INVESTMENT AGREEMENT



                  INVESTMENT AGREEMENT, dated as of January 8, 2002 (this

"Agreement"), by and among Martha Stewart Living Omnimedia, Inc., a Delaware

corporation (the "Corporation"), ValueAct Capital Partners, L.P. a Delaware

limited partnership, ValueAct Capital Partners II, L.P. a Delaware limited

partnership and ValueAct Capital International, Ltd. a British Virgin Islands

corporation (collectively, "ValueAct"), and, for the purposes of Article I,

Section 2.3 and Article V hereof only, The Martha Stewart Family Limited

Partnership, L.P., a Connecticut limited partnership ("Stewart").



                                    RECITALS:



                  WHEREAS, pursuant to the terms of a Stock Purchase Agreement,

dated as of the date hereof (the "Stock Purchase Agreement"), Stewart has agreed

to sell to ValueAct, and ValueAct has agreed to purchase from Stewart, an

aggregate of 3,000,000 shares of Class A Stock (the "Stock Purchase");



                  WHEREAS, in connection with the consummation of the Stock

Purchase, the parties hereto desire to enter into certain arrangements relating

to ValueAct's ownership of the Class A Stock.



                  NOW, THEREFORE, in consideration of the premises and mutual

covenants and obligations hereinafter set forth, the parties hereto agree as

follows:



                                    ARTICLE I



                                  DEFINED TERMS



                  Section 1.1. Definitions. Unless the context otherwise

requires, the terms defined in this Article I shall, for the purposes of this

Agreement, have the meanings herein specified.



                  "1933 Act" means the Securities Act of 1933, as amended.



                  "1934 Act" means the Securities Exchange Act of 1934, as

amended.



                  "Affiliate" means with respect to a specified Person, any

Person that directly or indirectly controls, is controlled by, or is under

common control with, the specified Person, and that Person's spouse, estate,

personal representative or lineal descendants or any trust for the benefit of

such Person and/or such Person's spouse and/or such Person's lineal descendants

or any entities controlled by such Person. As used in this definition, the term

"control" means the possession, directly or indirectly, of the power to direct

or cause the direction of the management and policies of a Person, whether

through ownership of voting securities, by contract or otherwise.



                  "2002 Annual Meeting" shall have the meaning set forth in

Section 2.3 hereof.



                                       -1-

<PAGE>

                  "Agreement" means this Investment Agreement, as amended,

modified, supplemented or restated in accordance with the terms hereof from

time to time.



                  "Assign" and "Assignment" have the meanings set forth in

Section 2.1 hereof.



                  "Board" shall mean the Board of Directors of the Corporation.



                  "Class A Stock" shall mean Class A Common Stock, par value

$0.01 per share, of the Corporation.



                  "Class B Stock" shall mean the Class B Common Stock, par value

$0.01 per share, of the Corporation.



                  "Corporation" shall have the meaning set forth in the preamble

hereto.



                  "Delaware Act" shall mean the Delaware General Corporation

Law, as amended.



                  "Directors" shall mean those individuals elected as members of

the Board.



                  "NYSE" shall mean the New York Stock Exchange, Inc.



                  "Person" includes any individual, corporation, association,

partnership (general or limited), joint venture, trust, estate, limited

liability company, or other legal entity or organization.



                  "Registration Request" shall have the meaning set forth in

Section 3.1 hereof.



                  "Stewart" shall have the meaning set forth in the preamble

hereto.



                  "Stockholders Agreement " means the Stockholders Agreement,

dated as of October 19, 1999, by and among the Corporation and certain of its

stockholders.



                  "Stock Purchase" shall have the meaning set forth in the

recitals hereof.



                  "Ubben" shall have the meaning set forth in Section 2.3

hereof.



                  "ValueAct" shall have the meaning set forth in the preamble

hereto.



                  Section 1.2. Headings. The headings and subheadings in this

Agreement are included for convenience and identification only and are in no way

intended to describe, interpret, define or limit the scope, extent or intent

of this Agreement or any provision hereof.



                                   ARTICLE II



                         COVENANTS AND ACKNOWLEDGEMENTS



                  Section 2.1. Investment Intent. ValueAct represents and

warrants to the Corporation that it is acquiring the Class A Stock in the Stock

Purchase for investment for its own account and not with the view to, or for

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC