10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 001-15395

MARTHA STEWART LIVING OMNIMEDIA, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2187059
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
601 West 26th Street, New York, NY	10001
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) (212) 827-8000

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

Class	Outstanding as of November 3, 2011
Class A, $0.01 par value		29,252,042
Class B, $0.01 par value		25,984,625
Total		55,236,667

Martha Stewart Living Omnimedia, Inc.

September 30, 2011

Index to Form 10-Q

			Page
Part I.	Financial Information
	Item 1.	Financial Statements.		3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		14
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		29
	Item 4.	Controls and Procedures.		30
Part II.	Other Information
	Item 1.	Legal Proceedings.		30
	Item 1A.	Risk Factors.		30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		31
	Item 6.	Exhibits.		32
	Signatures			33

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MARTHA STEWART LIVING OMNIMEDIA, INC.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	September 30, 2011			December 31, 2010
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	14,989		$	23,204
Short-term investments		10,535			10,091
Accounts receivable, net		45,635			59,250
Inventory		8,518			5,309
Deferred television production costs		2,811			2,413
Other current assets		6,394			4,772
Total current assets		88,882			105,039
PROPERTY AND EQUIPMENT, net		13,970			14,507
GOODWILL, net		45,107			45,107
OTHER INTANGIBLE ASSETS, net		46,538			46,547
OTHER NONCURRENT ASSETS, net		8,969			11,114
Total assets	$	203,466		$	222,314
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	28,514		$	30,062
Accrued payroll and related costs		7,917			6,541
Current portion of deferred subscription revenue		13,714			18,734
Current portion of other deferred revenue		6,585			4,732
Current portion of loan payable		3,000			1,500
Total current liabilities		59,730			61,569
DEFERRED SUBSCRIPTION REVENUE		4,123			4,529
OTHER DEFERRED REVENUE		3,165			1,413
LOAN PAYABLE		3,000			7,500
DEFERRED INCOME TAX LIABILITY		5,537			4,527
OTHER NONCURRENT LIABILITIES		4,026			3,743
Total liabilities		79,581			83,281
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Class A Common Stock, $.01 par value, 350,000,000 shares authorized; 29,501,969 and 28,753,212 shares outstanding in 2011 and 2010, respectively		295			288
Class B Common Stock, $.01 par value, 150,000,000 shares authorized; 25,984,625 and 26,317,960 shares outstanding in 2011 and 2010, respectively		260			263
Capital in excess of par value		300,232			295,576
Accumulated deficit		(175,917	)		(156,201	)
Accumulated other comprehensive loss		(210	)		(118	)
		124,660			139,808
Less: Class A Treasury Stock – 59,400 shares at cost		(775	)		(775	)
Total shareholders’ equity		123,885			139,033
Total liabilities and shareholders’ equity	$	203,466		$	222,314

The accompanying notes are an integral part of these consolidated financial statements.

3

MARTHA STEWART LIVING OMNIMEDIA, INC.

Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
REVENUES
Publishing	$	33,242		$	34,318		$	102,059		$	100,945
Broadcasting		6,626			5,795			22,195			26,076
Merchandising		12,336			9,575			35,484			31,200
Total revenues		52,204			49,688			159,738			158,221
OPERATING COSTS AND EXPENSES
Production, distribution and editorial		29,361			29,184			91,078			85,837
Selling and promotion		15,073			14,803			42,394			42,889
General and administrative		12,245			11,982			38,084			37,887
Depreciation and amortization		1,027			1,627			2,947			3,689
Restructuring charges		3,792			—			3,792			—
Total operating costs and expenses		61,498			57,596			178,295			170,302
OPERATING LOSS		(9,294	)		(7,908	)		(18,557	)		(12,081	)
OTHER INCOME / (EXPENSE)
Interest income / (expense), net		61			46			(65	)		(62	)
Loss on sale of fixed asset		—			(647	)		—			(647	)
Gain on sale of short-term investments		—			403			—			403
(Loss) / income on equity securities		(190	)		(5	)		15			(24	)
Total other expense		(129	)		(203	)		(50	)		(330	)
LOSS BEFORE INCOME TAXES		(9,423	)		(8,111	)		(18,607	)		(12,411	)
Income tax provision		(278	)		(475	)		(1,109	)		(1,289	)
NET LOSS	$	(9,701	)	$	(8,586	)	$	(19,716	)	$	(13,700	)
LOSS PER SHARE – BASIC AND DILUTED
Net loss	$	(0.18	)	$	(0.16	)	$	(0.36	)	$	(0.25	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted		54,990			54,487			54,825			54,416

The accompanying notes are an integral part of these consolidated financial statements.

4

MARTHA STEWART LIVING OMNIMEDIA, INC.

Consolidated Statement of Shareholders’ Equity

For the Nine Months Ended September 30, 2011

(unaudited, in thousands)

	Class A Common Stock				Class B Common Stock															Class A Treasury Stock
	Shares		Amount		Shares			Amount			Capital in excess of par value			Accumulated deficit			Accumulated other comprehensive loss			Shares			Amount			Total
Balance at January 1, 2011		28,753	$	288		26,318		$	263		$	295,576		$	(156,201	)	$	(118	)		(59	)	$	(775	)	$	139,033
Comprehensive loss:
Net loss		—		—		—			—			—			(19,716	)		—			—			—			(19,716	)
Other comprehensive loss:
Unrealized loss on securities		—		—		—			—			—			—			(92	)		—			—			(92	)
Total comprehensive loss																											(19,808	)
Conversion of shares		333		3		(333	)		(3	)		—			—			—			—			—			—
Issuance of shares of stock in conjunction with stock option exercises		265		3		—			—			582			—			—			—			—			585
Issuance of shares of stock and restricted stock, net of cancellations and tax withholdings		151		1		—			—			(74	)		—			—			—			—			(73	)
Non-cash equity compensation		—		—		—			—			4,148			—			—			—			—			4,148
Balance at September 30, 2011		29,502	$	295		25,985		$	260		$	300,232		$	(175,917	)	$	(210	)		(59	)	$	(775	)	$	123,885

The accompanying notes are an integral part of these consolidated financial statements.

5

MARTHA STEWART LIVING OMNIMEDIA, INC.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Nine Months Ended September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(19,716	)	$	(13,700	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash revenue		(846	)		(5,060	)
Depreciation and amortization		2,947			3,689
Amortization of deferred television production costs		16,727			15,439
Non-cash equity compensation		4,181			4,175
Deferred income tax expense		1,009			1,008
(Income) / loss on equity securities		(15	)		24
Gain on sale of short-term investment		—			(403	)
Loss on sale of fixed assets		—			647
Other non-cash charges, net		415			493
Changes in operating assets and liabilities
Accounts receivable, net		13,615			18,909
Inventory		(3,209	)		(119	)
Deferred television production costs		(16,969	)		(17,813	)
Accounts payable and accrued liabilities		(1,548	)		(99	)
Accrued payroll and related costs		1,376			1,043
Deferred subscription revenue		(5,426	)		(3,698	)
Deferred revenue		4,237			1,082
Other changes		505			1,346
Total changes in operating assets and liabilities		(7,419	)		651
Net cash (used in) / provided by operating activities		(2,717	)		6,963
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(2,405	)		(4,156	)
Proceeds from the sale of fixed assets		—			1,403
Purchases of short-term investments		(5,680	)		(14,282	)
Sales of short-term investments		5,002			14,845
Net cash used in investing activities		(3,083	)		(2,190	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt		(3,000	)		(3,000	)
Proceeds received from stock option exercises		585			81
Net cash used in financing activities		(2,415	)		(2,919	)
Net (decrease) / increase in cash		(8,215	)		1,854
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		23,204			25,384
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	14,989		$	27,238

The accompanying notes are an integral part of these consolidated financial statements.

6

Martha Stewart Living Omnimedia, Inc.

Notes to Consolidated Financial Statements

September 30, 2011

(unaudited)

1. General

Martha Stewart Living Omnimedia, Inc., together with its subsidiaries, is herein referred to as “we,” “us,” “our,” or the “Company.”

The information included in the foregoing interim consolidated financial statements is unaudited. In the opinion of management, all adjustments, all of which are of a normal recurring nature and necessary for a fair presentation of the results of operations for the interim periods presented, have been reflected therein. The results of operations for interim periods do not necessarily indicate the results to be expected for the entire year. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) with respect to the Company’s fiscal year ended December 31, 2010 (the “2010 Form 10-K”) which may be accessed through the SEC’s website at http://www.sec.gov.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management does not expect such differences to have a material effect on the Company’s consolidated financial statements.

2. Significant Accounting Policies

Equity Compensation

The Company has issued stock-based compensation to certain of its employees and a non-employee consultant. In accordance with the fair-value recognition provisions of Accounting Standards Codification (“ASC”) Topic 718, Share-Based Payments (“ASC Topic 718”) and SEC Staff Accounting Bulletin No. 107, compensation cost recognized in the periods ended September 30, 2011 and 2010 was based on the grant date fair value estimated in accordance with the provisions of ASC Topic 718. Time-based employee stock option, restricted stock, and restricted stock unit awards are amortized as non-cash equity compensation expense on a straight-line basis over the expected vesting period. The Company values time-based option awards using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires numerous assumptions, including expected volatility of the Company’s stock price and expected life of the option. Time-based restricted stock and restricted stock unit awards are valued at the market value of traded shares on the date of grant. Price-based options and price-based restricted stock unit awards are valued using the Monte Carlo Simulation method which takes into account assumptions such as volatility of the Company’s Class A Common Stock, the risk-free interest rate based on the contractual term of the award, the expected dividend yield, the vesting schedule, and the probability that the market conditions of the award will be achieved. The Company applies variable accounting to its non-employee price-based restricted stock unit awards.

The Company’s other significant accounting policies are discussed in detail in the 2010 Form 10-K.

3. Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

• Level 1: Observable inputs such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.

• Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair value of the Company’s level 2 financial assets is primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case a weighted average market price is used.

7

• Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the asset or liability.

The following tables present the Company’s assets that are measured at fair value on a recurring basis:

	September 30, 2011
(in thousands)	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Short-term investments:
U.S. government and agency securities	$	—	$	2,713	$	—	$	2,713
Corporate obligations		—		5,602		—		5,602
Other fixed income securities		—		1,040		—		1,040
International securities	$	—		1,180	$	—		1,180
Total	$	—	$	10,535	$	—	$	10,535

	December 31, 2010
(in thousands)	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Short-term investments:
U.S. government and agency securities	$	—	$	1,637	$	—	$	1,637
Corporate obligations		—		5,977		—		5,977
Other fixed income securities		—		2,140		—		2,140
International securities		—		337		—		337
Total	$	—	$	10,091	$	—	$	10,091

The Company has no liabilities that are measured at fair value on a recurring basis.

Assets measured at fair value on a nonrecurring basis

The Company’s non-financial assets, such as goodwill, intangible assets and property and equipment, as well as cost method investments, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized. Such impairment charges incorporate fair value measurements based on level 3 inputs.

8

4. Inventory

Inventory is comprised of paper stock. The inventory balances at September 30, 2011 and December 31, 2010 were approximately $8.5 million and $5.3 million, respectively.

5. Investments in Other Non-Current Assets

The Company has investments in preferred stock which it carries at cost. As of September 30, 2011, the Company’s aggregate carrying value of these investments was $5.7 million and was included within other noncurrent assets in the consolidated balance sheet. The Company has determined that certain of these investments represent interests in variable interest entities. As of September 30, 2011, the Company’s investments in the entities were substantially equal to its maximum exposure to loss. There are no future contractual funding commitments. The Company has determined that the Company is not the primary beneficiary of these entities since the Company does not have the power to direct the activities that most significantly impact the entities’ economic performance. Accordingly, the Company does not consolidate these entities and accounts for these investments under the cost method.

6. Credit Facilities

The Company has a line of credit with Bank of America in the amount of $5.0 million, which is generally used to secure letters of credit. The Company was compliant with the debt covenants as of September 30, 2011. The Company had no outstanding borrowings under this facility as of September 30, 2011 and had letters of credit outstanding of $2.6 million.

In April 2008, the Company entered into a loan agreement (subsequently amended and restated on August 7, 2009) with Bank of America for a term loan in the amount of $30.0 million related to the acquisition of certain assets of Emeril Lagasse. The loan is secured by substantially all of the assets of the Emeril business that the Company acquired. The loan agreement requires equal quarterly principal payments of $1.5 million and accrued interest to be paid for the duration of the loan term, approximately 5 years. As of September 30, 2011, the Company had paid $24 million in principal, including prepayment of $3.0 million due through March 31, 2012, such that $6.0 million was outstanding at September 30, 2011. Two principal payments of $1.5 million each are due as of June 30, 2012 and September 30, 2012, which are reflected as a current liability in the consolidated balance sheet as of September 30, 2011. The interest rate on all outstanding amounts is equal to a floating rate of 1-month London Interbank Offered Rate (“LIBOR”) plus 2.85%.

The loan terms have required the Company to be in compliance with certain financial and other covenants, failure with which to comply would result in an event of default and would permit Bank of America to accelerate and demand repayment of the loan in full. On June 29, 2011, the Company and Bank of America executed an amendment to the loan agreement, which eliminated the financial covenants that had previously required the Company to maintain a Funded Debt to EBITDA Ratio equal to or less than 2.0 and a Parent Guarantor Basic Fixed Charge Ratio equal to or greater than 2.75. The amendment also reduced the minimum level of consolidated Tangible Net Worth required to be maintained by the Company from $40 million to $30 million. Additionally, the amendment added a requirement that the Company maintain at all times cash and certain cash equivalents with an aggregate market value of not less than an amount equal to 200% of the outstanding loan principal. This cash and cash equivalents balance cannot be subject to any lien, security interest or other encumbrance, nor can it be held by the Company in order to comply with any other liquidity or other similar covenant under any agreement in respect of indebtedness or other obligations of the Company.

As of September 30, 2011, the Company was compliant with all debt covenants and expects to be compliant with all debt covenants through 2011. A current summary of the most significant financial covenants is as follows:

Financial Covenant
Tangible Net Worth	At least $30.0 million
Quick Ratio	Equal to or greater than 1.0
Unencumbered Cash and Designated Cash Equivalents	Equal to or greater than 200% of the loan balances

9

While the maintenance of a minimum level of cash balances has now become a financial covenant, the fact that the Company had cash balances that were well in excess of the loan principal at September 30, 2011 currently gives the Company the ability to repay the outstanding principal in full in the event of default or to prevent default.

7. Income taxes

The Company follows ASC Topic 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred assets and liabilities are recognized for the future costs and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company periodically reviews the requirements for a valuation allowance and makes adjustments to such allowances when changes in circumstances result in changes in the Company’s judgment about the future realization of deferred tax assets. ASC 740 places more emphasis on historical information, such as the Company’s cumulative operating results and its current year results than it places on estimates of future taxable income. Therefore, the Company has added $8.0 million to its valuation allowance in the nine months ended September 30, 2011, resulting in a cumulative balance of $84.9 million as of September 30, 2011. In addition, the Company has recorded $1.1 million of tax expense during the nine months ended September 30, 2011 which is primarily attributable to differences between the financial statement carrying amounts of past acquisitions of certain indefinite-lived intangible assets and their respective tax bases, which resulted in a net deferred tax liability of $5.5 million at September 30, 2011. The Company intends to maintain a valuation allowance until evidence would support the conclusion that it is more likely than not that the deferred tax asset could be realized.

ASC 740 further establishes guidance on the accounting for uncertain tax positions. As of September 30, 2011, the Company had an ASC 740 liability balance of $0.08 million, of which $0.06 million represented unrecognized tax benefits, which if recognized at some point in the future would favorably impact the effective tax rate, and $0.02 million represented interest. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for the years before 2005 and state examinations for the years before 2003. The Company anticipates that as a result of audit settlements and statute closures over the next twelve months, the liability will be reduced through cash payments of approximately $0.01 million.

8. Equity compensation

Stock option awards

On June 6, August 22, and September 6, 2011 the Company made awards under the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Compensation Plan to several new members of its executive management team, as provided for in their employment agreements. Certain awards include service period vesting triggers and consist of options to purchase 475,000 shares of Class A Common Stock at various exercise prices (the closing price on the date of grant), which options vest as to 158,333 shares on each of the second, third, and fourth anniversaries of their employment start dates. Non-cash equity compensation expense of approximately $0.05 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company measured the fair value of these awards as of the date of issuance using the Black-Scholes option pricing model, which value is recognized over the remaining service period of the awards. As of September 30, 2011, there was $0.8 million of total unrecognized compensation cost related to these nonvested stock option awards to be recognized over a period of 3.7 to 3.9 years. The following table summarizes the assumptions used in the Black-Scholes option-pricing model:

Risk-free interest rates	0.511% - 0.629%
Dividend yields	Zero
Expected volatility	60.80% - 60.88%
Expected option life	3.7 years
Average fair value per option granted	$1.38 - $2.17

The Company also made awards to these employees which include price-based vesting triggers. The price-based option awards consist of options to purchase an aggregate 700,000 shares of Class A Common Stock, whereby options for 175,000 shares with an exercise price of $6 per share will vest only at such time as the trailing average closing price of the Class A Common Stock during any 30 consecutive trading days during the term of the

10

employment agreement has been at least $6, options for 175,000 shares with an exercise price of $8 per share will vest only at such time as such trailing average has been at least $8, options for 175,000 shares with an exercise price of $10 per share will vest only at such time as such trailing average has been at least $10, and options for 175,000 shares with an exercise price of $12 per share will vest only at such time as such trailing average has been at least $12. Non-cash equity compensation expense of approximately $0.3 million was recorded during the three month period ended September 30, 2011 related to these price-based awards. The Company measured the fair value of these price-based awards as of the date of issuance using the Monte Carlo Simulation method and recognizes its fair value over the service period of the awards. As of September 30, 2011, there was $0.7 million of total unrecognized compensation cost related to these nonvested price-based option awards to be recognized over the expected service period listed below. The following table summarizes the assumptions used in the Monte Carlo Simulation method:

Risk-free interest rate	1.34% - 2.29%
Expected volatility	59.72% - 60.55%
Expected service period	0.46 - 1.97 years
Dividends	Zero
Estimated value of price-based option awards	$0.45 - $2.35

In addition to non-cash equity compensation expense recorded in connection with the new executive management option awards discussed above, non-cash equity compensation expense of approximately $0.6 million was recorded during the three month period ended September 30, 2011 related to the accelerated vesting of certain option awards previously granted to former members of executive management.

Restricted stock unit awards and restricted stock

The new members of the Company’s executive management team also received certain awards of 300,000 restricted stock units (“RSUs”), each of which represents the right to one share of Class A Common Stock, with service period vesting triggers, of which approximately 100,000 RSUs vest on each of the second, third, and fourth anniversaries of their employment start dates. Non-cash equity compensation expense of approximately $0.1 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company has measured the fair value of these service period based awards as of the grant date and will recognize this fair value over the remaining service periods of the awards. As of September 30, 2011, there was $1.2 million of total unrecognized compensation cost related to these nonvested RSUs to be recognized over a period of 3.7 to 3.9 years.

The Company also made RSU awards to these employees which include price-based vesting triggers. The price-based RSUs consist of the right to receive an aggregate 380,000 shares of Class A Common Stock, of which 50,000 RSUs will vest at such time as such trailing average common stock price has been at least $6, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $8, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $10, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $12, and the final 45,000 RSUs will vest at such time as the trailing average has been at least $14. Non-cash equity compensation expense of approximately $0.3 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company measured the fair value of these price-based awards as of the date of issuance using the Monte Carlo Simulation method and recognizes this fair value over the service period of the awards. As of September 30, 2011, there was $0.7 million of total unrecognized compensation cost related to these nonvested price-based restricted stock unit awards to be recognized over the expected service period listed below. The following table summarizes the assumptions used in the Monte Carlo Simulation method:

Risk-free interest rate	0.37 - 1.17%
Expected volatility	67.83% - 70.20%
Expected service period	0.42 - 1.90 years
Dividends	Zero
Estimated value of price-based restricted stock unit awards	$1.10 - $4.43

In addition to non-cash equity compensation expense recorded in connection with the new executive management RSUs discussed above, a reversal of approximately $0.9 million in non-cash equity compensation expense was recorded during the three-month period ended September 30, 2011 related to the forfeiture of certain priced-based restricted stock awards previously granted to a former member of executive management.

11

9. Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss includes net loss and unrealized gains and losses on available-for-sale securities. Total comprehensive loss for the nine months ended September 30, 2011 and 2010 was $19.8 million and $13.0 million, respectively.

10. Other

Production, distribution and editorial expenses; selling and promotion expenses; and general and administrative expenses are all presented exclusive of depreciation and amortization, which is shown separately within “Operating Costs and Expenses.”

Certain prior year financial information has been reclassified to conform with fiscal 2011 financial statement presentation. Prior years’ results of the former Internet segment have been combined with those of the Publishing segment in connection with the Company’s revised identification of operating segments.

11. Industry Segments

The Company is an integrated media and merchandising company providing consumers with inspiring lifestyle content and programming, and well-designed, high-quality products. The Company’s business segments are Publishing, Broadcasting and Merchandising. In 2010, the Company announced its plan to report the results of operations from its former Publishing and Internet operating segments under the operating segment titled “Publishing.” The Company has been continuing to execute its strategy to leverage its core content across its print and digital platforms more efficiently by further centralizing the creative process. In addition, during the fourth quarter of 2010, the Company reorganized its advertising sales force to centralize selling efforts across all media. As a result of these fundamental changes in the way it views its business, the Company evaluated its operating segments and determined that the print and digital platforms no longer met the definition of separate operating segments in accordance with ASC 280, Segment Reporting. The new Publishing segment provides management with a more meaningful assessment of the operating performance of the Company’s print and digital platforms.

The Publishing segment primarily consists of the Company’s operations related to its magazines and books, as well as its digital operations which includes the content-driven website, www.marthastewart.com. The Broadcasting segment primarily consists of the Company’s television production operations and its satellite radio operations. The Martha Stewart Show season 5 aired in syndication over a 12-month period beginning in the middle of September 2009 and ending in the middle of September 2010. Season 6 of The Martha Stewart Show aired on Hallmark Channel also over a 12-month period beginning and ending in the middle of September with season 7 of The Martha Stewart Show currently airing on Hallmark Channel beginning September 26, 2011. The Merchandising segment consists of the Company’s operations related to the design of merchandise and related promotional and packaging materials that are licensed to and distributed by its retail and manufacturing partners.

The accounting policies for the Company’s business segments are discussed in more detail in the 2010 Form 10-K.

Segment information for the quarters ended September 30, 2011 and 2010 is as follows:

(in thousands)	Publishing			Broadcasting			Merchandising			Corporate			Consolidated
2011
Revenues	$	33,242			6,626			12,336			—		$	52,204
Non–cash equity compensation		(273	)		(35	)		(201	)		(1,623	)		(2,132	)
Depreciation and amortization		(194	)		(128	)		(8	)		(697	)		(1,027	)
Restructuring charges		(350	)		(354	)		—			(3,088	)		(3,792	)
Operating (loss) / income		(3,585	)		(1,320	)		7,179			(11,568	)		(9,294	)
2010
Revenues	$	34,318		$	5,795		$	9,575			—		$	49,688
Non–cash equity compensation		(18	)		(3	)		50			(734	)		(705	)
Depreciation and amortization		(253	)		(612	)		(13	)		(749	)		(1,627	)
Operating (loss) / income		(1,113	)		(4,074	)		5,501			(8,222	)		(7,908	)

12

Segment information for the nine months ended September 30, 2011 and 2010 is as follows:

(in thousands)	Publishing			Broadcasting			Merchandising			Corporate			Consolidated
2011
Revenues	$	102,059			22,195			35,484			—		$	159,738
Non–cash equity compensation		(600	)		(61	)		(211	)		(3,674	)		(4,546	)
Depreciation and amortization		(543	)		(359	)		(24	)		(2,021	)		(2,947	)
Restructuring charges		(350	)		(354	)		—			(3,088	)		(3,792	)
Operating (loss) / income		(7,349	)		(3,616	)		21,196			(28,788	)		(18,557	)
2010
Revenues	$	100,945		$	26,076		$	31,200		$	—		$	158,221
Non–cash equity compensation		(482	)		(217	)		(635	)		(2,841	)		(4,175	)
Depreciation and amortization		(922	)		(748	)		(35	)		(1,984	)		(3,689	)
Operating (loss) / income		(1,789	)		(2,354	)		18,154			(26,092	)		(12,081	)

12. Restructuring Charges

The Company incurred approximately $3.8 million in restructuring charges during the nine-month period ended September 30, 2011. Restructuring charges included employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs. Included in the $3.8 million restructuring charge is an approximate $0.4 million reversal of non-cash equity compensation expense related to certain employee departures.

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-looking Statements and Risk Factors

Unless otherwise noted, “we,” “us,” “our” or the “Company” refers to Martha Stewart Living Omnimedia, Inc. and its subsidiaries.

Except for historical information contained in this Quarterly Report on Form 10-Q (this “Quarterly Report”), the statements in this Quarterly Report are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent only our current beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. These statements often can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “potential” or “continue” or the negative of these terms or other comparable terminology. Our actual results may differ materially from those projected in these statements, and factors that could cause such differences include the following among others:

• adverse reactions to publicity relating to Martha Stewart or Emeril Lagasse by consumers, advertisers and business partners;

• loss of the services of Ms. Stewart or Mr. Lagasse;

• loss of the services of other key personnel;

• softening of or increased competition in the portion of the domestic advertising market in which we compete;

• failure by the economy to sustain any meaningful recovery, including particularly the housing market and other developments that limit consumers’ discretionary spending or affect the value of our assets or access to credit or other funds;

• loss or failure of merchandising and licensing programs;

• failure in acquiring or developing new brands or realizing the benefits of acquisitions;

• inability to attract anticipated levels of viewers to our programming on Hallmark Channel;

• failure to protect our intellectual property;

• changes in consumer reading, purchasing, digital and/or television viewing patterns;

• increases in paper, postage, freight or printing costs;

• weakening in circulation;

• operational or financial problems at any of our business partners;

• our inability to successfully and profitably develop or introduce new products or the recall of products;

• failure of our branded products to successfully compete with comparable offerings;

• failure to predict, respond to and influence trends in consumer taste, shifts in business strategies, inability to add to our partnerships or capitalize on existing partnerships or the termination of such partnerships; and

• changes in government regulations affecting the Company’s industries.

These and other factors are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “2010 Form 10-K”) under the heading “Part I, Item 1A. Risk Factors.”

We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of new information, future events or otherwise.

14

EXECUTIVE SUMMARY

We are an integrated media and merchandising company providing consumers with inspiring lifestyle content and programming, and high-quality, licensed products that we design. We are organized into three business segments with Publishing and Broadcasting representing our media platforms that are complemented by our Merchandising segment. Summarized below are our operating results for the three and nine months ended September 30, 2011 and 2010.

	Three Months Ended Sept 30, 2011			Three Months Ended Sept 30, 2010			Nine Months Ended Sept 30, 2011			Nine Months Ended Sept 30, 2010
Total Revenues	$	52,204		$	49,688		$	159,738		$	158,221
Total Operating Costs and Expenses		(61,498	)		(57,596	)		(178,295	)		(170,302	)
Total Operating Loss	$	(9,294	)	$	(7,908	)	$	(18,557	)	$	(12,081	)

We generate revenue from various sources such as advertisers, licensing partners and magazine consumers. Publishing is our largest business segment, accounting for 64% of our total revenues for the nine months ended September 30, 2011. The primary source of Publishing segment revenue is advertising from our magazines, which include Martha Stewart Living, Martha Stewart Weddings, Everyday Food and Whole Living. Magazine subscriptions, advertising revenue generated from our digital properties and newsstand sales, along with royalties from our book business, account for most of the balance of Publishing segment revenue. Broadcasting segment revenue is derived primarily from our television advertising and license fees, as well as satellite radio advertising and license fees. Television programming is comprised of The Martha Stewart Show, a daily home and lifestyle show, Martha Bakes and other holiday and interview specials featuring Martha Stewart. In addition, we produce television programming featuring other talent, including programs featuring Chef Emeril Lagasse, Mad Hungry with Lucinda Scala Quinn and Petkeeping with Marc Morrone. The satellite radio programming that we produce airs as the Martha Stewart Living Radio channel on Sirius XM Radio. Merchandising segment revenues are generated from the licensing of our trademarks and designs for a variety of products sold at multiple price points through a wide range of distribution channels. Our retail partnerships include our Martha Stewart Living program at The Home Depot and our Martha Stewart Collection at Macy’s. We have manufacturing partnerships with Wilton Properties Inc. for our Martha Stewart Crafts program and Age Group for our Martha Stewart Pets line, as well as a variety of manufacturing partnerships to produce products under the Emeril Lagasse brand.

