{"id":43446,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/llc-membership-interest-purchase-agreement-stewart-living.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"llc-membership-interest-purchase-agreement-stewart-living","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/llc-membership-interest-purchase-agreement-stewart-living.html","title":{"rendered":"LLC Membership Interest Purchase Agreement &#8211; Stewart Living Omnimedia LLC, KPCB Holdings Inc. and KPCB IX Associates LLC"},"content":{"rendered":"<pre><div id=\"textbox\">\n<p>\n<\/p><pre>\n\n                   LLC MEMBERSHIP INTEREST PURCHASE AGREEMENT\n\n\n         LLC MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of July 27, 1999,\nby and among Martha Stewart Living Omnimedia LLC, a limited liability company\norganized under the laws of the state of Delaware (\"MSLO\"), KPCB Holdings, Inc.,\nas nominee, a corporation organized under the laws of the state of California\n(\"Buyer\") and KPCB IX Associates, LLC, a limited liability company organized\nunder the laws of California (\"KPCB\").\n\n         WHEREAS, Buyer desires to purchase from MSLO and MSLO desires to sell\nto Buyer membership interests representing 5% of the MSLO membership interests\nas described in the New LLC Agreement (as defined herein) and a warrant\nrepresenting the right to purchase, in certain circumstances, a 15% interest\n(subject to adjustment as provided in the warrant) in the Internet Business of\nMSLO (as defined in such warrant), on the terms and subject to the conditions\nset forth herein.\n\n         NOW, THEREFORE, the parties agree as follows:\n\n         1. Purchase and Sale of Membership Interests.\n\n            1.1 Sale and Purchase. At the Closing, Buyer shall purchase from\nMSLO, and MSLO shall sell and issue to Buyer, Class K LLC Membership Interests\nin MSLO representing 5.0% of the outstanding MSLO membership interests\nimmediately after giving effect to consummation of this transaction (the\n\"Membership Interests\") and a warrant representing the right to purchase, in\ncertain circumstances, an interest in the Internet Business of MSLO in the form\nof Exhibit A hereto (the \"Warrant\"), for an aggregate purchase price of\n$25,000,000 (twenty-five million dollars) (the \"Purchase Price\"), of which\n$250,000 shall be allocated to the Warrant, and subject to the terms and\nconditions of this Agreement and on the basis of the representations,\nwarranties, covenants and agreements contained herein (the \"Sale and Purchase\").\n\n            1.2 Closing. The Sale and Purchase shall take place on the date\nhereof at the offices of Wachtell, Lipton, Rosen &amp; Katz, 51 West 52nd Street,\nNew York, New York (which time and place are designated as the \"Closing\").\n\n            1.3 Deliveries at Closing. At the Closing, the parties shall,\nrespectively, make the following simultaneous deliveries:\n\n                (a) MSLO shall deliver to Buyer: (i) a certificate or\ncertificates representing the Membership Interests, duly executed on behalf of\nMSLO, (ii) the Warrant, duly executed on behalf of MSLO, (iii) the Fourth\nAmended and Restated Limited Liability Company Agreement of MSLO (the \"New LLC\nAgreement\"), in the form of Exhibit B hereto, duly executed on behalf of MSLO,\nThe Martha Stewart Family Limited Partnership (\"Stewart\"), Sharon Lee Patrick\n(\"Patrick\"), Time Publishing Ventures, Inc. (\"TPV\") and Grubman Indursky &amp; Schindler, P.C. (\"Grubman\", and together with Stewart, Patrick and TPV, the\n\"Existing\n\nMembers\"), and (iv) a cross receipt, duly executed on behalf of MSLO, indicating\nreceipt of the Purchase Price from Buyer.\n\n                (b) Buyer shall deliver to MSLO (i) the Purchase Price, by wire\ntransfer of immediately available funds to an account or accounts designated by\nMSLO, (ii) the New LLC Agreement duly executed on behalf of Buyer, and (iii) a\ncross receipt, duly executed on behalf of Buyer, indicating receipt of the\nMembership Interests and the Warrant from MSLO.\n\n                (c) The parties shall execute and deliver such other documents\nas are customary and reasonably necessary to consummate the transactions\ncontemplated hereby.\n\n         2. Representations and Warranties of MSLO. MSLO hereby represents and\nwarrants as follows:\n\n            2.1 Organization and Qualification. MSLO is a limited liability\ncompany duly organized and validly existing under the laws of the State of\nDelaware. MSLO has all requisite power and authority to carry on its business as\ncurrently conducted, other than such failures that would not reasonably be\nexpected to have a material adverse effect on MSLO's business, properties or\nfinancial condition (a \"Material Adverse Effect\"). MSLO is duly qualified to\ntransact business in each jurisdiction in which the failure to be so qualified\nwould reasonably be expected to have a Material Adverse Effect.