or endeavor of such
Enterprise that is distinct from, and unrelated to, and you have 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 that your employment with the
Company terminates, regardless of the reason for such termination, and ending on the
twelve-month anniversary of such date. You agree to provide notice of the restrictions on
your Competitive Activity to any Enterprise with which you have or contemplate having a
business or employment relationship.

	 	(b)	 	You agree that during your employment and for a twenty-four month period
thereafter you will not: (i) solicit for employment opportunities or employ any
employees of Martha Stewart or the Company; (ii) solicit or induce any employee
of Martha Stewart or the Company to terminate, alter or lessen that person’s
affiliation with Martha Stewart or the Company; or (iii) 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; provided, however, it will not be
deemed a breach of this provision to solicit your then-current assistant. You also
agree that during and after your employment, you will not solicit or induce any
person or entity that is a party to an agreement with Martha Stewart or the
Company to violate any such agreement. You acknowledge and agree that this
paragraph is reasonable and necessary to protect the Company’s legitimate
business interests.
	 
	 	(c)	 	In the course of your employment with the Company, you will acquire and have
access to confidential or proprietary information about the Company, including
but not limited to, trade secrets, methods, service models, marketing campaigns,
advertising, financial information and records, customer contacts, creative
policies and ideas, subscription lists, editorial policies, and information about or

 

 

received from advertisers, customers and other companies with which the Company does
business. The foregoing shall be collectively referred to as “Confidential Information.”
You are aware that the Confidential Information is not readily available to the public and
accordingly, you agree that you will not at any time (whether during the Term or after
termination of this Agreement), disclose to anyone (other than your counsel in the course
of a dispute arising from the alleged disclosure of Confidential Information or as
required by law) any Confidential Information, or utilize such Confidential Information
for your own benefit, or for the benefit of third parties. You agree that the foregoing
restrictions shall apply whether or not any such information is marked “confidential” and
regardless of the form of the information. The term “Confidential Information” does not
include information which (i) is or becomes generally available to the public other than
by breach of this provision or (ii) you learn from a third party who is not under an
obligation of confidence to the Company. In the event that you become legally required to
disclose any Confidential Information, you will provide the Company with prompt notice
thereof so that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this paragraph 6(c) to permit a particular
disclosure. In the event that such protective order or other remedy is not obtained, or
that the Company waives compliance with the provisions of this paragraph 6(c) to permit a
particular disclosure, you will furnish only that portion of the Confidential Information
which you are legally required to disclose and, at the Company’s expense, will cooperate
with the efforts of the Company to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information. You further
agree that all memoranda, disks, files, notes, records or other documents, whether in
electronic form or hard copy (collectively, the “Material”) compiled by you or made
available to you during your employment with the Company (whether or not the Material
constitutes or contains Confidential Information), and in connection with the performance
of your duties hereunder, shall be the property of the Company and shall be delivered to
the Company on the termination of your employment with the Company or at any other time
upon request. Except in connection with your employment with the Company, you agree that
you will not make or retain copies or excerpts of the Material.

	 	(d)	 	During your employment with the Company, and thereafter you 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 You 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)	 	If you commit a breach or the Company has reasonable grounds to believe that
you are about to commit a breach, of any of the provisions of clauses (a), (b), (c) or
(d) above, the Company shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction without being required
to post bond or other security and without having to prove the inadequacy of the
available remedies at law, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money damages
will not provide an adequate remedy to the Company. In addition, the Company may also
take all such other actions and remedies available to it under law or in equity and
shall be entitled to such damages as it can show it has sustained by reason of such
breach.
	 
	 	(f)	 	The parties acknowledge that the type and periods of restriction imposed in
the provisions of clauses (a), (b), (c) and (d) above are fair and reasonable and are
reasonably required for the protection of the Company and the goodwill associated with
the business of the Company. If any of the covenants in clauses (a), (b), (c) or (d)
above, or any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be given
full effect, without regard to the invalid portions. If any of the covenants contained
in clauses (a), (b), (c) or (d), or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce the
duration and/or areas of such provision and, in its reduced form, said provision shall
then be enforceable. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in clauses (a), (b), (c) and (d) above upon the courts
of any state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the intention
of the parties hereto that such determination not bar or in any way affect the
Company’s right to the relief provided above in the courts of any other states within
the geographical scope of such covenants, as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each state
being, for this purpose, severable into diverse and independent covenants.

