AMENDED AND RESTATED EMPLOYMENT
AGREEMENT BETWEEN
MARTHA STEWART LIVING OMNIMEDIA, INC.
AND MARTHA STEWART DATED AS OF APRIL 1, 2009
AGREEMENT, dated
as of April 1, 2009 (the “Effective Date”), by and
between Martha Stewart Living Omnimedia, Inc., a Delaware
corporation (the “Company”), and Martha Stewart (the
“Founder”).
WHEREAS,
the Founder is a party to an employment agreement, dated
September 17, 2004, as amended (the “Prior Employment
Agreement); and
WHEREAS,
the Company recognizes that the Founder’s talents and
abilities are unique and have been integral to the success of the
Company;
WHEREAS,
the Company wishes to secure the ongoing services of the Founder
pursuant to the terms and conditions set forth herein, and
therefore the Founder and the Company intend hereby to enter into a
new amended and restated employment agreement as set forth
herein;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereby agree as
follows:
1.
Employment. From and after the Effective Date, the
Company hereby agrees to employ the Founder as Chief Editorial and
Media Director of the Company, and the Founder hereby accepts such
employment, on the terms and conditions set forth below.
2.
Term. The Founder’s employment by the Company
hereunder shall begin on the Effective Date and shall end on
March 31, 2012, but subject to earlier termination as provided
herein (the “Employment Period”). The Employment Period
may be extended by mutual agreement of the Company and the
Founder.
3.
Position and Duties. During the Employment Period, the
Founder shall serve as Founder, Chief Editorial and Media Director
of the Company with the following duties, authority and
responsibilities:
(i) serving
as Founding Editorial Director for all publications of the
Company;
(ii) serving
as an executive producer for television and radio productions of
the Company; and
(iii) subject
to the oversight of the Board, serving as the primary spokesperson
for the Company (it being understood, however, that the Principal
Executive Officer, Chief Executive Officer(s) and the Chief
Financial Officer of the Company, rather than the Founder, shall
serve as primary spokespersons for the Company to the financial and
investment community and with respect to business and financial
affairs).
The Founder shall
report directly to the Board. Unless otherwise authorized by the
Board, the
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Founder shall
devote substantially all of her working time, attention and
energies during normal business hours (other than absences due to
illness or vacation) to the performance of her duties for the
Company. Notwithstanding the above, the Founder shall be permitted,
to the extent such activities do not violate, or substantially
interfere with her performance of her duties and responsibilities
under this Agreement, or any other agreement to which she and the
Company are parties, in all cases except for (iii), as determined
by the Principal Executive Officer and a committee of the Board, to
(i) engage in motion picture, television, public speaking and
publishing activities, (ii) appear from time to time in
commercials and/or advertisements that do not present a conflict
with the Company’s interests with respect to its products or
significant business relationships, in all cases subject to the
approval of the Board, (iii) manage her personal, financial
and legal affairs (including writing her autobiography),
(iv) serve on civic or charitable boards or committees (it
being expressly understood and agreed that the Founder’s
continuing to serve on any such board and/or committees on which
she is serving, or with which she is otherwise associated, as of
the Effective Date, shall be deemed not to interfere with her
performance of her duties and responsibilities under this
Agreement), (v) serve on boards of other companies and
(vi) make personal appearances and lectures, and the Founder
shall be entitled to receive and retain all remuneration received
by her from the items listed in clauses (i) through
(vi) of this paragraph (including, without limitation,
appearance and speaking fees, book advances, royalties, residuals
and other fees and compensation (including guild and union
payments) payable therewith) outside the performance of her duties
hereunder.
4.
Place of Performance. During the Employment Period, the
locations of employment of the Founder shall be in New York City,
New York and Bedford, New York and the Founder shall not be
required to relocate her employment to any other location. During
the Employment Period, the Company shall provide the Founder with
the same offices and staff that she was provided with immediately
prior to the Effective Date.
5.
Compensation and Related Matters.
(a) Talent Compensation. In consideration of her
continued work as a performer and for making public appearances on
behalf of the Company or for third-parties as required in support
of products covered by Company contracts with third parties
consistent with past practices, and as an author or provider of
content consistent with past practices for the Company’s
media properties, publications and contractual arrangements during
the Employment Period, the Company shall pay the Founder talent
compensation at the rate of not less than Two Million Dollars
($2,000,000) per year (the “Talent Compensation”). The
Talent Compensation shall be paid in approximately equal
installments in accordance with the Company’s customary
payroll practices and subject to all applicable income and
employment tax withholdings. The Talent Compensation shall be
subject to annual review by the Board and may be increased in the
Board’s discretion. If the Talent Compensation is increased
by the Board, such increased Talent Compensation shall then
constitute the Talent Compensation for all purposes under this
Agreement.
(b) Annual Bonus. For each full fiscal year of the
Company that begins and ends during the Employment Period, and for
the 2009 fiscal year, the Founder shall be eligible to earn an
annual cash bonus (the “Annual Bonus”) in such amount
as shall be determined by the
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Compensation
Committee of the Board (the “Compensation Committee”)
based on the achievement of Company and individual performance
goals as established by the Compensation Committee for each such
fiscal year , with a target Annual Bonus equal to One Million
Dollars ($1,000,000) (the “Target Amount”) and a
maximum Annual Bonus equal to 150% of the Target Amount. The
Compensation Committee shall establish objective criteria to be
used to determine the extent to which performance goals have been
satisfied. Such Annual 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. The
Founder shall be entitled to receive a pro rata portion of any
payable Annual Bonus for the 2012 fiscal year, upon expiration of
the Employment Period if this Agreement is not renewed, which pro
rata portion shall be determined by multiplying the amount of the
Annual Bonus paid to the Founder in respect of the full fiscal year
immediately prior to the expiration of the Employment Period by a
fraction the numerator of which is the number of days the Founder
was employed by the Company in the 2012 Fiscal Year and the
denominator or which is 365 and, subject to Section 20(b) below,
such pro rata Annual Bonus shall be paid by the Company to the
Founder within thirty (30) days following the expiration of
the Employment Period.
(c) Make-whole/retention payment. In recognition of
her extraordinary efforts on behalf of the Company and to maintain
her continued level of involvement during the Employment Period
consistent with past practices, the Company shall as soon as
practicable following the full execution of this Agreement (but not
later than the date which is five (5) days following the full
execution hereof) pay the Founder a payment of Three Million
Dollars ($3,000,000); provided, however, that if the Founder
terminates this Agreement without Good Reason (defined below) or
the Company terminates this Agreement for Cause (defined below)
during the Employment Period, a pro-rata portion of such payment
(determined based on a fraction, the numerator of which is the
number of calendar days from the Date of Termination (defined
below) through the last day of the Employment Period, and the
denominator of which is the total number of calendar days of the
Employment Period) shall be subject to forfeiture and repayment by
the Founder upon such terms and conditions as determined by the
Compensation Committee in its discretion at the time of such
forfeiture.
(d) Automobiles. During the Employment Period, the
Company shall provide the Founder with automobiles and drivers
seven days per week on a basis no less favorable than in effect
immediately prior to the Effective Date to be used in the
Founder’s sole discretion.
(e) Business, Travel and Entertainment Expenses. The
Company shall promptly reimburse the Founder for all business,
travel and entertainment expenses on a basis no less favorable than
in effect immediately prior to the Effective Date and subject to
the
Company’s current expense reimbursement policies, including,
without limitation, first class transportation or travel on a
private plane of the Company to the extent that such private plane
is available. The Founder shall pay the SIFL rate for any personal
use of such private plane.
(f) Vacation. During the Employment Period, the Founder
shall be entitled to six weeks of vacation per year. Vacation not
taken during the applicable fiscal year (but not in excess of three
weeks) shall be carried over to the next following fiscal
year.
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(g) Welfare, Pension and Incentive Benefit Plans.
During the Employment Period, the Founder (and her eligible spouse
and dependents) shall be entitled to participate in all welfare
benefit plans and programs maintained by the Company from time to
time for the benefit of its senior executives, including, without
limitation, all medical, hospitalization, dental, disability,
accidental death and dismemberment, travel accident and life
insurance plans, programs and arrangements, on a basis no less
favorable than in effect with respect to the Founder immediately
prior to the Effective Date. In addition, during the Employment
Period, the Founder shall be eligible to participate in all
pension, retirement, savings and other employee benefit plans and
programs maintained from time to time by the Company for the
benefit 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.
(h) Security Expenses. During the Employment Period,
the Company shall pay or promptly reimburse the Founder for
(1) all installation and maintenance costs and monitoring fees
relating to security at the Founder’s residences and
(2) all expenses relating to personal security services for
the Founder.
(i) Telephone and Internet Access. During the
Employment Period, the Company shall pay or promptly reimburse the
Founder for customary telephone, computer usage and internet access
at her homes for business use.
(j) New Programming. For any original network,
cable or syndicated show of the Company (other than “The
Martha Stewart Show”) produced after the Effective Date and
in which the Founder is the on-air talent (“New
Programming”), the Founder shall be entitled to receive an
amount equal to the fair market value of her talent services, as
mutually agreed to by the Founder and the Board, or, if the Founder
and the Board are unable to agree upon such fair market value, by
an independent expert selected by mutual agreement between the
Founder and the Board (it being understood that any determination
of fair market value shall take into account the Founder’s
rights to residual payments pursuant to the next sentence). Any
payments in respect of New Programming shall be paid in the
calendar year following the calendar year of production. In
addition, with respect to any re-run or re-packaging of any New
Programming (each, a “Re-run”), the Founder shall
receive an amount equal to ten percent (10%) of the Adjusted Gross
Revenues, which shall be paid no later than the end of the calendar
year in which the Adjusted Gross Revenues are
determined.
