SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
STEVEN MADDEN, LTD.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
STEVEN MADDEN, CHIEF EXECUTIVE OFFICER, STEVEN MADDEN, LTD.
(NAME OF PERSON(S) FILING THE PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and date of its filing.
1) Amount Previously Paid:
N/A
-------------------------------------------------
2) Form, Schedule or Registration Statement No.:
N/A
-------------------------------------------------
3) Filing Party:
N/A
-------------------------------------------------
4) Date Filed:
N/A
-------------------------------------------------
<PAGE>
STEVEN MADDEN, LTD.
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1998
----------------------------------------
TO THE STOCKHOLDERS OF STEVEN MADDEN, LTD.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Steven Madden, Ltd., a New York corporation (the
"Company"), will be held on May 22, 1998, at the Marriott Eastside located at
525 Lexington Avenue, New York, New York at 10:00 a.m., local time, and
thereafter as it may from time to time be adjourned, for the purposes stated
below.
1. To elect seven (7) directors to the Board of the Company for a
one (1) year term;
2. To consider and vote upon a proposal to approve the adoption
of the Company's 1998 Stock Plan;
3. To consider and vote upon a proposal to change the Company's
state of incorporation from New York to Delaware by means of a
merger of the Company with and into a wholly-owned Delaware
subsidiary (the "Reincorporation");
4. To ratify the appointment of Richard A. Eisner & Company, LLP
as independent auditors of the Company for fiscal year 1998;
and
5. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting.
Only those Stockholders of record at the close of business on April 10, 1998 are
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. A complete list of stockholders entitled to vote at the Annual Meeting
will be available at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
April 22, 1998 Steven Madden, President, Chairman of the Board and
Chief Executive Officer
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO AMERICAN
STOCK TRANSFER & TRUST COMPANY, 40 WALL STREET, NEW YORK, NEW YORK 10005.
<PAGE>
STEVEN MADDEN, LTD.
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Steven Madden, Ltd., a New York
corporation (the "Company"), for use at the annual meeting of the Company's
Stockholders to be held at the Marriott Eastside located at 525 Lexington
Avenue, New York, New York at 10:00 a.m., local time, and at any adjournments
thereof (the "Annual Meeting").
The Annual Meeting has been called to consider and take action on the
following proposals: (i) to elect seven (7) directors to the Board of Directors
of the Company for a one (1) year term, (ii) to consider and vote upon a
proposal to approve the adoption of the Company's 1998 Stock Plan, (iii) to
consider and vote upon a proposal to change the Company's state of incorporation
from New York to Delaware by means of a merger of the Company with and into a
wholly-owned Delaware subsidiary (the "Reincorporation'), (iv) to ratify the
appointment of Richard A. Eisner & Company, LLP as independent auditors of the
Company for fiscal year 1998, and (v) to transact such other business as may
properly come before the Annual Meeting or any adjournments thereof. The Board
of Directors knows of no other matters to be presented for action at the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
the persons named in the proxy will vote on such other matters and/or for other
nominees in accordance with their best judgement. The Company's Board of
Directors recommends that the Stockholders vote in favor of each of the
proposals. Only holders of record of common stock, $.0001 par value (the "Common
Stock"), of the Company at the close of business on April 10, 1998 (the "Record
Date") will be entitled to vote at the Annual Meeting.
The principal executive offices of the Company are located at 52-16
Barnett Avenue, Long Island City, NY 11104 and its telephone number is (718)
446-1800. The approximate date on which this Proxy Statement, the proxy card and
other accompanying materials are first being sent or given to Stockholders is
April 22, 1998. The Company's Annual Report for the fiscal year ended December
31, 1997, including audited financial statements, are being sent to Stockholders
together with this Proxy Statement and are incorporated herein by reference.
INFORMATION CONCERNING SOLICITATION AND VOTING
As of the Record Date, there were outstanding 8,654,773 shares of
Common Stock held by approximately 91 holders of record and 2,710 beneficial
owners. Only holders of shares of Common Stock on the Record Date will be
entitled to vote at the Annual Meeting. The holders of Common Stock are entitled
to one vote on all matters presented at the meeting for each share held of
record. The presence in person or by proxy of holders of record of a majority of
the shares outstanding and entitled to vote as of the Record Date shall be
required for a quorum to transact business at the Annual Meeting. If a quorum
should not be present, the Annual Meeting may be adjourned until a quorum is
obtained. The nominees to be selected as a Director named in Proposal 1 must
receive a plurality of the eligible votes cast at the Annual Meeting with
respect to such Proposal. The approval of the adoption of the Company's 1998
Stock Plan described in Proposal 2 must be approved by the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock. The
approval of the Reincorporation set forth in Proposal 3 must be
<PAGE>
approved by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Common Stock. The ratification of the appointment of
Richard A. Eisner & Company, LLP as independent auditors of the Company for
fiscal year 1998 described in Proposal 4 must be approved by the affirmative
vote of the majority of shares present at the meeting, in person or by proxy.
Abstentions and broker non-votes will have no effect with respect to Proposal 1
and Proposal 4, and will have the effect of a "no" vote with respect to Proposal
2 and Proposal 3. BROKERS WHO HOLD SHARES IN STREET NAME MAY VOTE ON BEHALF OF
BENEFICIAL OWNERS WITH RESPECT TO PROPOSALS 1 AND 4. The approval of all other
matters to be considered at the Annual Meeting requires the affirmative vote of
a majority of the eligible votes cast at the Annual Meeting on such matters.
The expense of preparing, printing and mailing this Proxy Statement,
exhibits and the proxies solicited hereby will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by officers and
directors and regular employees of the Company, without additional remuneration,
by personal interviews, telephone, telegraph or facsimile transmission. The
Company will also request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares of capital stock
held of record and will provide reimbursements for the cost of forwarding the
material in accordance with customary charges.
Proxies given by Stockholders of record for use at the Annual Meeting
may be revoked at any time prior to the exercise of the powers conferred. In
addition to revocation in any other manner permitted by law, Stockholders of
record giving a proxy may revoke the proxy by an instrument in writing, executed
by the Stockholder or his attorney authorized in writing or, if the Stockholder
is a corporation, under its corporate seal, by an officer or attorney thereof
duly authorized, and deposited either at the corporate headquarters of the
Company at any time up to and including the last business day preceding the day
of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
used, or with the chairman of such Annual Meeting on the day of the Annual
Meeting or adjournment thereof, and upon either of such deposits the proxy is
revoked.
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO
CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
COME BEFORE THE ANNUAL MEETING.
None of the matters to be acted on at the Annual Meeting give rise to
any statutory right of a Stockholder to dissent and obtain the appraisal of or
payment for such Stockholder's shares.
2
<PAGE>
PROPOSAL ONE
TO ELECT SEVEN DIRECTORS TO SERVE FOR ONE YEAR AND UNTIL THEIR SUCCESSORS HAVE
BEEN DULY ELECTED AND QUALIFIED
Under the By-Laws of the Company (the "By-Laws"), the Board of
Directors of the Company is required to be comprised of a minimum of three (3)
directors, subject to which limitation the number of directors may be fixed from
time to time by action of the stockholders or of the directors, with all
directors elected by the stockholders each year at the annual stockholders
meeting. The Company's board presently consists of seven (7) directors whose
terms expire at the Annual Meeting. Officers are elected annually by and serve
at the discretion of the Board of Directors.
The Board has nominated seven (7) candidates to serve as directors all
of whom are currently directors. The names and biographical summaries of the
seven (7) persons who have been nominated by the Board of Directors to stand for
election at the Annual Meeting have been provided below for your information.
The Board of Directors has proposed that these persons be elected at the Annual
Meeting to serve until the next annual meeting of stockholders. The Proxies will
be voted for the election of the seven (7) nominees listed below as directors of
the Company unless otherwise specified on the form provided. The vote of a
majority of the capital stock, present and constituting a quorum at the Annual
Meeting, will be necessary to elect the directors listed below. If, for any
reasons, any of the nominees shall be unable or unwilling to serve, the Proxies
will be voted for a substitute nominee who will be designated by the Board of
Directors at the Annual Meeting. Stockholders may abstain from voting by marking
the appropriate boxes on the enclosed Proxy. Abstentions shall be counted
separately and shall be used for purposes of calculating quorum.