\n\n            2.2 Capitalization. As of the Closing, the outstanding equity of\nMSLO will consist of Class A, Class B, Class C and Class K membership interests,\nas set forth on Exhibit C hereto. Other than such membership interests, as of\nthe Closing, options to acquire Class A membership interests equal to\napproximately 5% of the outstanding LLC interests are outstanding under the MSLO\nNon-qualified Class A LLC Unit Option Plan, the exercise of which options shall\nbe dilutive, on a net treasury basis, only to the other holders of the Class A\nInterests. In addition, upon a Conversion (as defined in the Third Amended and\nRestated Limited Liability Company Agreement of MSLO (the \"LLC Agreement\")) and\na subsequent public offering of the common stock of MSLO's successor\ncorporation, MSLO intends to issue common stock pursuant to the MSLO Phantom\nPerformance Unit Plan, a true and correct copy of which has been provided to\nBuyer. On or prior to the initial public offering, MSLO may issue additional\noptions to acquire equity interests in MSLO or the successor public company,\nprovided that options for no more than an aggregate of 10% of the fully-diluted\nequity shall be dilutive to Buyer as of the initial public offering. Except as\nset forth above and in the LLC Agreement and the New LLC Agreement, there are no\noutstanding rights, options, warrants, preemptive rights, rights of first\nrefusal or similar rights for the purchase or acquisition from MSLO of any\nequity interest in MSLO. Assuming the accuracy of the representations of Buyer\nand KPCB contained herein, all outstanding equity interests have been issued in\ncompliance with state and federal securities laws.\n\n            2.3 Subsidiaries. Except for Martha Stewart, Inc., a Connecticut\ncorporation, MSLO does not presently own or control, directly or indirectly, any\ninterest in any other\n\n\n                                      -2-\n\ncorporation, association, or other business entity. MSLO is not a participant in\nany joint venture, partnership, or similar arrangement.\n\n            2.4 Authorization. As of the Closing, all action on the part of\nMSLO, its officers, directors and Existing Members necessary for the\nauthorization, execution and delivery of this Agreement, the New LLC Agreement,\nthe Warrant and the performance of all obligations of MSLO hereunder and\nthereunder shall have been taken, and this Agreement, the New LLC Agreement and\nthe Warrant, assuming due execution by the parties hereto and thereto, will\nconstitute valid and legally binding obligations of MSLO, enforceable in\naccordance with their respective terms, subject to: (i) judicial principles\nlimiting the availability of specific performance, injunctive relief, and other\nequitable remedies and (ii) bankruptcy, insolvency, reorganization, moratorium\nor other similar laws now or hereafter in effect generally relating to or\naffecting creditors' rights.\n\n            2.5 Valid Issuance of Membership Interests and the Warrant. The\nMembership Interests and the Warrant, when issued, sold and delivered in\naccordance with the terms of this Agreement for the consideration expressed\nherein, shall be duly and validly issued and will be free of restrictions on\ntransfer directly or indirectly created by MSLO other than restrictions on\ntransfer under this Agreement, the terms of the Warrant, the New LLC Agreement\nand under applicable state and federal securities laws.\n\n            2.6 Governmental Consents. No consent, approval, order or\nauthorization of, or registration, qualification, designation, declaration or\nfiling with, any federal, state or local governmental authority on the part of\nMSLO is required in connection with the offer, sale or issuance of the\nMembership Interests and the Warrant , except for the following: (i) the filing\nof such notices as may be required under the Securities Act of 1933, as amended\n(the \"Securities Act\"); (ii) the filing of a notice of exemption pursuant to\nSection 25102(f) of the California Corporate Securities Law of 1968, as amended\n(the \"California Securities Law\"), which shall be filed by MSLO following the\nClosing; and (iii) the compliance with any other applicable state securities\nlaws, which compliance will have occurred within the appropriate time periods\ntherefor.\n\n            2.7 Litigation. There are no actions, suits, proceedings or\ninvestigations pending or, to the best of MSLO's knowledge, threatened before\nany court, administrative agency or other governmental body against MSLO which\nquestions the validity of this Agreement, the New LLC Agreement or the Warrant,\nor the right of MSLO to enter into any of them, or to consummate the\ntransactions contemplated hereby or thereby, or which would reasonably be\nexpected to have a Material Adverse Effect. MSLO is not a party or subject to,\nand none of its assets is bound by, the provisions of any order, writ,\ninjunction, judgment or decree of any court or government agency or\ninstrumentality which would reasonably be expected to have a Material Adverse\nEffect.\n\n            2.8 Employees. Except as set forth on Schedule 2.8 hereto, MSLO is\nnot a party to or bound by any currently effective employment contract, deferred\ncompensation agreement, bonus plan, incentive plan, profit sharing plan,\nretirement agreement or other\n\n\n\n                                      -3-\n\nemployee compensation agreement or arrangement with any collective bargaining\nagent. Except for Martha Stewart, who is a member of the Screen Actors Guild and\nthe American Federation of Television and Radio Artists, no employee of MSLO is\nrepresented by any labor union or covered by any collective bargaining\nagreement. There is no pending or, to the best of MSLO's knowledge, threatened\nlabor dispute involving MSLO and any group of its employees.