<PAGE>
As filed with the Securities and Exchange Commission on November 3, 1997
Registration No. -__________
---------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
---------------------------
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
---------------------------
STEVEN MADDEN, LTD.
(Exact name of registrant as specified in its charter)
New York 13-3588231
(State or other juris- (I.R.S. Employer
diction of organization) Identification No.)
52-16 Barnett Avenue, Long Island City, NY 11104
(Address of Principal Executive Offices) (Zip Code)
20,000 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF STOCK OPTIONS
6,400 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF STOCK OPTIONS
9,200 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF STOCK OPTIONS
1996 STOCK PLAN
1997 STOCK PLAN
(Full title of the plan)
Steven Madden
President
Steven Madden, Ltd.
52-16 Barnett Avenue
Long Island City, NY 11104
(Name and address of agent for service)
(718) 446-1800
(Telephone number, including area code,
of agent for service)
continued overleaf
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed
Proposed maximum
Title of Amount maximum aggregate Amount of
securities to be offering price offering registration
to be registered registered(1) per Share price(2) fee
- ---------------- ------------- --------- -------- ---
<S> <C> <C> <C> <C>
Common Stock, 20,000 $2.00 (2) $ 40,000 $ 12.12
par value $.0001 per share
Common Stock, 6,400 $3.75 (2) $ 24,000 $ 7.27
par value $.0001 per share
Common Stock, 9,200 $5.875 (2) $ 54,050 $ 16.38
par value $.0001 per share
Common Stock, 375,000 $6.9375 (3) $2,601,563 $ 788.36
par value $.0001 per share
Common Stock, 1,000,000 $6.9375 (3) $6,937,500 $ 2,102.27
par value $.0001 per share
-----------
Total $ 2,926.40
</TABLE>
(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended ("Securities Act"), this registration statement also covers an
indeterminate number of shares as may be required by reason of any stock
dividend, recapitalization, stock split, reorganization, merger,
consolidation, combination or exchange of shares or other similar change
affecting the stock.
(2) The proposed maximum offering price per share is based upon the designated
exercise price as stated in the Stock Option Agreement under which the
option was granted.
(3) Estimated solely for the purpose of calculating the registration fee based
upon the closing price of the shares of Common Stock on October 28, 1997 of
$6.9375 reported on The Nasdaq National Market.
2
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Item 2. Registrant Information and Employee Plan Annual Information
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference
The following documents or portions thereof, as filed with the Securities
and Exchange Commission by Steven Madden, Ltd., a New York corporation (the
"Corporation"), are incorporated herein by reference:
(1) Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997.
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997.
(3) Proxy Statement on Schedule 14A dated May 30, 1997.
(4) Annual Report on Form 10-KSB for the period ended December 31, 1996.
(5) The description of the Common Stock, par value $.0001 per share
("Common Stock"), of the Corporation contained in the Corporation
registration statement filed under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating
such description.
All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
subsequent to the effective date of this Registration Statement and prior to the
filing of a post-effective amendment which indicate that all securities offered
have been sold or which registers all securities then remaining unsold, shall be
deemed to be incorporated by reference in the Registration Statement and to be
part thereof from the date of filing such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this registration
statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed,
3
<PAGE>
except as so modified or superseded, to constitute a part of this registration
statement.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Article IV of the By-Laws provides as follows:
"ARTICLE IV"
INDEMNIFICATION
Indemnification. The Corporation shall (a) indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense of
settlement of such action or suit, (b) indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director or officer of the Corporation,
or served at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, for expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such action, suit or proceeding, in each case to the fullest extent
permissible under the indemnification provisions of Section 722 of the New York
Business Corporation Law or any successor statute and (c) advance reasonable and
necessary expenses in connection with such actions or suits, and not seek
reimbursement of such expenses unless there is a specific determination that the
officer or director is not entitled to such indemnification. The foregoing right
of indemnification shall in no way be exclusive of any other rights of
indemnification to which any such persons may be entitled, under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Item 7. Exemption from Registration Claimed
4
<PAGE>
Not Applicable.
Item 8. Exhibits
The following is a complete list of exhibits filed as a part of this
registration statement:
Exhibit No. Document
- ----------- --------
5.1 Opinion of Bernstein & Wasserman, LLP.
10.22 Consulting Agreement dated as of May 1, 1997 between the
Corporation and The Vayness Corporation, Ltd.
10.23 Stock Option Agreement dated as of May 1, 1997 between the
Corporation and The Vayness Corporation, Ltd.
10.24 Consulting Agreement dated as of August 23, 1994 between the
Corporation and Stephen Drescher.
10.25 Stock Option Agreement dated as of August 23, 1994 between the
Corporation and Stephen Drescher.
10.26 Stock Option Agreement dated as of January 7, 1997 between the
Corporation and Hampel Stefanides, Inc.
10.27 1996 Stock Plan.
10.28 1997 Stock Plan.
23.1 Consent of Richard A. Eisner & Company, LLP.
Item 9. Undertakings
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration
5
<PAGE>
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, the paragraphs (1)(i) and (1)(ii) do not apply if the
information is required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated
by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time be deemed to be the initial bona fide
offering thereof; and;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in item 6, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable, In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding, is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended, the
Registrant, certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Long Island City, New York, on the 29th day of October,
1997.
STEVEN MADDEN, LTD
By: /s/Steve Madden
------------------------------
Steven Madden
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendments thereto has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/Steven Madden Chairman of October 29, 1997
- --------------------------------- the Board, President
Steven Madden and Chief Executive
Officer
/s/Rhonda Brown Chief Operating Officer October 29, 1997
- --------------------------------- and Director
Rhonda Brown
/s/Arvind Dharia Chief Financial and October 29, 1997
- --------------------------------- Accounting Officer
Arvind Dharia and Director
/s/John Basile Executive Vice President October 29, 1997
- --------------------------------- and Director
John Basile
/s/John L. Madden Director October 29, 1997
- ---------------------------------
John L. Madden
/s/Peter Migliorini Director October 29, 1997
- ---------------------------------
Peter Migliorini
/s/Les Wagner Director October 29, 1997
- ---------------------------------
Les Wagner
</TABLE>
7
<PAGE>
STEVEN MADDEN, LTD
EXHIBITS
TO
REGISTRATION STATEMENT ON FORM S-8
8
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Document
- ----------- --------
5.1 Opinion of Bernstein & Wasserman, LLP.
10.22 Consulting Agreement dated as of May 1, 1997 between the
Corporation and The Vayness Corporation, Ltd.
10.23 Stock Option Agreement dated as of May 1, 1997 between the
Corporation and The Vayness Corporation, Ltd.
10.24 Consulting Agreement dated as of August 23, 1994 between the
Corporation and Stephen Drescher.
10.25 Stock Option Agreement dated as of August 23, 1994 between the
Corporation and Stephen Drescher.
10.26 Stock Option Agreement dated as of January 7, 1997 between the
Corporation and Hampel Stefanides, Inc.
10.27 1996 Stock Plan.
10.28 1997 Stock Plan.
23.1 Consent of Richard A. Eisner & Company, LLP.
9
<PAGE>
Exhibit 5.1
OPINION OF BERNSTEIN AND WASSERMAN, LLP
<PAGE>
[LETTERHEAD OF BERNSTEIN & WASSERMAN, LLP]
October 29, 1997
Steven Madden, Ltd.
52-16 Barnett Avenue
Long Island City, NY 11105
Ladies and Gentlemen:
We have acted as counsel for Steven Madden, Ltd., a New York
corporation ("Company"), in connection with a Registration Statement on Form
S-8 ("Registration Statement") being filed contemporaneously herewith by the
Company with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"), covering an aggregate of (i) 20,000
shares of the Company's Common Stock, $.0001 par value ("Common Stock"),
reserved for issuance upon the exercise of options heretofore granted pursuant
to that certain Option Agreement dated August 23, 1994 between the Company and
Steven Drescher, a consultant to the Company, (ii) 6,400 shares of Common Stock
reserved for issuance upon the exercise of options heretofore granted pursuant
to that certain Option Agreement and a certain Consulting Agreement, both dated
May 1, 1997 between the Company and The Vayness Company, Ltd, (iii) 9,200 shares
of Common Stock reserved for issuance upon the exercise of options heretofore
granted pursuant to an Agreement dated January 1, 1997 between the Company and
Hempel Stefanides, Inc., (iv) 375,000 shares of Common Stock reserved for
issuance under the Company's 1996 Stock Plan, and (v) 1,000,000 shares of Common
Stock reserved for issuance under the Company's 1997 Stock Plan.
In that connection, we have examined the Certificate of Incorporation,
as amended, and the Amended and Restated By-Laws of the Company, the
Registration Statement, the Option Agreements, the relevant agreement between
the Company and the optionholders, the relevant stock plans, corporate
proceedings of the Company relating to the issuance of the Common Stock pursuant
to the Option Agreements and under the 1996 Stock Plan and the 1997 Stock Plan,
and such other instruments and documents as we have deemed relevant under the
circumstances.
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us as original or photostatic copies. We have also assumed that the
corporate records of the Company include all corporate proceedings taken by the
Company to date.
Based upon and subject to the foregoing, we are of the opinion that the
Common Stock has been duly and validly authorized and, when issued and paid for
as described in the respective documents, will be duly and validly issued, fully
paid and nonassessable.
We hereby consent to the use of this opinion as herein set forth as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Bernstein & Wasserman, LLP
------------------------------
BERNSTEIN & WASSERMAN, LLP
<PAGE>
Exhibit 10.22
CONSULTING AGREEMENT DATED AS OF MAY 1, 1997
BY AND BETWEEN THE CORPORATION AND
THE VAYNESS CORPORATION, LTD.
<PAGE>
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of May 1, 1997, by and between Steven
Madden, Ltd., a New York corporation (the "Company"), and The Vayness Company,
Ltd. located at 11740 Wilshire Blvd., Building A, Suite #1203, Los Angeles, CA
90025 (the "Consultant").
W I T N E S E T H :
WHEREAS, the Company desires to secure the services of the Consultant and
the Consultant desires to render services to the Company, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
Section 1. Consulting Services. The Company hereby engages Consultant and
the Consultant hereby accepts such engagement, as a consultant to the Company,
subject to the terms and conditions set forth in this Agreement. The Consultant
shall:
1. assist the Company with developing and refining its marketing
objectives for the Japanese marketplace;
2. assist the Company in identifying, selecting and developing
relationships with strategic partners to service the Japanese
marketplace (the "Japan Partners");
3. assist the Company in negotiating and finalizing agreements with
Japanese Partners;
4. assist the Company in expanding its business in the Japanese
marketplace, including without limitation, maintaining and further
developing the Company's relationship with Japanese Partners; and
5. assist the Company in identifying potential abuses of the Company's
rights in the Japanese marketplace, including without limitation,
trademark infringement.
<PAGE>
Until an agreement is executed by the Company with a Japanese Partner, or two(2)
years following the date hereof, whichever occurs first (the" Personal Service
Period"), all services provided by Consultant pursuant to this Agreement shall
be performed only by Vital Vayness. Any delegation of Consultant's duties
hereunder during the Personal Service Period to an individual other than Mr.
Vayness without the Company's prior written consent shall be a breach of this
Agreement and may permit the Company to terminate this Agreement in accordance
with the terms of Section 4.
Section 2. Term of Agreement.
The term of this Agreement shall be for a period of ten (10) years
commencing on the date hereof and ending on March 31, 2007 (the "Term"), subject
to earlier termination by the parties pursuant to Section 4.
Section 3. Payments to Consultant.
(a) The Company shall (i) pay to Consultant a fee equal to fifteen percent
(15%) of any and all gross revenue and other consideration (prior to any tax
withholding or other deductions if any) received by the Company and/or its
affiliates, related companies, successors or assigns (collectively, a "Company
Entity") from any and all Japanese Partners and/or their affiliates, successors,
assigns, related companies, subsidiaries, or sublicenses, in perpetuity in
connection with the licensing of any and all Company Entity trademarks, logos,
names, designs and/or visual representations, (ii) pay to Consultant a fee equal
to fifteen percent (15%) of any and all Net Profit (as hereinafter defined)
realized by a Company Entity as the result of the sale of products by a Company
Entity, and/or its subcontractors to any and all Japanese Partners and/or their
affiliates, successors, assigns, related companies, subsidiaries, or subleases,
in perpetuity, and (iii) grant to Consultant a number of options (the "Options")
to purchase shares of Common Stock of the Company in accordance with the terms
of the Option Agreement attached hereto as Exhibit A (collectively, the
"Consulting Fee"). All payments by the Company to Consultant shall be paid
within thirty (30) days following receipt of revenue by a Company Entity, along
with accounting statements pertaining to such payments, showing the gross
revenues received,
2
<PAGE>
the expenses incurred as set forth below and all commissions payable to
consultant therefrom. "Net Profit" means any and all gross revenue and other
considerations (prior to any tax withholding or other deductions if any) less
only direct expenses and costs incurred by the Company in connection with
manufacturing and shipping, if any, of said products.
(b) During the term of this Agreement, the Company shall promptly reimburse
the Consultant for all reasonable and necessary travel expenses and other
disbursements incurred by the Consultant on behalf of the Company, in
performance of the Consultant's duties hereunder, assuming Consultant has
received prior approval for such travel expenses and disbursements by the
Company.
(c) During the term of this Agreement, the Company shall keep complete and
accurate books and records covering all transactions relating to the subject
matter of this Agreement, and Consultant or its representatives shall have the
right to inspect and audit such books and records.
Section 4. Termination.
The Company may terminate the engagement of the Consultant and all of the
Company's obligations under this Agreement at any time for Cause (as hereinafter
defined) by giving the Consultant notice of such termination, with reasonable
specificity of the details thereof. "Cause" shall mean (i) the Consultant's
misconduct which could reasonably be expected to have a material adverse effect
on the business and affairs of the Company, (ii) the Consultant's disregard of
lawful instructions of the Company's President or Chief Operating Officer
relating to Consultant's neglect of duties or failure to act, which, in each
case, could reasonably be expected to have a material adverse effect on the
business and affairs of the Company, (iii) the commission by the Consultant of
an act constituting common law fraud, or a felony, or criminal act against the
Company or any affiliate thereof or any of the assets of any of them, (iv) the
Consultant's abuse of alcohol or other drugs or controlled substances, or
conviction of a crime involving moral turpitude, (v) the Consultant's material
breach of any of the agreements contained herein or (vi) during the Personal
Service Period only, the Consultant's death, Disability (as hereinafter
defined);
3
<PAGE>
provided however, that if the Consultant terminates this Agreement as a result
of a material breach by the Company of this Agreement, such termination shall
not be considered "Cause" hereunder. "Disability" shall mean the Consultant is
incapable of performing the services required hereunder as a result of a mental
or physical disability for a period of one-hundred eighty (180) consecutive days
or for a period of two hundred seventy (270) days during any three hundred sixty
(360) day period.
A termination pursuant to this Section 4(i), (ii), (iii), (iv) (other than
as a result of a conviction of a crime involving moral turpitude) or (v) shall
take effect 60 days after the giving of the notice contemplated hereby unless
the Consultant shall, during such 60-day period, remedy to the reasonable
satisfaction of the Board of Directors of the Company the misconduct, disregard,
abuse or material breach specified in such notice. A termination pursuant to
Section 4(iv) (as a result of a conviction of a crime involving moral turpitude)
or (vi) shall take effect immediately upon the giving of the notice contemplated
hereby. The effective date of termination shall hereinafter be referred to as
the "Termination Date".
Section 5. Effect of Termination of Agreement.
Upon the termination of Consultant for Cause, neither the Consultant nor
the Consultant's beneficiaries or estate shall have any further rights to
compensation under this Agreement or any claims against the Company arising out
of this Agreement, except the right to receive (i) the unpaid portion of the
Consulting Fee provided for in Section 3, earned through the Termination Date
(the "Unpaid Fee Amount"), and (ii) reimbursement for any expenses for which the
Consultant shall not have theretofore been reimbursed (the "Expense
Reimbursement Amount"); provided however, that in the event that Consultant is
terminated pursuant to Section 4(vi), then in addition to the foregoing, the
Consultant shall be entitled to the Consulting Fee for the two (2) years
following the Termination Date.
Section 6. Disclosure of Confidential Information.
Consultant recognizes that it has had and will continue to have access to
secret and confidential information regarding the Company, including but not
limited to its customer list,
4
<PAGE>
products, know-how, and business plans. Consultant acknowledges that such
information is of great value to the Company, is the sole property of the
Company, and has been and will be acquired by it in confidence. In consideration
of the obligations undertaken by the Company herein, Consultant will not, at any
time, during or after his engagement hereunder, reveal, divulge or make known to
any person, any information acquired by Consultant during the course of his
employment, which is treated as confidential by the Company, including but not
limited to its customer list, and marketing and strategic plans, not otherwise
in the public domain, except as may be required in performance of Consultant's
duties. The provisions of this Section 5 shall survive Consultant's engagement
hereunder.
Section 7. Covenant Not To Compete.
(a) Consultant recognizes that the services to be performed by it hereunder
are special and unique. The parties confirm that it is reasonably necessary for
the protection of Company that each of Consultant, its officers, directors and
affiliates agree, and accordingly, each of Consultant, its officers, directors,
and affiliates does hereby agree, that it shall not, directly or indirectly, at
any time during the Personal Service Period:
(i) except as provided in Subsection (c) below, be engaged in the sale,
licensing, distribution or marketing of footwear products targeting
primarily the junior marketplace (the "Products") or provide technical
assistance, advice or counseling regarding the Products worldwide
either on his own behalf or as an officer, director, stockholder,
partner, consultant, associate, employee, owner, agent, creditor,
independent contractor, or co- venturer of any third party; or
(ii) employ or engage, or cause or authorize, directly or indirectly, to be
employed or engaged, for or on behalf of itself or any third party,
any employee or agent of Company or any affiliate thereof.
(b) If any of the restrictions contained in this Section 7 shall be deemed
to be unenforceable by reason of the extent,
5
<PAGE>
duration or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
(c) This Section 7 shall not be construed to prevent Consultant from (i)
owning, directly or indirectly, in the aggregate, an amount not exceeding two
percent (2%) of the issued and outstanding voting securities of any class of any
company whose voting capital stock is traded on a national securities exchange
or on the over-the-counter market other than securities of the Company or (ii)
from working with or for any Japanese company with respect to the manufacturing,
marketing, licensing, sub-licensing or selling the Products in Japan.
Section 8. Miscellaneous.
8.1 Injunctive Relief. Consultant acknowledges that the services to be
rendered under the provisions of this Agreement are of a special, unique and
extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Consultant agrees that any breach or threatened
breach by him of Sections 6 or 7 of this Agreement shall entitle Company, in
addition to all other legal remedies available to it, to apply to any court of
competent jurisdiction to seek to enjoin such breach or threatened breach. The
parties understand and intend that each restriction agreed to by Consultant
hereinabove shall be construed as separable and divisible from every other
restriction, that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one or
more or all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which Company
seeks enforcement thereof, such restriction shall be limited to the extent
permitted by law.
8.2 Assignments. Neither Consultant nor the Company may assign or delegate
any of their rights or duties under this Agreement without the express written
consent of the other party.
6
<PAGE>
8.3 Entire Agreement. This Agreement constitutes and embodies the full and
complete understanding and agreement of the parties with respect to Consultant's
engagement by the Company, supersedes all prior understandings and agreements,
whether oral or written, between the Consultant and the Company, and shall not
be amended, modified or changed except by an instrument in writing executed by
the party to be charged. The invalidity or partial invalidity of one or more
provisions of this Agreement shall not invalidate any other provision of this
Agreement. No waiver by either party of any provision or condition to be
performed shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
8.4 Binding Effect. This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.
8.5 Headings. The headings contained in this Agreement are for convenience
of reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
8.6 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by registered or
certified mail, return receipt requested, postage prepaid, or by private
overnight mail service (e.g. Federal Express) to the party at the address set
forth on the books and records of the Company or to such other address as either
party may hereafter give notice of in accordance with the provisions hereof.
Notices shall be deemed given on the sooner of the date actually received or the
third business day after sending.
8.7 Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions. Any and all disputes,
controversies and claims arising out of or relating to this Agreement or
concerning the respective rights or obligations hereunder of the parties hereto
shall be settled and determined by arbitration in New
7
<PAGE>
York, New York before the Commercial Panel of the American Arbitration
Association in accordance with and pursuant to the then existing Commercial
Arbitration Rules. The arbitrators shall have the power to award specific
performance or injunctive relief and reasonable attorneys' fees and expenses to
any party in any such arbitration. However, in any arbitration proceeding
arising under this Agreement, the arbitrators shall not have the power to
change, modify or alter any express condition, term or provision hereof, and to
that extent the scope of their authority is limited. The arbitration award shall
be final and binding upon the parties and judgment thereon may be entered in any
court having jurisdiction thereof.
8.8 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one of the same instrument.
8.9 Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent consultant and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges that the compensation provided herein is a gross amount of
compensation and that the Company will not withhold from such compensation any
amounts respective income taxes, social security payments or any other payroll
taxes. All such income taxes and payments shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such
matters.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
STEVEN MADDEN, LTD.
By: /s/Rhonda Brown
-------------------------------
Name: Rhonda Brown
Title: Chief Operating Officer
THE VAYNESS COMPANY, LTD.
By: /s/Vital Vayness
-------------------------------
Name: Vital Vayness
Title: President
9
<PAGE>
Exhibit 10.23
STOCK OPTION AGREEMENT DATED AS OF MAY 1, 1997
BY AND BETWEEN THE CORPORATION AND
THE VAYNESS CORPORATION, LTD.
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the 1st day of May, 1997, (the "Grant Date") is
made and entered into by and between Steven Madden, Ltd., a New York corporation
with its principal offices located at 52-16 Barnett Avenue, Long Island City, NY
11104 (the "Company"), and The Vayness Company, Ltd. (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company and Optionee have entered into that certain Consulting
Agreement dated as of the date hereof (the "Consulting Agreement"); and
WHEREAS, as partial consideration for services rendered for by Optionee,
the Company has agreed to provide Optionee with options to purchase shares of
the Company's common stock, par value $.0001 per share (the "Common Stock"); and
WHEREAS, the Optionee desires to accept the grant of such options, subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
Section 1. Grant of Options. Subject to the provisions of this Agreement,
the Company hereby grants to the Optionee options (the "Options") to purchase
from the Company Six Thousand Four Hundred (6,400) shares of Common Stock (the
"Option Shares") at an exercise price of $3.75 per share (the "Exercise Price").
Section 2. Vesting; Termination of Options. Commencing on August 1, 1997
and on each of November 1, 1997, February 1, 1998 and May 1, 1998 thereafter,
one thousand six hundred (1,600) options shall vest. Following vesting the
Optionee may exercise the Options at any time until April 30, 2002, unless
Optionee is terminated for Cause (as defined in the
<PAGE>
Consulting Agreement) in which case such Options shall terminate one hundred
twenty (120) days following termination.
Section 3. Corporate Events. In the event of a proposed liquidation of the
Company, a proposed sale of all or substantially all of its assets or its Common
Stock, a proposed merger or consolidation, or a proposed separation or
reorganization, the Board of Directors may declare that the Options shall
terminate as of a date to be fixed by the Board of Directors; provided however,
that not less than thirty (30) days preceding the date of such termination, the
Optionee may exercise the Options in whole or in part. However, nothing set
forth herein shall (i) extend the term set for purchasing the Option Shares or
(ii) give the Optionee any rights or privileges as a stockholder of the Company
prior to Optionee's exercise of any of the Option Shares.
Section 4. Exercise of Options. The Options may be exercised in whole or in
part in accordance with the provisions of this Agreement by the Optionee's
tendering the Exercise Price (or a proportionate part thereof if the Options are
partially exercised) in immediately available funds or other consideration
reasonably acceptable to the Board of Directors of the Company. The Company
shall cooperate to the extent reasonably possible with the Optionee in an
exercise pursuant to which all or part of the Optionee Shares will be sold
simultaneously with the exercise of the Options with the broker-dealer
participating in such sale being irrevocably instructed to remit the proceeds
from the exercise of the Options to the Company upon settlement of the sale of
the underlying Option Shares.
The Optionee may exercise part or all of the Options by tender to the
Company of a written notice of exercise together with advice of the delivery of
an order to a broker to sell part or all of the Option Shares, subject to such
exercise notice and an irrevocable order to such
2
<PAGE>
broker to deliver to the Company (or its transfer agent) sufficient proceeds
from the sale of such Option Shares to pay the exercise price and any
withholding taxes. All documentation and procedures to be followed in connection
with such a "cashless exercise" shall be approved in advance by the Company,
which approval shall be expeditiously provided and not unreasonably withheld.
Section 5. Shares Certificates. Upon receipt of payment in full of the
Exercise Price, and after taking such steps as it deems necessary to satisfy any
withholding tax obligations imposed upon it by any level of government, the
Company will cause one or more stock certificates evidencing the Optionee's
ownership of the Option Shares so purchased by the Optionee to be issued to the
Optionee.
Section 6. Restrictions; Piggyback Registration Rights. The Options and the
Option Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"). Optionee understands that, unless registered with the
Securities and Exchange Commission for sale to the public, all Option Shares
acquired upon the exercise of the Options shall be "restricted securities" as
that term is defined in Rule 144 promulgated under the Act. The certificate
representing the Option Shares shall bear an appropriate legend restricting
their transfer. Such Option Shares cannot be sold, transferred, assigned or
otherwise hypothecated without registration under the Act or unless a valid
exemption from registration is then available under applicable federal and state
securities laws and the Optionee has furnished the Company with an opinion of
counsel satisfactory in form and substance to the Company's counsel that such
registration is not required.
In the event that the Company files a registration statement with the
Securities and
3
<PAGE>
Exchange Commission covering shares of its Common Stock, the Company agrees to
include in such registration statement (other than a registration statement on
Form S-4) the Option Shares for sale to the public at no cost or expense to the
Optionee.
Section 7. Default of Optionee. Should the Optionee at any time breach any
provision of this Agreement, the Options granted hereunder shall be deemed null
and void. This provision shall be in addition and not in lieu of any other
remedies which the Company may have at law and/or in equity.
Section 8. Share Adjustments. If there is any change in the number of
shares of Common Stock on account of the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or exchanges of
shares of Common Stock, or otherwise, the number of Option Shares available for
purchase by the exercise of the Options, and the Exercise Price, shall be
proportionately adjusted by the Company.
Section 9. Miscellaneous Provisions.
(a) Notices. Unless otherwise specifically provided herein, all notices to
be given hereunder shall be in writing and sent to the parties by certified
mail, return receipt requested, which shall be addressed to each party's
respective address, as set forth in the first paragraph of this Agreement, or to
such other address as such party shall give to the other party hereto by a
notice given in accordance with this Section and, except as otherwise provided
in this Agreement, shall be effective when deposited in the United States mail
properly addressed and postage prepaid. If such notice is sent other than by the
United States mail, such notice shall be effective when actually received by the
party being noticed.
(b) Assignment. This Agreement and the rights granted hereunder may not be
assigned in whole or in part by Optionee except by will or the laws of descent
and distribution. This
4
<PAGE>
Agreement may be assigned by the Company without the consent of the Optionee.
(c) Further Assurances. Both parties hereto shall execute and deliver such
other instruments and do such other acts as may be necessary to carry out the
intent and purposes of this Agreement.
(d) Gender. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms and the
singular form of nouns and pronouns shall include the plural and vice versa.
(e) Captions. The captions contained in this Agreement are inserted only as
a matter of convenience and in no way define, limit, extend or prescribe the
scope of this Agreement or the intent of any of the provisions hereof.
(f) Completeness and Modification. This Agreement and the Consulting
Agreement constitutes the entire understanding between the parties hereto
superseding all prior and contemporaneous agreements or understandings among the
parties hereto concerning the grant of stock options to the Optionee. This
Agreement shall not terminated, except in accordance with its terms, or amended
in writing executed by all of the parties hereto.
(g) Waiver. The waiver of a breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
(h) Severability. The invalidity or enforceability, in whole or in part, of
any covenant, promise or undertaking, or any section, subsection, paragraph,
sentence, clause phrase or word or of any provision of this Agreement shall not
affect the validity or enforceability of the remaining portions thereof.
(i) Construction. This Agreement shall be governed by and construed in
accordance
5
<PAGE>
with the internal laws of the State of New York.
(j) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs, successors, estate and personal representatives of the
Optionee and upon the successors and assigns of the Company.
(k) Litigation-Attorney' Fees. In connection with any litigation arising
out of the enforcement of this Agreement or for its interpretation, the
prevailing party shall be entitled to recover its costs, including reasonable
attorneys' fees, at the trial and all appellate levels form the other party
hereto, who was an adverse party to such litigation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year set forth in the first paragraph of this Agreement above.
STEVEN MADDEN, LTD.
By: /s/Steven Madden
-------------------------------
Name: Steven Madden
Title: President and
Chief Executive Officer
THE VAYNESS COMPANY, LTD.
By: /s/Vital Vayness
-------------------------------
Name: Vital Vayness
Title:
6
<PAGE>
Exhibit 10.24
CONSULTING AGREEMENT DATED AS OF AUGUST 23, 1994
BY AND BETWEEN THE CORPORATION AND
STEPHEN DRESCHER
<PAGE>
CONSULTING AGREEMENT
AGREEMENT, made and entered into this ____ day of ____________, between
__________, having offices at __________________________________ (the
"Consultant"), and STEVEN MADDEN, LTD. having an office at 52-16 Barnett Avenue,
Long Island City, NY 11104 (the "Company").
WHEREAS, the Company desires to obtain the benefit of the services of the
Consultant, and the Consultant desires to render such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
the mutual covenants herein contained, hereby agree as follows:
1. Term: Subject to the provisions hereinafter set forth, the Company
hereby retains the Consultant and the consultant hereby accepts its
retention for a term commencing as of the date hereof and terminating
_______________ (the "Term")
2. Scope: During the Term, the Consultant shall consult with and
render advice to the Company specifically concerning strategic planning and
other related matters.
<PAGE>
All final decisions with respect to areas as to which the Consultant
has rendered advice to the Company are decisions of the Company and the
Consultant shall have no liability or responsibility therefore. The
Consultant shall render such services to the best of its ability and shall
use its best efforts to promote the interests of the Company.
3. Compensation: As compensation for the services to be rendered by
Consultant during the Term, the Company agrees to sell to the Consultant
________ shares of _________ common stock of the Company for $.0001 per
share. The shares of common stock have been registered on a Form S-8
registration statement which was declared effective by the Securities and
Exchange Commission on _______________.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
By: _________________________
STEVEN MADDEN, LTD.
By: __________________________
<PAGE>
Exhibit 10.25
STOCK OPTION AGREEMENT DATED AS OF AUGUST 23, 1994
BY AND BETWEEN THE CORPORATION AND
STEPHEN DRESCHER
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the 23rd day of August, 1994, (the "Grant Date")
is made and entered into by and between STEVEN MADDEN, LTD., a New York
corporation with its principal offices located at 540 Broadway, New York, New
York 10012 (the "Company") and Stephen Drescher whose address is 300 East 93rd
Street, Penthouse E, New York, New York 10128 (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved the granting to
the Optionee of the option to purchase certain shares of common stock, par value
$.0001 per share ("Common Stock"); and
WHEREAS, the Optionee desires to accept the grant of such option, subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
Section 1. Grant of Option. Subject to the provisions of this Agreement,
the Company hereby grants to the Optionee an option (the "Option") to purchase
from the Company at any time during the period commencing on the date hereof
through and including August 1, 1999 (the "Termination Date") Twenty Thousand
(20,000) shares of Common Stock (the "Option Shares") at an exercise price of
$2.00 per share (the "Exercise Price")
Section 2. Termination of Options. To the extent not exercised, the Option
shall terminate on the Termination Date.
<PAGE>
Section 3. Corporate Events. In the event of a proposed liquidation of the
Company, a proposed sale of all or substantially all of its assets or its Common
Stock, a proposed merger or consolidation, or a proposed separation or
reorganization, the Board of Directors may declare that the Option shall
terminate as of a date to be fixed by the Board of Directors; provided however,
that not less than thirty (30) days preceding the date of such termination, the
Optionee may exercise the Option in whole or in part. However, nothing set forth
herein shall (i) extend the term set for purchasing the Option Shares or (ii)
give the Optionee any rights or privileges as a stockholder of the Company prior
to Optionee's exercise of any of the Option Shares.
Section 4. Exercise of Option. The Option may be exercised in whole or in
part in accordance with the provisions of this Agreement by the Optionee's
tendering the Exercise Price (or a proportionate part thereof if the Option is
partially exercised) in immediately available funds. The Company shall cooperate
to the extent reasonably possible with the Optionee in an exercise pursuant to
which all or part of the Optionee Shares will be sold simultaneously with the
exercise of this Option with the broker-dealer participating in such sale being
irrevocably instructed to remit the proceeds from the exercise of the Option to
the Company upon settlement of the sale of the underlying Option Shares.
The Optionee may exercise part or all of the Option by tender to the
Company of a written notice of exercise together with advice of the delivery of
an order to a broker to sell part or all of the
2
<PAGE>
Option Shares, subject to such exercise notice and an irrevocable order to such
broker to deliver to the Company (or its transfer agent) sufficient proceeds
from the sale of such Option Shares to pay the exercise price and any
withholding taxes. All documentation and procedures to be followed in connection
with such a "cashless exercise" shall be approved in advance by the Company,
which approval shall be expeditiously provided and not unreasonably withheld.
Section 5. Shares Certificates. Upon receipt of payment in full of the
Exercise Price, and after taking such steps as it deems necessary to satisfy any
withholding tax obligations imposed upon it by any level of government, the
Company will cause one or more stock certificates evidencing the Optionee's
ownership of the Option Shares so purchased by the Optionee to be issued to the
Optionee.
Section 6. Restrictions; Registration Rights. The Option and the Option
Shares have not been registered under the Securities Act of 1933, as amended
(the "Act"). The Company agrees to register the Option Shares on Form S-8 with
the Securities and Exchange Commission. All Option Shares acquired upon the
exercise of the Option shall be "restricted securities" as that term is defined
in Rule 144 promulgated under the Act. The certificate representing the Option
Shares shall bear an appropriate legend restricting their transfer. Such Option
Shares cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is then
available
3
<PAGE>
under applicable federal and state securities laws and the Optionee has
furnished the Company with an opinion of counsel satisfactory in form and
substance to the Company's counsel that such registration is not required.
Section 7. Default of Optionee. Should the Optionee at any time breach any
provision of this Agreement, the Option granted hereunder shall be null and
void. The provision shall be in addition and not in lieu of any other remedies
which the Company may have at law and/or in equity.
Section 8. Share Adjustments. If there is any change in the number of
shares of Common Stock on account of the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or exchanges of
shares of Common Stock, or otherwise, the number of Option Shares available for
purchase by the exercise of the Option, and the Exercise Price, shall be
proportionately adjusted by the Company.
Section 9. Miscellaneous Provisions.
(a) Notices. Unless otherwise specifically provided herein, all notices to
be given hereunder shall be in writing and sent to the parties by certified
mail, return receipt requested, which shall be addressed to each party's
respective address, as set forth in the first paragraph of this Agreement, or to
such other address as such party shall give to the other party hereto by a
notice given in accordance with this Section and, except as otherwise provided
in this Agreement, shall be effective when deposited in the United States mail
properly addressed and postage prepaid. If
4
<PAGE>
such notice is sent other than by the United States mail, such notice shall be
effective when actually received by the party being noticed.
(b) Assignment. This Agreement and the rights granted hereunder may not be
assigned in whole or in part by Optionee except by will or the laws of descent
and distribution, and the Option is exercisable during Optionee's lifetime only
by the Optionee. This Agreement may be assigned by the Company without the
consent of the Optionee.
(c) Further Assurances. Both parties hereto shall execute and deliver such
other instruments and do such other acts as may be necessary to carry out the
intent and purposes of this Agreement.
(d) Gender. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms and the
singular form of nouns and pronouns shall include the plural and vice versa.
(e) Captions. The captions contained in this Agreement are inserted only as
a matter of convenience and in no way define, limit, extend or prescribe the
scope of this Agreement or the intent of any of the provisions hereof.
(f) Completeness and Modification. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the grant of stock options to the Optionee. This Agreement shall not terminated,
except in accordance with its terms, or amended in writing executed by all of
5
<PAGE>
the parties hereto.
(g) Waiver. The waiver of a breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
(h) Severability. The invalidity or enforceability, in whole or in part, of
any covenant, promise or undertaking, or any section, subsection, paragraph,
sentence, clause phrase or word or of any provision of this Agreement shall not
affect the validity or enforceability of the remaining portions thereof.
(i) Construction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
(j) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs, successors, estate and personal representatives of the
Optionee and upon the successors and assigns of the Company.
(k) Litigation-Attorney' Fees. In connection with any litigation arising
out of the enforcement of this Agreement or for its interpretation, the
prevailing party shall be entitled to recover its costs, including reasonable
attorneys' fees, at the trial and all appellate levels form the other party
hereto, who was an adverse party to such litigation.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year set forth in the first paragraph of this Agreement above.
ATTEST: STEVEN MADDEN, LTD.
BY: /s/ Steven Madden
-------------------------
Steven Madden
President
7
<PAGE>
Exhibit 10.26
STOCK OPTION AGREEMENT DATED AS OF JANUARY 7, 1997
BY AND BETWEEN THE CORPORATION AND
HAMPEL STEFANIDES, INC.
<PAGE>
LETTER OF AGREEMENT
This agreement is by and between Hampel Stefanides, Inc., of 111 Fifth Avenue,
New York, New York 10003 (Agency) and Steve Madden, Ltd. of 52-16 Barnett
Avenue, Long Island City, New York 11104 (Client).
Agency and Client hereby agree to have the Agency serve as Client's advertising
agency from January 8, 1997 through January 7, 1998 in accordance with and
subject to the following terms and conditions:
1. The Agency will perform the following services for Client, with Client's
direction:
A. Study Clients products and/or services.
B. Analyze Client's present and potential markets.
C. Utilize Agency's knowledge of the factors of distribution and sales and their
methods of operation.
D. Write, design, illustrate, or otherwise prepare Client's advertisements, in a
final format, ready for distribution to the media.
E. Plan and order the space, time, or other means to be used for Client's
advertising while endeavoring to secure the most advantageous rates available.
F. Check, verify and analyze insertions, displays, broadcasts, or other means
used for Client's advertising.
G. Create and produce collateral materials to include video's, signage,
packaging and other marketing communications materials required for the Client
2. Agency is authorized to act as Client's agent in purchasing the materials and
services required to produce advertising on Client's behalf. Agency will obtain
from Client prior written approval to purchase all such materials and services.
However, if time does not permit Agency to obtain prior written approval, it may
proceed based on verbal approval with prompt confirmation in writing by Agency.
Agency will use its best efforts to secure the most competitive rates for both
materials and media. All such materials and services will become Client's
property upon payment to Agency by Client.
3. Agency will submit written proposals with estimated timetables and
budgetary requirements for Client's prior approval.
<PAGE>
4. Agency will take every reasonable precaution to safeguard any and all of
Client's property entrusted to its custody or control, but in the absence of
gross negligence on Agency's part or willful disregard by Agency, Agency will
not be held responsible for any loss, damage, destruction, or unauthorized use
by others of any such property.
5. Client reserves the right to modify, reject, cancel, or stop any and all
plans, schedules, or work in process, and in such event Agency shall immediately
take proper steps to carry out Client's instructions; provided such action is
taken, Client agrees to assume Agency's liability for all previously approved
commitments, and to reimburse Agency for any losses it may incur in connection
with these canceled plans, in addition to paying Agency any compensation due it
prior to cancellation in accordance with the provisions of this agreement.
Agency will endeavor to the best of its knowledge and ability to guard against
any loss to Client through failure of media or suppliers to properly execute
their commitments, but Agency shall not be held responsible for failure on their
parts unless such failure is the result of Agency's negligence and/or
misconduct.
6. Agency shall not disclose Client's trade secrets or pending patents or other
confidential information used by Client in the operation of its business, nor
use the information in any way, directly or indirectly, except as required in
the performance of this contract.
7. Client shall be responsible for the accuracy, completeness, and propriety of
information concerning its products and services that it furnishes to Agency in
connection with performance of this agreement.
8. Except as is otherwise provided below, Client will indemnify and hold Agency
harmless from and against any liabilities and expenses (including attorney's
fees) reasonably incurred by Agency in respect of any action or proceeding
brought or threatened to be brought before any court, administrative body, or
other tribunal, which action arises out of the services rendered by Agency
hereunder including, without limitation, liabilities and expenses arising out of
claims with respect to advertising prepared by Agency. Agency agrees to
indemnify and hold Client harmless from and against any liabilities and expenses
(including attorney's fees) reasonably incurred by Client in respect to any
advertising materials prepared by Agency for Client that give rise to any claim
pertaining to libel, slander, defamation, trademark infringement, copyright
<PAGE>
infringement, invasion of privacy, trade secrets, piracy and/or plagiarism
unless such claim results from information or materials furnished by Client. The
terms of this paragraph 8 will not terminate with termination of this agreement.
Agency represents that it has Professional Liability Insurance and will maintain
such coverage for the term of this contract in an amount of not less than
$1,000,000.
9. Agency is a signatory to the Screen Actors Guild (SAG) and the American
Federation of Television and Radio Artists (AFTRA). Client agrees to abide by
regulations regarding these associations. Upon termination of this agreement,
Client agrees to sign a Transfer of Rights Agreement which will transfer all
talent obligations from Agency to Client.
10. Client agrees to pay Agency the actual, net costs of all media, materials
and third party services purchased on its behalf including reasonable
miscellaneous reimbursable expenses such as travel, telephone, photocopies,
facsimiles, postage and shipping. The exact amount of cash discounts allowed to
Agency by suppliers for prompt payment will be credited to Client provided
Client pays Agency in time to take the suppliers' discount and that there is not
an overdue indebtedness at the time of payment.
11. Compensation to the Agency for services rendered will be made in the form of
a retainer, Steve Madden Ltd. common stock and hourly fees in the following
manner:
a) In consideration of services related to the development and placement of
advertising in the media during the term of this agreement, the Client will pay
a monthly retainer of $ 8,000 (to be billed the first of each month) and provide
Agency with a number of options to purchase shares of Client's Common Stock
equal to $ 54,000 divided by the closing price as reported by the NASDAQ Stock
Market on January 7,1997 (The Market Price). The options will have an exercise
price equal to The Market Price and vest in four (4) equal installments each on
April 7,1997, July 7, 19971 October 7, 1997 and January 7, 1998. The Client
agrees to register the shares of Common Stock issuable upon exercise of the
options prior to the date of vesting. The options will terminate two (2) years
from the date of vesting. If this agreement is terminated by the Client prior to
January 7, 1998, then the Agency shall retain the right to the option
installment which it would have earned during the contract year quarter which in
such termination occurs.
<PAGE>
11b) For projects that are both unrelated to media advertising and do not
utilize graphics inherent to the advertising idea (e.g. corporate video's,
annual reports, research), Agency will bid on a project basis with compensation
based on hourly fees.
11c) For all Agency digital studio services (e.g., mechanicals, type, etc.),
Client will be billed standard Agency rates.
12. Client agrees to pay all invoices within thirty days of invoice date. Any
invoice not paid according to these terms is subject to a monthly finance charge
of 1 1/2% plus all collection costs, including reasonable attorney costs and
court fees.
13. The term of this agreement shall be from January 8, 1997 and shall continue
in force from that date until January 7, 1998 and may be terminated by thirty
days notice in writing given by either party to the other and sent registered
mail or overnight mail courier service to the principal place of business of the
party to whom such notice is addressed. This agreement may be terminated without
notice by either party if the other party is (a) in default or breach and the
default or breach has not been cured within ten (10) days, (b) bankrupt or
making an assignment for the benefit of creditors, (c) subject to a suit for
appointment of a receiver, or (d) dissolved or liquidated.
14. Agency, during the term of this agreement, will not act as advertising
agency for any product directly competitive with Client.
15. Agency will not utilize services or purchase products from a subsidiary or
other entity with which Agency has a financial interest unless Agency discloses
that information to Client and Client approves the transaction in writing.
16. Agency agrees that Client is under no obligation to approve or use the ideas
presented to Client by Agency.
17. Agency acknowledges that, except as set forth in paragraph 2, it is acting
as an independent contractor and no employment responsibility or obligation is
created with this agreement. All work product is made as work for hire and upon
termination all paid for work product will be delivered to Client at Client's
cost.
<PAGE>
18. Client may at any time during the life of this contract, and upon reasonable
notice and during normal business hours, examine Agency's files and records that
pertain to the handling of Client's advertising.
19. This agreement, which is to be governed by the laws of New York, contains
the entire understanding of the parties and supersedes all prior discussion,
correspondence and understandings whether oral or written and may not be
changed, assigned or modified except in writing signed by both parties.
Hampel Stefanides, Inc.: Steve Madden Ltd.:
By /s/ ILLEGIBLE By /s/ Rhonda J. Brown
----------------------------- -------------------------
Date 1/8/97 Date 1/9/97
<PAGE>
Exhibit 10.27
1996 STOCK PLAN
<PAGE>
STEVEN MADDEN, LTD.
1996 STOCK PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 6, 1996
SECTION 1. PURPOSE. The purpose of the Steven Madden, Ltd. 1996 Stock Plan
(the "Plan") is to provide a means whereby directors and selected employees,
officers, agents, consultants, and independent contractors of Steven Madden,
Ltd., a Delaware corporation (the "Company"), or of any parent or subsidiary (as
defined in subsection 5.7 hereof and referred to hereinafter as "Affiliates")
thereof, may be granted incentive stock options and/or nonqualified stock
options to purchase shares of common stock, $.0001 par value ("Common Stock") in
order to attract and retain the services or advice of such directors, employees,
officers, agents, consultants, and independent contractors and to provide
additional incentive for such persons to exert maximum efforts for the success
of the Company and its Affiliates by encouraging stock ownership in the Company.
SECTION 2. ADMINISTRATION. Subject to Section 2.3 hereof, the Plan shall be
administered by the Board of Directors of the Company (the "Board") or, in the
event the Board shall appoint and/or authorize a committee of two or more
members of the Board to administer the Plan, by such committee. The
administrator of the Plan shall hereinafter be referred to as the "Plan
Administrator".
The foregoing notwithstanding, with respect to grants to be made to
directors: (a) the Plan Administrator shall be constituted so as to meet the
requirements of Section 16(b) of the Exchange Act and Rule 16b-3 thereunder,
each as amended from time to time, or (b) if the Plan Administrator cannot be so
constituted, no options shall be granted under the Plan to any directors.
2.1 PROCEDURES. The Board shall designate one of the members of the Plan
Administrator as chairman. The Plan Administrator may hold meetings at such
times and places as it shall determine. The acts of a majority of the members of
the Plan Administrator present at meetings at which a quorum exists, or acts
approved in writing by all Plan Administrator members, shall be valid acts of
the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and conditions explicitly set
forth herein, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options to be granted under
the Plan, including, without limitation, selection of whether an option will be
an incentive stock option or a nonqualified stock option, selection of the
individuals to be granted options, the number of shares to be subject to each
option, the exercise price per share, the timing of grants and all other terms
and conditions of the options. Grants under the Plan need not be identical in
any respect, even when made
<PAGE>
simultaneously. The Plan Administrator may also establish, amend, and revoke
rules and regulations for the administration of the Plan. The interpretation and
construction by the Plan Administrator of any terms or provisions of the Plan or
any option issued hereunder, or of any rule or regulation promulgated in
connection herewith, shall be conclusive and binding on all interested parties,
so long as such interpretation and construction with respect to incentive stock
options corresponds to the requirements of Internal Revenue Code of 1986, as
amended (the "Code"). Section 422, the regulations thereunder, and any
amendments thereto. The Plan Administrator shall not be personally liable for
any action made in good faith with respect to the Plan or any option granted
thereunder.
2.3 RULE 16b-3 AND SECTION 16(b) COMPLIANCE; BIFURCATION OF PLAN. It is the
intention of the Company that the Plan comply in all respects with Rule 16b-3
under the Securities Exchange Act of 1934 (the "Exchange Act") to the extent
applicable, and in all events the Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3. If any Plan provision is later found not
to be in compliance with such Rule, such provision shall be deemed null and
void. The Board of Directors may act under the Plan only if all members thereof
are "disinterested persons" as defined in Rule 16b-3 and further described in
Section 4 hereof; and no director or officer or other Company "insider" subject
to Section 16 of the Exchange Act may sell shares received upon the exercise of
an option during the six month period immediately following the grant of the
option without complying with the terms of Section 16 of the Exchange Act.
Notwithstanding anything in the Plan to the contrary, the Board, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit, or
condition the use of any provision of the Plan to participants who are officers
and directors or other persons subject to Section 16(b) of the Exchange Act
without so restricting, limiting, or conditioning the Plan with respect to other
participants.
SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan shall
be the Common Stock, presently authorized but unissued or subsequently acquired
by the Company. Subject to adjustment as provided in Section 7 hereof, the
aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under the Plan shall not exceed in the aggregate 375,000 shares
as such Common Stock was constituted on the effective date of the Plan. If any
option granted under the Plan shall expire, be surrendered, exchanged for
another option, canceled, or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of the Plan, including for replacement options which
may be granted in exchange for such surrendered, canceled, or terminated
options.
SECTION 4. ELIGIBILITY. An incentive stock option may be granted only to
any individual who, at the time the option is granted, is a director, employee,
officer, agent, consultant, or independent contractor of the Company or any
Affiliate thereof. A nonqualified stock option may be granted to any director,
employee, officer, agent, consultant, or independent
<PAGE>
contractor of the Company or any Affiliate thereof, whether an individual or an
entity. Any party to whom an option is granted under the Plan shall be referred
to hereinafter as an "Optionee".
A director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of a director as a
person to whom options may be granted, or in the determination of the number of
shares which may be covered by options granted to the director, the Plan
complies with the requirements of Rule 16b-3 under the Exchange Act.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan
shall be evidenced by written agreements which shall contain such terms,
conditions, limitations, and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with the Plan.
5.2 TERM AND MATURITY. Subject to the restrictions contained in Section 6
hereof with respect to granting stock options to greater than ten percent
stockholders, the term of each stock option shall be as established by the Plan
Administrator and, if not so established, shall be ten years from the date of
its grant, but in no event shall the term of any incentive stock option exceed a
ten year period.
5.3 EXERCISE. Each option may be exercised in whole or in part; provided,
that only whole shares may be issued pursuant to the exercise of any option.
Subject to any other terms and conditions herein, the Plan Administrator may
provide that an option may not be exercised in whole or in part for a stated
period or periods of time during which such option is outstanding; provided,
that the Plan Administrator may rescind, modify, or waive any such limitation
(including by the acceleration of the vesting schedule upon a change in control
of the Company) at any time and from time to time after the grant date thereof.
During an Optionee's lifetime, any incentive stock options granted under the
Plan are personal to such Optionee and are exercisable solely by such Optionee.
Options shall be exercised by delivery to the Company of notice of the number of
shares with respect to which the option is exercised, together with payment of
the exercise price in accordance with Section 5.4 hereof.
5.4 PAYMENT OF EXERCISE PRICE. Except as set forth below, payment of the
option exercise price shall be made in full at the time the notice of exercise
of the option is delivered to the Company and shall be in cash, bank certified
or cashier's check, or personal check (unless at the time of exercise the Plan
Administrator in a particular case determines not to accept a personal check)
for shares of Common Stock being purchased.
The Plan Administrator can determine at the time the option is granted in
the case of incentive stock options, or at any time before exercise in the case
of nonqualified stock options, that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and applicable laws
and regulations (including, without limitation, federal tax and securities laws
and regulations and state corporate law), an option may be exercised by:
<PAGE>
(a) delivery of shares of Common Stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such
fair market value to be determined in good faith by the Plan
Administrator;
(b) delivery of a properly executed Notice of Exercise, together with
irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price
and any federal, state, or local withholding tax obligations that may
arise in connection with the exercise; or
(c) delivery of a properly executed Notice of Exercise, together with
instructions to the Company to withhold from the shares of Common
Stock that would otherwise be issued upon exercise that number of
shares of Common Stock having a fair market value equal to the option
exercise price.
5.5 WITHHOLDING TAX REQUIREMENT. The Company or any Affiliate thereof shall
have the right to retain and withhold from any payment of cash or Common Stock
under the Plan the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. No option may be
exercised unless and until arrangements satisfactory to the Company, in its sole
discretion, to pay such withholding taxes are made. At its discretion, the
Company may require an Optionee to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so reimbursed. In lieu thereof, the Company shall
have the right to withhold from any other cash amounts due or to become due from
the Company to the Optionee an amount equal to such taxes or retain and withhold
a number of shares having a market value not less than the amount of such taxes
required to be withheld by the Company to reimburse the Company for any such
taxes and cancel (in whole or in part) any such shares of Common Stock so
withheld. If required by Section 16(b) of the Exchange Act, the election to pay
withholding taxes by delivery of shares of Common Stock held by any person who
at the time of exercise is subject to Section 16(b) of the Exchange Act shall be
made either six months prior to the date the option exercise becomes taxable or
at such other times as the Company may determine as necessary to comply with
Section 16(b) of the Exchange Act. Although the Company may, in its discretion,
accept Common Stock as payment of withholding taxes, the Company shall not be
obligated to do so.
5.6 NONTRANSFERABILITY.
5.6.1 OPTION. Options granted under the Plan and the rights and privileges
conferred hereby may not be transferred, assigned, pledged, or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code, or Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall not be subject to execution, attachment, or similar
<PAGE>
process. Any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of any option under the Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of the Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void ab initio. The designation by an
Optionee of a beneficiary does not, in and of itself, constitute an
impermissible transfer under this subsection 5.6.1.
5.6.2 STOCK. The Plan Administrator may provide in the agreement granting
the option that (a) the Optionee may not transfer or otherwise dispose of shares
acquired upon exercise of an option without first offering such shares to the
Company for purchase on the same terms and conditions as those offered to the
proposed transferee or (b) upon termination of employment of an Optionee, the
Company shall have a six month right of repurchase as to the shares acquired
upon exercise, which right of repurchase shall allow for a maximum purchase
price equal to the fair market value of the shares on the termination date. The
foregoing rights of the Company shall be assignable by the Company upon
reasonable written notice to the Optionee.
5.7 TERMINATION OF RELATIONSHIP. If the Optionee's relationship with the
Company or any Affiliate thereof ceases for any reason other than termination
for cause, death, or total disability, and unless by its terms the option sooner
terminates or expires, then the Optionee may exercise, for a three month period,
that portion of the Optionee's option which is exercisable at the time of such
cessation, but the Optionee's option shall terminate at the end of the three
month period following such cessation as to all shares for which it has not
theretofore been exercised, unless, in the case of a nonqualified stock option,
such provision is waived in the agreement evidencing the option or by resolution
adopted by the Plan Administrator within 90 days of such cessation. If, in the
case of an incentive stock option, an Optionee's relationship with the Company
or Affiliate thereof changes from employee to nonemployee (i.e., from employee
to a position such as a consultant), such change shall constitute a termination
of an Optionee's employment with the Company or Affiliate and the Optionee's
incentive stock option shall terminate in accordance with this subsection 5.7.
If an Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct, or disclosure of confidential
information. If an Optionee's relationship with the Company or any Affiliate
thereof is suspended pending an investigation of whether or not the Optionee
shall be terminated for cause, all Optionee's rights under any option granted
hereunder likewise shall be suspended during the period of investigation.
If an Optionee's relationship with the Company or any Affiliate thereof
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock
<PAGE>
option, cease to be treated as an incentive stock option until the end of the 12
month period following such cessation (unless by its terms it sooner terminates
and expires). As used in the Plan, the term "total disability" refers to a
mental or physical impairment of the Optionee which is expected to result in
death or which has lasted or is, in the opinion of the Company and two
independent physicians, expected to last for a continuous period of 12 months or
more and which causes or is, in such opinion, expected to cause the Optionee to
be unable to perform his or her duties for the Company and to be engaged in any
substantial gainful activity. Total disability shall be deemed to have occurred
on the first day after the Company and the two independent physicians have
furnished their opinion of total disability to the Plan Administrator.
For purposes of this subsection 5.7, a transfer of relationship between or
among the Company and/or any Affiliate thereof shall not be deemed to constitute
a cessation of relationship with the Company or any of its Affiliates. For
purposes of this subsection 5.7, with respect to incentive stock options,
employment shall be deemed to continue while the Optionee is on military leave,
sick leave, or other bona fide leave of absence (as determined by the Plan
Administrator). The foregoing notwithstanding, employment shall not be deemed to
continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
As used herein, the term "Affiliate" shall be defined as follows: (a) when
referring to a subsidiary corporation, "Affiliate" shall mean any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the granting of the option, the stock possessing 50%
or more of the total combined voting power of all classes of stock of each of
the corporations other than the Company is owned by one of the other
corporations in such chain; and (b) when referring to a parent corporation,
"Affiliate" shall mean any corporation in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, each of
the corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
5.8 DEATH OF OPTIONEE. If an Optionee dies while he or she has a
relationship with the Company or any Affiliate thereof or within the three month
period (or 12 month period in the case of totally disabled Optionees) following
cessation of such relationship, any option held by such Optionee, to the extent
that the Optionee would have been entitled to exercise such option, may be
exercised within one year after his or her death by the personal representative
of his or her estate or by the person or persons to whom the Optionee's rights
under the option shall pass by will or by the applicable laws of descent and
distribution.
5.9 STATUS OF STOCKHOLDER. Neither the Optionee nor any party to which the
Optionee's rights and privileges under the option may pass shall be, or have any
of the rights or privileges of, a stockholder of the Company with respect to any
of the shares issuable upon the exercise of any option granted under the Plan
unless and until such option has been exercised.
<PAGE>
5.10 CONTINUATION OF EMPLOYMENT. Nothing in the Plan or in any option
granted pursuant to the Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of an Affiliate thereof, or to
interfere in any way with the right of the Company or of any such Affiliate to
terminate his or her employment or other relationship with the Company at any
time.
5.11 MODIFICATION AND AMENDMENT OF OPTION. Subject to the requirements of
Section 422 of the Code with respect to incentive stock options and to the terms
and conditions and within the limitations of the Plan, including, without
limitation, Section 9.1 hereof, the Plan Administrator may modify or amend
outstanding options granted under the Plan. The modification or amendment of an
outstanding option shall not, without the consent of the Optionee, impair or
diminish any of his or her rights or any of the obligations of the Company under
such option. Except as otherwise provided herein, no outstanding option shall be
terminated without the consent of the Optionee. Unless the Optionee agrees
otherwise, any changes or adjustments made to outstanding incentive stock
options granted under the Plan shall be made in such a manner so as not to
constitute a "modification" as defined in Section 424(h) of the Code and so as
not to cause any incentive stock option issued hereunder to fail to continue to
qualify as an incentive stock option as defined in Section 422(b) of the Code.
5.12 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to all incentive
stock options granted under the terms of the Plan, to the extent that the
aggregate fair market value (determined at the time of the grant of the
incentive stock option) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, an Affiliate thereof or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
foregoing sentence shall not apply, and the limitation shall be that provided by
the Code or the Internal Revenue Service, as the case may be, if such annual
limit is changed or eliminated by (a) amendment of the Code or (b) issuance by
the Internal Revenue Service of (i) a Revenue ruling, (ii) a Private Letter
ruling to any of the Company, any Optionee, or any legatee, personal
representative, or distributee of any Optionee, or (iii) regulations.
5.13 VALUATION OF COMMON STOCK RECEIVED UPON EXERCISE.
5.13.1 EXERCISE OF OPTIONS UNDER SECTIONS 5.4(A) AND (C). The value of
Common Stock received by the Optionee from an exercise under Sections 5.4(a) and
5.4(c) hereof shall be the fair market value as determined by the Plan
Administrator, provided, that if the Common Stock is traded in a public market,
such valuation shall be the average of the high and low trading prices or bid
and asked prices, as applicable, of the Common Stock for the date of receipt by
the Company of the Optionee's delivery of shares under Section 5.4(a) hereof or
delivery of the Notice of Exercise under Section 5.4(c) hereof, determined as of
the trading day immediately preceding such date (or, if no sale of shares is
reported for such
<PAGE>
trading day, on the next preceding day on which any sale shall have been
reported).
5.13.2 EXERCISE OF OPTION UNDER SECTION 5.4(B). The value of Common Stock
received by the Optionee from an exercise under Section 5.4(b) hereof shall
equal the sales price received for such shares.
SECTION 6. GREATER THAN TEN PERCENT STOCKHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If incentive stock
options are granted under the Plan to employees who, at the time of such grant,
own greater than ten percent of the total combined voting power of all classes
of stock of the Company or any Affiliate thereof, the term of such incentive
stock options shall not exceed five years and the exercise price shall be not
less than 110% of the fair market value of the Common Stock at the time of grant
of the incentive stock option. This provision shall control notwithstanding any
contrary terms contained in an option agreement or any other document. The term
and exercise price limitations of this provision shall be amended to conform to
any change required by a change in the Code or by ruling or pronouncement of the
Internal Revenue Service.
6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors, and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership estate, or trust shall be deemed to be owned
proportionately by or for its stockholders, partners, or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him or her which is actually issued and
outstanding immediately before the grant of the incentive stock option to the
employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number
and class of shares for which options may be granted under the Plan, the number
and class of shares covered by each outstanding option, and the exercise price
per share thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split or consolidation of
shares or any like capital adjustment, or the payment of any stock dividend.
7.1. EFFECT OF LIQUIDATION, REORGANIZATION, OR CHANGE IN CONTROL.
7.1.1 CASH, STOCK, OR OTHER PROPERTY FOR STOCK. Except as provided in
subsection 7.1.2 hereof, upon a merger (other than a merger of the
<PAGE>
Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than mere reincorporation
or creation of a holding company), or liquidation of the Company (each, an
"event"), as a result of which the stockholders of the Company receive cash,
stock, or other property in exchange for, or in connection with, their shares of
Common Stock, any option granted hereunder shall terminate, but the time during
which such options may be exercised shall be accelerated as follows: the
Optionee shall have the right immediately prior to any such event to exercise
such Optionee's option in whole or in part whether or not the vesting
requirements set forth in the option agreement have been satisfied.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR EXCHANGE STOCK. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
or reorganization (other than mere reincorporation or creation of a holding
company), all options granted hereunder shall be converted into options to
purchase shares of Exchange Stock unless the Company and corporation issuing the
Exchange Stock, in their sole discretion, determine that any or all such options
granted hereunder shall not be converted into options to purchase shares of
Exchange Stock but instead shall terminate in accordance with the provisions of
subsection 7.1.1 hereof. The amount and price of converted options shall be
determined by adjusting the amount and price of the options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition, separation, or reorganization. Unless the Board determines
otherwise, the converted options shall be fully vested whether or not the
vesting requirements set forth in the option agreement have been satisfied.
7.2 FRACTIONAL SHARES. In the event of any adjustment in the number of
shares covered by an option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. Except as otherwise required for
the Plan to qualify for the exemption afforded by Rule 16b-3 under the Exchange
Act, all adjustments under this Section 7 shall be made by the Board, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. Unless an Optionee agrees otherwise,
any change or adjustment to an incentive stock option shall be made in such a
manner so as not to constitute a "modification" as defined in Section 424(h) of
the Code and so as not to cause the incentive stock option issued hereunder to
fail to continue to qualify as an incentive stock option as defined in Section
422(b) of the Code.
<PAGE>
SECTION 8. SECURITIES LAW COMPLIANCE. Shares shall not be issued with
respect to an option granted under the Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended (the "Act"), the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance, including, without limitation, the availability of an
exemption from registration for the issuance and sale of any shares hereunder.
Inability of the Company to obtain from any regulatory body having jurisdiction,
the authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, if, in the opinion of counsel
for the Company, assurances are required by any relevant provision of the
aforementioned laws, the Company may require the Optionee to give written
assurances satisfactory to the Company at the time of any such exercise (a) as
to the Optionee's knowledge and experience in financial and business matters
(and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters)
and that such Optionee is capable of evaluating, either alone or with the
purchaser representative, the merits and risks of exercising the option or (b)
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares. The foregoing requirements shall be
inoperative if the issuance of the shares upon the exercise of the option has
been registered under a then currently effective registration statement under
the Act.
At the option of the Company, a stop-transfer order against any shares may
be placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold, or otherwise transferred
unless an opinion of counsel is provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates in order to assure exemption
from registration. The Plan Administrator may also require such other action or
agreement by the Optionees as may from time to time be necessary to comply with
the federal and state securities laws. NONE OF THE ABOVE SHALL BE CONSTRUED TO
IMPLY AN OBLIGATION ON THE PART OF THE COMPANY TO UNDERTAKE REGISTRATION OF THE
OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities exchange
or on the NASDAQ National Market, all stock issued hereunder if not previously
listed on such exchange or market shall, if required by the rules of such
exchange or market, be authorized by that exchange or market for listing thereon
prior to the issuance thereof.
<PAGE>
SECTION 9. USE OF PROCEEDS. The proceeds received by the Company from the
sale of shares pursuant to the exercise of options granted hereunder shall
constitute general funds of the Company.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 BOARD ACTION. The Board may at any time suspend, amend, or terminate
the Plan, provided, that no amendment shall be made without stockholder approval
within 12 months before or after adoption of the Plan if such approval is
necessary to comply with any applicable tax or regulatory requirement, including
any such approval as may be necessary to satisfy the requirements for exemptive
relief under Rule 16b-3 of the Exchange Act or any successor provision. Rights
and obligations under any option granted before amendment of the Plan shall not
be altered or impaired by any amendment of the Plan unless the Company requests
the consent of the person to whom the option was granted and such person
consents in writing thereto.
10.2 AUTOMATIC TERMINATION. Unless sooner terminated by the Board, the Plan
shall terminate ten years from the earlier of (a) the date on which the Plan is
adopted by the Board or (b) the date on which the Plan is approved by the
stockholders of the Company. No option may be granted after such termination or
during any suspension of the Plan. The amendment or termination of the Plan
shall not, without the consent of the option holder, alter or impair any rights
or obligations under any option theretofore granted under the Plan.
SECTION 11. EFFECTIVENESS OF THE PLAN. The Plan shall become effective upon
adoption by the Board so long as it is approved by the holders of a majority of
the Company's outstanding shares of voting capital stock at any time within 12
months before or after the adoption of the Plan by the Board.
<PAGE>
STEVEN MADDEN, LTD.
[INCENTIVE][NONQUALIFIED] STOCK OPTION LETTER AGREEMENT
TO: _______________________
We are pleased to inform you that you have been selected by the Plan
Administrator of the Steven Madden, Ltd. (the "Company") 1996 Stock Plan (the
"Plan") to receive a(n) [INCENTIVE] [NONQUALIFIED] option for the purchase of
___ shares of the Company's common stock, $.0001 par value, at an exercise price
of $____ per share (the "exercise price"). A copy of the Plan is attached and
the provisions thereof, including, without limitation, those relating to
withholding taxes, are incorporated into this Agreement by reference.
The terms of the option are as set forth in the Plan and in this Agreement.
The most important of the terms set forth in the Plan are summarized as follows:
Term. The term of the option is ten years from date of grant, unless sooner
terminated.
Exercise. During your lifetime only you can exercise the option. The Plan
also provides for exercise of the option by the personal representative of your
estate or the beneficiary thereof following your death. You may use the Notice
of Exercise in the form attached to this Agreement when you exercise the option.
Payment for Shares. The option may be exercised by the delivery of:
(a) Cash, personal check (unless at the time of exercise the Plan
Administrator determines otherwise), or bank certified or cashier's checks;
(b) Unless the Plan Administrator in its sole discretion determines
otherwise, shares of the capital stock of the Company held by you having a
fair market value at the time of exercise, as determined in good faith by
the Plan Administrator, equal to the exercise price;
(c) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with
instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair
market value equal to the option exercise price; or
(d) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price.
<PAGE>
Acceleration. Notwithstanding the vesting schedule for the option set forth
below, the option will be automatically exercisable for the total number of
shares the subject of the option upon a "Change in Control," (as defined below),
or if advised by the Plan Administrator in writing, upon any
actually-anticipated "Change in Control," unless otherwise advised in writing by
the Plan Administrator, who has complete discretion in determining the specific
conditions upon which the option is to accelerate in connection with a Change in
Control.
Termination. The option will terminate: (i) immediately upon termination
for cause, as defined in the Plan, or three months after cessation of your
relationship as a director of the Company, unless cessation is due to death or
total disability, in which case the option shall terminate 12 months after
cessation of such relationship; (ii) three months after a "Change in Control",
unless otherwise advised in writing by the Plan Administrator, who has complete
discretion in determining the specific conditions upon which the option is to
terminate in connection with a Change in Control, if at all.
Transfer of Option. The option is not transferable except by will or by the
applicable laws of descent and distribution or pursuant to a qualified domestic
relations order.
Vesting. The option is vested according to the following schedule:
Period of Optionee's
Continuous Relationship
With the Company or
Affiliate From the Date Portion of Total Option
the Option is Granted Which is Exercisable
--------------------- --------------------
1 year 33%
2 years 67%
3 years 100%
Date of Grant. The date of grant of the option is____.
A. "Change of Control" will be deemed to occur (i) should a person or
related group of persons (other than the Company or its affiliates), who does
not own of record 10% or more (a "10% Acquisition") of the Company's outstanding
voting stock, which 10% Acquisition of the Company's outstanding voting stock is
not approved by the Board; and (ii) within any period of twenty-four consecutive
months or less from the date of such 10% Acquisition (the "Period"), there is
effected a change in the composition of the Board of Directors such that a
majority of the Board members (rounded up to the next whole number) cease to be
comprised of individuals who either (A) have been members of the Board
continuously before such 10% Acquisition and throughout the Period or (B) have
been elected or nominated for election as Board members
<PAGE>
during the Period by at least a majority of the Board members described in
clause (A) who were still in office at the time such election or nomination was
approved by the Board.
YOUR PARTICULAR ATTENTION IS DIRECTED TO SECTION 8 OF THE PLAN WHICH DESCRIBES
CERTAIN IMPORTANT CONDITIONS RELATING TO FEDERAL AND STATE SECURITIES LAWS THAT
MUST BE SATISFIED BEFORE THE OPTION CAN BE EXERCISED AND BEFORE THE COMPANY CAN
ISSUE ANY SHARES TO YOU. THE COMPANY HAS NO OBLIGATION TO REGISTER THE SHARES
THAT WOULD BE ISSUED UPON THE EXERCISE OF YOUR OPTION, AND IF IT NEVER REGISTERS
THE SHARES, YOU WILL NOT BE ABLE TO EXERCISE THE OPTION UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. AT THE PRESENT TIME, EXEMPTIONS FROM REGISTRATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE VERY LIMITED AND MIGHT BE
UNAVAILABLE TO YOU PRIOR TO THE EXPIRATION OF THE OPTION. CONSEQUENTLY, YOU
MIGHT HAVE NO OPPORTUNITY TO EXERCISE THE OPTION AND TO RECEIVE SHARES UPON SUCH
EXERCISE. IN ADDITION, YOU SHOULD CONSULT WITH YOUR TAX ADVISOR CONCERNING THE
RAMIFICATIONS TO YOU OF HOLDING OR EXERCISING YOUR OPTIONS OR HOLDING OR SELLING
THE SHARES UNDERLYING SUCH OPTIONS.
You understand that, during any period in which the shares which may be
acquired pursuant to your option are subject to the provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (and you yourself are also so
subject), in order for your transactions under the Plan to qualify for the
exemption from Section 16(b) provided by Rule 16b-3, a total of six months must
elapse between the grant of the option and the sale of shares underlying the
option.
<PAGE>
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
STEVEN MADDEN, LTD.
By: ________________________
Name:
Title:
ACCEPTANCE AND ACKNOWLEDGMENT
I, a resident of the State of
____________________, accept the stock
option described above granted under the
Steven Madden, Ltd. 1996 Stock Plan, and
acknowledge receipt of a copy of this
Agreement, including a copy of the Plan.
I have read and understand the Plan,
including the provisions of Section 8
thereof.
Dated: _____________________________
____________________________________ ____________________________
Taxpayer I.D. Number Signature
By his or her signature below, the spouse of the Optionee, if such Optionee
is legally married as of the date of such Optionee's execution of this
Agreement, acknowledges that he or she has read this Agreement and the Plan and
is familiar with the terms and provisions thereof, and agrees to be bound by all
the terms and conditions of this Agreement and the Plan.
Dated: _____________________________
_________________________
Spouse's Signature
_________________________
Printed Name
<PAGE>
NOTICE OF EXERCISE
The undersigned, pursuant to a nonqualified Stock Option Letter Agreement
(the "Agreement") between the undersigned and Steven Madden, Ltd. (the
"Company"), hereby irrevocably elects to exercise purchase rights represented by
the Agreement, and to purchase thereunder shares (the "Shares") of the Company's
common stock, $.0001 par value ("Common Stock"), covered by the Agreement and
herewith makes payment in full therefor.
1. If the sale of the Shares and the resale thereof has not, prior to the
date hereof, been registered pursuant to a registration statement filed and
declared effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned hereby agrees, represents, and warrants that:
(a) the undersigned is acquiring the Shares for his or her own account
(and not for the account of others), for investment and not with a view to
the distribution or resale thereof;
(b) By virtue of his or her position, the undersigned has access to
the same kind of information which would be available in a registration
statement filed under the Act;
(c) the undersigned is a sophisticated investor;
(d) the undersigned understands that he or she may not sell or
otherwise dispose of the Shares in the absence of either (i) a registration
statement filed under the Act or (ii) an exemption from the registration
provisions thereof; and
(e) The certificates representing the Shares may contain a legend to
the effect of subsection (d) of this Section 1.
2. If the sale of the Shares and the resale thereof has been registered
pursuant to a registration statement filed and declared effective under the Act,
the undersigned hereby represents and warrants that he or she has received the
applicable prospectus and a copy of the most recent annual report, as well as
all other material sent to stockholders generally.
3. The undersigned acknowledges that the number of shares of Common
Stock subject to the Agreement is hereafter reduced by the number of shares of
Common Stock represented by the Shares.
Very truly yours,
__________________________________________
(type name under signature line)
Social Security No. ______________________
Address: _________________________________
<PAGE>
STEVEN MADDEN, LTD.
NON-QUALIFIED STOCK OPTION LETTER AGREEMENT
TO: __________________
We are pleased to inform you that you have been selected by the Board of
Directors of Steven Madden, Ltd. (the "Company") to receive a nonqualified
option for the purchase of ________ shares of the Company's common stock, $.0001
par value, at an exercise price of $______ per share (the "exercise price").
The terms of the option are as set forth in the Plan and in this Agreement.
The most important of the terms set forth in the Plan are summarized as follows:
Term. The term of the option is ten years from date of grant, unless sooner
terminated.
Exercise. During your lifetime only you can exercise the option. The Plan
also provides for exercise of the option by the personal representative of your
estate or the beneficiary thereof following your death. You may use the Notice
of Exercise in the form attached to this Agreement when you exercise the option.
Payment For Shares. The option may be exercised by the delivery of:
(a) Cash, personal check (unless at the time of exercise the Plan
Administrator determines otherwise), or bank certified or cashier's checks;
(b) Unless the Plan Administrator in its sole discretion determines
otherwise, shares of the capital stock of the Company held by you having a
fair market value at the time of exercise, as determined in good faith by
the Plan Administrator, equal to the exercise price;
(c) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with
instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair
market value equal to the option exercise price; or
(d) Unless the Plan Administrator in its sole discretion determines
otherwise, a properly executed Notice of Exercise, together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price.
Transfer of Option. The option is not transferable except by will or by the
applicable
<PAGE>
laws of descent and distribution or pursuant to a qualified domestic
relations order.
Vesting. Your options will vest upon final approval and signing of the
contract with the City of Seattle for the Interbay site.
Date of Grant. The date of grant of the option is ____________, 1996.
YOUR PARTICULAR ATTENTION IS DIRECTED TO SECTION 8 OF THE PLAN WHICH DESCRIBES
CERTAIN IMPORTANT CONDITIONS RELATING TO FEDERAL AND STATE SECURITIES LAWS THAT
MUST BE SATISFIED BEFORE THE OPTION CAN BE EXERCISED AND BEFORE THE COMPANY CAN
ISSUE ANY SHARES TO YOU THE COMPANY HAS NO OBLIGATION TO REGISTER THE SHARES
THAT WOULD BE ISSUED UPON THE EXERCISE OF YOUR OPTION, AND IF IT NEVER REGISTERS
THE SHARES, YOU WILL NOT BE ABLE TO EXERCISE THE OPTION UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. AT THE PRESENT TIME, EXEMPTIONS FROM REGISTRATION
UNDER FEDERAL AND STATE SECURITIES LAWS ARE VERY LIMITED AND MIGHT BE
UNAVAILABLE TO YOU PRIOR TO THE EXPIRATION OF THE OPTION. CONSEQUENTLY, YOU
MIGHT HAVE NO OPPORTUNITY TO EXERCISE THE OPTION AND TO RECEIVE SHARES UPON SUCH
EXERCISE. IN ADDITION, YOU SHOULD CONSULT WITH YOUR TAX ADVISOR CONCERNING THE
RAMIFICATIONS TO YOU OF HOLDING OR EXERCISING YOUR OPTIONS OR HOLDING OR SELLING
THE SHARES UNDERLYING SUCH OPTIONS.
You understand that, during any period in which the shares which may be
acquired pursuant to your option are subject to the provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (and you yourself are also so
subject), in order for your transactions under the Plan to qualify for the
exemption from Section 16(b) provided by Rule 16b-3, a total of six months must
elapse between the grant of the option and the sale of shares underlying the
option.
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
STEVEN MADDEN, LTD.
By: ___________________________
Name:
Title:
<PAGE>
Exhibit 10.28
1997 STOCK PLAN
<PAGE>
THE 1997 STOCK PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON MAY 10, 1997
SECTION 1. PURPOSE. The purpose of the Steven Madden, Ltd. 1997 Stock Plan
(the "Plan") is to provide a means whereby directors and selected employees,
officers, agents, consultants, and independent contractors of Steven Madden,
Ltd., a New York corporation (the "Company"), or of any parent or subsidiary (as
defined in subsection 5.7 hereof and referred to hereinafter as "Affiliates")
thereof, may be granted incentive stock options and/or nonqualified stock
options to purchase shares of common stock, $.0001 par value ("Common Stock") in
order to attract and retain the services or advice of such directors, employees,
officers, agents, consultants, and independent contractors and to provide
additional incentive for such persons to exert maximum efforts for the success
of the Company and its Affiliates by encouraging stock ownership in the Company.
SECTION 2. ADMINISTRATION. Subject to Section 2.3 hereof, the Plan shall be
administered by the Board of Directors of the Company (the "Board") or, in the
event the Board shall appoint and/or authorize a committee of two or more
members of the Board to administer the Plan, by such committee. The
administrator of the Plan shall hereinafter be referred to as the "Plan
Administrator".
The foregoing notwithstanding, with respect to grants to be made to
directors: (a) the Plan Administrator shall be constituted so as to meet the
requirements of Section 16(b) of the Exchange Act and Rule 16b-3 thereunder,
each as amended from time to time, or (b) if the Plan Administrator cannot be so
constituted, no options shall be granted under the Plan to any directors.
2.1 PROCEDURES. The Board shall designate one of the members of the Plan
Administrator as chairman. The Plan Administrator may hold meetings at such
times and places as it shall determine. The acts of a majority of the members of
the Plan Administrator present at meetings at which a quorum exists, or acts
approved in writing by all Plan Administrator members, shall be valid acts of
the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and conditions explicitly set
forth herein, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options to be granted under
the Plan, including, without limitation, selection of whether an option will be
an incentive stock option or a nonqualified stock option, selection of the
individuals to be granted options, the number of shares to be subject to each
option, the exercise price per share, the timing of grants and all other terms
and conditions of the options. Grants under the Plan need not be identical in
any respect, even when made simultaneously. The Plan Administrator may also
establish, amend, and revoke rules and regulations for the administration of the
Plan. The interpretation and construction by the Plan Administrator of any terms
or provisions of the Plan or any option issued hereunder, or of any rule or
regulation promulgated in connection herewith, shall be conclusive and binding
on all
<PAGE>
interested parties, so long as such interpretation and construction with respect
to incentive stock options corresponds to the requirements of Internal Revenue
Code of 1986, as amended (the "Code"). Section 422, the regulations thereunder,
and any amendments thereto. The Plan Administrator shall not be personally
liable for any action made in good faith with respect to the Plan or any option
granted thereunder.
2.3 RULE 16b-3 AND SECTION 16(b) COMPLIANCE; BIFURCATION OF PLAN. It is the
intention of the Company that the Plan comply in all respects with Rule 16b-3
under the Securities Exchange Act of 1934 (the "Exchange Act") to the extent
applicable, and in all events the Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3. If any Plan provision is later found not
to be in compliance with such Rule, such provision shall be deemed null and
void. The Board of Directors may act under the Plan only if all members thereof
are "disinterested persons" as defined in Rule 16b-3 and further described in
Section 4 hereof; and no director or officer or other Company "insider" subject
to Section 16 of the Exchange Act may sell shares received upon the exercise of
an option during the six month period immediately following the grant of the
option without complying with the terms of Section 16 of the Exchange Act.
Notwithstanding anything in the Plan to the contrary, the Board, in its
absolute discretion, may bifurcate the Plan so as to restrict, limit, or
condition the use of any provision of the Plan to participants who are officers
and directors or other persons subject to Section 16(b) of the Exchange Act
without so restricting, limiting, or conditioning the Plan with respect to other
participants.
SECTION 3. STOCK SUBJECT TO THE PLAN. The stock subject to this Plan shall
be the Common Stock, presently authorized but unissued or subsequently acquired
by the Company. Subject to adjustment as provided in Section 7 hereof, the
aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under the Plan shall not exceed in the aggregate 1,000,000
shares as such Common Stock was constituted on the effective date of the Plan.
If any option granted under the Plan shall expire, be surrendered, exchanged for
another option, canceled, or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of the Plan, including for replacement options which
may be granted in exchange for such surrendered, canceled, or terminated
options.
SECTION 4. ELIGIBILITY. An incentive stock option may be granted only to
any individual who, at the time the option is granted, is a director, employee,
officer, agent, consultant, or independent contractor of the Company or any
Affiliate thereof. A nonqualified stock option may be granted to any director,
employee, officer, agent, consultant, or independent contractor of the Company
or any Affiliate thereof, whether an individual or an entity. Any party to whom
an option is granted under the Plan shall be referred to hereinafter as an
"Optionee".
A director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of a director as a
person to whom options may be granted, or in the determination of the number of
shares which may be covered by options granted to the
<PAGE>
director, the Plan complies with the requirements of Rule 16b-3 under the
Exchange Act.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan
shall be evidenced by written agreements which shall contain such terms,
conditions, limitations, and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with the Plan.
5.2 TERM AND MATURITY. Subject to the restrictions contained in Section 6
hereof with respect to granting stock options to greater than ten percent
stockholders, the term of each stock option shall be as established by the Plan
Administrator and, if not so established, shall be ten years from the date of
its grant, but in no event shall the term of any incentive stock option exceed a
ten year period.
5.3 EXERCISE. Each option may be exercised in whole or in part; provided,
that only whole shares may be issued pursuant to the exercise of any option.
Subject to any other terms and conditions herein, the Plan Administrator may
provide that an option may not be exercised in whole or in part for a stated
period or periods of time during which such option is outstanding; provided,
that the Plan Administrator may rescind, modify, or waive any such limitation
(including by the acceleration of the vesting schedule upon a change in control
of the Company) at any time and from time to time after the grant date thereof.
During an Optionee's lifetime, any incentive stock options granted under the
Plan are personal to such Optionee and are exercisable solely by such Optionee.
Options shall be exercised by delivery to the Company of notice of the number of
shares with respect to which the option is exercised, together with payment of
the exercise price in accordance with Section 5.4 hereof.
5.4 PAYMENT OF EXERCISE PRICE. Except as set forth below, payment of the
option exercise price shall be made in full at the time the notice of exercise
of the option is delivered to the Company and shall be in cash, bank certified
or cashier's check, or personal check (unless at the time of exercise the Plan
Administrator in a particular case determines not to accept a personal check)
for shares of Common Stock being purchased.
The Plan Administrator can determine at the time the option is granted in
the case of incentive stock options, or at any time before exercise in the case
of nonqualified stock options, that additional forms of payment will be
permitted. To the extent permitted by the Plan Administrator and applicable laws
and regulations (including, without limitation, federal tax and securities laws
and regulations and state corporate law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an Optionee
having a fair market value equal to the exercise price, such fair market
value to be determined in good faith by the Plan Administrator;
(b) delivery of a properly executed Notice of Exercise, together with
irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price and
any federal, state, or local withholding tax
<PAGE>
obligations that may arise in connection with the exercise; or
(c) delivery of a properly executed Notice of Exercise, together with
instructions to the Company to withhold from the shares of Common Stock
that would otherwise be issued upon exercise that number of shares of
Common Stock having a fair market value equal to the option exercise price.
5.5 WITHHOLDING TAX REQUIREMENT. The Company or any Affiliate thereof shall
have the right to retain and withhold from any payment of cash or Common Stock
under the Plan the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. No option may be
exercised unless and until arrangements satisfactory to the Company, in its sole
discretion, to pay such withholding taxes are made. At its discretion, the
Company may require an Optionee to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so reimbursed. In lieu thereof, the Company shall
have the right to withhold from any other cash amounts due or to become due from
the Company to the Optionee an amount equal to such taxes or retain and withhold
a number of shares having a market value not less than the amount of such taxes
required to be withheld by the Company to reimburse the Company for any such
taxes and cancel (in whole or in part) any such shares of Common Stock so
withheld. If required by Section 16(b) of the Exchange Act, the election to pay
withholding taxes by delivery of shares of Common Stock held by any person who
at the time of exercise is subject to Section 16(b) of the Exchange Act shall be
made either six months prior to the date the option exercise becomes taxable or
at such other times as the Company may determine as necessary to comply with
Section 16(b) of the Exchange Act. Although the Company may, in its discretion,
accept Common Stock as payment of withholding taxes, the Company shall not be
obligated to do so.
5.6 NONTRANSFERABILITY.
5.6.1 OPTION. Options granted under the Plan and the rights and privileges
conferred hereby may not be transferred, assigned, pledged, or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code, or Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall not be subject to execution, attachment, or similar
process. Any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of any option under the Plan or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of the Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void ab initio. The designation by an
Optionee of a beneficiary does not, in and of itself, constitute an
impermissible transfer under this subsection 5.6.1.
5.6.2 STOCK. The Plan Administrator may provide in the agreement granting
the option that (a) the Optionee may not transfer or otherwise dispose of shares
acquired upon exercise of an option without first offering such shares to the
Company for purchase on the
<PAGE>
same terms and conditions as those offered to the proposed transferee or (b)
upon termination of employment of an Optionee, the Company shall have a six
month right of repurchase as to the shares acquired upon exercise, which right
of repurchase shall allow for a maximum purchase price equal to the fair market
value of the shares on the termination date. The foregoing rights of the Company
shall be assignable by the Company upon reasonable written notice to the
Optionee.
5.7 TERMINATION OF RELATIONSHIP. If the Optionee's relationship with the
Company or any Affiliate thereof ceases for any reason other than termination
for cause, death, or total disability, and unless by its terms the option sooner
terminates or expires, then the Optionee may exercise, for a three month period,
that portion of the Optionee's option which is exercisable at the time of such
cessation, but the Optionee's option shall terminate at the end of the three
month period following such cessation as to all shares for which it has not
theretofore been exercised, unless, in the case of a nonqualified stock option,
such provision is waived in the agreement evidencing the option or by resolution
adopted by the Plan Administrator within 90 days of such cessation. If, in the
case of an incentive stock option, an Optionee's relationship with the Company
or Affiliate thereof changes from employee to nonemployee (i.e., from employee
to a position such as a consultant), such change shall constitute a termination
of an Optionee's employment with the Company or Affiliate and the Optionee's
incentive stock option shall terminate in accordance with this subsection 5.7.
If an Optionee is terminated for cause, any option granted hereunder shall
automatically terminate as of the first discovery by the Company of any reason
for termination for cause, and such Optionee shall thereupon have no right to
purchase any shares pursuant to such option. "Termination for cause" shall mean
dismissal for dishonesty, conviction or confession of a crime punishable by law
(except minor violations), fraud, misconduct, or disclosure of confidential
information. If an Optionee's relationship with the Company or any Affiliate
thereof is suspended pending an investigation of whether or not the Optionee
shall be terminated for cause, all Optionee's rights under any option granted
hereunder likewise shall be suspended during the period of investigation.
If an Optionee's relationship with the Company or any Affiliate thereof
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock option, cease to be treated as an
incentive stock option until the end of the 12 month period following such
cessation (unless by its terms it sooner terminates and expires). As used in the
Plan, the term "total disability" refers to a mental or physical impairment of
the Optionee which is expected to result in death or which has lasted or is, in
the opinion of the Company and two independent physicians, expected to last for
a continuous period of 12 months or more and which causes or is, in such
opinion, expected to cause the Optionee to be unable to perform his or her
duties for the Company and to be engaged in any substantial gainful activity.
Total disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of total
disability to the Plan Administrator.
For purposes of this subsection 5.7, a transfer of relationship between or
among the Company and/or any Affiliate thereof shall not be deemed to constitute
a cessation of
<PAGE>
relationship with the Company or any of its Affiliates. For purposes of this
subsection 5.7, with respect to incentive stock options, employment shall be
deemed to continue while the Optionee is on military leave, sick leave, or other
bona fide leave of absence (as determined by the Plan Administrator). The
foregoing notwithstanding, employment shall not be deemed to continue beyond the
first 90 days of such leave, unless the Optionee's reemployment rights are
guaranteed by statute or by contract.
As used herein, the term "Affiliate" shall be defined as follows: (a) when
referring to a subsidiary corporation, "Affiliate" shall mean any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the granting of the option, the stock possessing 50%
or more of the total combined voting power of all classes of stock of each of
the corporations other than the Company is owned by one of the other
corporations in such chain; and (b) when referring to a parent corporation,
"Affiliate" shall mean any corporation in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, each of
the corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
5.8 DEATH OF OPTIONEE. If an Optionee dies while he or she has a
relationship with the Company or any Affiliate thereof or within the three month
period (or 12 month period in the case of totally disabled Optionees) following
cessation of such relationship, any option held by such Optionee, to the extent
that the Optionee would have been entitled to exercise such option, may be
exercised within one year after his or her death by the personal representative
of his or her estate or by the person or persons to whom the Optionee's rights
under the option shall pass by will or by the applicable laws of descent and
distribution.
5.9 STATUS OF STOCKHOLDER. Neither the Optionee nor any party to which the
Optionee's rights and privileges under the option may pass shall be, or have any
of the rights or privileges of, a stockholder of the Company with respect to any
of the shares issuable upon the exercise of any option granted under the Plan
unless and until such option has been exercised.
5.10 CONTINUATION OF EMPLOYMENT. Nothing in the Plan or in any option
granted pursuant to the Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of an Affiliate thereof, or to
interfere in any way with the right of the Company or of any such Affiliate to
terminate his or her employment or other relationship with the Company at any
time.
5.11 MODIFICATION AND AMENDMENT OF OPTION. Subject to the requirements of
Section 422 of the Code with respect to incentive stock options and to the terms
and conditions and within the limitations of the Plan, including, without
limitation, Section 9.1 hereof, the Plan Administrator may modify or amend
outstanding options granted under the Plan. The modification or amendment of an
outstanding option shall not, without the consent of the Optionee, impair or
diminish any of his or her rights or any of the obligations of the Company under
such option. Except as otherwise provided herein, no outstanding option shall be
<PAGE>
terminated without the consent of the Optionee. Unless the Optionee agrees
otherwise, any changes or adjustments made to outstanding incentive stock
options granted under the Plan shall be made in such a manner so as not to
constitute a "modification" as defined in Section 424(h) of the Code and so as
not to cause any incentive stock option issued hereunder to fail to continue to
qualify as an incentive stock option as defined in Section 422(b) of the Code.
5.12 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to all incentive
stock options granted under the terms of the Plan, to the extent that the
aggregate fair market value (determined at the time of the grant of the
incentive stock option) of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, an Affiliate thereof or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
foregoing sentence shall not apply, and the limitation shall be that provided by
the Code or the Internal Revenue Service, as the case may be, if such annual
limit is changed or eliminated by (a) amendment of the Code or (b) issuance by
the Internal Revenue Service of (i) a Revenue ruling, (ii) a Private Letter
ruling to any of the Company, any Optionee, or any legatee, personal
representative, or distributee of any Optionee, or (iii) regulations.
5.13 VALUATION OF COMMON STOCK RECEIVED UPON EXERCISE.
5.13.1 EXERCISE OF OPTIONS UNDER SECTIONS 5.4(A) AND (C). The value of
Common Stock received by the Optionee from an exercise under Sections 5.4(a) and
5.4(c) hereof shall be the fair market value as determined by the Plan
Administrator, provided, that if the Common Stock is traded in a public market,
such valuation shall be the average of the high and low trading prices or bid
and asked prices, as applicable, of the Common Stock for the date of receipt by
the Company of the Optionee's delivery of shares under Section 5.4(a) hereof or
delivery of the Notice of Exercise under Section 5.4(c) hereof, determined as of
the trading day immediately preceding such date (or, if no sale of shares is
reported for such trading day, on the next preceding day on which any sale shall
have been reported).
5.13.2 EXERCISE OF OPTION UNDER SECTION 5.4(B). The value of Common Stock
received by the Optionee from an exercise under Section 5.4(b) hereof shall
equal the sales price received for such shares.
SECTION 6. GREATER THAN TEN PERCENT STOCKHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If incentive stock
options are granted under the Plan to employees who, at the time of such grant,
own greater than ten percent of the total combined voting power of all classes
of stock of the Company or any Affiliate thereof, the term of such incentive
stock options shall not exceed five years and the exercise price shall be not
less than 110% of the fair market value of the Common Stock at the time of grant
of the incentive stock option. This provision shall control notwithstanding any
contrary terms contained in an option agreement or any other document.
<PAGE>
The term and exercise price limitations of this provision shall be amended to
conform to any change required by a change in the Code or by ruling or
pronouncement of the Internal Revenue Service.
6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in determining stock
ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors, and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership estate, or trust shall be deemed to be owned
proportionately by or for its stockholders, partners, or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him or her which is actually issued and
outstanding immediately before the grant of the incentive stock option to the
employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number
and class of shares for which options may be granted under the Plan, the number
and class of shares covered by each outstanding option, and the exercise price
per share thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split or consolidation of
shares or any like capital adjustment, or the payment of any stock dividend.
7.1. EFFECT OF LIQUIDATION, REORGANIZATION, OR CHANGE IN CONTROL.
7.1.1 CASH, STOCK, OR OTHER PROPERTY FOR STOCK. Except as provided in
subsection 7.1.2 hereof, upon a merger (other than a merger of the Company in
which the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
reorganization (other than mere reincorporation or creation of a holding
company), or liquidation of the Company (each, an "event"), as a result of which
the stockholders of the Company receive cash, stock, or other property in
exchange for, or in connection with, their shares of Common Stock, any option
granted hereunder shall terminate, but the time during which such options may be
exercised shall be accelerated as follows: the Optionee shall have the right
immediately prior to any such event to exercise such Optionee's option in whole
or in part whether or not the vesting requirements set forth in the option
agreement have been satisfied.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR EXCHANGE STOCK. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or
<PAGE>
stock, separation, or reorganization (other than mere reincorporation or
creation of a holding company), all options granted hereunder shall be converted
into options to purchase shares of Exchange Stock unless the Company and
corporation issuing the Exchange Stock, in their sole discretion, determine that
any or all such options granted hereunder shall not be converted into options to
purchase shares of Exchange Stock but instead shall terminate in accordance with
the provisions of subsection 7.1.1 hereof. The amount and price of converted
options shall be determined by adjusting the amount and price of the options
granted hereunder in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the Common Stock receive in such merger,
consolidation, acquisition, separation, or reorganization. Unless the Board
determines otherwise, the converted options shall be fully vested whether or not
the vesting requirements set forth in the option agreement have been satisfied.
7.2 FRACTIONAL SHARES. In the event of any adjustment in the number of
shares covered by an option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. Except as otherwise required for
the Plan to qualify for the exemption afforded by Rule 16b-3 under the Exchange
Act, all adjustments under this Section 7 shall be made by the Board, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. Unless an Optionee agrees otherwise,
any change or adjustment to an incentive stock option shall be made in such a
manner so as not to constitute a "modification" as defined in Section 424(h) of
the Code and so as not to cause the incentive stock option issued hereunder to
fail to continue to qualify as an incentive stock option as defined in Section
422(b) of the Code.
SECTION 8. SECURITIES LAW COMPLIANCE. Shares shall not be issued with
respect to an option granted under the Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended (the "Act"), the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance, including, without limitation, the availability of an
exemption from registration for the issuance and sale of any shares hereunder.
Inability of the Company to obtain from any regulatory body having jurisdiction,
the authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, if, in the opinion of counsel
for the Company, assurances are required by any relevant provision of the
aforementioned laws, the Company may require the Optionee to give written
assurances satisfactory to the Company at the time of any such exercise (a) as
to the Optionee's knowledge and experience in financial and business matters
<PAGE>
(and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters)
and that such Optionee is capable of evaluating, either alone or with the
purchaser representative, the merits and risks of exercising the option or (b)
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares. The foregoing requirements shall be
inoperative if the issuance of the shares upon the exercise of the option has
been registered under a then currently effective registration statement under
the Act.
At the option of the Company, a stop-transfer order against any shares may
be placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold, or otherwise transferred
unless an opinion of counsel is provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on stock certificates in order to assure exemption
from registration. The Plan Administrator may also require such other action or
agreement by the Optionees as may from time to time be necessary to comply with
the federal and state securities laws. NONE OF THE ABOVE SHALL BE CONSTRUED TO
IMPLY AN OBLIGATION ON THE PART OF THE COMPANY TO UNDERTAKE REGISTRATION OF THE
OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities exchange
or on the Nasdaq National Market, all stock issued hereunder if not previously
listed on such exchange or market shall, if required by the rules of such
exchange or market, be authorized by that exchange or market for listing thereon
prior to the issuance thereof.
SECTION 9. USE OF PROCEEDS. The proceeds received by the Company from the
sale of shares pursuant to the exercise of options granted hereunder shall
constitute general funds of the Company.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 BOARD ACTION. The Board may at any time suspend, amend, or terminate
the Plan, provided, that no amendment shall be made without stockholder approval
within 12 months before or after adoption of the Plan if such approval is
necessary to comply with any applicable tax or regulatory requirement, including
any such approval as may be necessary to satisfy the requirements for exemptive
relief under Rule 16b-3 of the Exchange Act or any successor provision. Rights
and obligations under any option granted before amendment of the Plan shall not
be altered or impaired by any amendment of the Plan unless the Company requests
the consent of the person to whom the option was granted and such person
consents in writing thereto.
10.2 AUTOMATIC TERMINATION. Unless sooner terminated by the Board, the Plan
shall terminate ten years from the earlier of (a) the date on which the Plan is
adopted by the Board or (b) the date on which the Plan is approved by the
stockholders of the Company. No option may be granted after such termination or
during any suspension of the Plan.
<PAGE>
The amendment or termination of the Plan shall not, without the consent of the
option holder, alter or impair any rights or obligations under any option
theretofore granted under the Plan.
SECTION 11. EFFECTIVENESS OF THE PLAN. The Plan shall become effective upon
adoption by the Board so long as it is approved by the holders of a majority of
the Company's outstanding shares of voting capital stock at any time within 12
months before or after the adoption of the Plan by the Board.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of our report dated February 14, 1997 on the consolidated financial
statements of Steven Madden, Ltd. and subsidiaries included in the 1996 Annual
Report on Form 10-KSB.
Richard A. Eisner & Company, LLP
New York, New York
October 28, 1997