BIOGRAPHICAL SUMMARIES OF NOMINEES FOR THE BOARD OF DIRECTORS
STEVEN MADDEN has been since the Company's inception, the Chairman of
the Board, Chief Executive Officer and President. In 1980, Mr. Madden joined
L.J. Simone, a domestic footwear manufacturer, as an Account Executive. At that
time, L.J. Simone had annual sales of approximately $800,000. Mr. Madden was
promoted to Sales Manager and Director of Product Development and was
instrumental in the company's growth to $28 million in annual sales. After
leaving L.J. Simone in 1988, Mr. Madden joined M.C.M. Footwear, where he
commenced the design, development and marketing of the "Souliers" line of
footwear for women. In 1990, Mr. Madden founded the Company.
RHONDA J. BROWN has been the Chief Operating Officer of the Company
since July 1996 and a Director of the Company since November 1996. From July
1988 to July 1992, Ms. Brown served as Senior Vice-President and General
Merchandise Manager to Lord & Taylor, a division of the May Company. From August
1992 to December 1994, Ms. Brown served as Merchandise President of Macy's East,
a division of R.H. Macy & Co., Inc. Prior to joining the Company, Ms. Brown
served as President and Chief Executive Officer of Icing, Inc. from May 1995 to
December 1995. Ms. Brown attended the American University, receiving a BS in
Marketing and Public Communications in 1976.
ARVIND DHARIA has been the Chief Financial Officer of the Company since
October 1992 and a Director since December 1993. From December 1988 to September
1992, Mr. Dharia was Assistant Controller of Millennium III Real Estate Corp.
3
<PAGE>
JOHN BASILE has been the Director of Operations of the Company since
June 1994 and a Director of the Company since November 1996. Mr. Basile was a
Sales Manager at Bellini Imports from 1980 to 1990. From 1990 to 1994, Mr.
Basile was Executive Vice President of Cougar U.S.A. responsible for the United
States Division of Susan Shoes of Canada.
JOHN L. MADDEN has been a Director of the Company since the Company's
inception. From February 1990 to April 1992, Mr. Madden served as a Branch
Office Manager for Biltmore Securities Corp. From April 1992 until August 1993,
Mr. Madden was associated with GKN Securities, Inc. as a Senior Account
Executive. From August 1993 to April 1994, Mr. Madden returned to Biltmore
Securities as a Managing Director and registered sales representative. From May
1994 to May 1996 Mr. Madden served as Vice President of Investments for GKN
Securities, Inc. From May 1996 through December 1996, Mr. Madden was associated
with Kenny Securities, Inc. As of January 1997, Mr. Madden has been associated
with Merit Capital, Corp. Mr. Madden is the brother of Steven Madden, the
Company's Chairman of the Board, Chief Executive Officer and President.
PETER MIGLIORINI has been a Director of the Company since October 1996.
From 1987 to 1994, Mr. Migliorini served as Director of Operations for Mackroyce
Group. Mr. Migliorini has previously served in a number of capacities, ranging
from Assistant Buyer to Chief Planner/Coordinator for several shoe companies
including Meldisco Shoes, Perry Shoes, and Fasco Shoes. From 1994 to present,
Mr. Migliorini has served as Sales Manager for Greschlers, Inc., a major supply
company located in Brooklyn, New York.
LES WAGNER has been a Director of the Company since October 1996. Mr.
Wagner has served in a number of other capacities for Baker/Leeds Shoe Store, a
Division of Edison Brothers Stores, Inc. from 1963 to 1993 which included,
President, Gussini Discount Shoe Division from 1987 to 1988; Vice President Real
Estate Northeast Area from 1988 to 1989; and General Merchandise Manager from
1989 to 1993. From 1993 to 1996, Mr. Wagner served as the President of
Baker/Leeds. Mr. Wagner attended Harvard University, completing the Advanced
Management Program (AMP 100). Mr. Wagner performs consulting services for the
Company from time to time.
Steven Madden and John L. Madden are brothers. Except for such
relationship, there are no family relationships among any of the directors or
executive officers of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
OF MS. RHONDA BROWN AND MESSRS. STEVEN MADDEN, ARVIND DHARIA, JOHN BASILE, JOHN
L. MADDEN, PETER MIGLIORINI AND LES WAGNER. UNLESS OTHERWISE INSTRUCTED OR
UNLESS AUTHORITY TO VOTE IS WITHHELD, THE ENCLOSED PROXY WILL BE VOTED FOR THE
ELECTION OF THE ABOVE LISTED NOMINEES.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met four (4) times during the fiscal year ended
December 31, 1997. No incumbent Director attended fewer than 75% of the total
number of Board of Directors meetings. The Board of Directors has standing
Audit, Real Estate and Compensation Committees.