\n\n            2.9 Intellectual Property. MSLO has sufficient title to and\nownership of, or other rights to use, all trade secrets, and, to its knowledge,\ncopyrights, information, proprietary rights, trademarks, service marks and trade\nnames in each case necessary for its business as now conducted without any\nmaterial conflict with or infringement of the rights of others, except where\nsuch failures or conflicts would not reasonably be expected to have a Material\nAdverse Effect. Except for license agreements entered into in the ordinary\ncourse of business or otherwise as set forth on Schedule 2.9 hereto, there are\nno material outstanding options, licenses, or agreements of any kind relating to\nthe foregoing, nor is MSLO bound by or a party to any material options, licenses\nor agreements of any kind with respect to the trademarks, service marks, trade\nnames, copyrights, trade secrets, licenses, information, proprietary rights and\nprocesses of any other person or entity. MSLO has not received any written, or\nto its knowledge, oral communications alleging that MSLO has violated or, by\nconducting its business as proposed, would violate any of the trademarks,\nservice marks, trade names, copyrights or trade secrets or other proprietary\nrights of any other person or entity, except for such violations as would not\nreasonably be expected to have a Material Adverse Effect.\n\n            2.10 Compliance with Other Instruments. MSLO is not in violation or\ndefault of any provision of its Certificate of Formation or the LLC Agreement,\neach as in effect immediately prior to the Closing, except for such failures as\nwould not reasonably be expected to have a Material Adverse Effect. MSLO is not\nin violation or default of any provision of any material instrument, mortgage,\ndeed of trust, loan, contract, commitment, judgment, decree, order or obligation\nto which it is a party or by which it or any of its properties or assets are\nbound which would reasonably be expected to have a Material Adverse Effect. To\nthe best of its knowledge, MSLO is not in violation or default of any provision\nof any federal, state or local statute, rule or governmental regulation which\nwould reasonably be expected to have a Material Adverse Effect. The execution,\ndelivery and performance of and compliance with this Agreement, the New LLC\nAgreement and the issuance and sale of the Membership Interests and Warrant,\nwill not result in any such violation, be in conflict with or constitute, with\nor without the passage of time or giving of notice, a default under any such\nprovision, require any consent or waiver under any such provision (other than\nany consents or waivers that have been obtained), or result in the creation of\nany mortgage, pledge, lien, encumbrance or charge upon any of the properties or\nassets of MSLO pursuant to any such provision.\n\n            2.11 Permits. MSLO has all franchises, permits, licenses, and any\nsimilar authority necessary for the conduct of its business as now being\nconducted by it, the lack of which would reasonably be expected to have a\nMaterial Adverse Effect. MSLO is not in default in any material respect under\nany of such franchises, permits, licenses, or other similar authority.\n\n\n                                      -4-\n\n            2.12 Environmental and Safety Laws. To the best of its knowledge,\nMSLO is not in violation of any applicable statute, law or regulation relating\nto the environment or occupational health and safety, except for such violations\nas would not reasonably be expected to have a Material Adverse Effect.\n\n            2.13 Registration Rights. Except as provided in the New LLC\nAgreement and its predecessor agreements, MSLO has not granted or agreed to\ngrant any registration rights, including piggyback rights, to any person or\nentity.\n\n            2.14 Title to Property and Assets. Except as set forth on Schedule\n2.14, MSLO has good and marketable title to all of properties and assets owned\nby it, free and clear of all mortgages, liens and encumbrances, except liens for\ncurrent taxes and assessments not yet due and possible minor liens and\nencumbrances which do not, in any case, materially detract from the value of the\nproperty subject thereto or materially impair the operations of MSLO. With\nrespect to the material property and assets it leases, MSLO is in material\ncompliance with such leases and, to the best of its knowledge, holds a valid\nleasehold interest free of all liens, claims or encumbrances, except for such\nliens, claims or encumbrances which would not materially impair the operations\nof MSLO. MSLO's material properties and assets are in good condition and repair,\nin all material respects, for the purposes for which they are currently used,\nordinary wear and tear excepted.