We incur expenses primarily consisting of compensation and related charges across all segments. In addition, we incur expenses related to the physical costs associated with producing magazines (including related direct mail and other marketing expenses), the editorial costs associated with creating content across our media platforms, the technology costs associated with our digital properties and the costs associated with producing our television programming. We also incur general overhead costs, including facilities and related expenses. Through September 30, 2011, we incurred restructuring charges, which consisted of employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs. We expect to incur additional restructuring charges as we continue to execute on our strategic plan.

15

Detailed segment operating results for the three months and nine months ended September 30, 2011 and 2010 are summarized below.

	Three Months Ended Sept 30, 2011			Three Months Ended Sept 30, 2010			Nine Months Ended Sept 30, 2011			Nine Months Ended Sept 30, 2010
Segment Revenues:
Publishing Segment	$	33,242		$	34,318		$	102,059		$	100,945
Broadcasting Segment		6,626			5,795			22,195			26,076
Merchandising Segment		12,336			9,575			35,484			31,200
TOTAL REVENUES	$	52,204		$	49,688		$	159,738		$	158,221
Segment Operating Costs and Expenses:
Publishing Segment	$	(36,827	)	$	(35,431	)	$	(109,408	)	$	(102,734	)
Broadcasting Segment		(7,946	)		(9,869	)		(25,811	)		(28,430	)
Merchandising Segment		(5,157	)		(4,074	)		(14,288	)		(13,046	)
TOTAL OPERATING COSTS AND EXPENSES BEFORE CORPORATE EXPENSES	$	(49,930	)	$	(49,374	)	$	(149,507	)	$	(144,210	)
Operating Income / (Loss):
Publishing Segment	$	(3,585	)	$	(1,113	)	$	(7,349	)	$	(1,789	)
Broadcasting Segment		(1,320	)		(4,074	)		(3,616	)		(2,354	)
Merchandising Segment		7,179			5,501			21,196			18,154
Total Segment Operating Income Before Corporate Expenses	$	2,274		$	314		$	10,231		$	14,011
Corporate Expenses *		(11,568	)		(8,222	)		(28,788	)		(26,092	)
TOTAL OPERATING LOSS	$	(9,294	)	$	(7,908	)	$	(18,557	)	$	(12,081	)

* Corporate expenses include unallocated costs of certain items such as compensation and related costs for certain departments such as executive, finance, legal, human resources, office services and information technology, as well as allocated portions of rent and related expenses for these departments that reflect current utilization of office space. Unallocated expenses are recorded as Corporate expenses because these items are directed and controlled by central management and not our segment management and therefore not included as part of our segment operating performance.

16

Three months ended September 30, 2011 Operating Results Compared to Three Months ended September 30, 2010 Operating Results

For the three months ended September 30, 2011, total revenues increased 5% from the prior-year period due to an increase in Merchandising segment revenues from higher sales, higher television revenue from license fees related to our new programming on Hallmark Channel and higher digital advertising revenue. These items were partially offset by lower television and print advertising revenue.

For the three months ended September 30, 2011, our operating costs and expenses before Corporate expenses increased 1% from the prior-year period due to higher paper, printing and distribution expenses, higher content creation costs and higher subscriber acquisition costs in our Publishing segment. In our Merchandising segment, production, distribution and editorial expenses increased to support our new merchandising relationships. Largely offsetting these increases were lower Broadcasting segment operating costs and expenses due to lower television production and distribution costs related to season 6 of The Martha Stewart Show. In addition, selling and promotion expenses decreased due to lower staff costs from the reorganization of our advertising sales department in the fourth quarter of 2010 in both the Publishing and Broadcasting segments. The Publishing and Broadcasting segments operating costs and expenses included restructuring charges, which mainly consisted of certain consulting costs and employee severance.

Corporate expenses increased 41% in the three months ended September 30, 2011 as compared to the prior-year period primarily due to restructuring charges. These Corporate restructuring charges, which consisted of employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs, were partially offset by the reallocation of facilities-related expenses primarily to the Publishing segment, as described further in the segment discussion below.

Nine months ended September 30, 2011 Operating Results Compared to Nine Months ended September 30, 2010 Operating Results

For the nine months ended September 30, 2011, total revenues increased 1%, compared to the nine months ended September 30, 2010 due to an increase in Merchandising segment revenues from new relationships and increased sales, higher television revenue from license fees related to our new programming on Hallmark Channel, higher digital advertising revenue and higher magazine subscription revenue. Largely offsetting these items were the inclusion of certain one-time items in the prior-year period, including substantially all of the exclusive license fee of approximately $5.0 million from Hallmark Channel for a significant portion of our library of programming, as well as royalties related to our Kmart and 1-800-Flowers.com agreements, which ended January 2010 and June 2010, respectively, and the $2.2 million termination payment that we received from 1-800-Flowers.com. The prior-year period also included a $1.0 million one-time payment received from a manufacturing partner. In addition, television and print advertising revenue were lower in the nine months ended September 30, 2011 than in the nine months ended September 30, 2010.

For the nine months ended September 30, 2011, our operating costs and expenses before Corporate expenses increased 4% from the prior-year period predominantly due to higher paper, printing and distribution expenses, higher content creation costs and higher subscriber acquisition costs in our Publishing segment. These increases in costs were partially offset by lower television production and distribution costs related to season 6 of The Martha Stewart Show in our Broadcasting segment, as well as lower advertising staff costs from the reorganization of our advertising sales department in the fourth quarter of 2010 in both the Publishing and Broadcasting segments. The Publishing and Broadcasting segments operating costs and expenses included restructuring charges, which mainly consisted of certain consulting costs and employee severance.

Corporate expenses increased 10% in the nine months ended September 30, 2011 as compared to the prior-year period primarily due to restructuring charges. These Corporate restructuring charges, which consisted of employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs, were partially offset by the reallocation of facilities-related expenses primarily to the Publishing segment, as described further in the segment discussion below.

17

Liquidity

During the first nine months of 2011, our overall cash, cash equivalents and short-term investments decreased $7.8 million from December 31, 2010 due to principal pre-payments on our term loan, cash used for operations and capital expenditures during the nine months ended September 30, 2011. Cash, cash equivalents and short-term investments were $25.5 million and $33.3 million at September 30, 2011 and December 31, 2010, respectively.

18

Comparison of Three Months Ended September 30, 2011 to Three Months Ended September 30, 2010

PUBLISHING SEGMENT
(in thousands)	Three Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Publishing Segment Revenues
Print advertising	$	16,206		$	17,799		$	(1,593	)
Digital advertising		5,004			4,260			744
Circulation		11,555			11,817			(262	)
Books		54			189			(135	)
Other		423			253			170
Total Publishing Segment Revenues		33,242			34,318			(1,076	)
Publishing Segment Operating Costs and Expenses
Production, distribution and editorial		(21,043	)		(20,387	)		(656	)
Selling and promotion		(13,206	)		(13,135	)		(71	)
General and administrative		(2,034	)		(1,656	)		(378	)
Depreciation and amortization		(194	)		(253	)		59
Restructuring charges		(350	)		—			(350	)
Total Publishing Segment Operating Costs and Expenses		(36,827	)		(35,431	)		(1,396	)
Operating Loss	$	(3,585	)	$	(1,113	)	$	(2,472	)

Publishing segment revenues decreased 3% for the three months ended September 30, 2011, compared to the three months ended September 30, 2010. Print advertising revenue decreased $1.6 million due primarily to a decrease in advertising pages in Martha Stewart Living, partially offset by higher rates. Advertising pages and rates declined in Everyday Food, Whole Living and Martha Stewart Weddings, as well. Digital advertising revenue increased $0.7 million due to an increase in sold advertising volume, partially offset by lower advertising rates. Circulation revenue decreased $0.3 million due primarily to lower newsstand sales of Martha Stewart Living. Newsstand sales also decreased for all other titles. The declines were partially offset by the sales of the special issue of Everyday Food with no comparable special interest publication in the prior-year period.

Magazine Publication Schedule	Three months ended September 30, 2011	Three Months ended September 30, 2010
Martha Stewart Living	Three Issues	Three Issues
Martha Stewart Weddings	One Issue	One Issue
Everyday Food	Two Issues	Two Issues
Whole Living	Two Issues	Two Issues
Special Interest Publications	Two Issues	One Issue

Production, distribution and editorial expenses increased $0.7 million due to higher paper, distribution and printing prices and the costs associated with the additional special issue of Everyday Food. Production, distribution and editorial expenses also increased due to higher editorial compensation costs to support the print and digital magazines, books, websites and other digital initiatives, partially offset by savings from lower volume of magazine pages produced, lower professional fees related to the websites and the timing of story costs. Selling and promotion expenses increased $0.1 million due to an increase in certain subscriber acquisition costs and the timing of newsstand marketing costs. These increases were largely offset by lower staff costs primarily from the reorganization of our advertising sales department in the fourth quarter of 2010, as well as lower commission expenses. General and administrative expenses increased $0.4 million largely due to higher facilities-related expenses from the reallocation of rent charges to reflect current utilization of office space, as well as higher compensation expense. The increase in our Publishing segment rent allocation was offset by a decrease in Corporate rent. Restructuring charges included certain consulting costs.

19

BROADCASTING SEGMENT
(in thousands)	Three Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Broadcasting Segment Revenues
Advertising	$	2,228		$	4,131		$	(1,903	)
Radio licensing		875			875			—
Television licensing and other		3,523			789			2,734
Total Broadcasting Segment Revenues		6,626			5,795			831
Broadcasting Segment Operating Costs and Expenses
Production, distribution and editorial		(5,929	)		(6,839	)		910
Selling and promotion		(311	)		(853	)		542
General and administrative		(1,224	)		(1,565	)		341
Depreciation and amortization		(128	)		(612	)		484
Restructuring charges		(354	)		—			(354	)
Total Broadcasting Segment Operating Costs and Expenses		(7,946	)		(9,869	)		1,923
Operating Loss	$	(1,320	)	$	(4,074	)	$	2,754

Broadcasting segment revenues increased 14% for the three months ended September 30, 2011, compared to the three months ended September 30, 2010. Advertising revenue decreased $1.9 million primarily due to the decline in household ratings, as well as lower rates, for season 6 of The Martha Stewart Show on Hallmark Channel as compared to season 5 of The Martha Stewart Show in syndication. Advertising revenue also declined due to fewer sales of television integrations at lower rates and decreased radio advertising. Television licensing and other revenue increased $2.7 million primarily due to the delivery of new television programming to Hallmark Channel as part of the companion programming to The Martha Stewart Show, which included Emeril’s Table, Martha Bakes and Mad Hungry with Lucinda Scala Quinn, partially offset by the prior-year period talent fees for certain television programming featuring Emeril Lagasse.

Production, distribution and editorial expenses decreased $0.9 million due to lower television production costs related to season 6 of The Martha Stewart Show on Hallmark Channel and the absence of distribution fees, which were payable under the season 5 syndication agreement for The Martha Stewart Show. The cost savings from The Martha Stewart Show season 6 were partially offset by television production costs associated with the delivery of new programming to Hallmark Channel, including an allocation of certain rent and related charges from general and administrative expenses. Selling and promotion expenses decreased $0.5 million primarily due to lower staff costs from the reorganization of our advertising sales department in the fourth quarter of 2010. General and administrative expenses decreased $0.3 million due to the allocation to production, distribution and editorial costs within the Broadcasting segment of certain rent and related charges associated with the new programming on Hallmark Channel, partially offset by higher compensation expense. Restructuring charges included employee severance as well as certain other non-recurring costs.

20

MERCHANDISING SEGMENT
(in thousands)	Three Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Merchandising Segment Revenues
Royalty and other	$	12,336		$	9,575		$	2,761
Total Merchandising Segment Revenues		12,336			9,575			2,761
Merchandising Segment Operating Costs and Expenses
Production, distribution and editorial		(2,389	)		(1,958	)		(431	)
Selling and promotion		(1,556	)		(815	)		(741	)
General and administrative		(1,204	)		(1,288	)		84
Depreciation and amortization		(8	)		(13	)		5
Total Merchandising Segment Operating Costs and Expenses		(5,157	)		(4,074	)		(1,083	)
Operating Income	$	7,179		$	5,501		$	1,678

Merchandising segment revenues increased 29% for the three months ended September 30, 2011, compared to the three months ended September 30, 2010. Royalty and other revenues increased $2.8 million primarily due to higher sales from certain of our existing partners.

Production, distribution and editorial expenses increased $0.4 million primarily due to higher compensation expenses associated with an increase in headcount of creative staff to support our new merchandising relationships. Selling and promotion expenses increased $0.7 million mostly as a result of services that we provided to our partners for reimbursable creative services projects.

21

CORPORATE
(in thousands)	Three Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Corporate Operating Costs and Expenses
General and administrative	$	(7,783	)	$	(7,473	)	$	(310	)
Depreciation and amortization		(697	)		(749	)		52
Restructuring charges		(3,088	)		—			(3,088	)
Total Corporate Operating Costs and Expenses		(11,568	)		(8,222	)		(3,346	)

Corporate operating costs and expenses increased 41% for the three months ended September 30, 2011, compared to the three months ended September 30, 2010. General and administrative expenses increased $0.3 million due to an increase in compensation expense as a result of overlaps in our executive management team during transition periods. These increases were partially offset by the classification of certain costs now characterized as restructuring charges, as well as the reallocation of rent charges to our Publishing segment to reflect current utilization of office space. Restructuring charges included employee severance and related professional fees, as well as certain consulting and recruiting costs. Also included in the $3.1 million restructuring charge is an approximate $0.4 million reversal of non-cash equity compensation expense related to certain employee departures.

OTHER ITEMS

Loss on sale of fixed asset. The three months ended September 30, 2010 included a loss of $0.6 million on the sale of a fixed asset with no comparable loss for the three months ended September 30, 2011.

Gain on sale of short-term investments. The three months ended September 30, 2010 included a gain of $0.4 million on the sale of short-term investments from the disposition of certain marketable equity securities with no comparable gain in the three months ended September 30, 2011.

Loss on equity securities. Loss on equity securities was $0.2 million and $0.01 million for the three month periods ended September 30, 2011 and 2010, respectively. The prior-year period expense was the result of marking a warrant then held by us to fair value in accordance with accounting principles governing these financial instruments. That warrant was canceled during the three months ended September 30, 2011 resulting in a loss of $0.2 million in the current-year period. On September 30, 2011, we had no other similar assets that required a valuation in accordance with accounting principles governing derivative financial instruments.

Net loss. Net loss was $9.7 million for the three months ended September 30, 2011, compared to net loss of $8.6 million for the three months ended September 30, 2010, as a result of the factors described above.

22

Comparison of Nine Months Ended September 30, 2011 to Nine Months Ended September 30, 2010

PUBLISHING SEGMENT
(in thousands)	Nine Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Publishing Segment Revenues
Print advertising	$	50,466		$	53,550		$	(3,084	)
Digital advertising		14,528			11,914			2,614
Circulation		34,650			33,611			1,039
Books		1,288			1,036			252
Other		1,127			834			293
Total Publishing Segment Revenues		102,059			100,945			1,114
Publishing Segment Operating Costs and Expenses
Production, distribution and editorial		(64,643	)		(59,357	)		(5,286	)
Selling and promotion		(37,589	)		(37,558	)		(31	)
General and administrative		(6,283	)		(4,897	)		(1,386	)
Depreciation and amortization		(543	)		(922	)		379
Restructuring charges		(350	)		—			(350	)
Total Publishing Segment Operating Costs and Expenses		(109,408	)		(102,734	)		(6,674	)
Operating Loss	$	(7,349	)	$	(1,789	)	$	(5,560	)

Publishing revenues increased 1% for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010. Print advertising revenue decreased $3.1 million due primarily to a decrease in advertising pages in Martha Stewart Living, partially offset by higher rates. Advertising pages declined in Everyday Food and Whole Living, as well, partially offset by an increase in rates at Whole Living. Martha Stewart Weddings advertising revenue increased due to more pages sold partially offset by lower rates. Digital advertising revenue increased $2.6 million due to an increase in sold advertising volume, partially offset by lower rates. Circulation revenue increased $1.0 million due to higher volume of subscription copies served of Martha Stewart Living at higher revenues per copy. Newsstand sales decreased for Martha Stewart Living, Everyday Food and Whole Living, partially offset by the sales of the special issue of Everyday Food with no comparable special interest publication in the prior-year period, as well as higher newsstand sales of Martha Stewart Weddings.

Magazine Publication Schedule	Nine Months ended September 20, 2011	Nine Months ended September 30, 2010
Martha Stewart Living	Nine Issues	Nine Issues
Martha Stewart Weddings	Three Issues	Three Issues
Everyday Food	Eight Issues	Eight Issues
Whole Living	Seven Issues	Seven Issues
Special Interest Publications	Two Issues	One Issue

Production, distribution and editorial expenses increased $5.3 million due to higher paper, printing and distribution prices and the costs associated with the additional special issue of Everyday Food. Production, distribution and editorial expenses also increased due to higher art and editorial compensation and story costs to support the print and digital magazines, books, websites and other digital initiatives, partially offset by savings from lower volume of magazine pages produced. Selling and promotion expenses increased slightly due to higher subscriber acquisition costs, the timing of newsstand marketing costs and higher digital marketing and advertising operations costs supporting the increase in digital advertising revenues. These increases were largely offset by lower staff costs primarily from the prior year reorganization of our advertising sales department and lower print advertising marketing expenses. General and administrative expenses increased $1.4 million largely due to a larger allocation of facilities-related expenses to reflect the current utilization of office space, as well as higher compensation expense. The increase in our Publishing segment rent allocation was offset by a decrease in Corporate

23

rent. The costs associated with the Company’s 2007 launch of a redesigned website, which were fully depreciated during the second quarter of 2010, resulted in a reduction in depreciation and amortization expenses by $0.4 million during this nine-month period compared to the prior-year period. Restructuring charges include certain consulting costs.

BROADCASTING SEGMENT
(in thousands)	Nine Months Ended September 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Broadcasting Segment Revenues
Advertising	$	9,954		$	14,972		$	(5,018	)
Radio licensing		2,625			2,625			—
Television licensing and other		9,616			8,479			1,137
Total Broadcasting Segment Revenues		22,195			26,076			(3,881	)
Broadcasting Segment Operating Costs and Expenses
Production, distribution and editorial		(19,386	)		(20,912	)		1,526
Selling and promotion		(1,240	)		(2,448	)		1,208
General and administrative		(4,472	)		(4,322	)		(150	)
Depreciation and amortization		(359	)		(748	)		389
Restructuring charges		(354	)		—			(354	)
Total Broadcasting Segment Operating Costs and Expenses		(25,811	)		(28,430	)		2,619
Operating Loss	$	(3,616	)	$	(2,354	)	$	(1,262	)

Broadcasting segment revenues decreased 15% for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010. Advertising revenue decreased $5.0 million primarily due to the decline in household ratings, as well as lower rates, for season 6 of The Martha Stewart Show on Hallmark Channel as compared to season 5 of The Martha Stewart Show in syndication. Advertising revenue also declined due to fewer sales of television integrations at lower rates and decreased radio advertising. Television licensing and other revenue increased $1.1 million primarily due to the delivery of new television programming to Hallmark Channel as part of the companion programming to The Martha Stewart Show, which included Emeril’s Table, Martha Bakes, Mad Hungry with Lucinda Scala Quinn, and holiday and other specials. The increase in these television licensing revenues was partially offset by the inclusion in the first quarter of 2010 of substantially all of the exclusive license fee of approximately $5.0 million from Hallmark Channel for a significant portion of our library of programming, as well as the prior-year period talent fees for certain television programming featuring Emeril Lagasse.

Production, distribution and editorial expenses decreased $1.5 million due to lower television production costs related to season 6 of The Martha Stewart Show on Hallmark Channel and the absence of distribution fees, which were payable under the season 5 syndication agreement for The Martha Stewart Show. The cost savings from The Martha Stewart Show season 6 were partially offset by higher television production costs associated with the delivery of new programming to Hallmark Channel. Selling and promotion expenses decreased $1.2 million primarily due to lower staff costs from the prior year reorganization of our advertising sales department. General and administrative expenses increased $0.2 million primarily due to higher compensation expense, partially offset by the allocation to production, distribution and editorial costs within the Broadcasting segment of certain rent and related charges associated with the new programming on Hallmark Channel. Restructuring charges included employee severance as well as certain other non-recurring costs.

24

MERCHANDISING SEGMENT
(in thousands)	Nine Months Ended Sept 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Merchandising Segment Revenues
Royalty and other	$	35,484		$	31,200		$	4,284
Total Merchandising Segment Revenues		35,484			31,200			4,284
Merchandising Segment Operating Costs and Expenses
Production, distribution and editorial		(7,049	)		(5,568	)		(1,481	)
Selling and promotion		(3,565	)		(2,883	)		(682	)
General and administrative		(3,650	)		(4,560	)		910
Depreciation and amortization		(24	)		(35	)		11
Total Merchandising Segment Operating Costs and Expenses		(14,288	)		(13,046	)		(1,242	)
Operating Income	$	21,196		$	18,154		$	3,042

Merchandising segment revenues increased 14% for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010. Royalty and other revenues increased $4.3 million primarily due to the contributions from our new merchandising relationships and increased sales from certain of our existing partners, partially offset by the inclusion in the prior-year period of royalties and a one-time $2.2 million termination payment from 1-800-Flowers.com, an agreement that ended in June 2010. In addition, the prior-year period included royalties from the terminated Kmart license and a one-time $1.0 million payment received from a manufacturing partner.

Production, distribution and editorial expenses increased $1.5 million primarily due to higher compensation expenses associated with an increase in headcount to support our new merchandising relationships. Selling and promotion expenses increased $0.7 million mostly as a result of services that we provided to our partners for reimbursable creative services projects. General and administrative expenses decreased $0.9 million largely due to the benefit in non-cash equity compensation expense from a large forfeiture of equity awards in connection with certain executive departures in the Merchandising segment.

25

CORPORATE
(in thousands)	Nine Months Ended September 30,
	2011 (unaudited)			2010 (unaudited)			Better / (Worse)
Corporate Operating Costs and Expenses
General and administrative	$	(23,679	)	$	(24,108	)	$	429
Depreciation and amortization		(2,021	)		(1,984	)		(37	)
Restructuring charges		(3,088	)		—			(3,088	)
Total Corporate Operating Costs and Expenses		(28,788	)		(26,092	)		(2,696	)

Corporate operating costs and expenses increased 10% for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010. General and administrative expenses decreased $0.4 million due to the reallocation of rent charges to our Publishing segment to reflect current utilization of office space, as well as lower rent expense from the consolidation of certain offices. These decreases were partially offset by an increase in compensation expense as a result of overlaps in our executive management team during transition periods. Restructuring charges included employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs. Also included in the $3.1 million restructuring charge is an approximate $0.4 million reversal of non-cash equity compensation expense related to certain employee departures.

OTHER ITEMS

Loss on sale of fixed asset. The nine months ended September 30, 2010 included a loss of $0.6 million on the sale of a fixed asset with no comparable loss for the nine months ended September 30, 2011.

Gain on sale of short-term investments. The nine months ended September 30, 2010 included a gain of $0.4 million on the sale of short-term investments from the disposition of certain marketable equity securities with no comparable gain in the nine months ended September 30, 2011.

Income / (Loss) on equity securities. Income on equity securities was $0.02 million for the nine months ended September 30, 2011 compared to a loss on equity securities of $0.02 million for the prior-year period. Income/(loss) on equity securities was the result of marking a warrant then held by us to fair value in accordance with accounting principles governing these financial instruments. That warrant was canceled resulting in a loss during the three months ended September 30, 2011, partially offset by the gains previously recorded in 2011. On September 30, 2011, we had no other similar assets that required a valuation in accordance with accounting principles governing derivative financial instruments.

Net Loss. Net loss was $19.7 million for the nine months ended September 30, 2011, compared to net loss of $13.7 million for the nine months ended September 30, 2010, as a result of the factors described above.

26

Liquidity and Capital Resources

Overview

During the nine months ended September 30, 2011, our overall cash, cash equivalents and short-term investments decreased $7.8 million from December 31, 2010. The decrease was due to principal pre-payments on our term loan with Bank of America, cash used for operations and capital expenditures during the period. Cash, cash equivalents and short-term investments were $25.5 million and $33.3 million at September 30, 2011 and December 31, 2010, respectively.

We believe that our available cash balances and short-term investments will be sufficient to meet our cash needs for working capital and capital expenditures, as well as loan payments and maintenance of applicable debt covenants for at least the next twelve months.

Cash Flows from Operating Activities

Our cash inflows from operating activities are generated by our business segments from revenues, as described previously in the business segment discussions, which include cash from advertisers, licensing partners and magazine consumers. Operating cash outflows generally include employee and related costs, the physical costs associated with producing magazines, the editorial costs associated with creating content across our media platforms, the technology costs associated with our digital properties, the production costs incurred for our television programming and the cash costs of facilities.

Cash used in operating activities was $2.7 million for the nine months ended September 30, 2011, compared with cash provided by operating activities of $7.0 million for the nine months ended September 30, 2010. During the nine months ended September 30, 2011, cash from operations decreased due to an increase in our operating loss, as discussed earlier, as well as the timing of cash receipts from magazine subscription orders and cash used to pay certain accounts payable and accrued liabilities. These decreases in cash from operations were partially offset by the collection of advertising and television license fee receivables and the receipt of an upfront advance payment related to our new multi-book agreement with Clarkson Potter/Publishers for Martha Stewart books.

Cash Flows from Investing Activities

Our cash inflows from investing activities generally include proceeds from the sale of short-term investments. Investing cash outflows generally include payments for short- and long-term investments and additions to property, plant, and equipment.

Cash used in investing activities was $3.1 million and $2.2 million for the nine months ended September 30, 2011 and 2010, respectively. During the first nine months of 2011, cash flow used in investing activities was primarily for capital improvements to our information technology infrastructure, as well as certain costs associated with our websites.

Cash Flows from Financing Activities

Our cash inflows from financing activities generally include proceeds from the exercise of stock options for our Class A Common Stock issued under our equity incentive plans. Cash outflows from financing activities generally include principal repayments on outstanding debt.

Cash flows used in financing activities were $2.4 million and $2.9 million for the nine months ended September 30, 2011 and 2010, respectively. During the first nine months of 2011, we made $3.0 million in principal pre-payments on our term loan with Bank of America.

Debt

We have a line of credit with Bank of America in the amount of $5.0 million, which is generally used to secure letters of credit. The line was renewed as of June 30, 2011 for a one-year period. We were compliant with the debt covenants as of September 30, 2011. We had no outstanding borrowings under this facility as of September 30, 2011 and had letters of credit outstanding of $2.6 million.

