August 6, 2002
Ms. Martha Stewart
c/o James F. Fitzpatrick, Esq.
Jeffrey H. Smith, Esq.
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004-1206

Dear Ms. Stewart:

The Committee on Energy and Commerce continues its investigation into the conduct of ImClone Systems, Inc., and the development of its anti-cancer drug known as Erbitux. As you know, in the course of our investigation, Committee staff received a briefing from ImClone's outside counsel on June 3, 2002, regarding the findings of a probe conducted by the outside counsel relating to possible insider trading or tipping by ImClone officers or directors of ImClone shares in the weeks before the Food and Drug Administration (FDA) refused to file ImClone's application for Erbitux.

In that briefing, outside counsel disclosed that you sold all of your ImClone shares on December 27, 2002, the day before ImClone received the FDA's refusal-to-file letter for Erbitux. On June 5, 2002, Committee staff contacted one of your attorneys to determine the accuracy of the report of your trade and to provide you an opportunity to explain the circumstances of your December 27th trade and your telephone message to Dr. Samuel Waksal on December 27, 2001. Your trade was publicly reported on June 6, 2002.

During the next several days, your attorneys assured Committee staff that your trade reflected a pre-existing agreement and that you did not have any non-public material information from ImClone. To clear up any confusion, your attorney submitted a letter, dated June 12, 2002, summarizing the circumstances of your trade (attached). Since the submission of the June 12th letter, the Committee has learned of several developments raising questions about the accuracy of statements made by your legal representatives concerning the circumstances of your December 27, 2001, trade of ImClone stock. These developments include the following:

1. The discrepancy between the reported recollections of you and your broker about the timing of the pre-existing understanding on when to trade your remaining ImClone shares;

2. The question of whether a pre-existing understanding actually existed or was accurately described based on the reported discrepancies discovered by an internal investigation of Merrill Lynch between the recollections of your broker and your broker's assistant;

3. The question of your intentions for your trade of December 27th and your communications with Merrill Lynch and to the office of Dr. Samuel Waksal on December 27th based on December 27, 2001, e-mails from your broker to his assistant, and the December 27, 2001, e-mail from your broker's assistant to your e-mail address that could be accessible on a laptop computer that you are known to bring with you on your travels.

We acknowledge and appreciate that you have voluntarily produced some records and information to the Committee. However, these efforts and the pace of these efforts are not sufficient for our mutual interests in resolving these issues expeditiously, fairly, and comprehensively.

To resolve these issues and to assure the integrity of the Committee's process and investigation, Committee staff had several conversations with your lawyers to discuss suitable arrangements for a possible interview with you. In addition, Oversight and Investigations Subcommittee Chairman James C. Greenwood and the Committee staff had a lengthy meeting with your attorneys to listen to your concerns, to discuss the Committee's concerns, and to negotiate possible arrangements for an interview that could be held in a non-public setting. Finally, the Committee staff had a lengthy follow-up meeting with your attorneys to continue these discussions. Based on these discussions, we have been informed that on advice of your counsel you will not agree to be interviewed by the Committee at this time under any condition. We sincerely hope, and urge, you to reconsider your position.

Although your trade began as a peripheral issue to the ImClone investigation, your trade and its circumstances and statements made on your behalf are now serious ones. We want to assure ourselves that you have not attempted to mislead this Committee with the intent to obstruct an investigation. Given the gravity of the matter, we need to obtain additional information expeditiously while we await your final response to our request for an interview. Therefore, to resolve issues relating to the integrity of the Committee's process, pursuant to Rules X and XI of the U.S. House of Representatives, please provide the following by August 20, 2002:

1. All records of communications to and from your e-mail addresses to any individual relating to ImClone Systems, Samuel Waksal, or your Merrill Lynch securities account for the time period of December 1, 2001, to January 9, 2002.

2. (All records for telephone numbers held by you, or under your effective control, for the time period of December 1, 2001, to January 9, 2002.

3. All records for telephone numbers for your business manager, Heidi DeLuca, held by, or under the effective control of, Martha Stewart Living Omnimedia for the time period of December 1, 2001, to January 9, 2002.

4. All records in the possession or control of Heidi DeLuca relating to ImClone Systems covering the time period of September 1, 2001, to January 9, 2002.

5. All records not covered by the above requests that you or your representatives believe would corroborate the statements in the June 12, 2002, letter.