\n\n            2.15 Financial Statements. MSLO has delivered to Buyer (a) an\naudited consolidated statement of financial position and statement of operations\nof MSLO as of and for the fiscal year ended December 31, 1998, and (b) an\nunaudited consolidated statement of financial position and statement of\noperations of MSLO as of and for the three-month period ended March 31, 1999\n(together with the notes thereto, the \"Financial Statements\"). The Financial\nStatements fairly present, in all material respects, the financial position and\nresults of operations of MSLO as of the dates and for the periods indicated,\nsubject in the case of the March 31, 1999 Financial Statements, to normal\nyear-end adjustments. Except as set forth on Schedule 2.15, MSLO has no material\nliabilities or obligations which are not reflected or reserved against in the\nDecember 31, 1998 statement of financial position (the \"MSLO Balance Sheet\")\nwhich would be required to be reflected thereon if prepared as of the date\nhereof in accordance with U.S. generally accepted accounting principles, except\nfor liabilities or obligations incurred since the date of the MSLO Balance Sheet\nin the ordinary course of business or which are not material.\n\n            2.16 Agreements; Actions.\n\n                (a) Except for agreements described herein and in the New LLC\nAgreement, and the employment agreements and other agreements set forth on\nSchedule 2.16(a) hereto, there are no agreements, understandings or proposed\ntransactions between MSLO and any of its officers, directors, affiliates, or any\naffiliate thereof.\n\n                (b) Other than the LLC Agreement, the Integrated Agreement with\nRespect to Employment and Property Services, License and Non-Competition\nMatters, by and\n\n\n                                      -5-\n\nbetween Martha Stewart and MSLO, dated as of February 3, 1997, the Loan\nAgreement for a principal amount of $15.0 million between NationsBank, N.A. and\nMSLO, dated as of March 30, 1999, and agreements entered into in the ordinary\ncourse of business consistent with past practice, there are no agreements,\nunderstandings, instruments, contracts, judgments, orders, writs or decrees to\nwhich MSLO is a party or by which it is bound that involve (i) obligations of,\nor payments by MSLO in excess of, $5 million, (ii) provisions restricting the\ndevelopment, manufacture or distribution of MSLO's products or services or (iii)\nindemnification by MSLO with respect to infringement of proprietary rights.\n\n                (c) Except as reflected in the Financial Statements or set forth\non Schedule 2.16(c), since March 31, 1999, MSLO has not (i) incurred\nindebtedness for money borrowed in excess of $3 million individually or $7\nmillion in the aggregate, or (ii) sold, exchanged or otherwise disposed of any\nof its assets or rights, other than the sale of its inventory and license\nagreements in the ordinary course of business.\n\n            2.17 Tax Returns and Audits. Except as would not reasonably be\nexpected to have a Material Adverse Effect, MSLO (a) is characterized as a\npartnership for United States federal income tax purposes, and (b) has prepared\nand filed all United States federal, state and local income tax returns required\nto be filed by it. To the best of MSLO's knowledge, no deficiency assessment or\nproposed adjustment by any taxing authority to MSLO's federal, state, or local\nincome taxes is pending.\n\n            2.18 Draft Prospectus. MSLO has previously provided to KPCB drafts\nof the prospectus of Martha Stewart Living Omnimedia, Inc. that MSLO intends to\ninclude as part of such entity's registration statement on Form S-1. The most\nrecent such draft provided to KPCB has been prepared in good faith by MSLO, and,\nin the judgment of MSLO's senior management, accurately and fairly describes in\nall material respects the historical businesses of MSLO as they exist on the\ndate thereof, provided that MSLO makes no representation or warranty herein with\nrespect to any forward-looking statements contained in such draft.\n\n            2.19 No Implied Representations. Except as expressly set forth\nherein or in the New LLC Agreement or the Warrant, MSLO makes no representations\nor warranties of any kind to Buyer.\n\n            2.20 Brokers or Finders. MSLO has not agreed to incur, directly or\nindirectly, any liability for brokerage or finders' fees, agents' commissions or\nother similar charges in connection with this Agreement or any of the\ntransactions contemplated hereby.\n\n         3. Representations and Warranties of Buyer and KPCB. Buyer and KPCB\nhereby jointly and severally represent and warrant that:\n\n            3.1 Experience. Buyer and KPCB are experienced in evaluating\ncompanies such as MSLO, are able to fend for themselves in transactions such as\nthe one contemplated by this Agreement, have such knowledge and experience in\nfinancial and business matters that\n\n\n                                      -6-\n\nBuyer and KPCB are capable of evaluating the merits and risks of its prospective\ninvestment in MSLO, and have the ability to bear the economic risks of the\ninvestment.\n\n            3.2 Investment. Buyer is acquiring the Membership Interests for\ninvestment for its own account and not with the view to, or for resale in\nconnection with, any distribution thereof. Buyer and KPCB understand that the\nMembership Interests have not been registered under the Securities Act or the\nCalifornia Securities Law, by reason of a specific exemption from the\nregistration provisions of the Securities Act and the California Securities Law,\nrespectively, which depends upon, among other things, the bona fide nature of\nthe investment intent as expressed herein. Buyer and KPCB further represent that\nthey do not have any contract, undertaking, agreement or arrangement with any\nperson to sell, transfer or grant participation to any third person with respect\nto any of the Membership Interests. Buyer and KPCB understand and acknowledge\nthat the offering of the Membership Interests pursuant to this Agreement will\nnot be registered under the Securities Act nor under the state securities laws\non the ground that the sale provided for in this Agreement and the issuance of\nsecurities hereunder is exempt from the registration requirements of the\nSecurities Act and any applicable state securities laws.\n\n            3.3 Rule 144. Buyer and KPCB acknowledge that the Membership\nInterests must be held indefinitely unless subsequently registered under the\nSecurities Act and any applicable state securities laws or an exemption from\nsuch registration is available and the transfer thereof is otherwise permitted\nunder the New LLC Agreement. Buyer and KPCB are aware of the provisions of Rule\n144 promulgated under the Securities Act that permit limited resale of shares\npurchased in a private placement subject to the satisfaction of certain\nconditions. Buyer and KPCB covenant that, in the absence of an effective\nregistration statement covering the Membership Interests in question, Buyer will\nsell, transfer, distribute or otherwise dispose of (collectively, \"Transfer\")\nthe Membership Interests only in a manner consistent with its representations\nand covenants set forth in this Section 3 and those set forth in the New LLC\nAgreement. In connection therewith, Buyer and KPCB acknowledge that MSLO will\nmake a notation on its books regarding the restrictions on transfers set forth\nin this Section 3 and will transfer Membership Interests on the books of MSLO\nonly to the extent not inconsistent therewith.\n\n            3.4 No Public Market. Buyer and KPCB understand that no public\nmarket now exists for the Membership Interests , and that there may never be a\npublic market for the Membership Interests.\n\n            3.5 Access to Data. Buyer and KPCB have received and reviewed\ninformation about MSLO and have had an opportunity to discuss MSLO's business,\nmanagement and financial affairs with its management and to review MSLO's\nfacilities. Buyer and KPCB understand that such discussions, as well as any\nwritten information provided by MSLO, were intended to describe the aspects of\nMSLO's business and prospects which MSLO believes to be material, but were not\nnecessarily a thorough or exhaustive description, and except as expressly set\nforth in this Agreement, MSLO makes no representation or warranty with respect\nto the completeness of such information and makes no representation or warranty\nof any kind with respect to any information provided by any entity other than\nMSLO. Some of such information\n\n\n                                      -7-\n\nincludes projections as to the future performance of MSLO, which projections may\nnot be realized, are based on assumptions which may not be correct and are\nsubject to numerous factors beyond MSLO's control.\n\n            3.6 Authorization. As of the Closing, all action on the part of\nBuyer and KPCB, and their respective officers, directors and partners necessary\nfor the authorization, execution and delivery of this Agreement and the New LLC\nAgreement and the performance of all obligations of Buyer and KPCB hereunder and\nthereunder shall have been taken, and this Agreement and the New LLC Agreement,\nassuming due execution by the parties hereto and thereto, constitute valid and\nlegally binding obligations of Buyer and KPCB, enforceable in accordance with\ntheir respective terms, subject to: (i) judicial principles limiting the\navailability of specific performance, injunctive relief, and other equitable\nremedies and (ii) bankruptcy, insolvency, reorganization, moratorium or other\nsimilar laws now or hereafter in effect generally relating to or affecting\ncreditors' rights.\n\n            3.7 Compliance with Other Instruments. Neither Buyer nor KPCB is in\nviolation or default of any provision of its certificate of incorporation or\nother organizational documents, as applicable, each as in effect immediately\nprior to the Closing, except for such failures as would not be reasonably\nexpected to materially adversely effect the ability of Buyer and KPCB to perform\ntheir respective obligations under this Agreement (a \"Buyer Material Adverse\nEffect\"). Neither Buyer nor KPCB is in violation or default of any provision of\nany material instrument, mortgage, deed of trust, loan, contract, commitment,\njudgment, decree, order or obligation to which it is a party or by which it or\nany of its properties or assets are bound which would reasonably be expected to\nhave a Buyer Material Adverse Effect. To the best of its knowledge, neither\nBuyer nor KPCB is in violation or default of any provision of any federal, state\nor local statute, rule or governmental regulation which would reasonably be\nexpected to have a Buyer Material Adverse Effect. The execution, delivery and\nperformance of and compliance with this Agreement and the New LLC Agreement will\nnot result in any such violation, be in conflict with or constitute, with or\nwithout the passage of time or giving of notice, a default under any such\nprovision, require any consent or waiver under any such provision (other than\nany consents or waivers that have been obtained), or result in the creation of\nany mortgage, pledge, lien, encumbrance or charge upon any of the properties or\nassets of Buyer or KPCB pursuant to any such provision.\n\n            3.8 Accredited Investor. Each of Buyer and KPCB is an \"accredited\ninvestor\" as defined in Rule 501 of Regulation D as promulgated by the\nSecurities and Exchange Commission under the Securities Act and shall submit to\nMSLO such further assurances of such status as may be reasonably requested by\nMSLO. For state securities law purposes, the principal address of both Buyer and\nKPCB is 2750 Sand Hill Road, Menlo Park, California 94025.\n\n         4. Covenants.\n\n            4.1 Confidentiality. MSLO, Buyer and KPCB, and their respective\nofficers, directors, partners and affiliates, agree to keep the terms and\nconditions of this Agreement and the transactions contemplated hereby\nconfidential, and agree not to disclose to any party not a\n\n\n                                      -8-\n\nparty to this Agreement or the New LLC Agreement any of the terms hereof, except\nas may be required by applicable law. Buyer and KPCB expressly acknowledge that\neach has received, and will receive in the future, Confidential Materials (as\nhereinafter defined), and that disclosure of such Confidential Materials to\nparties not a party to this Agreement would cause irreparable harm to MSLO.\nExcept with the prior written consent of MSLO or as required by law, neither\nBuyer nor KPCB, nor their respective officers, directors, partners or\naffiliates, shall (i) disclose any Confidential Materials to any party not a\nparty to this Agreement, or (ii) use any Confidential Materials for any purpose\nexcept in connection with their efforts on behalf of MSLO. Buyer, KPCB and their\nrespective officers, directors, partners or affiliates shall use their\nreasonable best efforts to preserve the confidentiality of all Confidential\nMaterials. In the event that a party concludes that it is legally obligated to\ndisclose any provision of this Agreement or any Confidential Materials, such\nparty shall provide the other party with prompt written notice, and shall seek\nto limit the dissemination of such Confidential Materials. In the case of legal\nproceedings in which such disclosure is required, the parties shall cooperate to\nobtain an appropriate protective order limiting the disclosure of such material.\nThe parties acknowledge that, in the event of a public offering of securities of\nMSLO or any subsidiary, MSLO may be required to disclose certain terms of this\nAgreement.\n\n                  \"Confidential Materials\" means any information or materials,\nwhether written or oral, tangible or intangible, (i) concerning MSLO, its\nsubsidiaries, businesses, markets, products, prospects, finances, principal\nshareholders and\/or members, and (ii) which Buyer and\/or KPCB develops, or with\nrespect to which Buyer and\/or KPCB gains access or knowledge, as a direct result\nof MSLO's provision to Buyer and\/or KPCB of information and\/or materials.\nNotwithstanding the foregoing, the Confidential Material shall not include (A)\ninformation that was known to, and material that was in the possession of, Buyer\nand\/or KPCB prior to the commencement of any negotiations with MSLO, (B)\ninformation that is or becomes generally known to, and materials possessed by,\nthe public at large or entities involved in the Internet Business (other than as\na result of a breach of this agreement by Buyer and\/or KPCB or by disclosure of\nany other party which Buyer and\/or KPCB knows, or has reason to know, is under\nan obligation of confidentiality to MSLO), (C) information or material acquired\nby Buyer and\/or KPCB independently from a third party (other than a third party\nwhich Buyer and\/or KPCB knows, or has reason to know, is under an obligation of\nconfidentiality to MSLO), and (D) information or material independently\ndeveloped by Buyer and\/or KPCB and not as a result of the disclosure of\ninformation or provision of materials by MSLO. The Confidential Materials may\ninclude, but are not necessarily limited to, the following: concepts;\ntechniques; data; documentation; research and development; customer lists;\nadvertising plans; distribution networks; new product concepts; designs;\npatterns; sketches; planned introduction dates; processes; marketing procedures;\n\"know-how\"; marketing techniques and materials; development plans; names and\nother information related to strategic partners, suppliers, or vendors; pricing\npolicies and strategic, business or financial information, including business\nplans and financial pro formas.\n\n            4.2 Business Development. MSLO, Buyer and KPCB agree to act in good\nfaith and use their reasonable best efforts in developing the Internet Business\nof MSLO and\n\n\n                                      -9-\n\nmaximizing the value to stockholders of such businesses and MSLO as a whole.