In an announcement on Monday, Martha Stewart Living Omnimedia (UNKNOWN:MSO.DL) and J.C. Penney (NYSE:JCP) disclosed that the companies have come to terms on a new commercial agreement and revised their licensing and design partnership.

Under the terms of the new agreement, the two companies will partner for a shorter period on a "more focused range of product categories." Martha Stewart Living will get back the 11 million shares of MSLO stock (17% of the company) that J.C. Penney owns. J.C. Penney will also no longer have a seat on the MSLO Board.

Martha Stewart will continue to design window treatments and hardware, lighting, rugs, and holiday and celebration products, and will receive design fees and royalties. The revised agreement comes following a lawsuit from Macy's in December 2011 that the agreement between Martha Stewart Living and J.C. Penney violated Macy's exclusive rights to certain Martha Stewart-branded products.

Of the agreement, MSLO said in a statement: "We are pleased to announce this revised commercial agreement. We are designing excellent products for 2014, and we look forward to seeing them in stores and online at jcp.com."

"We are happy to be moving forward and continuing to provide our customers with quality products," added Mike Ullman, J.C. Penney's CEO.