Related Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions

9. Related Party Transactions

On July 9, 2012, the Company and MS Real Estate Management Company (“MS Real Estate”) agreed to extend the Intangible Asset License Agreement dated as of June 3, 2008, between the Company and MS Real Estate (the “IAL Agreement”), until June 30, 2013, rather than expiring on September 30, 2012. Additionally, the Company and Ms. Stewart agreed to extend the term of her current employment agreement until June 30, 2017, rather than expiring on June 30, 2012. However, the parties have agreed to negotiate mutually acceptable adjustments to the terms of the employment agreement to take effect at July 1, 2013 (or such earlier date as the parties may agree). Under the extension letter, if the parties do not reach an agreement regarding mutually acceptable adjustments to her employment agreement, the Company can choose to have the employment agreement continue in effect through June 30, 2017 or to allow it to lapse at June 30, 2013. If the Company chooses to allow the employment agreement to continue in effect after June 30, 2013, the IAL Agreement will be further extended until June 30, 2017.

The extension letter changes Ms. Stewart’s previous title of Founder and Chief Editorial, Media and Content Officer to Founder and Chief Creative Officer. It also provides that no additional compensation is payable for new programming after June 30, 2012 unless it would require Ms. Stewart to provide services, as a performer, in excess of the commitment previously required with respect to The Martha Stewart Show. References in Section 5(b) (Annual Bonus) of the employment agreement to fiscal year 2012 have been modified to refer to the fiscal year in which the term of the employment agreement lapses.