July 21, 2005
Mr. John Cuti
Dear John:
We are very pleased and excited to extend an offer to you to join Martha
Stewart Living Omnimedia, Inc. ("MSO") as described below:
1) POSITION: You will serve in a full-time capacity as an MSO employee with
the title of General Counsel, subject to review on an annual basis.
2) TERM: You shall begin work on Tuesday, September 6, 2005, and your
employment shall continue until terminated by either you or MSO (the
"Term"), subject to the terms of paragraph 13 entitled "Severance".
3) DUTIES: During the Term, you will devote your full business time, attention
and energies to the performance of duties included in your job description
and such other duties as may be reasonably assigned to you and which are
consistent with your titles. In performing your duties you will report
directly to the President and Chief Executive Officer, or other position(s)
as MSO deems appropriate. It will be your responsibility to keep that
office informed on a timely basis and as directed on your progress with
respect to your duties hereunder.
4) COMPENSATION: You will be paid a salary at the annual rate of not less than
$400,000, payable as earned, in 26 equal payments of $15,384.61 in
accordance with MSO's standard payroll practices for salaried employees.
Your MSO compensation level is Grade 39. In a manner consistent with other
MSO senior executives, you will be eligible for salary increases based upon
your performance and the performance of MSO as the then-current policies of
MSO provide for executives at your level.
5) BONUS: Provided you continue to be employed by MSO at the time annual
bonuses are paid, you will be eligible for an annual target bonus of 60% of
your base salary, pursuant to company policies. In general, your bonus will
be determined based upon MSO's customary practices in effect from time to
time with respect to bonus determination for executives of comparable
level, and is based upon an evaluation of your performance as General
Counsel, as well as the performance of MSO against certain financial goals
and targets as determined by the company. Your 2005 bonus will be paid in
accordance with MSO's normal practices and will be $80,000.
6) BENEFITS: You will be eligible for all employment benefits provided by MSO
subject to the terms and conditions of any relevant benefits plan document
and MSO's then-current policy (which may be changed by MSO from time to
time), which presently entitles you to coverage as of your first day of
work.
7) LONG-TERM INCENTIVE PLANS: As of your start date, you will be granted
20,000 shares of restricted stock (the "Award") under the Amended and
Restated 1999 Stock Incentive Plan (the "Plan"). The Award represents the
right to receive shares of MSO Class A common stock on the respective
vesting dates. The Award will vest over three years, with thirty-three
percent (33%) vesting on your first anniversary, thirty-three percent (33%)
vesting on your second anniversary, and the remaining thirty-four percent
(34%) vesting on your third anniversary. You must be employed by MSO on the
respective vesting date in order to receive that portion of the Award.
8) VACATION: You will be entitled to four (4) weeks vacation annually in
accordance with company policy for Executives.
9) NON-COMPETITION: You hereby agree that during your employment with MSO and
during any Tail Period (as defined below), you shall not engage in or
become associated with a Competitive Activity (as defined below). A
"Competitive Activity" shall mean any business which is competitive with
any business of MSO and its affiliates with respect to which you performed
any duties during your employment with MSO and its affiliates and their
predecessors. You shall be deemed to be "engaged in or associated with a
Competitive Activity" if you become an owner, employee, officer, director,
independent contractor, agent, partner, advisor, or render personal
services in any other capacity, with or for any individual, partnership,
corporation or other organization (collectively, an "Enterprise") that is
engaged in a Competitive Activity, provided, however, that you shall not be
prohibited from (a) owning less than five percent of the stock in any
publicly traded Enterprise engaging in a Competitive Activity, or (b) being
an employee, independent contractor or otherwise providing services to an
Enterprise that is engaged in a Competitive Activity so long as your
services relate to an aspect or endeavor of such Enterprise that is
distinct from, and unrelated to, and you have no influence or control over,
such Enterprise's pursuit of a Competitive Activity. "Tail Period" shall
mean the period, if any, commencing on the date that your employment with
MSO terminates, and ending on the twelve-month anniversary of such date.
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 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 MSO may be entitled at law or in equity, MSO
will be entitled to seek a temporary or permanent injunction or injunctions
or temporary restraining order or orders to prevent breaches thereof. Your
such 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.
10) CONFIDENTIALITY: You agree to sign the MSO confidentiality agreement upon
hire.
11) AT WILL STATUS: You specifically understand and agree that your employment
hereunder shall be at all times on an "at will" basis, meaning that either
you or MSO can terminate your employment at any time and for any reason,
with or without cause or notice, and nothing contained herein shall be
construed as establishing any other relationship between you and MSO.
12) WORK FOR HIRE: As an MSO employee, you will be part of a team of highly
talented individuals, whose creative contributions are an integral part of
MSO's success as a company. Accordingly, you acknowledge and agree that MSO
has specially ordered and commissioned any and all results and proceeds of
your services hereunder (the "works") as works-made-for-hire under the
United States copyright Act and all similar laws throughout the world (the
"Act"), and that MSO shall be deemed the sole author and owner of all
right, title and interest in the Works in any an all languages, formats and
media, whether now known or hereafter created, throughout the world in
perpetuity (the "Rights"). If the Works or any part of the Works are not
deemed works-made-for-hire under the Act, you hereby irrevocably grant and
assign the Rights exclusively to MSO. You hereby waive any so-called moral
rights of authors and other similar rights in connection with the Works.
You acknowledge and agree that MSO is not under any obligation to use the
Works, and may exploit, reproduce, distribute, make derivative works of,
alter or edit the Works or combine the Works with other materials, in any
media whether now known or hereafter created throughout the world, in MSO's
sole discretion, free of any obligation to you whatsoever, financial or
otherwise. You hereby waive the right to seek or obtain any injunctive or
other equitable relief in connection with MSO's exploitation of the Works
and any Rights therein. You agree that upon any termination of your
employment, you will immediately turn over any and all of the Works in your
possession to MSO. You irrevocably grant to MSO the perpetual right to use
and authorize others to use your name, biographical information,
photograph, and likeness (in each
case in a form approved by you) in connection with any use of the Works
and/or in connection with your employment with MSO. You represent and
warrant that you have the right to perform your services for MSO and to
grant the Rights in the Works to MSO, and that, to the best of your
knowledge, the Works will be original with you, and neither the Works, nor
MSO's exercise of any of the Rights, shall violate or otherwise conflict
with the rights of any person or entity.
13) SEVERANCE: You will be a participant in the 2005 Executive Severance Pay
Plan.
We hope that you find the foregoing terms acceptable. You may indicate your
agreement with these terms and accept this offer by signing this letter as well
as the confidentiality agreement and returning them to me.
John, all of us are very excited at the prospect of having you on the
Martha Stewart Living Omnimedia team. We think that you will enjoy our highly
creative and collaborative atmosphere, and we know that we will enjoy having you
here.
Very truly yours,
/s/ Susan Lyne
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Susan Lyne
President and Chief Executive Officer
Martha Stewart Living Omnimedia, Inc.
ACCEPTED AND AGREED:
/s/ John Cuti
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John Cuti
Date: July 22, 2005