27

In April 2008, we entered into a loan agreement (subsequently amended and restated on August 7, 2009) with Bank of America for a term loan in the amount of $30.0 million related to the acquisition of certain assets of Emeril Lagasse (“Emeril”). The loan is secured by substantially all of the assets of the Emeril business that we acquired. The loan agreement requires equal principal payments of $1.5 million and accrued interest to be paid quarterly for the duration of the loan term, approximately 5 years. As of September 30, 2011, we had paid $24.0 million in principal, including prepayment of the $3.0 million due through March 31, 2012, such that $6.0 million was outstanding at September 30, 2011. Two principal payments of $1.5 million each are due on June 30, 2012 and September 30, 2012 and are reflected as a current liability in the consolidated balance sheet as of September 30, 2011. The interest rate on all outstanding amounts is equal to a floating rate of 1-month London Interbank Offered Rate (“LIBOR”) plus 2.85%.

The loan terms have required us to be in compliance with certain financial and other covenants, failure with which to comply would result in an event of default and would permit Bank of America to accelerate and demand repayment of the loan in full. The loan agreement has been amended several times, most recently in June 2011, at which time the financial covenants that had previously required us to maintain a Funded Debt to EBITDA Ratio equal to or less than 2.0 and a Parent Guarantor Basic Fixed Charge Ratio equal to or greater than 2.75 were eliminated. The amendment also reduced the minimum level of consolidated Tangible Net Worth required to be maintained by us from $40 million to $30 million. Additionally, the amendment added a requirement that we maintain at all times cash and certain cash equivalents with an aggregate market value of not less than an amount equal to 200% of the outstanding loan principal. This cash and cash equivalents balance cannot be subject to any lien, security interest or other encumbrance, nor can it be held by us in order to comply with any other liquidity or other similar covenant under any agreement in respect of indebtedness or other obligations of us.

As of September 30, 2011, we were compliant with all debt covenants. A current summary of the most significant financial covenants is as follows:

Financial Covenant
Tangible Net Worth	At least $30.0 million
Quick Ratio	Equal to or greater than 1.0
Unencumbered Cash and Designated Cash Equivalents	Equal to or greater than 200% of the loan balances

We expect to be compliant with all debt covenants through 2012. While the maintenance of a minimum level of cash balances has now become a financial covenant, the fact that we had cash balances that were well in excess of the loan principal at September 30, 2011 currently gives us the ability to repay the outstanding principal in full in the event of default or to prevent default.

Seasonality and Quarterly Fluctuations

Our businesses can experience fluctuations in quarterly performance. Our Publishing segment results can vary from quarter to quarter due to publication schedules and seasonality of certain types of advertising. In addition, advertising revenue on marthastewart.com and our other websites is tied to traffic among other key factors and is typically highest in the fourth quarter of the year. Advertising revenue from our Broadcasting segment is highly dependent on ratings which fluctuate throughout the television season following general viewer trends. Ratings tend to be highest during the fourth quarter and lowest in the summer months. Certain revenues and costs in our television business also fluctuate based on production and delivery schedules. Revenues from our Merchandising segment can vary significantly from quarter to quarter due to new product launches and the seasonality and performance of certain product lines.

Off-Balance Sheet Arrangements

At September 30, 2011, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have had or are likely to have a material current or future effect on our financial statements. As described in the 2010 Form 10-K, we could have indemnification obligations with respect to our officers and directors.

28

Critical Accounting Policies and Estimates

General

Except for the policy described below, our significant accounting policies are described in Note 1 to the Consolidated Financial Statements in our 2010 Form 10-K. We consider an accounting estimate to be critical if it required assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates could have a material effect on our results of operations. These critical estimates include those related to revenue recognition, allowance for doubtful accounts and sales returns, television production costs, valuation of long-lived assets, goodwill and other intangible assets, income taxes, and non-cash equity compensation. We base our estimates on historical experience, current developments and on various other assumptions that we believe to be reasonable under these circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.

Non-Cash Equity Compensation

We currently have a stock incentive plan that permits us to grant various types of share-based incentives to key employees, directors and consultants. The primary types of incentives that have been granted under the plan are restricted shares of common stock, restricted stock unit awards and stock options. Restricted shares are valued at the market value of traded shares on the date of grant. Other than performance-based shares tied to the market price of our Class A common stock, performance-based awards are accrued as compensation expense based on the probable outcome of the performance condition, consistent with requirements of Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation. Time-based option awards are valued using a Black-Scholes option pricing model. The Black-Scholes option pricing model requires numerous assumptions, including expected volatility of our stock price and expected life of the option. Price-based options and price-based restricted stock unit awards are valued using the Monte Carlo Simulation method which takes into account assumptions such as volatility of our Class A Common Stock, the risk-free interest rate based on the contractual term of the award, expected dividend yield, vesting schedule, and the probability that the market conditions of the award will be achieved.

Our other critical accounting policies and estimates are discussed in detail in the 2010 Form 10-K, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” especially under the heading, “Critical Accounting Policies and Estimates.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to certain market risks as the result of our use of financial instruments, in particular the potential market value loss arising from adverse changes in interest rates, as well as from adverse changes in stock prices, which impact our derivative financial instrument. We do not utilize financial instruments for trading purposes.

Interest Rates

We are exposed to market rate risk due to changes in interest rates on our loan agreement with Bank of America that we entered into on April 2, 2008 under which we borrowed $30.0 million to fund a portion of the acquisition of certain assets of Emeril Lagasse. Interest rates applicable to amounts outstanding under this facility are at variable rates based on the 1-month LIBOR rate plus 2.85%. A change in interest rates on this variable rate debt impacts the interest incurred and cash flows but does not impact the fair value of the instrument. We had outstanding borrowings of $6.0 million on the term loan at September 30, 2011 at an average rate of 3.1% for the quarter. A one percentage point increase in the interest rate would have increased interest expense by $0.02 million for the three months ended September 30, 2011.

We also have exposure to market rate risk for changes in interest rates as those rates relate to our investment portfolio. The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. We attempt to protect and preserve our invested funds by limiting default, market and reinvestment risk. To achieve this objective, we invest our excess cash in debt instruments of the United States Government and its agencies and in high-quality corporate issuers (including bank instruments and money market funds) and, by internal policy, limit both the term and amount of credit exposure to any one issuer. As of September 30, 2011, net unrealized gains and losses on these investments were not material. However, in the third quarter of 2011, we recorded approximately $0.1 million in interest income. Our future investment income may fluctuate due to changes in interest rates, or we may suffer losses in principal if forced to sell securities that have declined in market value due to changes in interest rates.

29

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of that date to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have determined that, during the third quarter of fiscal 2011, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is party to legal proceedings in the ordinary course of business, including product liability claims for which we are indemnified by our licensees. None of these proceedings is deemed material.

ITEM 1A. RISK FACTORS

There have been no material changes from risk factors as previously disclosed in the 2010 Form 10-K, under the heading Part I, Item 1A, “Risk Factors.”

30

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) None.

(b) None.

(c) Issuer Purchases of Equity Securities

The following table provides information about our purchases of our Class A Common Stock during each month of the quarter ended September 30, 2011:

	(a)		(b)		(c)	(d)
Period	Total Number of Shares (or Units) Purchased (1)		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs
July 2011		—		—	Not applicable	Not applicable
August 2011		15,878	$	3.23	Not applicable	Not applicable
September 2011		—		—	Not applicable	Not applicable
Total for quarter ended September 30, 2011		15,878	$	3.23	Not applicable	Not applicable

(1) Represents shares withheld by, or delivered to, us pursuant to provisions in agreements with recipients of restricted stock units and restricted stock granted under our stock incentive plan allowing us to withhold, or the recipient to deliver to us, the number of shares of our Class A Common Stock having the fair value equal to tax withholding due.

31

ITEM 6. EXHIBITS.

Exhibit Number	Exhibit Title
10.1	Amended and Restated Employment Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.2	Amendment dated as of September 15, 2011 to the Amended and Restated Employment Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.3	Services Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.4	Employment Agreement, dated as of September 6, 2011, between Martha Stewart Living Omnimedia, Inc. and Kenneth P. West.
10.5	Separation Agreement and General Release, dated as of September 13, 2011, between Martha Stewart Living Omnimedia, Inc. and Peter Hurwitz.
31.1	Certification of Principal Executive Officer
31.2	Certification of Principal Financial Officer
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Extension Schema Document
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MARTHA STEWART LIVING OMNIMEDIA, INC.
	Date:	November 7, 2011
		/s/ Kenneth P. West
	Name:	Kenneth P. West
	Title:	Chief Financial Officer
		(Principal Financial Officer and duly authorized officer)

33

EXHIBIT INDEX

Exhibit Number	Exhibit Title
10.1	Amended and Restated Employment Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.2	Amendment dated as of September 15, 2011 to the Amended and Restated Employment Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.3	Services Agreement, dated as of July 26, 2011, between Martha Stewart Living Omnimedia, Inc. and Charles Koppelman.
10.4	Employment Agreement, dated as of September 6, 2011, between Martha Stewart Living Omnimedia, Inc. and Kenneth P. West.
10.5	Separation Agreement and General Release, dated as of September 13, 2011, between Martha Stewart Living Omnimedia, Inc. and Peter Hurwitz.
31.1	Certification of Principal Executive Officer
31.2	Certification of Principal Financial Officer
32	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Extension Schema Document
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

34

EX-10.1

Exhibit 10.1

EXECUTION VERSION

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of July 26, 2011 (the “Effective Date”), by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Charles A. Koppelman (the “Executive”).

WHEREAS, the Company desires that the Executive continue to serve as its Executive Chairman following the Effective Date, and the Executive is willing to be so employed, in each case on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Employment Term. Subject to the provisions of Section 7 of this Agreement, the Company hereby agrees to continue to employ the Executive hereunder, and the Executive hereby agrees to continue to be employed by the Company hereunder, in each case subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the Transition Date (as defined below) (such period, the “Employment Term”). The Transition Date shall mean the earlier of December 31, 2011 or the date on which the President and Chief Operating Officer of the Company reports directly to the Company’s Board of Directors (the “Board”). The Company will provide the Executive with two weeks advance notice of the Transition Date if it is prior to December 31, 2011.

2. Duties.

(a) During the Employment Term, the Executive shall serve as the Executive Chairman of the Company. The Executive shall be the senior-most executive officer of the Company and shall have the duties and responsibilities customarily exercised by an individual serving in that position in a corporation of the size and nature of the Company; provided, however, that it is acknowledged and agreed that the employees of the Company (other than Martha Stewart) report to the President and Chief Operating Officer. In his capacity as Executive Chairman, the Executive shall use his best energies and abilities in the performance of his duties, services and responsibilities for the Company. In performing such duties, services and responsibilities, the Executive will report directly to the Board.

(b) During the Employment Term, the Executive shall devote substantially all of his business time and attention to the businesses of the Company and its subsidiaries and affiliates and shall not engage in any activity inconsistent with the foregoing, whether or not such activity shall be engaged in for pecuniary profit, unless approved by the Board; provided, however, that, to the extent such activities do not violate, or substantially interfere with his performance of his duties, services and responsibilities under, this Agreement, the Executive shall be permitted to manage his personal, financial and legal affairs and serve on civic or charitable boards and committees of such boards. The parties understand and agree that the

Executive may continue to serve on corporate, civic and charitable boards on which he sits as of the date of this Agreement (including as a director of Six Flags, Inc., a trustee of Asarco/Than Trust, a member of Counsel Financial II LLC, the Chairman of CAK Entertainment, Inc., a stockholder and director of SFNY, Inc, and a trustee of the United States Gypsum Asbestos Personal Injury Settlement Trust) (such activities, together, and as may be amended pursuant to this paragraph, the “Non-Company Activities”). Executive shall not permit the Non-Company Activities to interfere with the Executive’s performance on behalf of the Company under this Agreement, and Executive agrees that, subject to the first sentence of this paragraph, he shall only accept new or additional responsibilities related to businesses other than the Company’s (such new or additional responsibilities constituting Non-Company Activities) to the extent Executive gives up a Non-Company Activity requiring a commensurate amount of time and effort. During the Employment Term, the Executive’s principal location of employment shall be at the Company’s executive offices in New York City, New York, except for customary business travel on behalf of the Company and its subsidiaries and affiliates.

(c) Upon any termination of the Executive’s employment with the Company, the Executive shall be deemed to have resigned from all other positions he then holds as an employee or director or other independent contractor of the Company or any of its subsidiaries or affiliates, unless otherwise agreed by the Company and the Executive. Any such termination shall constitute a “separation of service” with the Company for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

3. Base Salary; Bonus.

(a) During the Employment Term, in consideration of the performance by the Executive of the Executive’s obligations during the Employment Term (including any service in any position with any subsidiary or affiliate of the Company), the Company shall pay the Executive a base salary (the “Base Salary”) at an annual rate of $990,000.

(b) During the Employment Term, in addition to the payments of the Base Salary set forth above, the Executive shall be eligible to receive, in respect of each calendar year during which the Employment Term is in effect (which, in the case of the 2011 calendar year, will include the period from January 1, 2011 through the Transition Date), a performance-based cash bonus of 100% of Base Salary at target and 150% of Base Salary at maximum based on achievement of goals established with respect to each calendar year by the Compensation Committee of the Board after reasonable consultation with the Executive. Such bonus, if any, shall be paid concurrently with other bonuses paid to senior executives of the Company, provided you are continuously and actively employed through such date of payment (except as otherwise provided in Section 9(a) below). Such 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.

4. Benefits.

(a) During the Employment Term, the Executive shall be entitled to participate in the employee benefit plans, policies, programs, perquisites and arrangements, as

2

may be amended from time to time, that are provided generally to similarly situated employees of the Company (excluding for this purpose Martha Stewart) to the extent the Executive meets the eligibility requirements for any such plan, policy, program, perquisite or arrangement.

(b) The Company shall reimburse the Executive for all reasonable business expenses incurred by the Executive in carrying out the Executive’s duties, services and responsibilities under this Agreement during the Employment Term, 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 Executive shall comply with generally applicable policies, practices and procedures of the Company with respect to reimbursement for, and submission of expense reports, receipts or similar documentation of, such expenses

(c) The Company will contribute $60,000 per year to the Executive for driver expenses in installments of $5,000, payable monthly in arrears on the first check run of the following month.

(d) The Company shall, to the extent feasible and available, make an office available to one or more individuals working with the Executive on Non-Company Activities, provided that Employee shall reimburse the Company for the use of such space at the applicable rental rate.

(e) The Company shall reimburse Executive for the reasonable attorneys’ fees incurred by him in connection with the preparation of this Agreement (and related agreements) up to a maximum of $35,000.

(f) For purposes of complying with Section 409A, any reimbursement of benefits provided under this Section 4 shall be subject to the following: (i) provision of such reimbursement or benefits provided during one calendar year shall not affect the amount of reimbursements or benefits provided during a subsequent calendar year; (ii) such reimbursements or benefit may not be exchanged or substituted for other forms of compensation to the Executive; and (iii) payments must be made no later than the last day of the calendar year immediately following the calendar year in which the expense is incurred.

5. Vacations. During each calendar year of the Employment Term (pro rata for partial calendar years), the Executive shall be entitled to four weeks of paid vacation to be taken in accordance with the applicable policy of the Company.

6. Equity Compensation. Upon a Change of Control of the Company during the Employment Term, all unvested equity awards held by the Executive that were granted prior to the Effective Date (excluding, however, the Performance Shares if such Performance Shares have not vested by their own terms) shall become fully vested and (in the case of stock options) exercisable.

3

7. Termination of the Employment Term.

(a) The Executive’s employment with the Company and the Employment Term shall terminate upon the earliest to occur of:

(i) the death of the Executive;

(ii) the termination of the Executive’s employment by the Company by reason of the Executive’s Disability;

(iii) the termination of the Executive’s employment by the Company for Cause or without Cause;

(iv) the termination of the Executive’s employment by the Executive for Good Reason or without Good Reason; and

(v) the expiration of the Employment Term.

(b) For purposes of this Agreement, the following terms shall have the following meanings:

(i) “Cause” shall mean that the Board has made a good faith determination, after providing the Executive with reasonably detailed written notice and a reasonable opportunity to be heard on the issues at a Board meeting, that any of the following has occurred:

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

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

(3) the Executive has been convicted of a felony; or

(4) the Executive has engaged in fraud against the Company or misappropriated Company property (other than incidental property).

For purposes of this Agreement, no act or failure by the Executive shall be considered “willful” if such act is done by the Executive in the good faith belief that such act is or was in the best interests of the Company or one or more of its businesses. Nothing in this Section 7(b)(i) shall be construed to prevent the Executive from contesting the Board’s determination that Cause exists.

(ii) “Change in Control” of the Company shall mean:

(1) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (as such term is used in Section 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting Stock of the Company; provided that this clause (1) shall not apply with respect to a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date;

4

(2) all or substantially all of the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company);

(3) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets if such plan of liquidation will result in the winding-up of the business of the Company;

(4) the consummation of any merger, consolidation or other similar corporate transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or its ultimate parent company if such surviving company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); or

(5) the failure of the Company to have any securities required to be registered under Section 12 of the Exchange Act.

For purposes of this definition, “the Company” shall include any entity that succeeds to all or substantially all of the business of the Company; “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation; and references to ownership of “more than 50% of the Voting Stock” shall mean the ownership of shares of Voting Stock that represent the right to exercise more than 50% of the votes entitled to be cast in the election of directors of a corporation.

(iii) “Disability” of the Executive shall have occurred if, as a result of the Executive’s incapacity due to physical or mental illness as determined by a physician selected by the Executive, and reasonably acceptable to the Company, the Executive shall have been substantially unable to perform his duties hereunder for six consecutive months, or for an aggregate of 180 days during any period of twelve consecutive months.

5

(iv) “Good Reason” shall mean the occurrence, without the Executive’s express prior written consent, of any one or more of the following:

(1) a material breach of a payment obligation under the Agreement by the Company after the Effective Date that continues after reasonable notice and opportunity to cure;

(2) the Company’s requiring the Executive to be based at a location in excess of 35 miles from the location of the Executive’s principal job location or office specified in Section 2(b), except for required travel on the Company’s business to an extent substantially consistent with the Executive’s position; or

(3) a reduction by the Company of the Executive’s base salary or target annual bonus percentage as in effect on the Effective Date.

The Executive’s right to terminate employment in a termination for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. Subject to the requirements set forth above, the Executive’s continued employment shall not constitute a consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

8. Termination Procedures.

(a) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive during the Employment Term (other than pursuant to Sections 7(a)(i) and 7(a)(v)) shall be communicated by written Notice of Termination to the other party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under that provision.

(b) Date of Termination. For purposes of this Agreement, “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death, (ii) if the Executive’s employment is terminated pursuant to Section 7(a)(ii), 30 days after the date of receipt of the Notice of Termination (provided that the Executive does not return to the substantial performance of his duties on a full-time basis during such 30-day period), (iii) if the Executive’s employment is terminated pursuant to Section 7(a)(v), the date of expiration of the Employment Term, and (iv) if the Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within 30 days after the giving of such notice) set forth in such Notice of Termination.

9. Termination Payments.

(a) Upon any termination of the Executive’s employment, he shall be entitled to payment of any earned but unpaid portion of the Base Salary, bonus, benefits and unreimbursed business expenses, in each case with respect to the period ending on the Date of Termination. In addition, upon termination of Executive’s employment without Cause or a

6

termination by Executive with Good Reason or a termination on account of the expiration of the Employment Term, Executive will be entitled to a pro-rated bonus for the year of termination (calculated at the end of the fiscal year and then pro rated through the date of termination) provided that applicable performance targets have been met and bonuses are paid generally to similarly situated executives at the Company. Such payments shall be made in accordance with the provisions of Section 3 and Section 4 of this Agreement.

(b) In addition to the payments and benefits provided in Section 9(a), if the Executive’s employment is terminated (x) by the Company without Cause, (y) by the Executive for Good Reason or (z) on account of expiration of the Employment Term, (i) outstanding equity awards (excluding, however, the Performance Shares if such Performance Shares have not vested by their own terms) held by the Executive shall vest and/or become exercisable, (ii) the period for exercising any vested stock options held by the Executive shall be extended to the later of one year from the Termination Date or one year from the date of termination of the Executive’s service as a director of the Company (but in no event beyond the remaining term of the option), (iii) the Company shall pay the Executive the Severance Payment within the 60 day time period specified below and (iv) the Company shall provide the Executive with continued medical coverage at active-employee rates for two years or, if earlier, until the Executive receives subsequent employer-provided coverage (whether or not the Executive is eligible for COBRA continuation coverage under the Company’s health plan). For purposes of this Section 9(b), the “Severance Payment” shall be a lump-sum cash payment equal to $1,466,923. The Severance Payment shall be paid no later than 60 days following the Date of Termination; provided the Executive has executed the release referred to below and any waiting period with respect to such release has elapsed. In addition, (i) provision of continued medical coverage to the Executive pursuant to this Section 9(b) during any one calendar year shall not affect the amount of such coverage provided during a subsequent calendar year; and (ii) provision of such continued medical coverage may not be exchanged or substituted for other forms of compensation to the Executive.

Payment of the Severance Pay shall be conditioned upon the Executive’s execution of a general release in the form attached hereto as Exhibit A.

10. Confidential Information; Noncompetition; Nonsolicitation; Nondisparagement.

(a) Confidential Information. Except as may be required or appropriate in connection with his carrying out his duties under this Agreement, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or any legal process, or as is necessary in connection with any adversarial proceeding against the Company (in which case the Executive shall cooperate with the Company in obtaining a protective order at the Company’s expense against disclosure by a court of competent jurisdiction), communicate, to anyone other than the Company and those designated by the Company or on behalf of the Company in the furtherance of its business or to perform his 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 Executive during the Executive’s services to the Company that is not generally available public knowledge (other than by acts by the Executive in violation of this Agreement).

7

(b) Noncompetition. During the Employment Term and until the eighteen (18) month anniversary of the Executive’s Date of Termination, the Executive shall not engage in or become associated with any Competitive Activity. For purposes of this Section 10(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 radio, 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 name, likeness, image, or voice of any Company employee (without limitation, Company employees for the purposes of this Section 10(b) shall be deemed to include Martha Stewart and Emeril Lagasse) to promote or market any such product or service, (iii) the creation, publication or distribution of regular or special issues of magazines and operation of websites, and (iv) any other business in which the Company is engaged during the term of this Agreement (it being understood that a media business shall not be deemed to engage in Competitive Activity if the content produced by such media business does not compete with the content of the such programs (in the case of clause (i)) or magazines or websites (in the case of clause (iii)). The Executive shall be considered to have become “associated with a Competitive Activity” if he becomes involved as an owner, employee, officer, director, independent contractor, agent, partner, advisor, or in any other capacity calling for the rendition of the Executive’s personal services, with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity and his involvement relates to a significant extent to the Competitive Activity of such entity; provided, however, that the Executive shall not be prohibited from (a) owning less than two percent 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; and provided, further, however, that the Executive shall not be deemed to have become associated with a Competitive Activity if the Executive becomes chief executive officer of an organization that engages in one or more Competitive Activities so long as (i) less than 10% of the annual revenue of such organization is derived from Competitive Activities and (ii) the Executive does not actively participate in the management or operation of the part of such organization that engages in any Competitive Activity. If, at any time, the provisions of this Section 10(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 10(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 Executive agrees that this Section 10(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 Term, and for twenty-four (24) months after the Executive’s Date of Termination, the Executive shall not, directly or indirectly, (1) solicit for employment by other than the Company any person (other than any personal secretary or assistant hired to work directly for the Executive) employed by the Company or its affiliated companies as of the Date of Termination, (2) solicit for employment by other than the Company any person known by the Executive (after reasonable inquiry) to be employed at the time by the Company or its affiliated companies as of the date of the solicitation or (3) solicit any 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.

8

(d) Non-disparagement. During the Employment Term and thereafter, (i) the Executive shall not, directly or indirectly, make or publish any disparaging statements (whether written or oral) regarding the Company or any of its affiliated companies or businesses, or the affiliates, directors, officers, agents, principal stockholders or customers of any of them and (ii) neither the Company nor any of its affiliated companies or businesses or their affiliates, directors, or officers shall directly or indirectly, make or publish any disparaging statements (whether written or oral) regarding the Executive. Executive shall not author, co-author, or assist in the production or authorship of any story, book, show, script or other work about the Company or Martha Stewart without the Company’s prior review of such work and the Company’s written consent as to the production and content thereof.

(e) Injunctive Relief. In the event of a breach or threatened breach of this Section 10, each party agrees that the non-breaching party shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, the parties acknowledging that damages would be inadequate and insufficient.

11. Reimbursement of Legal Fees. If any contest or dispute shall arise between the Company and the Executive regarding any provision of this Agreement, the Company shall reimburse the Executive for all legal fees and expenses reasonably incurred by the Executive in connection with such contest or dispute, but only if the Executive prevails to a substantial extent with respect to the Executive’s claims brought and pursued in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable but not later than ninety (90) days following the resolution of such contest or dispute (whether or not appealed) to the extent the Company receives written evidence of such fees and expenses.

12. Indemnification.

(a) General. The Company agrees that if the Executive 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 Executive is or was a trustee, director or officer of the Company or any of its affiliates or is or was serving at the request of the Company or any of its 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 Executive 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 Executive in connection therewith, and such indemnification shall continue as to the Executive even if the Executive has ceased to be a trustee, director, officer, member, employee or agent, or is no longer employed by the Company and shall inure to the benefit of his heirs, executors and administrators.

9

(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 12 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 Executive 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 Executive 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 Executive 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 Executive for the portion of such Expenses to which the Executive is entitled.

(e) Advance of Expenses. Expenses incurred by the Executive in connection with any Proceeding shall be paid by the Company in advance upon request of the Executive that the Company pay such Expenses, but only in the event that the Executive shall have delivered in writing to the Company (i) an undertaking to reimburse the Company for Expenses with respect to which the Executive is not entitled to indemnification and (ii) a statement of his good faith belief that the standard of conduct necessary for indemnification by the Company has been met.

(f) Notice of Claim. The Executive shall give to the Company notice of any claim made against him for which indemnification will or could be sought under this Agreement. In addition, the Executive shall give the Company such information and cooperation as it may reasonably require and as shall be within the Executive’ s power and at such times and places as are convenient for the Executive.

(g) Defense of Claim. With respect to any Proceeding as to which the Executive 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 Executive, 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 Executive also shall have the right to employ his own counsel in such action, suit or proceeding if he reasonably concludes that failure to do so would involve a conflict of interest between the Company and the Executive, 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 Executive under this Agreement for any amounts paid in settlement of any action or claim effected without its

10

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 Executive without the Executive’s written consent. Neither the Company nor the Executive 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 12 shall not be exclusive of any other right which the Executive 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) Insurance. The Executive shall be covered by the directors’ and officers’ insurance policies maintained by the Company on the same basis as other directors and officers of the Company.

13. Dispute Resolution. Except as set forth in Section 10(e), any controversy or claim arising out of or relating to this Agreement or the making, interpretation or breach thereof shall be settled by arbitration in New York City, New York by three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, and any party to the arbitration may institute proceedings in any court having jurisdiction for the specific performance of any such award. The powers of the arbitrator shall include, but not be limited to, the awarding of injunctive relief.

14. Representations.

(a) The Executive represents and warrants that (i) he is not subject to any contract, arrangement, policy or understanding, or to any statute, governmental rule or regulation, that in any way limits his ability to enter into and fully perform his obligations under this Agreement and (ii) he is not otherwise unable to enter into and fully perform his obligations under this Agreement.

(b) The Company represents and warrants to the Executive that (i) this Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation of the Company and (ii) subject to the accuracy of the Executive’s representation in Section 14(a), the employment of the Executive on the terms and conditions contained in this Agreement will not conflict with or result in a breach or violation of the terms of any contract or other obligation or instrument to which the Company is a party or by which it is bound or any statute, law, rule, regulation, judgment, order or decree applicable to the Company.

15. Successors; Binding Agreement.

(a) Company’s Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred, except that the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be

11

required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall include any successor to its business and/or assets (by merger, purchase or otherwise) which executes and delivers the agreement provided for in this Section 15 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b) Executive’s Successors. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon the Executive’s death, this Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to the Executive’s interests under this Agreement. If the Executive should die following his Date of Termination while any amounts would still be payable to him hereunder if he had continued to live, all such amounts unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to such person or persons so appointed in writing by the Executive, or otherwise to his legal representatives or estate.

16. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive, at his residence address most recently filed with the Company; and

a copy to:

Howard Jacobs, Esq.

Katten Muchin Rosenman, LLP

575 Madison Avenue

New York, NY 10022

Tel: (212) 940-8505 Fax: (212) 894-5505

If to the Company:

Martha Stewart Living Omnimedia, Inc.

11 West 42nd Street

New York, NY 10036

Attention: General Counsel

Tel: (212) 827-8362

Fax: (212) 827-8188;

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

12

17. Mitigation. The Executive shall not be required to mitigate damages with respect to the termination of his employment under this Agreement by seeking other employment or otherwise, and there shall be no offset against amounts due the Executive under this Agreement on account of subsequent employment except as specifically provided in Section 9(b). Additionally, amounts owed to the Executive under this Agreement shall not be offset by any claims the Company may have against the Executive, and the Company’s obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any other circumstances, including, without limitation, any counterclaim, recoupment, defense or other right which the Company may have against the Executive or others.

18. Modification; Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the party to be charged. 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.

19. Section 409A.

(a) The intent of the parties is that payments and benefits under this Agreement comply with 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. Executive is hereby advised to seek independent advice from your tax advisor(s) with respect to any payments or benefits under this Agreement. Notwithstanding the foregoing, the Company does not guarantee the tax treatment of any payments or benefits provided under this Agreement, whether pursuant to the Code, federal, state, local or foreign tax laws and regulations.

(b) If the Executive is deemed on the date of termination of his “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 Executive’s separation from service or, (ii) the date of the Executive’s death if and to the extent such six-month delay is required to comply with Section 409A(a)(2)(B) of the Code. In such event, on or promptly after the first business day following the six-month delay period, all payments delayed pursuant to this Section19 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) If under this Agreement, an amount is to be paid in installments, each installment shall be treated as a separate payment for purposes of Treasury Regulations Section 1.409A2(b)(2)(iii).

13

20. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

22. Entire Agreement. This Agreement (and Exhibits hereto) together with the Indemnification Agreement dated May 19, 2011 between the Company and the Executive and the post-employment services agreement (and exhibit thereto) referenced in Section 26 below set forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter.

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

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

25. Governing Law; Survival. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles. Each of the parties agrees that if any dispute is not resolved by the parties pursuant to Section 13, such dispute shall be resolved only in the courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the parties irrevocably and unconditionally (a) submits for itself in any Proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such New York State court or, to the extent permitted by law, in such federal court; (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that it may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, or its performance under or the enforcement of this Agreement; (d) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 16; and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of New York. The provisions of Section 10 that are intended to survive the Employment Term shall remain in full force and effect for their respective periods of duration; it being understood that the provisions of Section 10(d) shall be perpetual.

14

26. Contemporaneous Execution of Services Agreement Regarding Post-Employment Services. Contemporaneously with the execution hereof, the parties each shall execute the services agreement attached hereto as Exhibit B.

27. Release.

(a) For and in consideration of the payments to be provided to Executive pursuant to this Agreement and the agreements referenced in this Agreement, Executive hereby irrevocably releases the Company, its past and present parents, subsidiaries and affiliates, and the directors, officers, employees, shareholders, attorneys, agents, representatives and advisors and the successors, predecessors and assigns of each of such persons and entities (and those acting on their behalf in any capacity whatsoever) (collectively, the “Company Released Parties”) from all claims, counterclaims, actions, complaints, causes of action, judgments, debts, rights to indemnification, demands or suits, at law or in equity, known or unknown, arising from, relating to or otherwise concerning Executive’s service with the Company and its subsidiaries and affiliates, which Executive or any of his executors, administrators or heirs and the successors, predecessors and assigns of each of the foregoing ever had, now have or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever from the beginning of time to the Effective Date, including, without limitation, any claims arising out of, relating to or otherwise concerning the Employment Agreement between the Executive and the Company dated September 17, 2008, as amended (the “2008 Employment Agreement”) on or prior to the Effective Date (the “Release of Claims”). This Release of Claims includes, without limitation, any claims arising out of federal, state or local wage payment, discrimination, sexual harassment, hostile work environment, retaliation, and fair employment practice law, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Sections 2000e et seq., the Age Discrimination in Employment Act, as amended, 29 U.S.C. Sections 621 et seq. (“ADEA”), the Americans with Disabilities Act, as amended, 42 U.S.C. Sections 12101 et seq., the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. Sections 2601 et seq., the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. Sections 201 et seq., the Employment Retirement Income Security Act of 1974, as amended, 29 U.S.C. Sections 1001 et seq., and any other federal, state or local law or ordinance (whether common law or statutory) dealing with discrimination in employment on the basis of sex, gender, age, race, color, national origin, religion, disability or equal pay requirements, or other protected category, including, without limitation, such claims based on theories of the mental and physical condition, sexual harassment, hostile work environment, retaliation, contract or tort. Excluded from the scope of this Release of Claims, however, are (i) any rights Executive has arising under this Agreement after the Effective Date; (ii) any rights Executive has arising after the Effective Date under Executive’s Restricted Stock Agreement dated October 1, 2008, Executive’s Restricted Stock Unit Agreements dated October 1, 2008, March 2, 2009 (as amended January 31, 2011) and March 1, 2010 (as amended January 31, 2011), and Executive’s Stock Option Agreements dated July 22, 2004, March 10, 2005, October 27, 2005, May 17, 2006, May 17, 2007, May 20, 2008, October 1, 2008, March 2, 2009, March 1, 2010 and March 1, 2011; and (iii) any rights Executive has or hereafter acquires to indemnification and advancement of expenses in

15

accordance with the Indemnification Agreement, Section 12 of the 2008 Employment Agreement or the provisions of certificates of incorporation, by-laws or other governing documents of the Company and its subsidiaries and affiliates. Executive covenants not to sue the Company or any other person or entity described above, at law or in equity, in any forum, for any claims, counterclaims, actions, complaints or causes of actions that are within the scope of this Release of Claims.

(b) Executive hereby acknowledges and confirms that: (i) he was advised by the Company to consult with an attorney of his own selection regarding the terms of this Release of Claims; (ii) he was given a period of not fewer than twenty-one days to consider the terms of this Release of Claims and to consult with an attorney of his own selection with respect thereto, although he was free to sign this Release of Claims at any time during this period; and (iii) he knowingly and voluntarily accepts the terms of this Release of Claims.

(c) Executive understands that he may revoke this Release of Claims with respect to claims arising under ADEA at any time within seven (7) days of the date of his signing by providing written notice to the Company at the address specified in Section 16, and that with respect to claims arising under ADEA, this Release of Claims will take effect only upon the expiration of such seven-day revocation period and only if he has not timely revoked it.

28. Representation Regarding Claims. The Company represents and warrants to the Executive that, as of the Effective Date, the Board of Directors is not aware of any claims that the Company may have against the Executive arising from, relating to or otherwise concerning Executive’s service with the Company and its subsidiaries and affiliates.

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

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Peter Hurwitz
Name:	Peter Hurwitz
Title:	EVP + General Counsel
/s/ Charles A. Koppelman
Charles A. Koppelman

16

Exhibit A

GENERAL RELEASE¹

This General Release (the “Release”) is executed by Charles A. Koppelman (“Executive”) pursuant to Section 9(b) of the Amended and Restated Employment Agreement between Executive and Martha Stewart Living Omnimedia, Inc., dated July 20, 2011 (the “Employment Agreement”).

WHEREAS, Executive’s employment with the Company has terminated;

WHEREAS, the Company and Executive intend that the terms and conditions of the Employment Agreement and this Release shall govern all issues relating to Executive’s employment and termination of employment with the Company;

WHEREAS, Executive acknowledges that the consideration to be provided to Executive under the Employment Agreement is sufficient to support this Release; and

WHEREAS, Executive understands that the Company regards the representations by Executive in the Employment Agreement and this Release as material and the Company is relying upon such representations in paying amounts to Executive pursuant to the Employment Agreement.

EXECUTIVE THEREFORE AGREES AS FOLLOWS:

1. Executive’s employment with the Company terminated on                     , and Executive has and will receive the payments and benefits set forth in Section 9 of the Employment Agreement in accordance with the terms and subject to the conditions thereof.

2. Executive hereby irrevocably releases the Company, its past and present parents, subsidiaries and affiliates, and the directors, officers, employees, shareholders, attorneys, agents, representatives and advisors and the successors, predecessors and assigns of each of such persons and entities (and those acting on their behalf in any capacity whatsoever) (collectively, the “Company Released Parties”) from all claims, counterclaims, actions, complaints, causes of

¹  The Company will provide a contemporaneous representation to the Executive to the effect that as of the date of the General Release, with such exceptions as are disclosed to the Executive by the Company, the Board of Directors is not aware of any claims which the Company may have against the Executive arising from, relating to or otherwise concerning Executive’s service with the Company and its subsidiaries and affiliates.

17

action, judgments, debts, rights to indemnification, demands or suits, at law or in equity, known or unknown, arising from, relating to or otherwise concerning Executive’s service with the Company and its subsidiaries and affiliates, which Executive or any of his executors, administrators or heirs and the successors, predecessors and assigns of each of the foregoing ever had, now have or hereafter can, shall or may have, for, upon or by reason of any matter, cause or thing whatsoever from the beginning of time to the effective date of this Release (the “Release of Claims”). This Release of Claims includes, without limitation, any claims arising out of federal, state or local wage payment, discrimination, sexual harassment, hostile work environment, retaliation, and fair employment practice law, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Sections 2000e et seq., the Age Discrimination in Employment Act, as amended, 29 U.S.C. Sections 621 et seq. (“ADEA”), the Americans with Disabilities Act, as amended, 42 U.S.C. Sections 12101 et seq., the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. Sections 2601 et seq., the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. Sections 201 et seq., the Employment Retirement Income Security Act of 1974, as amended, 29 U.S.C. Sections 1001 et seq., and any other federal, state or local law or ordinance (whether common law or statutory) dealing with discrimination in employment on the basis of sex, gender, age, race, color, national origin, religion, disability or equal pay requirements, or other protected category, including, without limitation, such claims based on theories of the mental and physical condition, sexual harassment, hostile work environment, retaliation, contract or tort. Excluded from the scope of this Release of Claims, however, are (i) any rights Executive has to receive the payments and benefits set forth in Section 9 of the Employment Agreement in accordance with the terms and subject to the conditions thereof; (ii) any rights Executive has arising after the effective date of this Release under Executive’s Restricted Stock Agreement dated October 1, 2008, Executive’s Restricted Stock Unit Agreements dated March 2, 2009 (as amended January 31, 2011) and March 1, 2010 (as amended January 31, 2011), and Executive’s Stock Option Agreements dated July 22, 2004, March 10, 2005, October 27, 2005, May 17, 2006, May 17, 2007, May 20, 2008, October 1, 2008, March 2, 2009, March 1, 2010 and March 1, 2011²; (iii) any rights Executive has or hereafter acquires to indemnification and advancement of expenses in accordance with the Indemnification Agreement between the Company and Executive dated May 19, 2011, Section 12 of the Employment Agreement, Section 12 of the Employment Agreement between the Company and Executive dated September 17, 2008, or the provisions of certificates of incorporation, by-laws or other governing documents of the Company and its subsidiaries and affiliates; and (iv) any rights Executive has or hereafter acquires under the Services Agreement between the Company and Executive dated July 20, 2011. Executive covenants not to sue the Company or any other person or entity described above, at law or in equity, in any forum, for any claims, counterclaims, actions, complaints or causes of actions that are within the scope of this Release of Claims.

²  To be updated to reflect outstanding equity awards on the date of the General Release.

18

3. Executive hereby acknowledges and confirms that: (i) he was advised by the Company to consult with an attorney of his own selection regarding the terms of this Release of Claims; (ii) he was given a period of not fewer than twenty-one days to consider the terms of this Release of Claims and to consult with an attorney of his own selection with respect thereto, although he was free to sign this Release of Claims at any time during this period; and (iii) he knowingly and voluntarily accepts the terms of this Release of Claims.

4. Executive understands that he may revoke this Release of Claims with respect to claims arising under ADEA at any time within seven (7) days of the date of his signing by providing written notice to the Company at the address specified in Section 16 of the Employment Agreement, and that with respect to claims arising under ADEA, this Release of Claims will take effect only upon the expiration of such seven-day revocation period and only if he has not timely revoked it.

5. The invalidity or unenforceability of any provision or provisions of this Release shall not affect the validity or enforceability of any other provision of this Release, which shall remain in full force and effect.

6. The validity, interpretation, construction and performance of this Release shall be governed by the law of the State of New York without regard to its conflicts of law principles. In the event of any dispute regarding this Release, the provisions of Section 25 of the Employment Agreement shall govern.

7. The Employment Agreement and this Release constitute the entire understanding between the parties with respect to the subject matter hereof. Executive has not relied on any oral statements that are not included in the Employment Agreement or this Release.

Date:	/s/ Charles A. Koppelman
	Charles A. Koppelman

19

Exhibit B

SERVICES AGREEMENT

This Services Agreement (the “Agreement”) is entered into by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Charles A. Koppelman (“Koppelman”) as of July 20, 2011.

Whereas, Koppelman is currently performing services for the Company in the capacity of Executive Chairman of the Company pursuant to the Amended and Restated Employment Agreement dated as of July 20, 2011 by and between the Company and Koppelman (the “Employment Agreement”) and as a member of the Company’s Board of Directors (the “Board”);

Whereas, Koppelman’s services under the Employment Agreement and as a member of the Board will terminate on the earlier of December 31, 2011 or the date on which the President and Chief Operating Officer of the Company reports directly to the Company’s Board (the “Transition Date”);

Whereas, the Company desires to continue the services of Koppelman following the Transition Date, and Koppelman is willing to continue to perform services for the Company following the Transition Date, in each case on the terms and subject to the conditions set forth herein;

Now, therefore, in consideration of the mutual promises and obligations contained herein, intending to be legally bound hereby, the Company and Koppelman agree as follows:

1. Term. Subject to Koppelman’s services under the Employment Agreement continuing through the Transition Date, this Agreement shall become effective as of the Transition Date and shall continue for the duration of Koppelman’s services as a member of the Board.

2. Services. Commencing on the Transition Date, Koppelman will continue to serve as a member of the Company’s Board. In addition, Koppelman will be nominated to continue to serve as a member of the Company’s Board at the annual shareholders’ meeting to be held in 2012, provided the Company’s stock remains listed on the NASDAQ Stock Market or the New York Stock Exchange through such date. So long as he remains a member of the Board, Koppelman will serve as Non Executive Chairman, Vice Chairman or Special Committee Chairman, as the Board may determine in its discretion, and shall have such duties and responsibilities as may be assigned by the Board. In addition, from the Transition Date through December 31, 2012, Koppelman will make himself available to assist with an orderly transition of his responsibilities to a new principal executive officer as reasonably requested by the Company.

3. Compensation. During the term of this Agreement, Koppelman shall be entitled to receive Board fees on the same terms as apply from time to time to independent members of he Board, including an initial grant of restricted stock units equivalent to an equal number of

shares of Class A common stock, par value $0.01 per share, of the Company (“Common Stock”), having a value of $50,000 on the Transition Date, and containing terms substantially similar to those contained in initial Director grants, pursuant to the terms of the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”). In addition, in consideration of his serving as Chairman, Vice Chairman or Special Committee Chairman and assisting with transition, Executive shall be entitled to receive on the Transition Date 100,000 performance-vested restricted stock units (“RSUs”) representing 100,000 shares of Common Stock pursuant to the terms of the Plan, which shall vest as follows: 50,000 RSUs shall vest at such time as the trailing average closing price of the Common Stock during any 30 consecutive days during the period from the Transition Date through December 31, 2012 has been at least $6, and 50,000 RSUs shall vest at such time as the trailing average closing price of the Common Stock during any 30 consecutive days during the period from the Transition Date through December 31, 2012 has been at least $8. To the extent vested, the RSUs will be settled on December 31, 2012 or, if earlier, Koppelman’s termination of service as a member of the Board (other than on account of voluntary resignation by Koppelman or removal by the Company for cause). Upon voluntary resignation by Koppelman or removal by the Company for cause prior to December 31, 2012, any RSUs (whether vested or unvested) will be forfeited. In the event of a Change in Control (as defined in the Employment Agreement) of the Company prior to December 31, 2012, the Company will accelerate the vesting and settlement of the RSUs. The RSUs will be awarded pursuant to a Restricted Stock Unit Agreement substantially in the form attached hereto as Exhibit A. Except for amounts accrued under this Section 3, Executive will not be entitled to any additional payments upon termination of his services under this Agreement.

4. Office. During the Term, Koppelman shall be provided with a suitable office and secretarial assistance at the Company’s offices and use of appropriate telecommunication devices (e.g., cell phone, blackberry).

5. Independent Contractor Status. Koppelman shall provide the services to the Company under this Agreement as an independent contractor and, as such, shall be free to exercise his own discretion and judgment in the performance of such services and with respect to the time, place, method, and manner of performance. Nothing contained in this Agreement or in the performance of any consulting services shall be construed as creating the relationship of employer and employee between the Company and Koppelman. Koppelman will not be entitled to participate in any of the Company’s employee benefit plans or otherwise receive any insurance or other employee benefits provided to employees of the Company on account of any services provided by him under this Agreement.

6. Withholding Tax. The Company shall not withhold federal, state or local taxes with respect to the compensation payable to Koppelman under this Agreement, and Koppelman shall bear sole responsibility for the payment of all taxes due in connection with such compensation.

7. Non-Exclusivity of Services. This Agreement does not prohibit Koppelman from performing services for other businesses, to the extent otherwise permitted under Section 10 of the Employment Agreement.

2

8. Indemnification. The Indemnification Agreement dated May 19, 2011 between the Company and Koppelman (the “Indemnification Agreement”) shall remain in full force and effect.

9. Dispute Resolution. Any controversy or claim arising out of or relating to this Agreement or the making, interpretation or breach thereof shall be settled by arbitration in New York City, New York by three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, and any party to the arbitration may institute proceedings in any court having jurisdiction for the specific performance of any such award. The powers of the arbitrator shall include, but not be limited to, the awarding of injunctive relief.

10. Successors

(c) Company’s Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred without the consent of Koppelman except in connection with a sale or transfer of the capital stock, business and/or assets of the Company by merger, purchase or otherwise or in connection with any corporate restructuring of the Company for which no consent of Koppelman will be required.

(d) Koppelman’s Successors. No rights or obligations of Koppelman under this Agreement may be assigned or transferred by Koppelman other than his rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Koppelman’s death, this Agreement and all rights of Koppelman hereunder shall inure to the benefit of and be enforceable by Koppelman’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Koppelman’s interests under this Agreement.

11. 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 Koppelman, at his residence address most recently filed with the Company; and

a copy to:

Howard Jacobs, Esq.

Katten Muchin Rosenman, LLP

575 Madison Avenue

New York, NY 10022

If to the Company:

Martha Stewart Living Omnimedia, Inc.

601 West 26th Street

3

New York, NY 10001

Attention: General Counsel

Tel: (212) 827-8362

Fax: (212) 827-8188;

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

12. Modification; Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing and signed by Koppelman 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.

13. 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.

14. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

15. Entire Agreement. This Agreement and the Indemnification Agreement set forth the entire understanding of the parties as to the subject matter herein and supersede all prior agreements between the parties, whether written or oral, relating to the same subject matter. Notwithstanding the foregoing, the parties expressly acknowledge and agree that the Employment Agreement shall remain in full force and effect through the Transition Date and that the post-employment covenants contained in Section 10 of the Employment Agreement shall thereafter remain in full force and effect in accordance with their terms.

16. Section Headings; Absence of Presumption. The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation. With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement

17. Governing 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. Each of the parties agrees that any action to enforce an arbitration award rendered pursuant to Section 9 shall be initiated and maintained only in the courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the parties

4

irrevocably and unconditionally (a) submits for itself in any proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such proceeding shall be heard and determined in such New York State court or, to the extent permitted by law, in such federal court; (b) consents that any such proceeding may and shall be brought in such courts and waives any objection that it may now or thereafter have to the venue or jurisdiction of any such proceeding in any such court or that such proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) waives all right to trial by jury in any proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, or its performance under or the enforcement of this Agreement; (d) agrees that service of process in any such proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 11; and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of New York.

IN WITNESS WHEREOF, the Company and Koppelman have executed this Agreement on the day and year first written above.

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:
	Name:
	Title:
/s/ Charles A. Koppelman
Charles A. Koppelman

5

EX-10.2

Exhibit 10.2

EXECUTION VERSION

Martha Stewart Living Omnimedia, Inc.

601 W. 26th Street

New York, NY 10001

September 15, 2011

Charles A. Koppelman

Dear Mr. Koppelman:

Reference is made to your Amended and Restated Employment Agreement dated as of July 26, 2011 (the “Employment Agreement”) between you and Martha Stewart Living Omnimedia, Inc. (the “Company”). In connection with the termination of your employment effective as of September 15, 2011 (the “Date of Termination”), you and the Company have agreed to amend the Employment Agreement as follows:

1. Notwithstanding Section 9(b)(iii) and the second and third sentences in Section 9(b) of the Employment Agreement, your Severance Payment (as defined in the Employment Agreement) will be paid as follows:

(i) $500,000 will be paid to you within 60 days of the Date of Termination, of which $279,449.77 will be applied in satisfaction of your withholding tax obligations with respect to accelerated vesting of your outstanding equity awards, and the balance, less applicable withholding taxes, will be remitted to you; and

(ii) the balance of your Severance Payment ($966,923), less applicable withholding taxes, will be paid to you during the second week in January 2012.

2. All other terms and conditions of the Employment Agreement shall remain in effect in accordance with their terms.

Please indicate your agreement to the foregoing amendment to the Employment Agreement by signing and returning a copy of this letter at your earliest convenience.

Sincerely,
MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Daniel Taitz
Name:	Daniel Taitz
Title:	Chief Administrative Officer

EMPLOYEE ACKNOWLEDGEMENT:

I have read and understand the above terms and conditions and by signing below, I agree to the terms and conditions of the amendment to the Employment Agreement.

/s/ Charles Koppelman

Charles A. Koppelman

9/15/2011

Date

EX-10.3

Exhibit 10.3

EXECUTION VERSION

SERVICES AGREEMENT

This Services Agreement (the “Agreement”) is entered into by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Charles A. Koppelman (“Koppelman”) as of July 26, 2011.

Whereas, Koppelman is currently performing services for the Company in the capacity of Executive Chairman of the Company pursuant to the Amended and Restated Employment Agreement dated as of July 26, 2011 by and between the Company and Koppelman (the “Employment Agreement”) and as a member of the Company’s Board of Directors (the “Board”);

Whereas, Koppelman’s services under the Employment Agreement and as a member of the Board will terminate on the earlier of December 31, 2011 or the date on which the President and Chief Operating Officer of the Company reports directly to the Company’s Board (the “Transition Date”);

Whereas, the Company desires to continue the services of Koppelman following the Transition Date, and Koppelman is willing to continue to perform services for the Company following the Transition Date, in each case on the terms and subject to the conditions set forth herein;

Now, therefore, in consideration of the mutual promises and obligations contained herein, intending to be legally bound hereby, the Company and Koppelman agree as follows:

1. Term. Subject to Koppelman’s services under the Employment Agreement continuing through the Transition Date, this Agreement shall become effective as of the Transition Date and shall continue for the duration of Koppelman’s services as a member of the Board.

2. Services. Commencing on the Transition Date, Koppelman will continue to serve as a member of the Company’s Board. In addition, Koppelman will be nominated to continue to serve as a member of the Company’s Board at the annual shareholders’ meeting to be held in 2012, provided the Company’s stock remains listed on the NASDAQ Stock Market or the New York Stock Exchange through such date. So long as he remains a member of the Board, Koppelman will serve as Non Executive Chairman, Vice Chairman or Special Committee Chairman, as the Board may determine in its discretion, and shall have such duties and responsibilities as may be assigned by the Board. In addition, from the Transition Date through December 31, 2012, Koppelman will make himself available to assist with an orderly transition of his responsibilities to a new principal executive officer as reasonably requested by the Company.

3. Compensation. During the term of this Agreement, Koppelman shall be entitled to receive Board fees on the same terms as apply from time to time to independent members of the Board, including an initial grant of restricted stock units equivalent to an equal number of

shares of Class A common stock, par value $0.01 per share, of the Company (“Common Stock”), having a value of $50,000 on the Transition Date, and containing terms substantially similar to those contained in initial Director grants, pursuant to the terms of the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”). In addition, in consideration of his serving as Chairman, Vice Chairman or Special Committee Chairman and assisting with transition, Executive shall be entitled to receive on the Transition Date 100,000 performance-vested restricted stock units (“RSUs”) representing 100,000 shares of Common Stock pursuant to the terms of the Plan, which shall vest as follows: 50,000 RSUs shall vest at such time as the trailing average closing price of the Common Stock during any 30 consecutive days during the period from the Transition Date through December 31, 2012 has been at least $6, and 50,000 RSUs shall vest at such time as the trailing average closing price of the Common Stock during any 30 consecutive days during the period from the Transition Date through December 31, 2012 has been at least $8. To the extent vested, the RSUs will be settled on December 31, 2012 or, if earlier, Koppelman’s termination of service as a member of the Board (other than on account of voluntary resignation by Koppelman or removal by the Company for cause). Upon voluntary resignation by Koppelman or removal by the Company for cause prior to December 31, 2012, any RSUs (whether vested or unvested) will be forfeited. In the event of a Change in Control (as defined in the Employment Agreement) of the Company prior to December 31, 2012, the Company will accelerate the vesting and settlement of the RSUs. The RSUs will be awarded pursuant to a Restricted Stock Unit Agreement substantially in the form attached hereto as Exhibit A. Except for amounts accrued under this Section 3, Executive will not be entitled to any additional payments upon termination of his services under this Agreement.

4. Office. During the Term, Koppelman shall be provided with a suitable office and secretarial assistance at the Company’s offices and use of appropriate telecommunication devices (e.g., cell phone, blackberry).

5. Independent Contractor Status. Koppelman shall provide the services to the Company under this Agreement as an independent contractor and, as such, shall be free to exercise his own discretion and judgment in the performance of such services and with respect to the time, place, method, and manner of performance. Nothing contained in this Agreement or in the performance of any consulting services shall be construed as creating the relationship of employer and employee between the Company and Koppelman. Koppelman will not be entitled to participate in any of the Company’s employee benefit plans or otherwise receive any insurance or other employee benefits provided to employees of the Company on account of any services provided by him under this Agreement.

6. Withholding Tax. The Company shall not withhold federal, state or local taxes with respect to the compensation payable to Koppelman under this Agreement, and Koppelman shall bear sole responsibility for the payment of all taxes due in connection with such compensation.

7. Non-Exclusivity of Services. This Agreement does not prohibit Koppelman from performing services for other businesses, to the extent otherwise permitted under Section 10 of the Employment Agreement.

2

8. Indemnification. The Indemnification Agreement dated May 19, 2011 between the Company and Koppelman (the “Indemnification Agreement”) shall remain in full force and effect.

9. Dispute Resolution. Any controversy or claim arising out of or relating to this Agreement or the making, interpretation or breach thereof shall be settled by arbitration in New York City, New York by three arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof, and any party to the arbitration may institute proceedings in any court having jurisdiction for the specific performance of any such award. The powers of the arbitrator shall include, but not be limited to, the awarding of injunctive relief.

10. Successors

(a) Company’s Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred without the consent of Koppelman except in connection with a sale or transfer of the capital stock, business and/or assets of the Company by merger, purchase or otherwise or in connection with any corporate restructuring of the Company for which no consent of Koppelman will be required.

(b) Koppelman’s Successors. No rights or obligations of Koppelman under this Agreement may be assigned or transferred by Koppelman other than his rights to payments hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Koppelman’s death, this Agreement and all rights of Koppelman hereunder shall inure to the benefit of and be enforceable by Koppelman’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Koppelman’s interests under this Agreement.

11. 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 Koppelman, at his residence address most recently filed with the Company; and

a copy to:

Howard Jacobs, Esq.

Katten Muchin Rosenman, LLP

575 Madison Avenue

New York, NY 10022

If to the Company:

Martha Stewart Living Omnimedia, Inc.

601 West 26th Street

3

New York, NY 10001

Attention: General Counsel

Tel: (212) 827-8362

Fax: (212) 827-8188;

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

12. Modification; Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing and signed by Koppelman 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.

13. 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.

14. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

15. Entire Agreement. This Agreement and the Indemnification Agreement set forth the entire understanding of the parties as to the subject matter herein and supersede all prior agreements between the parties, whether written or oral, relating to the same subject matter. Notwithstanding the foregoing, the parties expressly acknowledge and agree that the Employment Agreement shall remain in full force and effect through the Transition Date and that the post-employment covenants contained in Section 10 of the Employment Agreement shall thereafter remain in full force and effect in accordance with their terms.

16. Section Headings; Absence of Presumption. The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation. With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement

17. Governing 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. Each of the parties agrees that any action to enforce an arbitration award rendered pursuant to Section 9 shall be initiated and maintained only in the courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the parties

4

irrevocably and unconditionally (a) submits for itself in any proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such proceeding shall be heard and determined in such New York State court or, to the extent permitted by law, in such federal court; (b) consents that any such proceeding may and shall be brought in such courts and waives any objection that it may now or thereafter have to the venue or jurisdiction of any such proceeding in any such court or that such proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) waives all right to trial by jury in any proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, or its performance under or the enforcement of this Agreement; (d) agrees that service of process in any such proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 11; and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of New York.

IN WITNESS WHEREOF, the Company and Koppelman have executed this Agreement on the day and year first written above.

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Peter Hurwitz
	Name: Peter Hurwitz
	Title: EVP + General Counsel
/s/ Charles A. Koppelman
Charles A. Koppelman

5

Exhibit A

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

RESTRICTED STOCK UNIT AGREEMENT

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

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

1. Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, 100,000 stock units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share (the “Restricted Stock Units”), on the terms and conditions set forth herein and in the Plan.

2. Vesting and Payment of Restricted Stock Units.

(a) So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule (each date specified being a “Vesting Date”):

(i) 50,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the period beginning on [Transition Date] and ending on December 31, 2012 has been at least equal to six (6) dollars (the “Milestone 6”); and

(ii) 50,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the period beginning on [Transition Date] and ending on December 31, 2012 has been at least equal to eight (8) dollars (the “Milestone 8”).

(b) If some or all of the Restricted Stock Units referred to in subsections (a)(i) and (a)(ii) above do not vest in accordance with such subsections, all of such Restricted Stock Units that do not vest as of December 31, 2012 shall be immediately forfeited without consideration.

(c) Payments, if any, shall be made on December 31, 2012 or, if earlier, upon your termination of service as a member of the Board (other than on account of your voluntary resignation or removal by the Company for cause) in the form set forth in Section 3 below. Upon your voluntary resignation or removal by the Company for cause prior to December 31, 2012, the Restricted Stock Units (whether vested or unvested) will be forfeited.

(d) In the event of a Change in Control (as such term is defined in the Amended and Restated Employment Agreement dated July 20, 2011 between you and the Company) of the Company prior to December 31, 2012, the Company will accelerate vesting and payment of the Restricted Stock Units.

3. Form of Settlement of Restricted Stock Units. Restricted Stock Units shall be settled in Shares, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until such issuance otherwise complies with all applicable law. Prior to the time the Restricted Stock Units are settled, you will have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

4. Withholding Taxes. You agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax obligations that arise in connection with the Restricted Stock Units which, at the sole discretion of the Committee, may include (i) having the Company withhold Shares from the settlement of the Restricted Stock Units, or (ii) any other arrangement approved by the Company, in either case, equal in value to the amount necessary to satisfy any such tax obligations. Absent any arrangements to the contrary, the Company may withhold Shares from the settlement of the Restricted Stock Units to satisfy the applicable tax withholding obligations hereunder.

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

6. Non-Transferability of Restricted Stock Units. The Restricted Stock Units shall not be transferable other than by will or the laws of descent and distribution. The designation of a beneficiary or entry into a will or similar arrangement does not constitute a transfer. The terms of this Agreement shall be binding upon your executors, administrators, heirs, successors and assigns.

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

2

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

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

10. Voting and Other Rights. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled.

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

12. No Entitlement or Claims for Compensation.

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

3

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

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

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

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

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

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

18. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Restricted Stock Unit under the Plan and participation in the Plan

4

or future Awards that may be granted under the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

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

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

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

23. Section 409A. The intent of the parties is that payments and benefits under this Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) under the short-term deferral exception thereunder 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. Each payment hereunder shall be treated as a separate payment to the maximum extent permissible under Section 409A.

*        *        *         *

(Signature Page Follows)

5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this      day of             , 201  .

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:
	(Signature)
Name:
Title:

RECIPIENT:

By:
	(Signature)
Address:

Telephone Number:

E-mail Address:

6

EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of September 6, 2011 (the “Effective Date”), is made by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Kenneth P. West (the “Executive”).

WHEREAS, the Company desires to employ the Executive, and the Executive is willing to be so employed, in each case on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Employment Term. Subject to the provisions of Section 7 of this Agreement, the Company hereby agrees to employ the Executive hereunder, and the Executive hereby agrees to be employed by the Company hereunder, in each case subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (such period, or until the Executive’s employment is earlier terminated pursuant to Section 7, the “Employment Term”).

2. Duties.

(a) Commencing on the Effective Date, the Executive shall serve as the Executive Vice President and Chief Financial Officer of the Company. The Executive shall have the duties and responsibilities customarily exercised by an individual serving in those positions in a corporation of the size and nature of the Company. The Executive shall report to the President and Chief Operating Officer of the Company or to such Company executive of equal or higher seniority. The Executive shall also serve the Board of Directors of the Company (the “Board”) with respect to various financial aspects of the Company, as the Board may request.

(b) During the Employment Term, the Executive shall use his best energies and abilities in the performance of his duties, services and responsibilities for the Company, shall comply with the Company’s policies and procedures and shall devote substantially all of his business time and attention to the businesses of the Company and its subsidiaries and affiliates and shall not engage in any activity inconsistent with the foregoing, whether or not such activity shall be engaged in for pecuniary profit, unless approved by the Board in writing; provided, however, that, to the extent such activities do not violate, or substantially interfere with his performance of his duties, services and responsibilities under this Agreement, the Executive shall be permitted to manage his personal, financial and legal affairs and serve on civic or charitable boards and committees of such boards. During the Employment Term, the Executive’s principal location of employment shall be at the Company’s executive offices in New York City, New York, except for reasonable and necessary business travel on behalf of the Company and its subsidiaries and affiliates.

(c) Upon any termination of the Executive’s employment with the Company, the Executive shall be deemed to have resigned from all other positions he then holds as an employee or director or other independent contractor of the Company or any of its subsidiaries or affiliates, unless otherwise agreed by the Company and the Executive. For purposes of

determining the timing of (but not eligibility for) amounts payable upon “termination of employment,” “Date of Termination” or “separation from service” under this Agreement, such terms shall mean, to the extent required under Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive’s “separation from service” as defined in Section 409A and the applicable regulations thereunder.

3. Base Salary; Bonus.

(a) During the Employment Term, in consideration of the performance by the Executive of the Executive’s obligations during the Employment Term (including any service in any position with any subsidiary or affiliate of the Company), the Company shall pay the Executive a base salary (the “Base Salary”) at an annual rate of $450,000. The Executive’s Base Salary shall be subject to increase but not decrease in the discretion of the Compensation Committee of the Board, and shall be payable in accordance with the normal payroll practices of the Company in effect from time to time, but not less frequently than monthly.

(b) During the Employment Term, in addition to the payments of the Base Salary set forth above, the Executive shall be eligible to receive a performance-based target bonus, as set forth below: In respect of each calendar year commencing on or after January 1, 2012 during which the Employment Term is in effect, the Executive shall be eligible to receive a performance-based target bonus of 75% of Base Salary (“Target Amount”), with a minimum of 0% and a maximum of 150% of Target Amount, based on achievement of goals established with respect to each calendar year by the Compensation Committee of the Board after reasonable consultation with the Executive. Such bonus(es), if any (including, any pro rated bonus(es)), shall be paid (i) 67% in cash paid in the same manner and concurrently with other cash bonuses paid to senior executives of the Company, and (ii) 33% in the form of stock options and/or Restricted Stock Units, which shall be granted on or around the date on which the cash portion of the Executive’s bonus is paid, shall vest ratably over a three-year period from the date of grant and shall be valued and have such other terms as established by the Company in its sole discretion, provided the Executive continues as an active employee of the Company in good standing through the date of such payment (except as otherwise expressly provided in Section 9(a)). Notwithstanding the preceding sentence, for the calendar year ending December 31, 2014, the Executive will be entitled to a pro-rated bonus for such year (calculated at the end of the calendar year and then pro-rated through the date of termination), provided that the applicable performance targets for such calendar year have been met (with any subjective performance factors to be evaluated and determined by the Board in good faith) and bonuses are paid generally to similarly situated executives at the Company. The cash portion of such pro-rated bonus, if any, will be paid in the same manner and concurrently with other cash bonuses paid to senior executives of the Company. In respect of the portion of the calendar year commencing on the Effective Date and ending December 31, 2011, the Executive shall be eligible to receive a performance-based target bonus in an amount equal to: (X) if the Company’s EBITDA for the entire 2011 calendar year (determined without regard to any one-time corporate restructuring charges) equals the target EBITDA goal for such entire 2011 calendar year (as established by the Compensation Committee of the Board), 75% of Base Salary multiplied by a fraction, the numerator of which is the number of days from the Effective Date to the end of the 2011 calendar year and the denominator of which is 365, (Y) if the Company’s EBITDA for the entire 2011 calendar year (determined without regard to any one-time corporate restructuring charges)

2

is either less than or more than the target EBITDA goal for such entire 2011 calendar year (as established by the Compensation Committee of the Board), a percentage of between 0% and 150% of Target Amount, determined by the Compensation Committee in its discretion using as a reference the amount by which the EBITDA target is exceeded or insufficient, as the case may be) of Base Salary multiplied by a fraction, the numerator of which is the number of days from the Effective Date to the end of the 2011 calendar year and the denominator of which is 365, provided that the bonus for the 2011 calendar year shall not be less than $30,000. The bonus payment for the calendar year ending December 31, 2011 shall be payable in cash only. The cash portion of the bonus(es) payable under this Section 3(b) shall be paid in a lump sum no later than March 15th of the calendar year following the calendar year to which such bonus relates.

4. Benefits.

(a) During the Employment Term, the Executive shall be entitled to participate in the employee benefit plans, policies, programs and arrangements, as may be amended from time to time, that are provided generally to similarly situated employees of the Company (excluding for this purpose Martha Stewart, Charles Koppelman and Lisa Gersh) to the extent the Executive meets the eligibility requirements for any such plan, policy, program or arrangement.

(b) The Company shall reimburse the Executive for all reasonable business expenses incurred by the Executive in carrying out the Executive’s duties, services and responsibilities under this Agreement during the Employment Term, including, without limitation, first class transportation. The Executive shall comply with generally applicable policies, practices and procedures of the Company with respect to reimbursement for, and submission of expense reports, receipts or similar documentation of, such expenses.

(c) For purposes of complying with Section 409A, any reimbursement of benefits provided under this Section 4 shall be subject to the following: (i) provision of such reimbursement or benefits provided during one calendar year shall not affect the amount of reimbursements or benefits provided during a subsequent calendar year; (ii) such reimbursements or benefit may not be exchanged or substituted for other forms of compensation to the Executive; and (iii) reimbursement payments must be made no later than the last day of the calendar year immediately following the calendar year in which the expense is incurred.

5. Vacations. During each calendar year of the Employment Term (pro rata for partial calendar years), the Executive shall be entitled to four weeks of paid vacation to be taken in accordance with the applicable policy of the Company.

6. Equity Compensation.

(a) On the Effective Date, the Company shall grant the Executive:

(i) 75,000 time-vested options to purchase Class A common stock of the Company, par value $0.01 per share (the “Stock”), at an exercise price equal to the Fair Market Value of the Common Stock (as such terms are defined in the Company’s Omnibus Stock and Option Compensation Plan) on the grant date (the “Time-Vested Options”), pursuant to the Stock Option Agreement attached hereto as Exhibit A (the

3

“Stock Option Agreement”). The Stock Option Agreement shall provide that (x) 25,000 Time-Vested Options shall vest on the second anniversary of the Effective Date, (y) 25,000 Time-Vested Options shall vest on the third anniversary of the Effective Date, and (z) 25,000 Time-Vested Options shall vest on the fourth anniversary of the Effective Date, in each case subject to the Executive remaining in continuous and active employment with the Company until such date (except as otherwise expressly provided in Section 9 of this Agreement).

(ii) 100,000 premium-priced, performance-vested options to purchase Stock (the “Performance-Vested Options”) pursuant to the Performance Stock Option Agreement attached hereto as Exhibit B (the “Performance Stock Option Agreement”). The Performance Stock Option Agreement shall provide that (w) 25,000 Performance-Vested Options shall be priced at $6 and shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $6, (x) 25,000 Performance-Vested Options shall be priced at $8 and shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $8, (y) 25,000 Performance-Vested Options shall be priced at $10 and shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $10, and (z) 25,000 Performance-Vested Options shall be priced at $12 and shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $12, in each case subject to the Executive remaining in continuous and active employment with the Company until such time. Notwithstanding the foregoing, the exercise price share of such Performance-Vested Options shall be no less than the Fair Market Value per share of the Common Stock on the grant date.

(iii) 50,000 time-vested Restricted Stock Units representing the right to receive 50,000 shares of Stock (the “Time-Vested Restricted Stock Units”), pursuant to the Restricted Stock Agreement attached hereto as Exhibit C (the “Restricted Stock Agreement”). The Restricted Stock Agreement shall provide that (x) 16,667 Time-Vested Restricted Stock Units shall vest on the second anniversary of the Effective Date, (y) 16,667 Time-Vested Restricted Stock Units shall vest on the third anniversary of the Effective Date, and (z) 16,666 Time-Vested Restricted Stock Units shall vest on the fourth anniversary of the Effective Date, in each case subject to the Executive remaining in continuous and active employment with the Company until such date (except as otherwise expressly provided in Section 9 of this Agreement).

(iv) 60,000 performance-vested Restricted Stock Units representing the right to receive 60,000 shares of Stock (the “Performance-Vested Restricted Stock Units”), pursuant to the Performance Restricted Stock Agreement attached hereto as Exhibit D (the “Performance Restricted Stock Agreement”). The Performance Restricted Stock Agreement shall provide that (w) 15,000 Performance-Vested Restricted Stock Units shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $8, (x) 15,000 Performance-Vested Restricted Stock Units shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment

4

Term has been at least $10, (y) 15,000 Performance-Vested Restricted Stock Units shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $12, and (z) 15,000 Performance-Vested Restricted Stock Units shall vest at such time as the trailing average closing price of the Stock during any 30 consecutive trading days during the Employment Term has been at least $14, in each case subject to the Executive remaining in continuous and active employment with the Company until such time.

7. Termination of the Employment Term.

(a) The Executive’s employment with the Company and the Employment Term shall terminate upon the earliest to occur of:

(i) the death of the Executive;

(ii) the termination of the Executive’s employment by the Company by reason of the Executive’s Disability;

(iii) the termination of the Executive’s employment by the Company for Cause or without Cause;

(iv) the termination of the Executive’s employment by the Executive for Good Reason; and

(v) the expiration of the Employment Term.

(b) For purposes of this Agreement, the following terms shall have the following meanings:

(i) “Cause” shall mean that the Company has made a good faith determination that any of the following has occurred:

(1) the continued failure by the Executive to substantially perform his material duties to the Company (other than due to mental or physical disability) after written notice specifying such failure and the manner in which the Executive may rectify such failure in the future; provided, that in the case of conduct above which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure;

(2) the Executive has engaged in misconduct that has resulted in material damage to the Company’s business or reputation;

(3) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, (A) a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct, or (B) a felony crime;

(4) the Executive has engaged in fraud against the Company or misappropriated Company property (other than incidental property), or

5

(5) the Executive has materially breached this Agreement; provided, that in the case of a material breach which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure.

(ii) “Change in Control” of the Company shall mean:

(1) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (as such term is used in Section 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting Stock of the Company; provided that this clause (1) shall not apply with respect to a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date;

(2) all or substantially all of the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (2) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity;

(3) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets if such plan of liquidation will result in the winding-up of the business of the Company; or

(4) the consummation of any merger, consolidation or other similar corporate transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or its ultimate parent company if such surviving company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (4) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting

6

Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or the ultimate parent company of such surviving or successor company if such surviving company is a subsidiary of another entity.

For purposes of this definition, “the Company” shall include any entity that succeeds to all or substantially all of the business of the Company; “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation; and references to ownership of “more than 50% of the Voting Stock” shall mean the ownership of shares of Voting Stock that represent the right to exercise more than 50% of the votes entitled to be cast in the election of directors of a corporation.

(iii) “Disability” of the Executive shall have occurred if, as a result of the Executive’s incapacity due to physical or mental illness as determined by a physician selected by the Executive, and reasonably acceptable to the Company, the Executive shall have been substantially unable to perform his duties hereunder for six consecutive months, or for an aggregate of 180 days during any period of twelve consecutive months.

(iv) “Good Reason” shall mean the occurrence, without the Executive’s express prior written consent, of any one or more of the following:

(1) a material diminution by the Company in the Executive’s overall authority, duties and responsibilities; provided that this provision shall not include a diminution in authority, duties and responsibilities solely by virtue of the Company becoming private or being acquired and made part of a larger entity;

(2) a material breach of this Agreement by the Company;

(3) a material change to the reporting structure set forth in Section 2(a);

(4) the Company’s requiring the Executive to be based at a location in excess of 35 miles from the location of the Executive’s principal job location or office specified in Section 2(b), except for required travel on the Company’s business to an extent substantially consistent with the Executive’s position; or

(5) a material reduction by the Company of the Executive’s Base Salary or performance-based target bonus percentage, as the same shall be increased from time to time,

provided that the foregoing events shall constitute Good Reason only if the Company fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason; and provided, further, that “Good Reason” shall cease to exist for an event on the 30th day following its occurrence unless the Executive has given the Company written notice thereof prior to such date.

7

8. Termination Procedures.

(a) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive during the Employment Term (other than pursuant to Sections 7(a)(i) and 7(a)(v)) shall be communicated by written Notice of Termination to the other party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under that provision.

(b) Date of Termination. For purposes of this Agreement, “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death, (ii) if the Executive’s employment is terminated pursuant to Section 7(a)(ii), 30 days after the date of receipt of the Notice of Termination (provided that the Executive does not return to the substantial performance of his duties on a full-time basis during such 30-day period), (iii) if the Executive’s employment is terminated pursuant to Section 7(a)(v), the date of expiration of the Employment Term, (iv) if the Executive’s employment is terminated pursuant to Section 7(a)(iii), the date on which a Notice of Termination is given or any later date set forth in such Notice of Termination, and (v) if the Executive’s employment is terminated pursuant to Section 7(a)(iv), 30 days after the date of the Company’s receipt of written notice from the Executive of the event which constitutes Good Reason (unless the Company has cured such event within such 30 day period).

9. Termination Payments.

(a) Upon any termination of the Executive’s employment, he shall be entitled to payment of any earned but unpaid portion of the Base Salary, benefits and unreimbursed business expenses, in each case with respect to the period ending on the Date of Termination. In addition, upon termination of Executive’s employment by the Company without Cause or a termination by Executive with Good Reason, Executive will be entitled to a pro-rated bonus with respect to the cash portion of his bonus for the year of termination (calculated at the end of the calendar year and then pro-rated through the Date of Termination), provided that the applicable performance targets have been met (with any subjective performance factors to be evaluated and determined by the Board in good faith) and bonuses are paid generally to similarly situated executives at the Company. Such payments shall be made when otherwise due in accordance with the provisions of Section 3 and Section 4 of this Agreement.

(b) (i) In addition to the payments and benefits provided in Section 9(a) and subject to the provisions of Section 9(e), if the Executive’s employment is terminated (x) by the Company without Cause or (y) by the Executive for Good Reason, in either case on or prior to the six month anniversary of the Effective Date and prior to the occurrence of a Change in Control, (i) the Company shall pay the Executive, commencing within two and one-half months after the Executive’s “separation from service” as defined for purposes of Section 409A, an amount equal to 6 months’ Base Salary, which shall be payable in the form of salary continuation in accordance with the Company’s regular payroll practices, and (ii) the Company shall provide the Executive with continued medical coverage at active-employee rates (unless doing so would violate any anti-discrimination provision or other legal requirement applicable to

8

the Company or the Company’s medical plan) until the earliest of (x) 6 months from the Date of Termination, or (y) the date on which the Executive is eligible to receive subsequent employer-provided coverage.

(ii) In addition to the payments and benefits provided in Section 9(a) and subject to the provisions of Section 9(e), if the Executive’s employment is terminated (x) by the Company without Cause or (y) by the Executive for Good Reason, in either case after the six month anniversary of the Effective Date but prior to the first anniversary of the Effective Date and prior to the occurrence of a Change in Control, (i) the Company shall pay the Executive, commencing within two and one-half months after the Executive’s “separation from service” as defined for purposes of Section 409A, an amount equal to 12 months’ Base Salary, which shall be payable in the form of salary continuation in accordance with the Company’s regular payroll practices, and (ii) the Company shall provide the Executive with continued medical coverage at active-employee rates (unless doing so would violate any anti-discrimination provision or other legal requirement applicable to the Company or the Company’s medical plan) until the earliest of (x) 12 months from the Date of Termination, or (y) the date on which the Executive is eligible to receive subsequent employer-provided coverage.

(c) In addition to the payments and benefits provided in Section 9(a) and subject to the provisions of Section 9(e), if the Executive’s employment is terminated (x) by the Company without Cause or (y) by the Executive for Good Reason, in either case on or after the first anniversary of the Effective Date and prior to the occurrence of a Change in Control, (i) the Company shall immediately vest the portion of the outstanding unvested Time-Vested Options and Time-Vested Restricted Stock Units that would otherwise have vested within twelve months of the Date of Termination had the Executive remained in employment through such date (and any such accelerated Restricted Stock Units shall be paid within 30 days after the Executive’s “separation from service” as defined for purposes of Section 409A), (ii) the Executive shall be entitled to receive from the Company, commencing within two and one-half months after the Executive’s “separation from service” as defined for purposes of Section 409A, an amount equal to 12 months’ Base Salary, which shall be payable in the form of salary continuation in accordance with the Company’s regular payroll practices, and (iii) the Company shall provide the Executive with continued medical coverage at active-employee rates (unless doing so would violate any anti-discrimination provision or other legal requirement applicable to the Company or the Company’s medical plan) until the earliest of (x) 12 months from the Date of Termination, (y) the end of the scheduled Employment Term or (z) the date on which the Executive is eligible to receive subsequent employer-provided coverage.

(d) In addition to the payments and benefits provided in Section 9(a) and subject to the provisions of Section 9(e), if the Executive’s employment is terminated (x) by the Company without Cause or (y) by the Executive for Good Reason, in either case after the occurrence of a Change in Control, (i) the Company shall immediately vest the portion of the outstanding unvested Time-Vested Options and Time-Vested Restricted Stock Units that would otherwise have vested within twenty-four months of the Date of Termination had the Executive remained in employment through such date (and any such accelerated Restricted Stock Units shall be paid within 30 days after the Executive’s “separation from service” as defined for purposes of Section 409A), (ii) the Executive shall be entitled to receive from the Company, commencing within two and one-half months after the Executive’s “separation from service” as

9

defined for purposes of Section 409A, an amount equal to 12 months’ Base Salary, which, in either case, shall be payable in the form of salary continuation in accordance with the Company’s regular payroll practices, and (iii) the Company shall provide the Executive with continued medical coverage at active-employee rates (unless doing so would violate any anti-discrimination provision or other legal requirement applicable to the Company or the Company’s medical plan) until the earliest of (x) 12 months from the Date of Termination, (y) the end of the scheduled Employment Term or (z) the date on which the Executive is eligible to receive subsequent employer-provided coverage.

(e) Payment of the amounts in Sections 9(b), 9(c) and 9(d) is subject to, and expressly conditioned upon, (i) the Executive’s execution of a general release in form satisfactory to the Company, and such release having become effective in accordance with its terms within 60 days following the Date of Termination, and (ii) the Executive’s compliance with the covenants contained in Section 10.

(f) Notwithstanding any provision of this Agreement to the contrary, to the extent (i) the two and one-half month period for making a severance payment under Section 9(b)(i), 9(c)(ii) or 9(d)(ii) or (ii) the 30 day period for paying any Restricted Stock Units under Section 9(c)(i) or 9(d)(i) begins in one calendar year and ends in a subsequent calendar year, the payment will be made in the subsequent calendar year.

10. Confidential Information; Noncompetition; Nonsolicitation; Nondisparagement.

(a) Confidential Information. Except as may be required or appropriate in connection with his carrying out his duties under this Agreement, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or any legal process, or as is necessary in connection with any adversarial proceeding against the Company (in which case the Executive shall cooperate with the Company in obtaining a protective order at the Company’s expense against disclosure by a court of competent jurisdiction), communicate, to anyone other than the Company and those designated by the Company or on behalf of the Company in the furtherance of its business or to perform his 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 Executive during the Executive’s services to the Company that is not generally available public knowledge (other than by acts by the Executive in violation of this Agreement).

(b) Noncompetition. During the Employment Term and (unless this Agreement terminates pursuant to clause (v) of Section 7(a)) for the Restricted Period thereafter, the Executive shall not engage in or become associated with any Competitive Activity. For purposes of this Section 10(b), the “Restricted Period” means the 12 month period following the Date of Termination. For purposes of this Section 10(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 radio, 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 name, likeness, image, or

10

voice of any Company employee (without limitation, Company employees for the purposes of this Section 10(b) shall be deemed to include Martha Stewart and Emeril Lagasse) to promote or market any such product or service, (iii) the creation, publication or distribution of regular or special issues of magazines and operation of websites specifically related to the Company’s business, and (iv) any other business in which the Company is engaged, or taken steps to engage, during the term of this Agreement. The Executive shall be considered to have become “associated with a Competitive Activity” if he becomes involved as an owner, employee, officer, director, independent contractor, agent, partner, advisor, or in any other capacity calling for the rendition of the Executive’s personal services, with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity, unless the Executive has no direct or indirect involvement in, or direct or indirect authority over, the Competitive Activity conducted by such organization; provided, however, that the Executive shall not be prohibited from (a) owning less than two percent 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 business if less than 10% of such corporation’s (and its affiliates’) or other business’ (and its affiliates’) revenues are derived from a Competitive Activity. If, at any time, the provisions of this Section 10(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 10(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 Executive agrees that this Section 10(b) as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

(c) Nonsolicitation; No-Hire. During the Employment Term, and for 12 months after the Date of Termination, the Executive shall not, directly or indirectly, (1) solicit for employment or hire, other than on behalf of the Company, any person (other than any personal secretary or assistant hired to work directly for the Executive) employed by the Company or its affiliated companies as of the Date of Termination, (2) solicit for employment or hire, other than on behalf of the Company, any person known by the Executive (after reasonable inquiry) to be employed at the time by the Company or its affiliated companies as of the date of the solicitation or (3) solicit any 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 thereafter, the Executive shall not, directly or indirectly, make or publish any disparaging statements (whether written or oral) regarding the Company or any of its affiliated companies or businesses, or the directors, officers, agents, principal stockholders or customers of any of them. Executive shall not author, co-author, or assist in the production or authorship of any story, book, show, script or other work about the Company or Martha Stewart without the Company’s prior review of such work and the Company’s written consent as to the production and content thereof.

