LICENSE AGREEMENT



            THIS AGREEMENT made as of this 21st day of June, 2001, by and

between MSO IP HOLDINGS, INC., a California corporation, with its principal

place of business at 11100 Santa Monica Boulevard, Suite 600, Los Angeles,

California 90025 ("MSO") and KMART CORPORATION, a Michigan corporation, with its

principal place of business at 3100 West Big Beaver Road, Troy, Michigan 48084

("Kmart").



            WHEREAS, MSO and Kmart have previously entered into an agreement,

dated January 28, 1997 (the "Bed and Bath Agreement"), pursuant to which Kmart

and MSO, among other things, merchandise and develop certain home products;



            WHEREAS, MSO and Kmart have previously entered into an agreement,

dated June 1, 1998 (the "Garden Agreement"), pursuant to which Kmart and MSO,

among other things, merchandise and develop certain garden products;



            WHEREAS, MSO and Kmart have previously entered into an agreement,

dated April 21, 1999 (the "Housewares Agreement," and together with the Bed and

Bath Agreement and the Garden Agreement, the "Prior Agreements"), pursuant to

which Kmart and MSO, among other things, merchandise and develop certain

housewares products;



            WHEREAS, Kmart and MSO have determined to terminate the Prior

Agreements and enter into this Agreement, which shall set forth revised terms

and conditions governing the relationship between the parties and shall, as of

August 1, 2001, supersede the Prior Agreements in every way (except for

obligations relating to payment of royalties for periods prior to August 1,

2001);



            NOW, THEREFORE, for good and valuable consideration the sufficiency

of which is hereby acknowledged by the parties hereto, the parties hereto hereby

agree as follows:



      I.    Grant. Subject to the terms and conditions of this Agreement, MSO

licenses to Kmart the limited right in the Territory (as defined below) to

utilize the trademark MARTHA STEWART EVERYDAY(TM) and variations and stylized

forms thereof designated by MSO (the "Trademark"), together with the name,

likeness, voice and signature of Martha Stewart (in each case solely in

connection with the Trademark) (the "Stewart Property"), and the designs and

other intellectual property incorporated in the Licensed Products (as defined

below) (the "Product Designs," and together with the Stewart Property and the

Trademark, the "Licensed Property"), all of which shall be approved by MSO in

the manner set forth herein, solely in connection with (i) the manufacture of

Licensed Products, (ii) the distribution of Licensed Products to, and retail

sale of Licensed Products by, Kmart's Kmart stores in the Territory, and (iii)

the manufacture and exploitation of the Materials (as defined in Section VI(1))

in connection with Kmart's sales of Licensed Products through its Kmart stores.

Any sale or other exploitation

{PAGE}   2

of the Licensed Products or use of the Licensed Property in a manner not

explicitly permitted hereunder shall be deemed a material breach of this

Agreement. "Licensed Products" shall mean the Home Products (as defined below),

the Garden Products (as defined below), the Housewares Products (as defined

below), the Seasonal Products (as defined below) and the Additional Products (as

defined in Section XVII). The "Home Products" shall mean those products

developed and merchandised by Kmart and MSO pursuant to the terms of this

Agreement and/or the Bed and Bath Agreement in the product categories set forth

on Schedule I(a) hereto. The "Garden Products" shall mean those products

developed and merchandised by Kmart and MSO pursuant to the terms of this

Agreement and/or the Garden Agreement in the product categories set forth on

Schedule I(b) hereto. The "Housewares Products" shall mean those products

developed and merchandised by Kmart and MSO pursuant to the terms of this

Agreement and/or the Housewares Agreement in the product categories set forth on

Schedule I(c) hereto. The "Seasonal Products" shall mean those products

developed and merchandised by Kmart and MSO pursuant to the terms of this

Agreement in the product categories set forth on Schedule I(d) hereto. "Product

Category" shall mean a broad category of Licensed Product (1) comprising

narrower categories of product associated by a common theme, and (2) which Kmart

and MSO consider a cohesive program (e.g. Home Products, Garden Products, etc.).

"Initial Products" shall mean the Home Products, the Garden Products, the

Housewares Products and the Seasonal Products. "Territory" shall mean the United

States of America and its territories, including, Puerto Rico, Guam, and the

U.S. Virgin Islands, and the Caribbean. Additionally, if Kmart opens Kmart

stores in additional small countries it may request of MSO for such country to

be added to the definition of the Territory, which request MSO shall generally

approve so long as (x) MSO (or its affiliate) is not already actively marketing

(either directly or through third parties) products and/or services in such

country, (y) MSO (or its affiliate) does not have plans to begin to market

(either directly or through third parties) products and/or services in such

country in the foreseeable future, and (z) MSO has no other compelling reason

why adding such country to the Territory would be detrimental to MSO's (or its

affiliate's) business.



      II. Exclusivity. (1) MSO warrants and agrees that the license of the

Licensed Property contained herein is exclusive to Kmart in Exclusive Stores (as

hereafter defined) in the Territory during the Term in connection with the

promotion, advertising, manufacture, distribution and sale of any products which

are Licensed Products. "Exclusive Stores" shall mean (i) the retail store

outlets in the discount store channel of distribution which includes only

Wal-Mart, Sam's Club, Target, J.C. Penney, Montgomery Ward, Venture, Bradlees,

Kohl's, Mervyn's, Meijer, Fred Meyer, Shopko, Costco and Hill's and similar

national or regional discount stores which are not in business as of the date

hereof but which may come into existence in the future during the Term, provided

that Kmart provides MSO with written notice of its desire to include such

newly-existing stores within the definition of Exclusive Stores within 60 days

of the initial opening of any such store and MSO reasonably agrees that such

store should be so included, and (ii) the retail store outlets of Sears, Lowe's,

Home Depot, HQ, Builder's Square and Hechinger's.



      (2) MSO may use or permit others to use the Licensed Property on products

which are of the same product type as Licensed Products and which are of a

higher quality and intended by MSO to be sold at a higher price point than the

Licensed Products sold by Kmart provided, however, that such products are sold

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