	7.	 	Work For Hire
	 
	 	 	As an Company employee, you will be part of a team of highly talented individuals, whose
creative contributions are an integral part of the Company’s success as a company.
Accordingly, you acknowledge and agree that the Company has specially ordered and
commissioned any and all results and proceeds of your services hereunder (the “Works”) as
works-made-for-hire under the United States Copyright Act and all similar laws throughout
the world (the “Act”), and that the Company shall be deemed as the sole author and owner of
all right, title and interest in the Works in any and all languages,

 

 

formats and media, whether now known or hereafter created, throughout the world in
perpetuity (the “Rights”). If the Works, or any part of the Works are not deemed
works-made-for-hire under the Act, you hereby irrevocably grant and assign the Rights
exclusively to the Company. You hereby waive any so-called moral rights of authors and
other similar rights in connection with the Works. You acknowledge and agree that the
Company is not under any obligation to use the Works, and may exploit, reproduce,
distribute, make derivative works of, alter or edit the Works or combine the Works with
other materials, in any media whether now known or hereafter created throughout the world,
in the Company’s sole discretion, free of any obligation to you whatsoever, financial or
otherwise. You hereby waive the right to seek or obtain any injunctive or other equitable
relief in connection with the Company’s exploitation of the Works and any Rights therein.
You agree that upon any termination of your employment, you will immediately turn over any
and all of the Works in your possession to the Company. You irrevocably grant to the
Company the perpetual right to use and authorize others to use your name, biographical
information, photograph and likeness in connection with any use of the Works and/or in
connection with your employment with the Company. You represent and warrant that you have
the right to perform your services for the Company and to grant the Rights in the Works to
the Company; the Works will be original with you; and neither the Works, nor the Company’s
exercise of any of the Rights, shall violate or otherwise conflict with the rights of any
person or entity.

	8.	 	Assignment
	 
	 	 	This Agreement may not be transferred, assigned, pledged or hypothecated by any party
hereto, other than by operation of law; provided, however, that Company shall be permitted
to assign this Agreement to an affiliate in connection with a reorganization of the
Company’s business or assets for tax or financial planning purposes. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
	 
	9.	 	Modification
	 
	 	 	This Agreement may not be orally canceled, changed, modified or amended, and no
cancellation, change, modification or amendment shall be effective or binding, unless in
writing and signed by the parties to this Agreement.
	 
	10.	 	Severability; Survival
	 
	 	 	In the event any provision or portion of this Agreement is determined to be invalid or
unenforceable for any reason, in whole or in part, the remaining provisions of this
Agreement shall nevertheless be binding upon the parties with the same effect as though the
invalid or unenforceable part had been severed and deleted. The respective rights and
obligations of the parties hereunder shall survive the termination of your employment to
the extent necessary to the intended preservation of such rights and obligations.

 

 

	11.	 	No Conflict
	 
	 	 	You represent and warrant that you are not subject to any agreement, instrument,
obligations, order, judgment or decree of any kind, or any other restrictive agreement or
obligation of any character, which would prevent you from entering into this Agreement or
which would be breached by you upon the performance of your duties pursuant to this
Agreement.
	 
	12.	 	Governing Law
	 
	 	 	This Agreement will be governed by and construed in accordance with the laws of the State
of New York applicable to agreements made and to be performed entirely within New York.
	 
	13.	 	Entire Agreement
	 
	 	 	Except as provided herein, this Agreement constitutes the complete agreement between you
and the Company and supersedes all prior agreements relating to the subject matter hereof.
	 
	14.	 	Withholding
	 
	 	 	The Company may withhold from any amounts payable under this Agreement such federal, state
or local taxes as shall be required to be withheld pursuant to any applicable law or
regulation.
	 
	15.	 	Section 409A
	 
	 	 	Notwithstanding anything herein to the contrary:

	 	 (a)	 	As determined by the Company, to the extent any provision herein constitutes a
“nonqualified deferred compensation plan” under Section 409A(d)(l) of the
Internal Revenue Code of 1986, as amended (the “Code”), which provides
benefits to you upon your “separation from service” under
Section 409A(a)(2)(A)(i) of the Code, and you are a “specified employee” under Section
409A(a)(2)(B)(i) of the Code, then any such payment to you shall not commence
prior to the date that is six (6) months after the date of your separation from
service and any amounts withheld during such six-month period shall be paid
once benefits commence. The right to a series of installment payments hereunder
is treated as a right to a series of separate payments.
	 
	 	 (b)	 	The provisions herein, and plans and arrangements referenced hereunder, are
intended to comply with the applicable requirements of Section 409A of the Code

 

 

and shall be limited, construed and interpreted in accordance with such
intent. To the extent that any payment or benefit described hereunder is subject
to Section 409A of the Code, it is intended that it shall be paid in a manner that
will comply with Section 409A of the Code, including any guidance issued by the
Secretary of the Treasury and the Internal Revenue Service with respect thereto.
Notwithstanding anything herein to the contrary, any provision hereunder that is
inconsistent with Section 409A of the Code shall be deemed to be amended to comply
with Section 409A of the Code and to the extent such provision cannot be amended
to comply therewith, such provision shall be null and void.

	 	(c)	 	You are entitled to certain taxable reimbursements and/or in-kind benefits for
the
specified period set forth hereunder (except if no specified period is set forth or
otherwise evidenced or intended hereunder the specified period shall be the term
of employment). The amount of expenses eligible for reimbursement, and/or in-kind benefits provided, during your taxable year shall not affect the expenses
eligible for reimbursement, and/or in-kind benefits to be provided, in any other
taxable year.
	 
	 	(d)	 	No acceleration of any payment, including payments made during the Severance
Period, shall be permitted if such acceleration would result in you being taxed under Section 409A of the Code.

	16.	 	Counterparts
	 
	 	 	This Agreement may be executed in counterparts, all of which taken together shall constitute
one instrument.

         If you agree with these terms, please sign the copy attached and return it to me, constituting
it our agreement.

	 	 	 	 	 
	 	Best regards,

Martha Stewart Living Omnimedia, Inc.

 	 
	 	By:  	/s/ Charles A. Koppelman
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 
	Accepted and Agreed:
	 	 
	 
	 	 
	/s/ Kelli TurnerEX-10.2

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT BETWEEN

MARTHA STEWART LIVING OMNIMEDIA, INC.

AND MARTHA STEWART DATED AS OF APRIL 1, 2009

     AGREEMENT, dated as of April 1, 2009 (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 September 17, 2004, as
amended (the “Prior Employment Agreement); 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 amended and restated 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 the
Effective Date and shall end on March 31, 2012, but subject to earlier termination as provided
herein (the “Employment Period”). 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 Principal Executive Officer, Chief Executive
Officer(s) and the Chief Financial Officer of the Company, rather than the Founder, shall serve as
primary spokespersons for the Company to the financial and investment community and with respect to
business and financial affairs).

     The Founder shall report directly to the Board. Unless otherwise authorized by the Board, the

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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, in all cases except for (iii), as determined by the Principal Executive Officer and a
committee of the Board, to (i) engage in motion picture, television, public speaking and publishing
activities, (ii) appear from time to time in commercials and/or advertisements that do not present
a conflict with the Company’s interests with respect to its products or significant business
relationships, in all cases subject to the approval of the Board, (iii) manage her personal,
financial and legal affairs (including writing her autobiography), (iv) 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), (v) serve on boards of other
companies and (vi) 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
(vi) 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
therewith) outside the performance of her duties hereunder.

     4. Place of Performance. During the Employment Period, the locations of
employment of the Founder shall be in New York City, New York and Bedford, New York and
the Founder shall not be required to relocate her employment to any other location. 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.