(e) Covenants Reasonable. The parties acknowledge that the restrictions contained in this Section 10 are a reasonable and necessary protection of the immediate interests of the Company, and any violation of these restrictions could cause substantial injury to the Company, and that the Company would not have entered into this Employment Agreement without receiving the additional consideration offered by the Executive in binding himself to each of these restrictions.

11

(f) Injunctive Relief. In the event of a breach or threatened breach of this Section 10, each party agrees that the non-breaching party shall be entitled to seek injunctive relief, either from the arbitrator or a court of appropriate jurisdiction, at the election of the party seeking the relief, to remedy any such breach or threatened breach, the parties acknowledging that damages would be inadequate and insufficient. The parties waive any requirement to post a bond in connection with any such proceeding. The right to apply for an injunction shall not be construed as prohibiting either party from pursuing any other available remedies for such breach or threatened breach.

11. Indemnification. At all times the Executive will be entitled to indemnification in accordance with the provisions of the Company’s charter and by-laws as then in effect.

12. Dispute Resolution. Subject to the provisions of Section 10(f), any controversy or claim arising out of or relating to this Agreement or the making, interpretation or breach thereof shall be resolved by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules (the “Rules”). The arbitration shall be conducted in New York City, New York by a single arbitrator appointed in accordance with the Rules, and judgment upon the award rendered by the arbitrator may be entered in and enforced by any court having jurisdiction thereof. The powers of the arbitrator shall include, but not be limited to, the awarding of injunctive relief and specific performance. The parties to any arbitration proceeding will treat all filings and evidence in the arbitration as confidential and shall not disclose either to any third party except as may be required by law or legal process, or as may be necessary in connection with any legal proceeding related to the award of the arbitrator.

13. Representations.

(a) The Executive represents and warrants that (i) he is not subject to any contract, arrangement, policy or understanding, or to any statute, governmental rule or regulation, including without limitation any non-competition agreement, that in any way limits his ability to enter into and fully perform his obligations under this Agreement and (ii) he is not otherwise unable to enter into and fully perform his obligations under this Agreement.

(b) The Company represents and warrants to the Executive that (i) this Agreement and each of the Stock Option Agreement, the Performance Stock Option Agreement, the Restricted Stock Agreement and the Performance Stock Agreement have been duly authorized, executed and delivered by the Company and each constitutes a valid and binding obligation of the Company, and (ii) subject to the accuracy of the Executive’s representation in Section 13(a), the employment of the Executive on the terms and conditions contained in this Agreement will not conflict with or result in a breach or violation of the terms of any contract or other obligation or instrument to which the Company is a party or by which it is bound or any statute, law, rule, regulation, judgment, order or decree applicable to the Company.

12

14. Successors; Binding Agreement.

(a) Company’s Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred without the consent of the Executive except in connection with a sale or transfer of the capital stock, business and/or assets of the Company by merger, purchase or otherwise or in connection with any corporate restructuring of the Company for which no consent of the Executive will be required.

(b) Executive’s Successors. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than his rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon the Executive’s death, this Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to the Executive’s interests under this Agreement. If the Executive should die following his Date of Termination while any amounts would still be payable to him hereunder if he had continued to live, all such amounts unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to such person or persons so appointed in writing by the Executive, or otherwise to his legal representatives or estate.

15. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered either personally or by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive, at his residence address most recently filed with the Company;

If to the Company:

Martha Stewart Living Omnimedia, Inc.

601 West 26th Street

New York, NY 10001

Attention: President

Tel: (212) 827-8362

Fax: (212) 827-8188;

a copy to:

Lawrence Shire, Esq.

Eric Sacks, Esq.

Grubman Indursky & Shire, P.C.

Carnegie Hall Tower

152 West 57th Street

New York, NY 10019

Tel: (212) 554-0400

Fax: (212) 554-0444

13

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

16. Modification; Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the party to be charged. 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.

17. Section 409A.

(a) The intent of the parties is that payments and benefits under this Agreement either comply with or are exempt from 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. The Executive is hereby advised to seek independent advice from his tax advisor(s) with respect to any payments or benefits under this Agreement. Notwithstanding the foregoing, the Company does not guarantee the tax treatment of any payments or benefits provided under this Agreement under Section 409A or under any other federal, state, local or foreign tax laws and regulations.

(b) If the Executive is deemed on the date of his “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), 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 Executive’s separation from service, or (ii) the date of the Executive’s death, if and to the extent such six-month delay is required to comply with Section 409A(a)(2)(B). In such event, on or promptly after the first business day following the six-month delay period, all payments delayed pursuant to this Section17 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) If under this Agreement, an amount is to be paid in installments, each installment shall be treated as a separate payment for purposes of Treasury Regulations Section 1.409A2(b)(2)(iii).

18. 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.

19. 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.

14

20. Entire Agreement. This Agreement, together with the Stock Option Agreement, the Performance Stock Option Agreement, the Restricted Stock Agreement, and the Performance Restricted Stock Agreement, set forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter.

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

22. Section Headings; Absence of Presumption.

(a) The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

(b) With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement.

23. Governing Law; Survival. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles. Each of the parties agrees that any action for injunctive relief under Section 10(f) and any action to enforce an arbitration award under Section 12 (a “Proceeding”) shall be brought only in the courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts. In that context, each of the parties irrevocably and unconditionally: (a) submits for itself/himself in any such Proceeding, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the courts of the State of New York sitting in the County of New York, the court of the United States of America for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court; (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that it/he may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, or its/his performance under or the enforcement of this Agreement; (d) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its/his address as provided in Section 15; and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of New York. The provisions of Section 10 that are intended to survive the Employment Term shall remain in full force and effect for their respective periods of duration; it being understood that the provisions of Section 10(d) shall be perpetual.

15

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

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Lisa Gersh
Name:	Lisa Gersh
Title:	President and Chief Operating Officer
/s/ Kenneth P. West
Kenneth P. West

16

EXHIBIT A

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

NOTICE OF STOCK OPTION GRANT

Optionee:

Kenneth P. West (“you” or “Executive”)

You have been granted an option (the “Option”) to purchase Common Stock of Martha Stewart Living Omnimedia, Inc. (the “Company”), as follows:

Date of Grant:	September 6, 2011
Exercise Price Per Share:
Total Number of Shares:	75,000
Total Exercise Price:
Type of Option:		Incentive Stock Option
	x	Nonstatutory Stock Option
Expiration Date:	September 5, 2021
Vesting Schedule:	So long as your Service continues, the Shares underlying this Option shall vest and become exercisable in accordance with the following schedule:
	25,000 of the Shares subject to this Option shall vest on September 6, 2013;
	25,000 of the Shares subject to this Option shall vest on September 6, 2014; and
	25,000 of the Shares subject to this Option shall vest on September 6, 2015.
	Notwithstanding the foregoing, (i) if your employment is terminated by the Company without Cause (as defined

below) or by you for Good Reason (as defined below), in either case on or after September 6, 2012 and prior to the occurrence of a Change in Control (as defined below), the Shares subject to this Option that would otherwise have vested within twelve months of the Date of Termination (as defined below) had you remained in employment through such date shall immediately vest and become immediately exercisable, and (ii) if your employment is terminated by the Company without Cause or by you for Good Reason, in either case after the occurrence of a Change in Control, the Shares subject to this Option that would otherwise have vested within twenty-four months of the Date of Termination had you remained in employment through such date shall immediately vest and become immediately exercisable.

For purposes of this Option, “Cause” shall mean that the Company has made a good faith determination that any of the following has occurred:

(1) the continued failure by the Executive to substantially perform his material duties to the Company (other than due to mental or physical disability) after written notice specifying such failure and the manner in which the Executive may rectify such failure in the future; provided, that in the case of conduct above which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure;

(2) the Executive has engaged in misconduct that has resulted in material damage to the Company’s business or reputation;

(3) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, (A) a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct, or (B) a felony crime;

(4) the Executive has engaged in fraud against the Company or misappropriated Company property (other than incidental property); or

(5) the Executive has materially breached his employment agreement (“Employment Agreement”) with the Company dated September 6, 2011 (the “Effective Date”); provided, that in the case of a material breach

2

which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure.

For purposes of this Option, “Good Reason” shall mean the occurrence, without the Executive’s express prior written consent, of any one or more of the following:

(1) a material diminution by the Company in the Executive’s overall authority, duties and responsibilities; provided that this provision shall not include a diminution in authority, duties and responsibilities solely by virtue of the Company becoming private or being acquired and made part of a larger entity;

(2) a material breach of the Employment Agreement by the Company;

(3) a material change to the reporting structure set forth in Section 2(a) of the Employment Agreement;

(4) the Company’s requiring the Executive to be based at a location in excess of 35 miles from the location of the Executive’s principal job location or office specified in Section 2(b), except for required travel on the Company’s business to an extent substantially consistent with the Executive’s position; or

(5) a material reduction by the Company of the Executive’s Base Salary or performance-based target bonus percentage, as the same shall be increased from time to time;

provided that the foregoing events shall constitute Good Reason only if the Company fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason; and provided, further, that “Good Reason” shall cease to exist for an event on the 30th day following its occurrence unless the Executive has given the Company written notice thereof prior to such date.

3

For purposes of this Option, a “Change in Control” shall mean:

(1) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (as such term is used in Section 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting Stock of the Company; provided that this clause (1) shall not apply with respect to a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date;

(2) all or substantially all of the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (2) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity;

(3) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets if such plan of liquidation will result in the winding-up of the business of the Company; or

(4) the consummation of any merger, consolidation or other similar corporate transaction unless, immediately after such transaction, the stockholders of the Company

4

immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or its ultimate parent company if such surviving company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (4) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or the ultimate parent company of such surviving or successor company if such surviving company is a subsidiary of another entity.

For purposes of this definition, “the Company” shall include any entity that succeeds to all or substantially all of the business of the Company; “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation; and references to ownership of “more than 50% of the Voting Stock” shall mean the ownership of shares of Voting Stock that represent the right to exercise more than 50% of the votes entitled to be cast in the election of directors of a corporation.

For purposes of this Option, “Date of Termination” shall mean:

(1) if your employment is terminated by the Company without Cause, the date on which a notice indicating the specific termination provisions in the Employment Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under that provision (“Notice of Termination”) is given or any later date set forth in such Notice of Termination, and

(2) if your employment is terminated by you for Good Reason, 30 days after the date of the Company’s receipt of written notice from you of the event which constitutes Good Reason (unless the Company has cured such event within such 30 day period).

5

	Except as otherwise provided above, in the event of the termination of your Service for any reason, all unvested Options shall be immediately forfeited without consideration.
	Except as otherwise provided above, no Shares subject to this Option shall vest or become exercisable upon a Change in Control (as such term is defined in the Plan, the Employment Agreement, or otherwise).
Termination Period:	You may exercise this Option for 3 months after termination of your Service except as set forth in Section 4 of the Stock Option Agreement and in no event may you exercise this Option after the Expiration Date. You are responsible for keeping track of these exercise periods following a termination of your Service for any reason. The Company will not provide further notice of such periods.

Unless otherwise defined in this Notice of Stock Option Grant, the terms used herein shall have the meanings assigned to them in the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”).

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and the Stock Option Agreement, all of which are attached to, and made a part of, this document.

In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide Service over time, that this Option is not being granted to you as consideration for services you rendered to the Company (or any Parent, Subsidiary, or Affiliate) prior to your Date of Grant, and that nothing in this Notice of Stock Option Grant or the attached documents confers upon you any right to continue your employment or consulting relationship with the Company (or any Parent, Subsidiary, or Affiliate) for any period of time, nor does it interfere in any way with your right or the Company’s (or any Parent’s, Subsidiary’s, or Affiliate’s) right to terminate that relationship at any time, for any reason, with or without cause.

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

6

OPTIONEE:	MARTHA STEWART LIVING OMNIMEDIA, INC.
	By:
Signature
	Title: President and Chief Operating Officer
Print Name

7

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

STOCK OPTION AGREEMENT

1. Grant of Option. Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), hereby grants to the Optionee named in the Notice of Stock Option Grant attached to this Stock Option Agreement (the “Optionee”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Stock Option Grant (the “Notice”), at the exercise price per Share set forth in the Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the Company’s Omnibus Stock and Option Compensation Plan (the “Plan”), which is incorporated in this Stock Option Agreement (the “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the meanings defined in the Plan.

This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a Nonstatutory Stock Option. Notwithstanding the foregoing, even if designated as an Incentive Stock Option, if the Shares subject to this Option (and all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans of the Company) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option in accordance with applicable law.

2. Exercise of Option.

(a) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule, Termination Period and Expiration Date set forth in the Notice, Section 4 below and with the applicable provisions of the Plan. This Option may not be exercised for a fraction of a share.

(b) Method of Exercise.

(i) This Option shall be exercisable by execution and delivery of the Notice of Exercise attached hereto as Exhibit A or of any other form of written notice approved for such purpose by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Committee in its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.

(ii) As a condition to the exercise of this Option and as further set forth in Section 13 of the Plan, Optionee agrees to make adequate provision for federal, state or other tax or withholding obligations, if any, which arise upon the grant, vesting or exercise of this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise.

(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless such issuance or delivery would comply with all applicable laws, rules and regulations, with such compliance determined by the Company in consultation with its legal counsel. This Option may not be exercised until such time as the Plan has been approved by the Company’s stockholders, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any applicable laws, rules or regulations, including any applicable U.S. federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by applicable laws, rules or regulations. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which this Option is exercised with respect to such Shares.

(iv) Subject to compliance with all applicable laws, rules and regulations, this Option shall be deemed to be exercised upon receipt by the Company of the appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable withholding obligations.

3. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination of the following, at the election of Optionee: (a) cash, (b) check, (c) Cashless Exercise, or (d) surrender of previously owned Shares.

4. Termination of Relationship. Following the date of termination of Optionee’s Service for any reason (the “Termination Date”), Optionee may exercise this Option only as set forth in the Notice and this Section 4. If Optionee does not exercise this Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event may this Option be exercised after the Expiration Date set forth in the Notice. In the event of termination of Optionee’s Service other than as a result of Optionee’s Disability, death or for Cause, Optionee may, to the extent Optionee is vested in the Option Shares at the Termination Date, exercise this Option during the Termination Period set forth in the Notice. In the event of any other termination, Optionee may exercise this Option only as described below:

(a) Termination upon Disability of Optionee. In the event of termination of Optionee’s Service as a result of Optionee’s Disability, Optionee may, but only within 12 months from the Termination Date, exercise this Option to the extent Optionee is vested in the Option Shares.

2

(b) Death of Optionee. In the event of the death of Optionee while in Service or within 3 months following the termination of Optionee’s Service, this Option may be exercised at any time within 12 months following the date of death by any beneficiary properly designated by the Optionee or, if no such beneficiary exists, by the Optionee’s estate or by a person who acquired the right to exercise this Option by bequest or inheritance, but only to the extent Optionee is vested in the Option Shares.

(c) Termination for Cause. In the event Optionee’s Service is terminated for Cause, this Option shall terminate immediately upon such termination for Cause. In the event Optionee’s employment or consulting relationship with the Company is suspended pending investigation of whether such relationship shall be terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.

5. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution. The designation of a beneficiary does not constitute a transfer. This Option may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

6. Authorization to Release Necessary Personal Information.

(a) Optionee hereby authorizes and directs Optionee’s employer to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding Optionee’s employment, the nature and amount of Optionee’s compensation and the facts and conditions of Optionee’s participation in the Plan (including, but not limited to, Optionee’s name, home address, telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that the Data may be transferred to the Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of this Option under the Plan or with whom shares acquired pursuant to this Option or cash from the sale of shares underlying this Option may be deposited. Optionee acknowledges that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of Optionee’s residence. Furthermore, Optionee acknowledges and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties is necessary for Optionee’s participation in the Plan.

(b) Optionee may at any time withdraw the consents herein by contacting Optionee’s local human resources representative in writing. Optionee further acknowledges that withdrawal of consent may affect Optionee’s ability to exercise or realize benefits from this Option, and Optionee’s ability to participate in the Plan.

3

7. No Entitlement or Claims for Compensation.

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

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

(c) Optionee acknowledges that he or she is voluntarily participating in the Plan.

(d) The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value, the Option will have no value. If Optionee exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.

8. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

9. Translation. If this Agreement or any other document related to the Plan is translated into a language other then English and if the translated version is different from the English version, the English version will take precedence.

10. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby

4

agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee regarding any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement, the Plan terms and provisions shall prevail.

11. Miscellaneous.

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

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

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

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

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

(f) Section 409A. The intent of the parties is that the Options under this Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“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.

5

EXHIBIT A

NOTICE OF EXERCISE

To:	Martha Stewart Living Omnimedia, Inc.
Attn:	Administrator of the Omnibus Stock and Option Compensation Plan
Subject:	Notice of Intention to Exercise Stock Option

This Notice of Exercise constitutes official notice that the undersigned intends to exercise Optionee’s option to purchase                  shares of Martha Stewart Living Omnimedia, Inc. Common Stock, under and pursuant to the Company’s Omnibus Stock and Option Compensation Plan (the “Plan”) and the Notice of Stock Option Grant and Stock Option Agreement (the “Agreement”) dated                     , as follows:

Number of Shares:
Exercise Price per Share:
Total Exercise Price:
Method of Payment of Exercise Price:
The shares should be registered in the name (s) of:
	and
	.1

By signing below, I hereby agree to be bound by all of the terms and conditions set forth in the Plan and the Agreement. If applicable, proof of my right to purchase the shares pursuant to the Plan and the Agreement is enclosed.²

Dated:
(Signature)	(Signature)3
(Please Print Name)	(Please Print Name)
(Full Address)	(Full Address)

1 If more than one name is listed, please specify whether the owners will hold the shares as community property or as joint tenants with the right of survivorship.

2 Applicable if someone other than the Optionee (e.g., a death beneficiary) is exercising the stock option.

3 Each person in whose name shares are to be registered must sign this Notice of Exercise.

EXHIBIT B

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

NOTICE OF STOCK OPTION GRANT

Optionee:

Kenneth P. West

You have been granted an option (the “Option”) to purchase Common Stock of Martha Stewart Living Omnimedia, Inc. (the “Company”), as follows:

Date of Grant:	September 6, 2011
Exercise Price Per Share:	As to the Shares subject to this Option that vest on Milestone 6 (as defined below), $6.00; as to the Shares subject to this Option that vest on Milestone 8 (as defined below), $8.00; as to the Shares subject to this Option that vest on Milestone 10 (as defined below), $10.00; and as to the Shares subject to this Option that vest on Milestone 12 (as defined below), $12.00
Total Number of Shares:	100,000
Total Exercise Price:	As to the Shares subject to this Option that vest on Milestone 6 (as defined below), $150,000; as to the Shares subject to this Option that vest on Milestone 8 (as defined below), $200,000; as to the Shares subject to this Option that vest on Milestone 10 (as defined below), $250,000; and as to the Shares subject to this Option that vest on Milestone 12 (as defined below), $300,000
Type of Option:	Incentive Stock Option
	x     Nonstatutory Stock Option
Expiration Date:	September 6, 2021
Vesting Schedule:	So long as your Service continues, the Shares underlying this Option shall vest and become exercisable in accordance with the following schedule:
	(i) 25,000 of the Shares subject to this Option shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the period beginning on September 6, 2011 and ending on September 6, 2014 (the “Performance Period”) has been at least equal to six (6) dollars (the “Milestone 6”);

	(ii) 25,000 of the Shares subject to this Option shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to eight (8) dollars (the “Milestone 8”);
	(iii) 25,000 of the Shares subject to this Option shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to ten (10) dollars (the “Milestone 10”); and
	(iv) 25,000 of the Shares subject to this Option shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to twelve (12) dollars (the “Milestone 12”).
	If some or all of the Shares subject to this Option referred to in sections (i), (ii), (iii), and (iv) above do not vest in accordance with such sections, all of such Shares subject to this Option that do not vest as of September 6, 2014 shall be immediately forfeited and terminate without consideration.
	In the event of the termination of your Service for any reason, all unvested Options shall be immediately forfeited without consideration.
	No Shares subject to this Option shall vest or become exercisable upon a Change in Control (as such term is defined in the Plan or otherwise).
Termination Period:	You may exercise this Option for 3 months after termination of your Service except as set forth in Section 4 of the Stock Option Agreement and in no event may you exercise this Option after the Expiration Date. You are

2

responsible for keeping track of these exercise periods following a termination of your Service for any reason. The Company will not provide further notice of such periods.

Unless otherwise defined in this Notice of Stock Option Grant, the terms used herein shall have the meanings assigned to them in the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”).

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and the Stock Option Agreement, all of which are attached to, and made a part of, this document.

In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide Service over time, that this Option is not being granted to you as consideration for services you rendered to the Company (or any Parent, Subsidiary, or Affiliate) prior to your Date of Grant, and that nothing in this Notice of Stock Option Grant or the attached documents confers upon you any right to continue your employment or consulting relationship with the Company (or any Parent, Subsidiary, or Affiliate) for any period of time, nor does it interfere in any way with your right or the Company’s (or any Parent’s, Subsidiary’s, or Affiliate’s) right to terminate that relationship at any time, for any reason, with or without cause.

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

OPTIONEE:	MARTHA STEWART LIVING OMNIMEDIA, INC.
	By:
Signature
	Title: President and Chief Operating Officer

3

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

STOCK OPTION AGREEMENT

1. Grant of Option. Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), hereby grants to the Optionee named in the Notice of Stock Option Grant attached to this Stock Option Agreement (the “Optionee”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Stock Option Grant (the “Notice”), at the exercise price per Share set forth in the Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the Company’s Omnibus Stock and Option Compensation Plan (the “Plan”), which is incorporated in this Stock Option Agreement (the “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement shall have the meanings defined in the Plan.

This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a Nonstatutory Stock Option. Notwithstanding the foregoing, even if designated as an Incentive Stock Option, if the Shares subject to this Option (and all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans of the Company) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option in accordance with applicable law.

2. Exercise of Option.

(a) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule, Termination Period and Expiration Date set forth in the Notice, Section 4 below and with the applicable provisions of the Plan. This Option may not be exercised for a fraction of a share.

(b) Method of Exercise.

(v) This Option shall be exercisable by execution and delivery of the Notice of Exercise attached hereto as Exhibit A or of any other form of written notice approved for such purpose by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Committee in its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.

(vi) As a condition to the exercise of this Option and as further set forth in Section 13 of the Plan, Optionee agrees to make adequate provision for federal, state or other tax or withholding obligations, if any, which arise upon the grant, vesting or exercise of this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise.

(vii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless such issuance or delivery would comply with all applicable laws, rules and regulations, with such compliance determined by the Company in consultation with its legal counsel. This Option may not be exercised until such time as the Plan has been approved by the Company’s stockholders, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any applicable laws, rules or regulations, including any applicable U.S. federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by applicable laws, rules or regulations. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which this Option is exercised with respect to such Shares.

(viii) Subject to compliance with all applicable laws, rules and regulations, this Option shall be deemed to be exercised upon receipt by the Company of the appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable withholding obligations.

3. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination of the following, at the election of Optionee: (a) cash, (b) check, (c) Cashless Exercise, or (d) surrender of previously owned Shares.

4. Termination of Relationship. Following the date of termination of Optionee’s Service for any reason (the “Termination Date”), Optionee may exercise this Option only as set forth in the Notice and this Section 4. If Optionee does not exercise this Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event may this Option be exercised after the Expiration Date set forth in the Notice. In the event of termination of Optionee’s Service other than as a result of Optionee’s Disability, death or for Cause, Optionee may, to the extent Optionee is vested in the Option Shares at the Termination Date, exercise this Option during the Termination Period set forth in the Notice. In the event of any other termination, Optionee may exercise this Option only as described below:

(a) Termination upon Disability of Optionee. In the event of termination of Optionee’s Service as a result of Optionee’s Disability, Optionee may, but only within 12 months from the Termination Date, exercise this Option to the extent Optionee is vested in the Option Shares.

2

(b) Death of Optionee. In the event of the death of Optionee while in Service or within 3 months following the termination of Optionee’s Service, this Option may be exercised at any time within 12 months following the date of death by any beneficiary properly designated by the Optionee or, if no such beneficiary exists, by the Optionee’s estate or by a person who acquired the right to exercise this Option by bequest or inheritance, but only to the extent Optionee is vested in the Option Shares.

(c) Termination for Cause. In the event Optionee’s Service is terminated for Cause, this Option shall terminate immediately upon such termination for Cause. In the event Optionee’s employment or consulting relationship with the Company is suspended pending investigation of whether such relationship shall be terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.

5. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution. The designation of a beneficiary does not constitute a transfer. This Option may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

6. Authorization to Release Necessary Personal Information.

(a) Optionee hereby authorizes and directs Optionee’s employer to collect, use and transfer in electronic or other form, any personal information (the “Data”) regarding Optionee’s employment, the nature and amount of Optionee’s compensation and the facts and conditions of Optionee’s participation in the Plan (including, but not limited to, Optionee’s name, home address, telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of shares held and the details of all Awards or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding) for the purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that the Data may be transferred to the Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer to a broker or other third party assisting with the administration of this Option under the Plan or with whom shares acquired pursuant to this Option or cash from the sale of shares underlying this Option may be deposited. Optionee acknowledges that recipients of the Data may be located in different countries, and those countries may have data privacy laws and protections different from those in the country of Optionee’s residence. Furthermore, Optionee acknowledges and understand that the transfer of the Data to the Company or any of its Parent, Subsidiaries, or Affiliates, or to any third parties is necessary for Optionee’s participation in the Plan.

(b) Optionee may at any time withdraw the consents herein by contacting Optionee’s local human resources representative in writing. Optionee further acknowledges that withdrawal of consent may affect Optionee’s ability to exercise or realize benefits from this Option, and Optionee’s ability to participate in the Plan.

3

7. No Entitlement or Claims for Compensation.

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

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

(c) Optionee acknowledges that he or she is voluntarily participating in the Plan.

(d) The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value, the Option will have no value. If Optionee exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.

8. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

9. Translation. If this Agreement or any other document related to the Plan is translated into a language other then English and if the translated version is different from the English version, the English version will take precedence.

10. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby

4

agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee regarding any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement, the Plan terms and provisions shall prevail.

11. Miscellaneous.

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

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

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

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

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

(f) Section 409A. The intent of the parties is that the Options under this Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“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.

5

EXHIBIT A

NOTICE OF EXERCISE

To:	Martha Stewart Living Omnimedia, Inc.
Attn:	Administrator of the Omnibus Stock and Option Compensation Plan
Subject:	Notice of Intention to Exercise Stock Option

This Notice of Exercise constitutes official notice that the undersigned intends to exercise Optionee’s option to purchase                  shares of Martha Stewart Living Omnimedia, Inc. Common Stock, under and pursuant to the Company’s Omnibus Stock and Option Compensation Plan (the “Plan”) and the Notice of Stock Option Grant and Stock Option Agreement (the “Agreement”) dated                 , as follows:

Number of Shares:
Exercise Price per Share:
Total Exercise Price:
Method of Payment of Exercise Price:
The shares should be registered in the name (s) of:
	and
	.4

By signing below, I hereby agree to be bound by all of the terms and conditions set forth in the Plan and the Agreement. If applicable, proof of my right to purchase the shares pursuant to the Plan and the Agreement is enclosed.⁵

Dated:
(Signature)	(Signature)6
(Please Print Name)	(Please Print Name)
(Full Address)	(Full Address)

⁴  If more than one name is listed, please specify whether the owners will hold the shares as community property or as joint tenants with the right of survivorship.