\nWithout limiting the foregoing, in the event MSLO determines that the public\nmarkets do not appropriately value its Internet Business as part as MSLO as a\nwhole, MSLO shall investigate the consummation of a transaction designed to\nmaximize the value of such businesses to its shareholders, which transaction\ncould take the form of the creation of a publicly traded tracking (or letter)\nstock structured to track the value of such businesses, the transfer of the\nassets and liabilities relating to such businesses into a publicly traded\nsubsidiary of MSLO, or another strategic transaction. Buyer and KPCB shall\nassist MSLO in developing the business plans and strategies for MSLO's Internet\nBusiness and provide MSLO with advice regarding the execution of these business\nplans and strategies. KPCB shall assist MSLO in attracting and retaining key\npersonnel for MSLO's Internet Business and shall assist MSLO in developing\nequity based compensation strategies relating thereto. MSLO will establish an\nequity compensation program or other equity-based or \"phantom\" plan designed, in\nthe judgment of the Board of Directors of MSLO, to incentivize management of the\nInternet Business to maximize the value of the Internet Business consistent with\nthe overall goals and objectives of the Board of Directors of MSLO. Any actions\ntaken with respect to the foregoing covenants shall be subject to the final\ndecision of MSLO, and, as applicable, the Board of Directors of MSLO.\n\n            4.3 Restrictions on Transfer.\n\n                (a) Prior to the initial public offering, if any, of MSLO or a\nsuccessor entity, Buyer shall not, directly or indirectly, Transfer any\nMembership Interests, or any rights with respect thereto, except as permitted by\nthe New LLC Agreement. Buyer shall not, directly or indirectly, on or prior to\nthe one-year anniversary of the consummation of such an offering, Transfer any\nshares of common stock or other equity interests into which the Membership\nInterests are converted or exchanged (collectively, \"Shares\"), or any rights\nwith respect thereto, provided, however, that, following the six-month\nanniversary of such offering, Buyer may distribute up to 50% of the Shares it\nreceives in such conversion or exchange to the limited partners or other fund\nparticipants in the relevant Kleiner Perkins Caufield &amp; Byers fund. The\nforegoing limitation shall not apply to any Transfer approved by the Board of\nDirectors of MSLO (or the successor entity), including a Transfer pursuant to a\ncorporate transaction relating to MSLO (or the successor entity) that is\napproved by such Board.\n\n                (b) In the event that Buyer, or its permitted transferee,\nexercises the Warrant and receives shares of Common Stock (as defined in the\nWarrant), for the six-month period following receipt of such shares, Buyer shall\nnot, directly or indirectly, Transfer any Shares (or rights in such Shares),\nexcept distributions to such entities described in the proviso in the second\nsentence of Section 4.3(a) and subject to the 50% limitation set forth therein.\nThe foregoing limitation shall not apply to any Transfer approved by the Board\nof Directors of MSLO (or the successor entity), including a Transfer pursuant to\na corporate transaction relating to MSLO (or the successor entity) approved by\nsuch Board.\n\n                (c) Buyer acknowledges and agrees that any certificates\nrepresenting Membership Interests or other equity securities or Common Stock\ndescribed in this paragraph may contain an appropriate legend reflecting the\nlimitations described in this paragraph, and that\n\n\n                                      -10-\n\nMSLO, or its transfer agent, may enter in its stock transfer books an\nappropriate stop-transfer order reflecting these provisions.\n\n         5. Miscellaneous.\n\n            5.1 Governing Law. This Agreement shall be governed in all respects\nby the laws of the State of Delaware, without regard to any provisions thereof\nrelating to conflicts of laws among different jurisdictions.\n\n            5.2 Survival. The representations and warranties made herein shall\nsurvive the Closing for a period of one year, whereupon they shall cease and be\nof no further force and effect.\n\n            5.3 Successors and Assigns. Except as otherwise provided herein, the\nprovisions hereof shall inure to the benefit of, and be binding upon, the\nsuccessors, assigns, heirs, executors and administrators of the parties hereto;\nprovided, however, that the rights of Buyer to purchase the Membership Interests\nshall not be assignable without the consent of MSLO. This Agreement shall not be\nconstrued so as to confer any right or benefit on any party not a party hereto,\nother than their respective successors, assigns, heirs, executors and\nadministrators.\n\n            5.4 Entire Agreement; Amendment. This Agreement and the other\ndocuments delivered pursuant hereto constitute the full and entire understanding\nand agreement among the parties with regard to the subjects hereof and thereof\nand supersedes all prior agreements and understandings relating thereto. Neither\nthis Agreement nor any term hereof may be amended, waived, discharged or\nterminated other than by a written instrument signed by the party against whom\nenforcement of any such amendment, waiver, discharge or termination is sought.