     5. Compensation and Related Matters.

          (a) Talent Compensation. In consideration of her continued work as a performer
and for making public appearances on behalf of the Company or for third-parties as required in
support of products covered by Company contracts with third parties consistent with past
practices, and as an author or provider of content consistent with past practices for the
Company’s media properties, publications and contractual arrangements during the Employment
Period, the Company shall pay the Founder talent compensation at the rate of not less than Two
Million Dollars ($2,000,000) per year (the “Talent Compensation”). The Talent Compensation
shall be paid in approximately equal installments in accordance with the Company’s customary
payroll practices and subject to all applicable income and employment tax withholdings. The
Talent Compensation shall be subject to annual review by the Board and may be increased in the
Board’s discretion. If the Talent Compensation is increased by the Board, such increased
Talent Compensation shall then constitute the Talent Compensation 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 2009 fiscal year, the Founder shall be eligible to
earn an annual cash bonus (the “Annual Bonus”) in such amount as shall be determined by the

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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 , with a target Annual Bonus equal to One Million Dollars ($1,000,000) (the “Target
Amount”) and a maximum Annual Bonus equal to 150% of the Target Amount. The Compensation Committee
shall establish objective criteria to be used to determine the extent to which performance goals
have been satisfied. Such Annual Bonus shall be paid in a lump sum no earlier than January 1st and
no later than March 15th of the calendar year following the calendar year to which such bonus
relates. The Founder shall be entitled to receive a pro rata portion of any payable Annual Bonus
for the 2012 fiscal year, upon expiration of the Employment Period if this Agreement is not
renewed, which pro rata portion shall be determined by multiplying the amount of the Annual Bonus
paid to the Founder in respect of the full fiscal year immediately prior to the expiration of the
Employment Period by a fraction the numerator of which is the number of days the Founder was
employed by the Company in the 2012 Fiscal Year and the denominator or which is 365 and, subject to
Section 20(b) below, such pro rata Annual Bonus shall be paid by the Company to the Founder within
thirty (30) days following the expiration of the Employment Period.

          (c) Make-whole/retention payment. In recognition of her extraordinary efforts
on behalf of the Company and to maintain her continued level of involvement during the
Employment Period consistent with past practices, the Company shall as soon as practicable
following the full execution of this Agreement (but not later than the date which is five (5)
days following the full execution hereof) pay the Founder a payment of Three Million Dollars
($3,000,000); provided, however, that if the Founder terminates this Agreement without Good
Reason (defined below) or the Company terminates this Agreement for Cause (defined below)
during the Employment Period, a pro-rata portion of such payment (determined based on a
fraction, the numerator of which is the number of calendar days from the Date of Termination
(defined below) through the last day of the Employment Period, and the denominator of which is
the total number of calendar days of the Employment Period) shall be subject to forfeiture
and repayment by the Founder upon such terms and conditions as determined by the
Compensation Committee in its discretion at the time of such forfeiture.

          (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.

3

 

          (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 of 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) 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.

          (i) 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.

          (j) New Programming. For any original network, cable or syndicated show of the Company
(other than “The Martha Stewart Show”) 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 to 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). Any payments in respect of New Programming
shall be paid in the calendar year following the calendar year of production. 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, which shall be paid no
later than the end of the calendar year in which the Adjusted Gross Revenues are determined.

“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.

          (k) 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

4

 

the Employment Period under the following circumstances:

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

          (b) Disability. The Company shall have the right to terminate the Founder’s
employment as a result of the Founder’s Disability (as defined below) as determined by a
physician selected by the Founder, and reasonably acceptable to the Company. “Disability”
shall
mean (i) the Founder’s inability to engage in any substantial gainful activity by reason of
any
medically determinable physical or mental impairment that can be expected to result in death
or
can be expected to last for a continuous period of not less than twelve (12) months; (ii) the
Founder is, by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less
than
twelve (12) months, receiving income replacement benefits for a period of not less than three
(3)
months under an accident and health plan covering the Founder; or (iii) the Founder is
determined to be totally disabled by the Social Security Administration.

          (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 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 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

5

 

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 materially inconsistent with this
Agreement or a material 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 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.

6

 

     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, subject in all respects to the application of Section 20(b) below:

          (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) Talent Compensation and accrued vacation pay through the Date of
Termination, (B) three million dollars ($3,000,000), 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.” To the extent any of the benefits
provided for in clauses (ii) — (v) above are taxable to the Founder, and except as permitted by
Section 409A (as defined in Section 20(a) below), any right to reimbursement or in-kind benefits

7

 

will not be subject to liquidation or exchange for another benefit, the amount of expenses eligible
for reimbursement, or in-kind benefits, provided during any taxable year it will not affect the
expenses eligible for reimbursement in a later taxable year, and any payments for reimbursements
will be paid on or before the last day of the taxable year following the taxable year in which the
expense was incurred.

          (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 Disability, the Founder shall continue to receive her full Talent
Compensation 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 Talent Compensation
over the amount of any long-term disability benefits that she receives under the Company’s
welfare benefit plans and programs providing ‘disability pay’ within the meaning of Treasury
Regulation Section 31.3121(v)(2)-1(b)(4)(iv)(C), 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 Talent Compensation (less any long-term disability benefits paid to
the Founder under the Company’s welfare benefit plans and programs providing ‘disability pay’
within the meaning of Treasury Regulation Section 31.3121(v)(2)-1(b)(4)(iv)(C)), 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

8

 

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

9

 

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) Non-disparagement. During the Employment Term and for two (2) years thereafter, (i)
neither the Founder, nor anyone acting on behalf of the Founder, shall make or publish any
disparaging or derogatory statement (whether written or oral) regarding the Company or any of its
affiliated companies or businesses, or the current directors or current executive vice presidents
and above of any of them, in any public communication, or in any non-public communication with any
member of the media or with any other person which may be reasonably expected to be publicly
disseminated to the press or the media, and (ii) neither the Company nor any of its affiliated
companies or businesses or their affiliates, current directors or current executive vice presidents
and above, nor anyone authorized by the Company to speak on behalf of the Company, shall make or
publish any disparaging or derogatory statement (whether written or oral) regarding the Founder in
any public communication, or in any non-public communication with any member of the media or with
any other person which may be reasonably expected to be publicly disseminated to the press or the
media.

          (e) 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, officer or employee 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

10

 

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. Such indemnification and this Section 10(a) 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 or upon any termination of this Agreement. In addition, the Company shall
indemnify and hold harmless the Founder in connection with any claim for indemnification under
clause (bb) of paragraph 11(a) of the Production Agreement (as defined in the Prior Employment
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;

11

 

          (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.

          (i) Timing of Reimbursements or Expenses. To the extent required under Section 409A (as
defined in Section 20(a) below), any reimbursements or expenses provided under this Section 10
shall be subject to the limitations on payment and reimbursement of taxable expenses set forth in
Section 8(a).

     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. To the extent required under Section 409A (as
defined in Section 20(a) below), any reimbursements or expenses provided under this Section 11
shall be subject to the limitations on payment and reimbursement of taxable expenses set forth
in
Section 8(a).

     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

12

 

(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) 827-8000

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

13

 

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 as otherwise provided in Section 10 hereof with respect to indemnification under Delaware
law, 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, the Intellectual Property License
Agreement and Preservation Agreement, dated as of October 22, 1999, and the Intangible Asset
License Agreement, dated June 13, 2008, 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.

     20. Section 409A.

          (a) The intent of the parties is that payments and benefits under this Agreement comply with
Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance issued thereunder
(“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. Founder is hereby advised to seek independent advice from her 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

14

 

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 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 earlier of (i) the expiration of the
six-month
period measured from the date of the Founder’s separation from service, or (ii) the date of
the
Founder’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 20 (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 Regulation Section
1.409A-2(b)(2)(iii).

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this
9th day of April, 2009.

	 	 	 	 	 
	 

	 	MARTHA STEWART LIVING OMNIMEDIA, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Charles A. Koppelman
	 

	 	 	 	 
	 

	 	 	 	Name: Charles A. Koppelman
	 

	 	 	 	Title: Principal Executive Officer
	 
	 	 	 	 
	 

	 	 	 	/s/ Martha Stewart
	 

	 	 	 	 
	 

	 	 	 	Martha Stewart

15

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