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Kmart, Martha Stewart reach new pact

/ Source: The Associated Press

Kmart Holding Corp. announced Monday that it is withdrawing a lawsuit against Martha Stewart's company after the two sides reached an agreement on royalties on sales of goods bearing the domestic maven's name.

The amended contract extends the partnership two years, until 2009, and expands it to cover new product categories, the companies said in a joint statement.

Kmart had accused Martha Stewart Living Omnimedia Inc. of overcharging it for the exclusive rights to sell housewares and other products under the Martha Stewart Everyday label.

The amended contract keeps a minimum guaranteed payment for overall sales, but eliminates minimum payments in each product category, which had been the source of the conflict.