“Adjusted
Gross Revenues” means gross revenues of the Company from any
Re-run minus the sum of (i) production costs, (ii) marketing
costs and (iii) distribution costs; provided that if such
Re-run includes programming other than New Programming, the portion
of Adjusted Gross Revenues which is attributable to New Programming
shall be determined on a fair and equitable basis approved by the
Founder.
(k) Equity Awards. The Board shall in its sole
discretion make an annual grant of stock options to
Founder.
6.
Termination. The Founder’s employment hereunder
may be terminated during
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the Employment
Period under the following circumstances:
(a) Death. The Founder’s employment hereunder
shall terminate upon her death.
(b) Disability. The Company shall have the right to
terminate the Founder’s employment as a result of the
Founder’s Disability (as defined below) as determined by a
physician selected by the Founder, and reasonably acceptable to the
Company. “Disability” shall mean (i) the
Founder’s inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months; (ii) the Founder is, by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering the
Founder; or (iii) the Founder is determined to be totally
disabled by the Social Security Administration.
(c) Cause. The Company shall have the right to
terminate the Founder’s employment for “Cause.”
For purposes of this Agreement, the Company shall have
“Cause” to terminate the Founder’s employment
only upon the Founder’s:
(i) willful
gross misconduct or conviction of a felony after the Effective Date
that, in either case, results in material and demonstrable damage
to the business or reputation of the Company; or
(ii) willful
and continued failure to perform her duties hereunder (other than
such failure resulting from legal necessity or after the issuance
of a Notice of Termination by the Founder for Good Reason) within
ten business days after the Company delivers to her a written
demand for performance that specifically identifies the actions to
be performed.
For purposes of
this Section 6(c), no act or failure to act by the Founder
shall be considered “willful” if such act is done by
the Founder in the good faith belief that such act is or was to be
beneficial to the Company or one or more of its businesses, or such
failure to act is due to the Founder’s good faith belief that
such action would be materially harmful to the Company or one of
its businesses. Cause shall not exist unless and until the Company
has delivered to the Founder a copy of a resolution duly adopted by
a majority of the Board (excluding the Founder for purposes of
determining such majority) at a meeting of the Board called and
held for such purpose after reasonable (but in no event less than
thirty days’) notice to the Founder and an opportunity for
the Founder, together with her counsel, to be heard before the
Board, finding that in the good faith opinion of the Board that
“Cause” exists, and specifying the particulars thereof
in detail. This Section 6(c) shall not prevent the Founder from
challenging in any court of competent jurisdiction the
Board’s determination that Cause exists or that the Founder
has failed to cure any act (or failure to act) that purportedly
formed the basis for the Board’s determination.
(d) Good Reason. The Founder may terminate her
employment for “Good Reason” after giving the Company
detailed written notice thereof, if the Company shall have failed
to cure the event or circumstance constituting “Good
Reason” within ten business days
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after receiving
such notice. Good Reason shall mean the occurrence of any of the
following without the written consent of the Founder:
(i) the
assignment to the Founder of duties materially inconsistent with
this Agreement or a material change in her titles or
authority;
(ii) any
failure by the Company to comply with Section 5 hereof in any
material way;
(iii) the
requirement of the Founder to relocate to locations other than
those provided in Section 4 hereof;
(iv) the
failure of the Company to comply with and satisfy Section 12(a) of
this Agreement; or
(v) any
material breach of this Agreement by the Company.
The
Founder’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder.
(e) Without
Cause. The Company shall have the right to terminate the
Founder’s employment hereunder without Cause by providing the
Founder with a Notice of Termination.
(f) Without
Good Reason. The Founder shall have the right to terminate her
employment hereunder without Good Reason by providing the Company
with a Notice of Termination.
7.
Termination Procedure.
(a) Notice of Termination. Any termination of the
Founder’s employment by the Company or by the Founder during
the Employment Period (other than pursuant to Section 6(a))
shall be communicated by written Notice of Termination to the other
party. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice indicating the specific
termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Founder’s employment
under that provision.
(b) Date of Termination. “Date of
Termination” shall mean (i) if the Founder’s
employment is terminated by her death, the date of her death,
(ii) if the Founder’s employment is terminated pursuant
to Section 6(b), thirty (30) days after the date of
receipt of the Notice of Termination (provided that the Founder
does not return to the substantial performance of her duties on a
full-time basis during such thirty (30) day period), and
(iii) if the Founder’s employment is terminated for any
other reason, the date on which a Notice of Termination is given or
any later date (within thirty (30) days after the giving of
such notice) set forth in such Notice of Termination.
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8.
Compensation upon Termination or
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