\n\n            5.5 Notices, Etc. All notices under this Agreement shall be\nsufficiently given for all purposes if made in writing and delivered personally,\nsent by documented overnight delivery service or, to the extent receipt is\nconfirmed, facsimile or other electronic transmission, to following addresses\nand numbers. Notices to MSLO shall be addressed to:\n\n                  Martha Stewart Living Omnimedia LLC\n                  20 West 43rd Street\n                  New York, New York 10036\n                  Telephone:  (212) 827-8000\n                  Facsimile:  (212) 827-8289\n                  Attn:  Gregory R. Blatt, Esq.\n                  Senior Vice President and General Counsel\n\nwith a copy to:\n\n                  Wachtell, Lipton, Rosen &amp; Katz\n                  51 West 52nd Street\n                  New York, NY 10019\n                  Telephone:  (212) 403-1000\n\n\n                                      -11-\n\n                  Facsimile:  (212) 403-2000\n                  Attn:  Andrew J. Nussbaum, Esq.\n\nor at such other address and to the attention to such other person as MSLO may\ndesignate by written notice to Buyer and KPCB. Notices to Buyer and KPCB shall\nbe addressed to:\n\n                  Kleiner Perkins Caufield &amp; Byers\n                  2750 Sand Hill Road\n                  Menlo Park, CA  94025\n                  Telephone:  (650) 233-2750\n                  Facsimile:  (650) 233-0300\n                  Attn:  John Doerr\n\nwith a copy to:\n\n                  Fenwick &amp; West LLP\n                  2 Palo Alto Square\n                  Palo Alto, CA  94306\n                  Telephone:  (650) 494-0600\n                  Facsimile:  (650) 494-1417\n                  Attn:  Gordon K. Davidson, Esq.\n\nor at such other address and to the attention of such other person as Buyer and\nKPCB may designate by written notice to MSLO.\n\n            5.6 Delays or Omissions. No delay or omission to exercise any right,\npower or remedy accruing to any party upon any breach or default of the other\nparty under this Agreement shall impair any such right, power or remedy of such\nfirst party, nor shall it be construed to be a waiver of any such breach or\ndefault, or an acquiescence therein, or of or in any similar breach or default\nthereafter occurring; nor shall any waiver of any single breach or default be\ndeemed a waiver of any other breach or default theretofore or thereafter\noccurring. Any waiver, permit, consent or approval of any kind or character on\nthe part of any holder of any breach or default under this Agreement, or any\nwaiver on the part of any holder of any provisions or conditions of this\nAgreement, must be in writing and shall be effective only to the extent\nspecifically set forth in such writing or as provided in this Agreement.\n\n            5.7 Expenses. MSLO, Buyer and KPCB shall each bear the expenses and\nlegal fees incurred on their own behalf with respect to this Agreement and the\ntransactions contemplated hereby.\n\n            5.8 Counterparts. This Agreement may be executed in any number of\ncounterparts, each of which may be executed by only one party, which shall be\nenforceable against the parties actually executing such counterparts, and all of\nwhich together shall constitute one instrument.\n\n\n                                      -12-\n\n            5.9 Severability; Enforcement. In the event that any provision of\nthis Agreement becomes or is declared by a court of competent jurisdiction to be\nillegal, unenforceable or void, this Agreement shall continue in full force and\neffect without such provision; provided that no such severability shall be\neffective if it materially changes the economic benefit of this Agreement to any\nparty. The parties hereto agree that irreparable damage for which money damages\nwould not be an adequate remedy would occur in the event that any of the\nprovision of this Agreement were not performed in accordance with its specific\nterms or was otherwise breached. It is accordingly agreed that, in addition to\nany other remedies a party may have at law or equity, the parties shall be\nentitled to seek an injunction of injunctions to prevent such breached of this\nAgreement and to enforce specifically the terms hereof.\n\n\n\n                                      -13-\n\n            IN WITNESS WHEREOF, the parties have executed this Agreement as of\nthe date first above written.\n\nMARTHA STEWART LIVING OMNIMEDIA LLC\n\n\n\nBy: \/s\/ Martha Stewart\n    ----------------------------\n    Name: Martha Stewart\n    Title: Chairman and Chief\n           Executive Officer\n\nKPCB HOLDINGS, INC., as nominee\n\n\n\nBy: \/s\/ L. John Doerr\n    ----------------------------\n    Name: L. John Doerr\n    Title: Senior Vice President\n\n\nKPCB IX ASSOCIATES, LLC\n\n\n\nBy: \/s\/ L. John Doerr\n    ----------------------------\n    Name: L. John Doerr\n    Title: Managing Director\n\n                                      -14-\n\n<\/pre>\n<\/div>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8137],"corporate_contracts_industries":[9464],"corporate_contracts_types":[9622,9627],"class_list":["post-43446","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-martha-stewart-living-omnimedia-inc","corporate_contracts_industries-media__books","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43446","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43446"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43446"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43446"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}