⁵ Applicable if someone other than the Optionee (e.g., a death beneficiary) is exercising the stock option.

⁶ Each person in whose name shares are to be registered must sign this Notice of Exercise.

EXHIBIT C

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (the “Agreement”) is made and entered into as of September 6, 2011 by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Kenneth P. West (“you” or “Executive”) pursuant to the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan, which is attached to, and made a part of, this Agreement. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

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

1. Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, 50,000 stock units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share (the “Restricted Stock Units”), on the terms and conditions set forth herein and in the Plan.

2. Vesting of Restricted Stock Units.

(a) So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule (each date specified being a “Vesting Date”):

• 16,667 Restricted Stock Units shall vest on September 6, 2013;

• 16,667 Restricted Stock Units shall vest on September 6, 2014; and

• 16,666 Restricted Stock Units shall vest on September 6, 2015.

(b) Notwithstanding the foregoing, (i) if your employment is terminated by the Company without Cause (as defined below) or by you for Good Reason (as defined below), in either case on or after September 6, 2012 and prior to the occurrence of a Change in Control (as defined below), the Restricted Stock Units that would otherwise have vested within twelve months of the Date of Termination (as defined below) had you remained in employment through such date shall immediately vest on the date of your “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and (ii) if your employment is terminated by the Company without Cause or by you for Good Reason, in either case after the occurrence of a Change in Control, the Restricted Stock Units that would otherwise have vested within twenty-four months of the Date of Termination had you remained in employment through such date shall immediately vest on the date of your “separation from service” as defined in Section 409A.

(c) For purposes of this Agreement, “Cause” shall mean that the Company has made a good faith determination that any of the following has occurred:

(i) the continued failure by the Executive to substantially perform his material duties to the Company (other than due to mental or physical disability) after written notice specifying such failure and the manner in which the Executive may rectify such failure in the future; provided, that in the case of conduct above which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure;

(ii) the Executive has engaged in misconduct that has resulted in material damage to the Company’ s business or reputation;

(iii) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, (A) a crime involving moral turpitude, fraud, forgery, embezzlement or similar conduct, or (B) a felony crime;

(iv) the Executive has engaged in fraud against the Company or misappropriated Company property (other than incidental property); or

(v) the Executive has materially breached his employment agreement (“Employment Agreement”) with the Company dated September 6, 2011 (the “Effective Date”); provided, that in the case of a material breach which is capable of being cured, the Executive shall have a period of thirty (30) days after the Executive is provided with written notice thereof in which to cure.

(d) For purposes of this Agreement, “Good Reason” shall mean the occurrence, without the Executive’s express prior written consent, of any one or more of the following:

(i) a material diminution by the Company in the Executive’ s overall authority, duties and responsibilities; provided that this provision shall not include a diminution in authority, duties and responsibilities solely by virtue of the Company becoming private or being acquired and made part of a larger entity;

(ii) a material breach of the Employment Agreement by the Company;

(iii) a material change to the reporting structure set forth in Section 2(a) of the Employment Agreement;

(iv) the Company’ s requiring the Executive to be based at a location in excess of 35 miles from the location of the Executive’ s principal job location or office specified in Section 2(b), except for required travel on the Company’ s business to an extent substantially consistent with the Executive’ s position; or

2

(v) a material reduction by the Company of the Executive’s Base Salary or performance-based target bonus percentage, as the same shall be increased from time to time;

provided that the foregoing events shall constitute Good Reason only if the Company fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason; and provided, further, that “Good Reason” shall cease to exist for an event on the 30th day following its occurrence unless the Executive has given the Company written notice thereof prior to such date.

(e) For purposes of this Agreement, a “Change in Control” shall mean:

(i) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (as such term is used in Section 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting Stock of the Company; provided that this clause (1) shall not apply with respect to a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date;

(ii) all or substantially all of the assets or business of the Company are disposed of pursuant to a merger, consolidation or other transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (2) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or succeeding to all or substantially all of the assets or business of the Company or the ultimate parent company of such surviving or successor company if such surviving or successor company is a subsidiary of another entity;

(iii) the Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets if such plan of liquidation will result in the winding-up of the business of the Company; or

(iv) the consummation of any merger, consolidation or other similar corporate transaction unless, immediately after such transaction, the stockholders of the Company immediately prior to the transaction own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company prior to such transaction more than 50% of the Voting Stock of the company surviving such transaction or its ultimate parent company if such surviving company is a subsidiary of another entity (there being excluded from the number of shares held by such stockholders, but not from the Voting Stock of the combined

3

company, any shares received by affiliates of such other company in exchange for stock of such other company); provided that this clause (iv) shall not apply if, immediately after such transaction, a stockholder of the Company who beneficially owns more than 50% of the Voting Stock of the Company on the Effective Date owns, directly or indirectly, more than 50% of the Voting Stock of the company surviving such transaction or the ultimate parent company of such surviving or successor company if such surviving company is a subsidiary of another entity.

For purposes of this definition, “the Company” shall include any entity that succeeds to all or substantially all of the business of the Company; “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation; and references to ownership of “more than 50% of the Voting Stock” shall mean the ownership of shares of Voting Stock that represent the right to exercise more than 50% of the votes entitled to be cast in the election of directors of a corporation.

(f) For purposes of this Agreement, “Date of Termination” shall mean:

(i) if your employment is terminated by the Company without Cause, the date on which a notice indicating the specific termination provisions in the Employment Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under that provision (“Notice of Termination”) is given or any later date set forth in such Notice of Termination, and

(ii) if your employment is terminated by you for Good Reason, 30 days after the date of the Company’s receipt of written notice from you of the event which constitutes Good Reason (unless the Company has cured such event within such 30 day period).

(g) Except as otherwise provided above, no Restricted Stock Units shall vest or become exercisable upon a Change in Control (as such term is defined in the Plan, the Employment Agreement, or otherwise).

(h) Payments, if any, shall be made as soon as practicable after the applicable Vesting Date, but in any event no later than 30 days following the Vesting Date.

3. Termination of Service. Except as set forth in Section 2 above, in the event of the termination of your Service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

4. Settlement of Restricted Stock Units. Restricted Stock Units shall be settled in Shares, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until such issuance otherwise complies with all applicable law. Prior to the time the Restricted Stock Units are settled, you will have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

5. Withholding Taxes. You agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax obligations that arise in connection with the Restricted Stock Units which, at the sole discretion of the Committee, may include (i) having the

4

Company withhold Shares from the settlement of the Restricted Stock Units, or (ii) any other arrangement approved by the Company, in either case, equal in value to the amount necessary to satisfy any such tax obligations. Absent any arrangements to the contrary, the Company may withhold Shares from the settlement of the Restricted Stock Units to satisfy the applicable tax withholding obligations hereunder.

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

7. Non-Transferability of Restricted Stock Units. The Restricted Stock Units shall not be transferable other than by will or the laws of descent and distribution. The designation of a beneficiary or entry into a will or similar arrangement does not constitute a transfer. The terms of this Agreement shall be binding upon your executors, administrators, heirs, successors and assigns.

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

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

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

11. Voting and Other Rights. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled.

5

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

13. No Entitlement or Claims for Compensation.

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

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

14. Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by telegram or fax or forty-eight

6

(48) hours after being deposited in the mail, as certified or registered mail, with postage prepaid, and addressed to the Company at its principal corporate offices and to you at the address maintained for you in the Company’s records.

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

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

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

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

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

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

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

7

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

23. Section 409A.

(a) The intent of the parties is that the Restricted Stock Units and payments under this Agreement either comply with or are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“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.

(b) If you are deemed on the date of your “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 under this Agreement that is considered “deferred compensation” under Section 409A the timing of which depends on your separation from service, such payment shall not be made prior to the earlier of (i) the expiration of the six-month period measured from the date of your separation from service, or (ii) the date of your death, if and to the extent such six-month delay is required to comply with Section 409A(a)(2)(B). In such event, on or promptly after the first business day following the six-month delay period, all payments delayed pursuant to this Section 23 shall be paid or reimbursed to you in a lump sum, and any remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) Each separate payment hereunder shall be treated as a separate payment to the maximum extent permissible under Section 409A.

*        *        *         *

(Signature Page Follows)

8

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this      day of                     , 201    .

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:
	(Signature)

Name: Lisa Gersh

Title: President and Chief Operating Officer

RECIPIENT:

By:
	(Signature)

Address:

Telephone Number:

E-mail Address:

9

EXHIBIT D

MARTHA STEWART LIVING OMNIMEDIA, INC.

OMNIBUS STOCK AND OPTION COMPENSATION PLAN

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (the “Agreement”) is made and entered into as of September 6, 2011 by and between Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), and Kenneth P. West pursuant to the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Option Compensation Plan (the “Plan”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Plan, which is attached to, and made a part of, this Agreement. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of this Agreement, the Plan terms and provisions shall prevail.

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

23. Restricted Stock Units. Pursuant to the Plan, the Company hereby grants to you, and you hereby accept from the Company, 60,000 stock units, each of which is a bookkeeping entry representing the equivalent in value of one (1) Share (the “Restricted Stock Units”), on the terms and conditions set forth herein and in the Plan.

24. Vesting of Restricted Stock Units.

(a) So long as your Service continues, the Restricted Stock Units shall vest in accordance with the following schedule (each date specified being a “Vesting Date”):

(i) 15,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the period beginning on September 6, 2011 and ending on September 6, 2014 (the “Performance Period”) has been at least equal to eight (8) dollars;

(ii) 15,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to ten (10) dollars;

(iii) 15,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to twelve (12) dollars; and

(iv) 15,000 Restricted Stock Units shall vest at such time as the trailing average closing price of the Common Stock of the Company during any thirty (30) consecutive days during the Performance Period has been at least equal to fourteen (14) dollars.

(b) If some or all of the Restricted Stock Units referred to in subsections (a)(i), (a)(ii), (a)(iii) or (a)(iv) above do not vest in accordance with such subsections, all of such Restricted Stock Units that do not vest as of September 6, 2014 shall be immediately forfeited without consideration.

(c) No Restricted Stock Units shall vest or become exercisable upon a Change in Control (as such term is defined in the Plan or otherwise).

(d) Payments, if any, shall be made as soon as practicable after the applicable Vesting Date, but in any event no later than 30 days following the Vesting Date.

25. Termination of Service. In the event of the termination of your Service for any reason, all unvested Restricted Stock Units shall be immediately forfeited without consideration.

26. Settlement of Restricted Stock Units. Restricted Stock Units shall be settled in Shares, provided that the Company shall have no obligation to issue Shares pursuant to this Agreement unless and until such issuance otherwise complies with all applicable law. Prior to the time the Restricted Stock Units are settled, you will have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company.

27. Withholding Taxes. You agree to make arrangements satisfactory to the Company for the satisfaction of any applicable tax obligations that arise in connection with the Restricted Stock Units which, at the sole discretion of the Committee, may include (i) having the Company withhold Shares from the settlement of the Restricted Stock Units, or (ii) any other arrangement approved by the Company, in either case, equal in value to the amount necessary to satisfy any such tax obligations. Absent any arrangements to the contrary, the Company may withhold Shares from the settlement of the Restricted Stock Units to satisfy the applicable tax withholding obligations hereunder.

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

29. Non-Transferability of Restricted Stock Units. The Restricted Stock Units shall not be transferable other than by will or the laws of descent and distribution. The designation of a beneficiary or entry into a will or similar arrangement does not constitute a transfer. The terms of this Agreement shall be binding upon your executors, administrators, heirs, successors and assigns.

30. Restriction on Transfer. Regardless of whether the transfer or issuance of the Shares to be issued pursuant to the Restricted Stock Units have been registered under the

2

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

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

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

33. Voting and Other Rights. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privileges of a stockholder of the Company unless and until the Restricted Stock Units are settled.

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

3

35. No Entitlement or Claims for Compensation.

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

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

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

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

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

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

4

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

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

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

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

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

23. Section 409A. The intent of the parties is that payments and benefits under this Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) under the short-term deferral exception thereunder 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. Each payment hereunder shall be treated as a separate payment to the maximum extent permissible under Section 409A.

*        *        *         *

(Signature Page Follows)

5

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this      day of             , 201    .

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:
	(Signature)

Name: Lisa Gersh

Title: President and Chief Operating Officer

RECIPIENT:

By:
	(Signature)

Address:

Telephone Number:

E-mail Address:

6

EX-10.5

Exhibit 10.5

EXECUTION VERSION

SEPARATION AGREEMENT AND GENERAL RELEASE

MARTHA STEWART LIVING OMNIMEDIA, INC. (including its current and former subsidiaries, and affiliates; the current and former officers, directors, agents and employees of each of the foregoing; and the successors and assigns of each of the foregoing; which shall be collectively hereinafter referred to as “the Company”), and Peter Hurwitz (including his successors, assigns, estate, heirs, executors, administrators and attorneys, which shall be collectively hereinafter referred to as “you” or “Mr. Hurwitz”) understand that Mr. Hurwitz’ employment will be terminated effective October 1, 2011 (the “Termination Date”), and agree to the following (the “Agreement”) in full and final resolution of all matters between them.

1. On and as of the Termination Date, you will relinquish all of your positions as an officer and/or director of the Company and your employment with the Company will terminate. You agree to sign any documents reasonably requested by the Company to confirm or effectuate the foregoing. From the date hereof until the Termination Date, you will make yourself available, at such times (which may be substantially full-time) and at such places as mutually agreeable to you and the Company, to assist the Company in the transition of your responsibilities and to assist the special committee of the Board of Directors of the Company as needed.

In addition, you agree that at any time after the Termination Date, you will cooperate with the Company and its attorneys in connection with any existing or future litigation against the Company, whether administrative, civil, or criminal in nature, in which and to the extent the Company deems your cooperation necessary, and that you will make yourself reasonably available, consistent with your other professional responsibilities, to confer with the Company’s attorneys, representatives and other personnel as reasonably necessary to assist the Company and/or provide truthful testimony as a witness. The Company will reimburse you, upon proper accounting, for reasonable expenses and disbursements incurred by you in assisting the Company pursuant to this paragraph and will pay you a reasonable per diem for each full business day you are required to devote to assisting the Company in connection with any such litigation.

2. Subject to this Agreement becoming effective in accordance with Section 17 hereof and your compliance with the provisions of this Agreement, you will be entitled to receive:

a. Your base salary through the Termination Date, which shall be paid in accordance with the Company’s regular payroll practices;

b. Your accrued unpaid PTO, if any, with respect to the period ending on the Termination Date, which shall be paid no later than 30 days after the Termination Date;

c. A severance payment of $680,000, which shall be paid in a lump sum no later than 45 days after the Termination Date;

d. Accelerated vesting, which will become effective as of the Termination Date, of your outstanding unvested stock options and restricted stock units (other than any performance based awards) that would next vest if not for your termination of employment as of October 1, 2011 (which awards are set forth on Schedule A hereto);

e. Extension of the period for exercising your vested stock options to one year from the Termination Date (or the end of the remaining term, if shorter); and

f. Continuation of your rights to indemnification under the Company’s certificate of incorporation, bylaws or other corporate governance document, or any applicable insurance policy.

3. All benefits coverage for you (including your dependents) shall end on the last day of the month in which the Termination Date occurs. Note that under COBRA, you have the option to extend your health care coverage for up to eighteen months. To the extent that you elect under COBRA to extend certain benefits, you shall be responsible directly for the entire cost of such benefits; provided, however, that the Company will reimburse you for the applicable COBRA premiums for the period commencing on the Termination Date and ending on the earlier of the nine (9) month anniversary of the Termination Date or your eligibility for other employer-provided health care coverage. Further information regarding COBRA and the applicable forms shall be provided under separate cover. If you have a Flexible Spending Account, you shall have ninety (90) days from your Termination Date to claim eligible expenses incurred on or prior to your Termination Date; provided that you may have an opportunity to elect under COBRA to continue to make contributions to your Flexible Spending Account through the remainder of the calendar year in which the Termination Date occurs, in which case (and provided you made such contributions) you would be able claim, for a period of ninety (90) days from the end of such calendar year, to claim eligible expenses incurred through the end of such calendar year.

4. Your contributions to the Company’s 401(k) plan will cease effective on the Termination Date. Merrill Lynch is the Company’s 401(k) plan administrator. Further information and important tax information will be provided under separate cover.

5. In consideration of the Company’s agreements set forth in this Agreement, Mr. Hurwitz releases and forever discharges the Company from any and all causes of action, claims, demands, damages, liabilities, liens costs and expenses (including without limitation attorneys’ fees) (collectively, “Claims”) of every kind and nature whatsoever, whether known or unknown, related in any way to any acts, failures to act, omissions, facts or circumstances occurring on or prior to the date of this Agreement, including but not limited to any and all Claims (i) arising out of or in any way related to your employment with the Company and/or the termination of such employment, including without limitation Claims for additional salary, bonus, incentive, commission, benefits, expenses, vacations, back pay or front pay; (ii) in tort, including but not limited to wrongful or retaliatory discharge in violation of public policy, emotional distress, slander, defamation,

/s/ PH

2

and interference with contractual relations; (iii) in contract, whether express or implied; (iv) under any Company policy, procedure, benefit plan or other agreement; or (v) under any and all federal, state or local laws or ordinances, including but not limited to Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act (excluding those involving vested benefits in the Company’s 401(k) plan), the Fair Labor Standards Act, the Federal Family and Medical Leave Act, the Sarbanes-Oxley Act, the New York State Constitution, the New York Human Rights Law, the New York Labor Law, the New York Civil Rights Law, the New York Wage and Hour Law, the New York Whistle Blower Law, the New York Retaliatory Action By Employers Law, the New York Non-Discrimination for Legal Actions Law, the New York Human Rights Law, and the New York City Human Rights Law, for harassment or discrimination on the basis of any protected classification, whistle blowing, or retaliation of any kind; or any other cause of action. You represent and warrant that you are the sole and lawful owner of all right, title and interest in and to every Claim and other matter that you are releasing hereby and that no other party has received any assignment or other right of substitution or subrogation to any such claim or matter. You also represent that you have the full power and authority to execute this Agreement on behalf of yourself and the other parties that may be included in the definition of Mr. Hurwitz above.

Additionally, you covenant never to bring any action or proceeding against the Company related to any claim released hereby. Notwithstanding the foregoing, this Agreement (i) does not extend to those rights which as a matter of law cannot be waived; (ii) does not limit any right you may have to file a charge or complaint with any state or federal agency or to participate or cooperate in such a matter (but you do pursuant to this Agreement waive the right to obtain any monetary damages resulting from any action or proceeding that may be brought by any state or federal agency); (iii) does not limit you rights to payments under this Agreement or your rights to benefits under the Company’s benefit plans (other than any severance plan) in accordance with the terms of such plans; and (iv) does not limit any right you may have to indemnification under the Company’s certificate of incorporation, bylaws or other corporate governance document, or any applicable insurance policy.

6. Mr. Hurwitz affirms, by signing this Agreement, that no claims against the Company are currently pending regarding any issues relating to or arising out of his employment or the termination thereof, and agrees not to file any such actions against the Company in any court, or in any other forum for his monetary benefit, in the future, except for any action which may be necessary to enforce the terms of this Agreement.

7. The Company affirms, by signing this Agreement, that the Board of Directors of the Company is not aware of any claims that the Company may have against you arising out of your employment with the Company.

8. Mr. Hurwitz agrees that on or before the Termination Date he shall turn over to the Company any property, material, documents and/or equipment furnished to and/or maintained by him, in whatever form of media (including in printed form or stored

/s/ PH

3

magnetically, optically or electronically) in connection with his employment with the Company (including but not limited to books, laptop computer, cell phone, personal digital assistant, identification card, product, merchandise, catalogs, samples, employee handbook, customer records, price lists, accounts receivable and accounts payable records, computer records and printouts, supplier records, data analysis and any and all Company-related records on his home computers, cell phones and personal digital assistants) unless the Company otherwise agrees in writing to allow you to retain any such property, material, documents and/or equipment. You shall promptly submit to the Company a reimbursement request, with appropriate supporting documentation, for any outstanding expenses that may be reimbursable under the Company’s regular policy. You shall promptly pay any expenses that you incurred with respect to which the Company could be liable (e.g., expenses incurred on the Company’s corporate credit card); if those expenses were properly incurred in connection with the Company’s business, you shall submit those expenses with appropriate supporting documentation to the Company and the Company shall reimburse you therefore.

9. Except as may otherwise be required by valid legal process, Mr. Hurwitz agrees that he will not disclose or use for any purpose any trade secrets or proprietary or confidential Company information acquired by him during his employment. In the event that Mr. Hurwitz receives legal process concerning such information, he shall provide reasonable advance notice to the Company of such process and cooperate with the Company in responding to such process. In responding to any such process, the Company may, at its option and at its expense, designate counsel to represent Mr. Hurwitz. As used in this Agreement, “confidential information” shall, without limitation, include:

a. Financial information, such as earnings, assets, debts, prices, pricing structure, volume of sales or other financial data;

b. Supply and service information, such as the names and addresses of suppliers of goods and services, terms of supply or service or of particular transactions, related information about potential suppliers to the extent that such information is not generally known to the public, and to the extent that the combination of suppliers or use of a particular supplier though generally known or available, yields advantages to the Company, the details of which are not generally known;

c. Marketing and pricing information, such as details about ongoing or proposed marketing programs, agreements by or on behalf of the Company, sales forecasts, results of marketing efforts, and information about impending transactions;

d. Personnel information, such as employees’ personal or medical histories, compensation or other terms of employment, actual or proposed promotions, hiring, resignations, disciplinary actions, terminations or reasons therefore, training methods, performance information or any other employee information;

e. Non-public information acquired in your capacity as general counsel of the Company regarding the legal or business affairs of the Company (including its

/s/ PH

4

current and former subsidiaries, and affiliates; the current and former officers, directors, agents and employees of each of the foregoing; and the successors and assigns of each of the foregoing), whether or not such information is covered by the attorney/client privilege; or

f. Customer information, such as any compilation of past, or existing or prospective retail or wholesale customers’ names, addresses or backgrounds, records of purchases and prices, proposals or agreements between customers and the Company, status of customers accounts or credit, or related information about actual or prospective customers.

10. For a one-year period from the date of this Agreement, Mr. Hurwitz agrees not to, directly or indirectly, solicit any of the Company’s employees to leave the employment of the Company, or induce, request or cause any Company employee or any customer, supplier, licensee or business relation of the Company to (i) reduce, cancel or terminate any business relationship with the Company, or seek to do any of the foregoing or (ii) alter or attempt to alter the terms of such business relationship in a manner adverse to the Company. Nothing in this section limits your obligations under the Confidentiality and Non-Disclosure Agreement you entered into with the Company as part of your employment. If, at any time, the provisions of this paragraph shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, this paragraph shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and you agree that this paragraph as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. You agree that the remedies at law for any breach or threat of breach by you of this paragraph will be inadequate, and that, in addition to any other remedy to which the Company may be entitled at law or in equity, the Company will be entitled to seek a temporary or permanent injunction or injunctions or temporary restraining order or orders to prevent breaches thereof, and in connection with seeking or obtaining any such relief, the Company shall not be required to allege or prove any actual damage or the inadequacy of any remedy at law and shall not be required to post any bond or other security. Your agreement shall not be deemed to prohibit you from opposing such relief on the basis of a dispute of facts related to any such application.

11. Mr. Hurwitz agrees to keep the existence and terms of this Agreement and the circumstances leading up to such Agreement and his departure from the Company confidential. Accordingly, Mr. Hurwitz shall not disclose such information to any person or entity, including but not limited to current, former or future employees of the Company. This confidentiality requirement, however, shall not prohibit Mr. Hurwitz from: (1) disclosure to his spouse, attorney or tax agencies; (2) disclosure as otherwise required by valid legal process (subject to the limitations in the second and third sentences of Section 9 hereof); or (3) disclosing the confidentiality and non-interference provisions of this Agreement to any prospective or actual employer or anyone acting as his agent or on his behalf.

/s/ PH

5

12. Mr. Hurwitz understands that if he should violate any provision of this Agreement, the Company may take legal action to enforce the Agreement, and may be entitled to any and all other equitable and legal remedies which may be available to it. Mr. Hurwitz understands and agrees that in the event of his intentional breach of the provisions of paragraphs 8 through 11 in particular, the Company, after affording to Mr. Hurwitz notice of such alleged breach and a reasonable opportunity to cure (if capable of being cured), shall be entitled to cancel its portion of the Agreement, withhold any payment or other benefits to be provided under this Agreement and/or shall be entitled to his return of the payments already made to Mr. Hurwitz under this Agreement. Mr. Hurwitz acknowledges that his compliance with paragraphs 8 through 11 of this Agreement is necessary to protect the business and goodwill of the Company, and that a breach will result in irreparable and continuing damage to the Company, for which money damages may not provide adequate relief. Consequently, Mr. Hurwitz agrees that, in the event he breaches or threatens or attempts to breach this portion of the Agreement, the Company shall be entitled to seek temporary restraining orders and preliminary or permanent injunctions in order to prevent the occurrence of continuation of such harm and money damages insofar as they can be determined, and Mr. Hurwitz further agrees that in connection with any such request for relief by the Company, the Company shall not be required to prove that the Company’s remedies at law are inadequate and the Company shall not be required to post any bond or other security. Mr. Hurwitz acknowledges that these provisions are reasonably and properly required for the protection of the Company. In any proceeding brought by either party to enforce its rights under the Agreement, the prevailing party shall be entitled to the recovery of reasonable attorneys’ fees.

13. The parties acknowledge that this Agreement is not an admission on either of their parts. Accordingly, this Agreement may not be admissible in any forum as an admission of any kind; provided that this sentence shall not prohibit either party from admitting into evidence the terms of this Agreement for the sole purpose of enforcing such terms. The parties further agree that questions regarding the interpretation of the language of the Agreement shall not be presumptively interpreted against the drafter as the Agreement is a product of negotiations between the parties.

14. Mr. Hurwitz acknowledges and understands that:

a. the above-referenced consideration is the total payment he will receive from the Company and exceeds that to which he would otherwise be entitled should he determine not to execute this Agreement;

b. he shall no longer be considered an employee of the Company after the Termination Date, and therefore, that the benefits of employment, other than those specifically referenced in this Agreement, will not be available nor accrue after such date;

/s/ PH

6

c. he is not entitled to any additional payments under the Company’s policies, benefit or commission plans, or any expressed or implied agreement with the Company other than as set forth in this Agreement; and

d. it is in exchange for the good and sufficient consideration provided in this Agreement that Mr. Hurwitz agrees to the provisions herein.

15. Mr. Hurwitz acknowledges that he has the right, and has been advised by the Company, to consult with an attorney, and that he has done so to the extent he desired prior to executing this Agreement. Mr. Hurwitz understands that he is entitled to fully consider this Agreement for a period of up to 21 days. In the event you sign the Agreement prior to the expiration of the time to consider this Agreement, the remaining time shall be waived. Accordingly, this Agreement shall not become effective or enforceable, nor shall any consideration be paid, until after both parties have signed it and eight (8) days have elapsed from Mr. Hurwitz executing it, providing Mr. Hurwitz has not revoked his Agreement in writing before that date. Mr. Hurwitz also understands that he may revoke this Agreement for up to seven (7) days following its execution by sending written notice to Tanya Saffadi.

16. The Company will respond to requests for employment references from prospective employers by directing such requests to the Human Resource Department which will solely confirm Mr. Hurwitz’ dates of employment and job title, as well as his salary upon his written authorization

17. Should any provision of this Agreement be held to be illegal, void or unenforceable, such provision shall be of no force and effect. However, the illegality or unenforceability of any such provision shall have no effect upon, and shall not impair the enforceability of, any other provision of this Agreement.

