MARTHA STEWART LIVING OMNIMEDIA, INC.



                   2002 PERFORMANCE-BASED EXECUTIVE BONUS PLAN



                                    SECTION 1

                        BACKGROUND, PURPOSE AND DURATION



         1.1 EFFECTIVE DATE. Martha Stewart Living Omnimedia, Inc. (the

"Company") hereby establishes the 2002 Executive Officer Performance-Based Bonus

Plan (the "Plan") effective as of March 25, 2002. Effectiveness of the Plan is

subject to ratification by an affirmative vote of the holders of a majority of

the Shares that are present in person or by proxy and entitled to vote at the

2002 Annual Meeting of Stockholders of the Company.



         1.2 PURPOSE OF THE PLAN. The Plan is intended to increase shareholder

value and the success of the Company by motivating the Company's key executives

(1) to perform to the best of their abilities, and (2) to achieve the Company's

objectives. The Plan's goals are to be achieved by providing such executives

with incentive awards based on the achievement of goals relating to the

performance of the Company. The Plan is intended to permit the grant of awards

to qualify as performance-based compensation under section 162(m) of the Code.



                                    SECTION 2

                                   DEFINITIONS



         The following words and phrases shall have the following meanings

unless a different meaning is plainly required by the context:



         2.1 "ACTUAL AWARD" means as to any Performance Period, the actual award

(if any) payable to a Participant for the Performance Period. Each Actual Award

is determined by the Payout Formula for the Performance Period, subject to the

Committee's authority under Section 3.6 to eliminate or reduce the award

otherwise determined by the Payout Formula.



         2.2 "AFFILIATE" means any corporation or other entity (including, but

not limited to, partnerships and joint ventures) controlled by or under common

control with the Company.



         2.3 "BASE SALARY" means as to any Performance Period, the Participant's

annualized salary rate on the last day of the Performance Period. Such Base

Salary shall be before both (a) deductions for taxes or benefits, and (b)

deferrals of compensation pursuant to Company-sponsored plans.



         2.4 "BOARD" means the Board of Directors of the Company.



         2.5 "CODE" means the Internal Revenue Code of 1986, as amended.

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