================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
DATE OF REPORT: SEPTEMBER 23, 2004
DATE OF EARLIEST EVENT REPORTED: SEPTEMBER 17, 2004
MARTHA STEWART LIVING OMNIMEDIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-15395 52-2187059
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
11 WEST 42ND STREET
NEW YORK, NY 10036
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 827-8000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 17, 2004, Martha Stewart Living Omnimedia, Inc. (the
"Company") entered into a new employment agreement with Martha Stewart. The
following summary is qualified in its entirety by reference to the text of
the employment agreement, a copy of which is filed as an exhibit to this
report. The agreement, which replaced Ms. Stewart's prior employment
agreement, is for a term of five years. During the term of the agreement,
Ms. Stewart will serve as Founder, Chief Editorial and Media Director of
the Company. Ms. Stewart will receive a base salary of $900,000 per year,
subject to annual review by the Board of Directors and increase in the
Board's discretion. Ms. Stewart will be entitled to an annual bonus in an
amount determined by the Compensation Committee of the Board based on the
achievement of Company and individual performance goals established by the
Compensation Committee for each fiscal year, with a target annual bonus
equal to 100% of base salary and a maximum annual bonus equal to 150% of
base salary, but in no event less than 55% of base salary. Ms. Stewart will
not be entitled to earn base salary or annual bonus in respect of any
period during which she is imprisoned, excluding any period of home
confinement.
Ms. Stewart will be entitled to participate in all welfare benefit plans
and programs maintained by the Company from time to time for the benefit of
its senior executives, on a basis no less favorable than in effect
immediately prior to the effective date of the agreement, and will be
eligible to participate in all pension, retirement, savings and other
employee benefit plans and programs maintained from time to time by the
Company for the benefit of its senior executives, other than any
equity-based incentive plans, severance plans, retention plans and any
annual cash incentive plan, on a basis no less favorable than in effect
immediately prior to the effective date of the agreement. Ms. Stewart will
be entitled to reimbursement for all business, travel and entertainment
expenses on a basis no less favorable than in effect immediately prior to
the effective date of the agreement and subject to the Company's current
expense reimbursement policies. The Company is also required to provide Ms.
Stewart with automobiles and drivers on a basis no less favorable than in
effect immediately prior to the effective date of the agreement, and
certain other benefits. In addition, Ms. Stewart will receive an annual
non-accountable expense allowance of $100,000 per year.
In consideration of the continued services of Ms. Stewart as on-air talent
for television and radio programs of the Company, the Company paid Ms.
Stewart $200,000 on the effective date of the agreement. In addition, for
each edition of certain potential future network television programming
which features Ms. Stewart as on-air talent, the Company will pay Ms.
Stewart an amount equal to the greater of $500,000 and two-thirds of all
talent fees due to the Company in respect of such edition. For any other
original network, cable or syndicated show of the Company produced after
the effective date and in which Ms. Stewart is the on-air talent ("New
Programming"), Ms. Stewart will be entitled to receive an amount equal to
the fair market value of her talent services, as mutually agreed by Ms.
Stewart and the Board. In addition, with respect to any re-run or
re-packaging of any New Programming, Ms. Stewart will receive an amount
equal to ten percent of the adjusted gross revenues from such re-run or
re-packaging.
The agreement contains termination and severance provisions substantially
comparable to Ms. Stewart's prior employment agreement. Under the
agreement, if Ms. Stewart is terminated without cause or terminates her
employment for good reason, she will be entitled to a lump sum payment
equal to the sum of (A) base salary and accrued vacation pay through the
date of termination, (B) three times her base salary and (C) the higher of
(1) $5,000,000 or (2) three times the highest annual bonus paid with
respect to any fiscal year beginning during the term of the agreement. The
Company will also continue to provide Ms. Stewart for the greater of the
remaining term of the agreement or three years following the date of
termination, the same medical, hospitalization, dental and life insurance
programs to which she was otherwise entitled under the agreement and will
continue to provide use of automobiles, staff and offices for three years.
The agreement contains confidentiality, non-competition, non-solicitation
and indemnification provisions substantially identical to the prior
employment agreement.
In connection with the execution of the new employment agreement with Ms.
Stewart, on September 17, 2004, the Company also entered into a new
location rental agreement with Ms. Stewart relating to the Company's use of
her properties, substantially in the form of the prior location rental
agreement with Ms. Stewart. Unless earlier terminated, the agreement is for
a three year term and provides for annual payments to Ms. Stewart of
$500,000 per year, which will be increased to $750,000 in each of the
second and third years if during the relevant year the Company is producing
any original network, cable or syndicated television show for which Ms.
Stewart serves as on-air talent. A copy of the location rental agreement is
filed as an exhibit to this report and is incorporated herein by reference.
In addition, on September 17, 2004, the Company and Ms. Stewart entered
into a letter agreement amending the Intellectual Property License and
Preservation Agreement between Ms. Stewart and the Company. A copy of this
letter agreement is filed as an exhibit to this report and is incorporated
herein by reference.
Item 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
In connection with the execution of the new employment agreement between
the Company and Martha Stewart, the Company and Ms. Stewart agreed to
terminate the employment agreement between the Company and Ms. Stewart
dated October 22, 1999, as amended, effective as of September 16, 2004.
Item 3.02. UNREGISTERED SALES OF EQUITY SECURITIES
In consideration of the execution of a consulting agreement under which
Mark Burnett has agreed to act as an advisor and consultant to the Company
with respect to various television matters, on September 17, 2004, the
Company issued to Mr. Burnett a warrant to purchase 2,500,000 shares of the
Company's Class A Common Stock at an exercise price of $12.59 per share.
The warrant will vest and become exercisable in tranches subject to the
achievement of various milestones relating to the broadcast of primetime
network television programming or production of a new series of Martha
Stewart Living or a successor program. The warrant will expire on March 17,
2012. The warrant was issued pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended.
Item 9.01 EXHIBITS
10.1 Employment Agreement dated as of September 17, 2004, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart
10.2 Location Rental Agreement dated as of September 17, 2004, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart
10.3 Letter Agreement dated September 17, 2004, between Martha Stewart
Living Omnimedia, Inc. and Martha Stewart
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
Dated: September 23, 2004
MARTHA STEWART LIVING OMNIMEDIA, INC.
By: /s/ James Follo
-------------------------------------
James Follo
Executive Vice President, Chief
Financial and Administrative Officer
Index of Exhibits
Exhibit No. Description
- ----------- -----------
10.1 Employment Agreement dated as of September 17, 2004, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart
10.2 Location Rental Agreement dated as of September 17, 2004, between
Martha Stewart Living Omnimedia, Inc. and Martha Stewart
10.3 Letter Agreement dated September 17, 2004, between Martha Stewart
Living Omnimedia, Inc. and Martha Stewart