AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1998,
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)
1995 STOCK PLAN
1998 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)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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,
par value $.0001 per share 1,030,000(2) $ 9.50(3) $ 9,785,000 $2,886.58
---------
Total $2,886.58
- ---------------
</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) Includes 30,000 shares of Common Stock reserved under the 1995 Stock
Plan and 1,000,000 shares reserved under the 1998 Stock Plan.
(3) Estimated solely for the purpose of calculating the registration fee
based upon the closing price of the shares of Common Stock on July 24, 1998 of
$ 9.50 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) Current Report on Form 8-K filed on July 14, 1998.
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(3) Proxy Statement on Schedule 14A dated April 22, 1998.
(4) Current Report on Form 8-K filed on February 13, 1998.
(5) Current Report on Form 8-K filed on January 27, 1998.
(6) Annual Report on Form 10-KSB for the period ended December 31, 1997.
(7) 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
3
<PAGE>
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, 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
4
<PAGE>
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
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 Berlack, Israels & Liberman LLP.
10.1 1995 Stock Plan.(1)
10.2 1998 Stock Plan.
23.1 Consent of Berlack, Israels & Liberman LLP (included in Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 filed on June 12, 1996.
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 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;
5
<PAGE>
(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, that 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 24th day of July, 1998.
STEVEN MADDEN, LTD.
By: /s/ STEVEN 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 July 24, 1998
- --------------------------------------- the Board, President
Steven Madden and Chief Executive
Officer
/s/ RHONDA BROWN Chief Operating Officer July 24, 1998
- --------------------------------------- and Director
Rhonda Brown
/s/ ARVIND DHARIA Chief Financial and July 24, 1998
- --------------------------------------- Accounting Officer
Arvind Dharia and Director
/s/ JOHN BASILE Executive Vice President July 24, 1998
- --------------------------------------- and Director
John Basile
/s/ JOHN L. MADDEN Director July 24, 1998
- ---------------------------------------
John L. Madden
/s/ PETER MIGLIORINI Director July 24, 1998
- ---------------------------------------
Peter Migliorini
/s/ LES WAGNER Director July 24, 1998
- ---------------------------------------
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 Berlack, Israels & Liberman LLP.
10.3 1998 Stock Plan.
23.1 Consent of Berlack, Israels & Liberman LLP (included in Exhibit
5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
9
EXHIBIT 5.1
OPINION OF BERLACK, ISRAELS & LIBERMAN, LLP
[LETTERHEAD OF BERLACK, ISRAELS & LIBERMAN LLP]
July 24, 1998
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 1,030,000 shares of the
Company's Common Stock, $.0001 par value ("Common Stock") consisting of (i)
30,000 shares of Common Stock reserved for issuance under the Company's 1995
Stock Plan, and (ii) 1,000,000 shares of Common Stock reserved for issuance
under the Company's 1998 Stock Plan.
In that connection, we have examined the Certificate of Incorporation,
as amended, and the By-Laws of the Company, the Registration Statement, the 1995
Stock Plan, the 1998 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 relevant option agreements and/or in accordance with the
Company's 1995 Stock Plan or 1998 Stock Plan, as the case may be, 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/ BERLACK, ISRAELS & LIBERMAN LLP
-------------------------------------
Berlack, Israels & Liberman LLP
10
EXHIBIT 10.2
THE 1998 STOCK PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON JANUARY 16, 1998
SECTION 1. PURPOSE. The purpose of the Steven Madden, Ltd. 1998 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
A-1
<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 director, the Plan
complies with the requirements of Rule 16b-3 under the Exchange Act.
A-2
<PAGE>
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 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
A-3
<PAGE>
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 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.
A-4
<PAGE>
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 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
A-5
<PAGE>
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 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
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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. 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
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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 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.
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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
(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
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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. 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.
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EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of our report dated February 6, 1998 on the financial statements of
Steven Madden, Ltd. included in the 1997 Annual Report on Form 10-KSB.
/s/ RICHARD A. EISNER & COMPANY, LLP
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Richard A. Eisner & Company, LLP
New York, New York
July 15, 1998
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