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.

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

1.Who are the parties?

a.Do they appear to have legal capacity?Remember you must tell me what data you are using to form your opinion.

2.Is there an agreement?

a.Is there an offer?

b.Is there an acceptance?

c."Fair agreement"?(This is really asking about the adequacy of the bargain.)

d.Meeting of the minds?(This is really asking about mutual assent.)

3.What is the subject matter of the contract?

a.Does the subject matter have "legality"?(This is asking about the contractual element - legality.)

4.What is the consideration?

5.What is the jurisdiction?(What state's law applies?)

6.What is the remedy if the company breaches?

7.What is the remedy if the employee breaches?