18. This Agreement contains the complete understanding between the Company and Mr. Hurwitz related to the subject matter hereto, and supersedes all prior agreements and understandings between the Company and Mr. Hurwitz related to subject matter, but excluding the Confidentiality and Non-Disclosure Agreement and the Intellectual Property and Proprietary Information Agreement previously executed by Mr. Hurwitz, which is incorporated herein by reference). Each party agrees that it is not relying on any representations, whether written or oral, not set forth in this Agreement, in determining to execute this Agreement. This Agreement may not be modified, changed or altered by any oral promise or statement, nor shall any written modification of this Agreement be binding on the Company until such modification is approved in writing by an officer of the Company. In signing this Agreement, the parties are not relying on any fact, statement or assumption not set forth in this Agreement.

19. You may not assign any of your rights or obligations under this Agreement without obtaining the express written consent of the Company. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of each party’s respective successors and permitted assigns. This Agreement is made under, and shall be governed by and construed under, the laws of the State of New York, without reference to

/s/ PH

7

principles of choice of law that might call for application of the substantive law of another jurisdiction. The federal and state courts located in New York County, New York, shall have sole and exclusive jurisdiction over any dispute arising out of or relating to this Agreement, and each party hereby expressly consents to the jurisdiction of such courts and waives any objection (whether on grounds of venue, residence, domicile, inconvenience of forum or otherwise), to such a proceeding brought before such a court.

*        *        *         *        *        *

By signing below, the Company and Mr. Hurwitz indicate that they have carefully read and understood the terms of this Agreement, enter into this Agreement knowingly, voluntarily and of their own free will, understand its terms and significance and intend to abide by its provisions without exception.

MARTHA STEWART LIVING OMNIMEDIA, INC.
By:	/s/ Charles Koppelman	9-13-2011
		Date
/s/ Peter Hurwitz		9-13-2011
Peter Hurwitz		Date

/s/ PH

8

Schedule A

Equity Awards Subject to Accelerated Vesting

Type	Grant Date	Vest Date	Amount to Vest		Option Price
NQ	3/1/2010	3/1/2012		5,000	$	5.48
NQ	3/1/2011	3/1/2012		24,750	$	3.95
RSU	3/1/2011	3/1/2012		12,500

/s/ PH

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Lisa Gersh, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Martha Stewart Living Omnimedia, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2011

/s/ Lisa Gersh

Lisa Gersh

President (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kenneth P. West, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Martha Stewart Living Omnimedia, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(c) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(d) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2011

/s/ Kenneth P. West

Kenneth P. West

Chief Financial Officer (principal financial officer)

EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 U.S.C. Section 1350

In connection with the Quarterly Report of Martha Stewart Living Omnimedia, Inc. (the “registrant”) on Form 10-Q for the quarter ended September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “report”), we, Lisa Gersh and Kenneth P. West, principal executive officer and principal financial officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, that:

(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Dated: November 7, 2011	/s/ Lisa Gersh
	Lisa Gersh
	President (principal executive officer)
Dated: November 7, 2011	/s/ Kenneth P. West
	Kenneth P. West
	Chief Financial Officer (principal financial officer)

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2011	Dec. 31, 2010
Class A Common Stock [Member]
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	350,000,000	350,000,000
Common Stock, shares outstanding	29,501,969	28,753,212
Treasury Stock, shares	59,400	59,400
Class B Common Stock [Member]
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	150,000,000	150,000,000
Common Stock, shares outstanding	25,984,625	26,317,960

XML

Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
REVENUES
Publishing	$ 33,242	$ 34,318	$ 102,059	$ 100,945
Broadcasting	6,626	5,795	22,195	26,076
Merchandising	12,336	9,575	35,484	31,200
Total revenues	52,204	49,688	159,738	158,221
OPERATING COSTS AND EXPENSES
Production, distribution and editorial	29,361	29,184	91,078	85,837
Selling and promotion	15,073	14,803	42,394	42,889
General and administrative	12,245	11,982	38,084	37,887
Depreciation and amortization	1,027	1,627	2,947	3,689
Restructuring charges	3,792		3,792
Total operating costs and expenses	61,498	57,596	178,295	170,302
OPERATING LOSS	(9,294)	(7,908)	(18,557)	(12,081)
OTHER INCOME / (EXPENSE)
Interest income / (expense), net	61	46	(65)	(62)
Loss on sale of fixed asset		(647)		(647)
Gain on sale of short-term investments		403		403
(Loss) / income on equity securities	(190)	(5)	15	(24)
Total other expense	(129)	(203)	(50)	(330)
LOSS BEFORE INCOME TAXES	(9,423)	(8,111)	(18,607)	(12,411)
Income tax provision	(278)	(475)	(1,109)	(1,289)
NET LOSS	$ (9,701)	$ (8,586)	$ (19,716)	$ (13,700)
LOSS PER SHARE - BASIC AND DILUTED
Net loss	$ (0.18)	$ (0.16)	$ (0.36)	$ (0.25)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted	54,990	54,487	54,825	54,416

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 03, 2011 Class A Common Stock [Member]	Nov. 03, 2011 Class B Common Stock [Member]	Nov. 03, 2011 Total Common Stock [Member]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2011
Entity Registrant Name	MARTHA STEWART LIVING OMNIMEDIA INC
Entity Central Index Key	0001091801
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		29,252,042	25,984,625	55,236,667

XML

Credit Facilities

9 Months Ended

Sep. 30, 2011

Credit Facilities [Abstract]

Credit Facilities

6. Credit Facilities

The Company has a line of credit with Bank of America in the amount of $5.0 million, which is generally used to secure letters of credit. The Company was compliant with the debt covenants as of September 30, 2011. The Company had no outstanding borrowings under this facility as of September 30, 2011 and had letters of credit outstanding of $2.6 million.

In April 2008, the Company entered into a loan agreement (subsequently amended and restated on August 7, 2009) with Bank of America for a term loan in the amount of $30.0 million related to the acquisition of certain assets of Emeril Lagasse. The loan is secured by substantially all of the assets of the Emeril business that the Company acquired. The loan agreement requires equal quarterly principal payments of $1.5 million and accrued interest to be paid for the duration of the loan term, approximately 5 years. As of September 30, 2011, the Company had paid $24 million in principal, including prepayment of $3.0 million due through March 31, 2012, such that $6.0 million was outstanding at September 30, 2011. Two principal payments of $1.5 million each are due as of June 30, 2012 and September 30, 2012, which are reflected as a current liability in the consolidated balance sheet as of September 30, 2011. The interest rate on all outstanding amounts is equal to a floating rate of 1-month London Interbank Offered Rate ("LIBOR") plus 2.85%.

The loan terms have required the Company to be in compliance with certain financial and other covenants, failure with which to comply would result in an event of default and would permit Bank of America to accelerate and demand repayment of the loan in full. On June 29, 2011, the Company and Bank of America executed an amendment to the loan agreement, which eliminated the financial covenants that had previously required the Company to maintain a Funded Debt to EBITDA Ratio equal to or less than 2.0 and a Parent Guarantor Basic Fixed Charge Ratio equal to or greater than 2.75. The amendment also reduced the minimum level of consolidated Tangible Net Worth required to be maintained by the Company from $40 million to $30 million. Additionally, the amendment added a requirement that the Company maintain at all times cash and certain cash equivalents with an aggregate market value of not less than an amount equal to 200% of the outstanding loan principal. This cash and cash equivalents balance cannot be subject to any lien, security interest or other encumbrance, nor can it be held by the Company in order to comply with any other liquidity or other similar covenant under any agreement in respect of indebtedness or other obligations of the Company.

As of September 30, 2011, the Company was compliant with all debt covenants and expects to be compliant with all debt covenants through 2011. A current summary of the most significant financial covenants is as follows:

Financial Covenant
Tangible Net Worth	At least $30.0 million
Quick Ratio	Equal to or greater than 1.0
Unencumbered Cash and Designated Cash Equivalents	Equal to or greater than 200% of the loan balances

While the maintenance of a minimum level of cash balances has now become a financial covenant, the fact that the Company had cash balances that were well in excess of the loan principal at September 30, 2011 currently gives the Company the ability to repay the outstanding principal in full in the event of default or to prevent default.

XML

Industry Segments

9 Months Ended

Sep. 30, 2011

Industry Segments [Abstract]

Industry Segments

11. Industry Segments

The Company is an integrated media and merchandising company providing consumers with inspiring lifestyle content and programming, and well-designed, high-quality products. The Company's business segments are Publishing, Broadcasting and Merchandising. In 2010, the Company announced its plan to report the results of operations from its former Publishing and Internet operating segments under the operating segment titled "Publishing." The Company has been continuing to execute its strategy to leverage its core content across its print and digital platforms more efficiently by further centralizing the creative process. In addition, during the fourth quarter of 2010, the Company reorganized its advertising sales force to centralize selling efforts across all media. As a result of these fundamental changes in the way it views its business, the Company evaluated its operating segments and determined that the print and digital platforms no longer met the definition of separate operating segments in accordance with ASC 280, Segment Reporting. The new Publishing segment provides management with a more meaningful assessment of the operating performance of the Company's print and digital platforms.

The Publishing segment primarily consists of the Company's operations related to its magazines and books, as well as its digital operations which includes the content-driven website, www.marthastewart.com. The Broadcasting segment primarily consists of the Company's television production operations and its satellite radio operations. The Martha Stewart Show season 5 aired in syndication over a 12-month period beginning in the middle of September 2009 and ending in the middle of September 2010. Season 6 of The Martha Stewart Show aired on Hallmark Channel also over a 12-month period beginning and ending in the middle of September with season 7 of The Martha Stewart Show currently airing on Hallmark Channel beginning September 26, 2011. The Merchandising segment consists of the Company's operations related to the design of merchandise and related promotional and packaging materials that are licensed to and distributed by its retail and manufacturing partners.

The accounting policies for the Company's business segments are discussed in more detail in the 2010 Form 10-K.

Segment information for the quarters ended September 30, 2011 and 2010 is as follows:

(in thousands)	Publishing			Broadcasting			Merchandising			Corporate			Consolidated
2011
Revenues	$	33,242			6,626			12,336			—		$	52,204
Non–cash equity compensation		(273	)		(35	)		(201	)		(1,623	)		(2,132	)
Depreciation and amortization		(194	)		(128	)		(8	)		(697	)		(1,027	)
Restructuring charges		(350	)		(354	)		—			(3,088	)		(3,792	)
Operating (loss) / income		(3,585	)		(1,320	)		7,179			(11,568	)		(9,294	)
2010
Revenues	$	34,318		$	5,795		$	9,575			—		$	49,688
Non–cash equity compensation		(18	)		(3	)		50			(734	)		(705	)
Depreciation and amortization		(253	)		(612	)		(13	)		(749	)		(1,627	)
Operating (loss) / income		(1,113	)		(4,074	)		5,501			(8,222	)		(7,908	)

Segment information for the nine months ended September 30, 2011 and 2010 is as follows:

(in thousands)	Publishing			Broadcasting			Merchandising			Corporate			Consolidated
2011
Revenues	$	102,059			22,195			35,484			—		$	159,738
Non–cash equity compensation		(600	)		(61	)		(211	)		(3,674	)		(4,546	)
Depreciation and amortization		(543	)		(359	)		(24	)		(2,021	)		(2,947	)
Restructuring charges		(350	)		(354	)		—			(3,088	)		(3,792	)
Operating (loss) / income		(7,349	)		(3,616	)		21,196			(28,788	)		(18,557	)
2010
Revenues	$	100,945		$	26,076		$	31,200		$	—		$	158,221
Non–cash equity compensation		(482	)		(217	)		(635	)		(2,841	)		(4,175	)
Depreciation and amortization		(922	)		(748	)		(35	)		(1,984	)		(3,689	)
Operating (loss) / income		(1,789	)		(2,354	)		18,154			(26,092	)		(12,081	)

XML

Significant Accounting Policies

9 Months Ended

Sep. 30, 2011

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

Equity Compensation

The Company has issued stock-based compensation to certain of its employees and a non-employee consultant. In accordance with the fair-value recognition provisions of Accounting Standards Codification ("ASC") Topic 718, Share-Based Payments ("ASC Topic 718") and SEC Staff Accounting Bulletin No. 107, compensation cost recognized in the periods ended September 30, 2011 and 2010 was based on the grant date fair value estimated in accordance with the provisions of ASC Topic 718. Time-based employee stock option, restricted stock, and restricted stock unit awards are amortized as non-cash equity compensation expense on a straight-line basis over the expected vesting period. The Company values time-based option awards using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires numerous assumptions, including expected volatility of the Company's stock price and expected life of the option. Time-based restricted stock and restricted stock unit awards are valued at the market value of traded shares on the date of grant. Price-based options and price-based restricted stock unit awards are valued using the Monte Carlo Simulation method which takes into account assumptions such as volatility of the Company's Class A Common Stock, the risk-free interest rate based on the contractual term of the award, the expected dividend yield, the vesting schedule, and the probability that the market conditions of the award will be achieved. The Company applies variable accounting to its non-employee price-based restricted stock unit awards.

The Company's other significant accounting policies are discussed in detail in the 2010 Form 10-K.

XML

Equity Compensation

9 Months Ended

Sep. 30, 2011

Equity Compensation [Abstract]

Equity Compensation

8. Equity compensation

Stock option awards

On June 6, August 22, and September 6, 2011 the Company made awards under the Martha Stewart Living Omnimedia, Inc. Omnibus Stock and Compensation Plan to several new members of its executive management team, as provided for in their employment agreements. Certain awards include service period vesting triggers and consist of options to purchase 475,000 shares of Class A Common Stock at various exercise prices (the closing price on the date of grant), which options vest as to 158,333 shares on each of the second, third, and fourth anniversaries of their employment start dates. Non-cash equity compensation expense of approximately $0.05 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company measured the fair value of these awards as of the date of issuance using the Black-Scholes option pricing model, which value is recognized over the remaining service period of the awards. As of September 30, 2011, there was $0.8 million of total unrecognized compensation cost related to these nonvested stock option awards to be recognized over a period of 3.7 to 3.9 years. The following table summarizes the assumptions used in the Black-Scholes option-pricing model:

Risk-free interest rates	0.511% - 0.629%
Dividend yields	Zero
Expected volatility	60.80% - 60.88%
Expected option life	3.7 years
Average fair value per option granted	$1.38 - $2.17

The Company also made awards to these employees which include price-based vesting triggers. The price-based option awards consist of options to purchase an aggregate 700,000 shares of Class A Common Stock, whereby options for 175,000 shares with an exercise price of $6 per share will vest only at such time as the trailing average closing price of the Class A Common Stock during any 30 consecutive trading days during the term of the employment agreement has been at least $6, options for 175,000 shares with an exercise price of $8 per share will vest only at such time as such trailing average has been at least $8, options for 175,000 shares with an exercise price of $10 per share will vest only at such time as such trailing average has been at least $10, and options for 175,000 shares with an exercise price of $12 per share will vest only at such time as such trailing average has been at least $12. Non-cash equity compensation expense of approximately $0.3 million was recorded during the three month period ended September 30, 2011 related to these price-based awards. The Company measured the fair value of these price-based awards as of the date of issuance using the Monte Carlo Simulation method and recognizes its fair value over the service period of the awards. As of September 30, 2011, there was $0.7 million of total unrecognized compensation cost related to these nonvested price-based option awards to be recognized over the expected service period listed below. The following table summarizes the assumptions used in the Monte Carlo Simulation method:

Risk-free interest rate	1.34% - 2.29%
Expected volatility	59.72% - 60.55%
Expected service period	0.46 - 1.97 years
Dividends	Zero
Estimated value of price-based option awards	$0.45 - $2.35

In addition to non-cash equity compensation expense recorded in connection with the new executive management option awards discussed above, non-cash equity compensation expense of approximately $0.6 million was recorded during the three month period ended September 30, 2011 related to the accelerated vesting of certain option awards previously granted to former members of executive management.

Restricted stock unit awards and restricted stock

The new members of the Company's executive management team also received certain awards of 300,000 restricted stock units ("RSUs"), each of which represents the right to one share of Class A Common Stock, with service period vesting triggers, of which approximately 100,000 RSUs vest on each of the second, third, and fourth anniversaries of their employment start dates. Non-cash equity compensation expense of approximately $0.1 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company has measured the fair value of these service period based awards as of the grant date and will recognize this fair value over the remaining service periods of the awards. As of September 30, 2011, there was $1.2 million of total unrecognized compensation cost related to these nonvested RSUs to be recognized over a period of 3.7 to 3.9 years.

The Company also made RSU awards to these employees which include price-based vesting triggers. The price-based RSUs consist of the right to receive an aggregate 380,000 shares of Class A Common Stock, of which 50,000 RSUs will vest at such time as such trailing average common stock price has been at least $6, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $8, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $10, an additional 95,000 RSUs will vest at such time as such trailing average has been at least $12, and the final 45,000 RSUs will vest at such time as the trailing average has been at least $14. Non-cash equity compensation expense of approximately $0.3 million was recorded during the three month period ended September 30, 2011 related to these awards. The Company measured the fair value of these price-based awards as of the date of issuance using the Monte Carlo Simulation method and recognizes this fair value over the service period of the awards. As of September 30, 2011, there was $0.7 million of total unrecognized compensation cost related to these nonvested price-based restricted stock unit awards to be recognized over the expected service period listed below. The following table summarizes the assumptions used in the Monte Carlo Simulation method:

Risk-free interest rate	0.37 - 1.17%
Expected volatility	67.83% - 70.20%
Expected service period	0.42 - 1.90 years
Dividends	Zero
Estimated value of price-based restricted stock unit awards	$1.10 - $4.43

In addition to non-cash equity compensation expense recorded in connection with the new executive management RSUs discussed above, a reversal of approximately $0.9 million in non-cash equity compensation expense was recorded during the three-month period ended September 30, 2011 related to the forfeiture of certain priced-based restricted stock awards previously granted to a former member of executive management.

XML

Comprehensive Loss

9 Months Ended

Sep. 30, 2011

Comprehensive Loss [Abstract]

Comprehensive Loss

9. Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company's comprehensive loss includes net loss and unrealized gains and losses on available-for-sale securities. Total comprehensive loss for the nine months ended September 30, 2011 and 2010 was $19.8 million and $13.0 million, respectively.

XML

Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

7. Income taxes

The Company follows ASC Topic 740, Income Taxes ("ASC 740"). Under the asset and liability method of ASC 740, deferred assets and liabilities are recognized for the future costs and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company periodically reviews the requirements for a valuation allowance and makes adjustments to such allowances when changes in circumstances result in changes in the Company's judgment about the future realization of deferred tax assets. ASC 740 places more emphasis on historical information, such as the Company's cumulative operating results and its current year results than it places on estimates of future taxable income. Therefore, the Company has added $8.0 million to its valuation allowance in the nine months ended September 30, 2011, resulting in a cumulative balance of $84.9 million as of September 30, 2011. In addition, the Company has recorded $1.1 million of tax expense during the nine months ended September 30, 2011 which is primarily attributable to differences between the financial statement carrying amounts of past acquisitions of certain indefinite-lived intangible assets and their respective tax bases, which resulted in a net deferred tax liability of $5.5 million at September 30, 2011. The Company intends to maintain a valuation allowance until evidence would support the conclusion that it is more likely than not that the deferred tax asset could be realized.

ASC 740 further establishes guidance on the accounting for uncertain tax positions. As of September 30, 2011, the Company had an ASC 740 liability balance of $0.08 million, of which $0.06 million represented unrecognized tax benefits, which if recognized at some point in the future would favorably impact the effective tax rate, and $0.02 million represented interest. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for the years before 2005 and state examinations for the years before 2003. The Company anticipates that as a result of audit settlements and statute closures over the next twelve months, the liability will be reduced through cash payments of approximately $0.01 million.

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (19,716)	$ (13,700)
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash revenue	(846)	(5,060)
Depreciation and amortization	2,947	3,689
Amortization of deferred television production costs	16,727	15,439
Non-cash equity compensation	4,181	4,175
Deferred income tax expense	1,009	1,008
(Income) / loss on equity securities	(15)	24
Gain on sale of short-term investment		(403)
Loss on sale of fixed assets		647
Other non-cash charges, net	415	493
Changes in operating assets and liabilities
Accounts receivable, net	13,615	18,909
Inventory	(3,209)	(119)
Deferred television production costs	(16,969)	(17,813)
Accounts payable and accrued liabilities	(1,548)	(99)
Accrued payroll and related costs	1,376	1,043
Deferred subscription revenue	(5,426)	(3,698)
Deferred revenue	4,237	1,082
Other changes	505	1,346
Total changes in operating assets and liabilities	(7,419)	651
Net cash (used in) / provided by operating activities	(2,717)	6,963
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,405)	(4,156)
Proceeds from the sale of fixed assets		1,403
Purchases of short-term investments	(5,680)	(14,282)
Sales of short-term investments	5,002	14,845
Net cash used in investing activities	(3,083)	(2,190)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt	(3,000)	(3,000)
Proceeds received from stock option exercises	585	81
Net cash used in financing activities	(2,415)	(2,919)
Net (decrease) / increase in cash	(8,215)	1,854
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	23,204	25,384
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 14,989	$ 27,238

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

• Level 1: Observable inputs such as quoted prices for identical assets and liabilities in active markets obtained from independent sources.

• Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair value of the Company's level 2 financial assets is primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case a weighted average market price is used.

• Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the asset or liability.

The following tables present the Company's assets that are measured at fair value on a recurring basis:

	September 30, 2011
(in thousands)	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Short-term investments:
U.S. government and agency securities	$	—	$	2,713	$	—	$	2,713
Corporate obligations		—		5,602		—		5,602
Other fixed income securities		—		1,040		—		1,040
International securities	$	—		1,180	$	—		1,180
Total	$	—	$	10,535	$	—	$	10,535

	December 31, 2010
(in thousands)	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Short-term investments:
U.S. government and agency securities	$	—	$	1,637	$	—	$	1,637
Corporate obligations		—		5,977		—		5,977
Other fixed income securities		—		2,140		—		2,140
International securities		—		337		—		337
Total	$	—	$	10,091	$	—	$	10,091

The Company has no liabilities that are measured at fair value on a recurring basis.

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets and property and equipment, as well as cost method investments, are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized. Such impairment charges incorporate fair value measurements based on level 3 inputs.

XML

Inventory

9 Months Ended

Sep. 30, 2011

Inventory [Abstract]

Inventory

4. Inventory

Inventory is comprised of paper stock. The inventory balances at September 30, 2011 and December 31, 2010 were approximately $8.5 million and $5.3 million, respectively.

XML

Restructuring Charges

9 Months Ended

Sep. 30, 2011

Restructuring Charges [Abstract]

Restructuring Charges

12. Restructuring Charges

The Company incurred approximately $3.8 million in restructuring charges during the nine-month period ended September 30, 2011. Restructuring charges included employee severance and other employee-related termination costs, as well as certain consulting and recruiting costs. Included in the $3.8 million restructuring charge is an approximate $0.4 million reversal of non-cash equity compensation expense related to certain employee departures.

XML

Investments In Other Non-Current Assets

9 Months Ended

Sep. 30, 2011

Investments In Other Non-Current Assets [Abstract]

Investments In Other Non-Current Assets

5. Investments in Other Non-Current Assets

The Company has investments in preferred stock which it carries at cost. As of September 30, 2011, the Company's aggregate carrying value of these investments was $5.7 million and was included within other noncurrent assets in the consolidated balance sheet. The Company has determined that certain of these investments represent interests in variable interest entities. As of September 30, 2011, the Company's investments in the entities were substantially equal to its maximum exposure to loss. There are no future contractual funding commitments. The Company has determined that the Company is not the primary beneficiary of these entities since the Company does not have the power to direct the activities that most significantly impact the entities' economic performance. Accordingly, the Company does not consolidate these entities and accounts for these investments under the cost method.

XML

Consolidated Statement Of Shareholders' Equity (USD $) In Thousands	Class A Common Stock [Member]	Class B Common Stock [Member]	Capital In Excess Of Par Value [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Class A Treasury Stock [Member]	Total
Balance at Dec. 31, 2010	$ 288	$ 263	$ 295,576	$ (156,201)	$ (118)	$ (775)	$ 139,033
Balance, shares at Dec. 31, 2010	28,753	26,318				(59)
Comprehensive loss:
Net loss				(19,716)			(19,716)
Other comprehensive loss:
Unrealized loss on securities					(92)		(92)
Total comprehensive loss							(19,808)
Conversion of shares	3	(3)
Conversion of shares, shares	333	(333)
Issuance of shares of stock in conjunction with stock option exercises	3		582				585
Issuance of shares of stock in conjunction with stock option exercises, shares	265
Issuance of shares of stock and restricted stock, net of cancellations and tax withholdings	1		(74)				(73)
Issuance of shares of stock and restricted stock, net of cancellations and tax withholdings, shares	151
Non-cash equity compensation			4,148				4,148
Balance at Sep. 30, 2011	$ 295	$ 260	$ 300,232	$ (175,917)	$ (210)	$ (775)	$ 123,885
Balance, shares at Sep. 30, 2011	29,502	25,985				(59)

XML

General

9 Months Ended

Sep. 30, 2011

General [Abstract]

General

1. General

Martha Stewart Living Omnimedia, Inc., together with its subsidiaries, is herein referred to as "we," "us," "our," or the "Company."

The information included in the foregoing interim consolidated financial statements is unaudited. In the opinion of management, all adjustments, all of which are of a normal recurring nature and necessary for a fair presentation of the results of operations for the interim periods presented, have been reflected therein. The results of operations for interim periods do not necessarily indicate the results to be expected for the entire year. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") with respect to the Company's fiscal year ended December 31, 2010 (the "2010 Form 10-K") which may be accessed through the SEC's website at http://www.sec.gov.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management does not expect such differences to have a material effect on the Company's consolidated financial statements.

XML

Other

9 Months Ended

Sep. 30, 2011

Other [Abstract]

Other

10. Other

Production, distribution and editorial expenses; selling and promotion expenses; and general and administrative expenses are all presented exclusive of depreciation and amortization, which is shown separately within "Operating Costs and Expenses."

Certain prior year financial information has been reclassified to conform with fiscal 2011 financial statement presentation. Prior years' results of the former Internet segment have been combined with those of the Publishing segment in connection with the Company's revised identification of operating segments.

XML

Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 14,989	$ 23,204
Short-term investments	10,535	10,091
Accounts receivable, net	45,635	59,250
Inventory	8,518	5,309
Deferred television production costs	2,811	2,413
Other current assets	6,394	4,772
Total current assets	88,882	105,039
PROPERTY AND EQUIPMENT, net	13,970	14,507
GOODWILL, net	45,107	45,107
OTHER INTANGIBLE ASSETS, net	46,538	46,547
OTHER NONCURRENT ASSETS, net	8,969	11,114
Total assets	203,466	222,314
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities	28,514	30,062
Accrued payroll and related costs	7,917	6,541
Current portion of deferred subscription revenue	13,714	18,734
Current portion of other deferred revenue	6,585	4,732
Current portion of loan payable	3,000	1,500
Total current liabilities	59,730	61,569
DEFERRED SUBSCRIPTION REVENUE	4,123	4,529
OTHER DEFERRED REVENUE	3,165	1,413
LOAN PAYABLE	3,000	7,500
DEFERRED INCOME TAX LIABILITY	5,537	4,527
OTHER NONCURRENT LIABILITIES	4,026	3,743
Total liabilities	79,581	83,281
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Capital in excess of par value	300,232	295,576
Accumulated deficit	(175,917)	(156,201)
Accumulated other comprehensive loss	(210)	(118)
Shareholders' equity before treasury stock	124,660	139,808
Less: Class A Treasury Stock - 59,400 shares at cost	(775)	(775)
Total shareholders' equity	123,885	139,033
Total liabilities and shareholders' equity	203,466	222,314
Class A Common Stock [Member]
SHAREHOLDERS' EQUITY
Common Stock	295	288
Class B Common Stock [Member]
SHAREHOLDERS' EQUITY
Common Stock	$ 260	$ 263