The Audit Committee of the Board of Directors consists of directors
John L. Madden, Les Wagner, and Peter Migliorini, none of whom is an employee of
the Company. This Committee is primarily responsible for reviewing the services
performed by the Company's independent auditors, evaluating the Company's
accounting
4
<PAGE>
policies and its system of internal controls, and reviewing significant finance
transactions.
The Compensation Committee of the Board of Directors consists of
directors Steven Madden, John L. Madden and Peter Migliorini. The Compensation
Committee is primarily responsible for reviewing compensation to be paid to
officers of the Company, and for administering the Company's compensation plans.
The Real Estate Committee of the Board of Directors consists of
directors Steven Madden, Rhonda Brown and Les Wagner. This Committee is
primarily responsible for overseeing real estate transactions for the Company.
In light of the Company's aggressive retail store expansion plan, the Real
Estate Committee was formed to consider proposed real estate transactions for
approval.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company during the year ended December 31, 1997,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were satisfied.
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Certain information concerning the Directors and Executive Officers of
the Company is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ---- --- ----------------------------
<S> <C> <C>
Steven Madden 40 Chairman of the Board,
Chief Executive Officer, and President
Rhonda Brown 42 Chief Operating Officer and Director
Arvind Dharia 48 Chief Financial Officer, Secretary and Director
John Basile 46 Executive Vice President and Director
Gerald Mongeluzo 57 President of Adesso-Madden, Inc.
John L. Madden 51 Director
Peter Migliorini 49 Director
Les Wagner 57 Director
</TABLE>
See "Biographical Summaries of Nominees for the Board of Directors" for
biographical summaries of Ms. R. Brown and Messrs. S. Madden, A. Dharia, J.
Basile, J. Madden, P. Migliorini and L. Wagner.
GERALD MONGELUZO, has been President of Adesso-Madden, Inc., a wholly
owned subsidiary of the Company, since September 1995. Mr. Mongeluzo founded
Prima Shoes, Inc., a buying agent of private label shoes, and served as
President from 1984 to 1987. From 1987-1991, Mr. Mongeluzo was the President of
the Prima Barbaro Division of Cells Enterprise, Inc. Prior to joining the
Company, Mr. Mongeluzo was the founder and President of Adesso Shoes, Inc., a
buying agent of private label shoes.
All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Officers are elected
annually by the Board of Directors and, subject to existing employment
agreements, serve at the discretion of the Board.
Directors receive options to purchase 20,000 shares of Common Stock per
year as compensation for their services. Commencing with fiscal year 1998,
directors who are also officers of the Company will not receive any compensation
for serving on the Board of Directors. All directors are reimbursed by the
Company for any expenses incurred in attending directors' meetings.
There are no family relationships among any of such persons, except
that Steven Madden, the Company's founder, Chairman of the Board and Chief
Executive Officer and President, and John L. Madden, a director of the Company,
are brothers.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth for each of the last three fiscal years ended
December 31, 1997, December 31, 1996 and December 31, 1995 the remuneration paid
by the Company to its Chief Executive Officer and the four other most highly
compensated executive officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- --------------------------------------------------------------------------------------------------------------------
NAME AND FISCAL OTHER ANNUAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) STOCK($) OPTIONS(#) COMPENSATION($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Steven Madden, President 1997 $232,692 $473,496 540,000 $243,395(1)
and Chief Executive 1996 $207,692 $436,458 20,000 $146,785(1)
Officer 1995 $182,692 $423,341 1,000,000
Rhonda Brown, Chief 1997 $208,342 $ 57,500 176,000
Operating Officer 1996 $ 96,153 $ 0.00 60,000
1995 ***** *****
Arvind Dharia, 1997 $117,000 $ 0.00 40,000 $ 86,968(2)
Chief Financial Officer 1996 $165,886 $ 0.00 20,000 $ 48,886(2)
1995 $130,000 $ 0.00 20,000
John Basile 1997 $250,000 $ 81,303 40,000
Director of Operations 1996 $173,786 $178,000 100,000
1995 $135,000 $226,094 100,000
Gerald Mongeluzo 1997 $215,615 $ 29,336 22,500
President, Adesso- 1996 $208,000 $ 0.00 30,000
Madden, Inc. 1995 ***** *****
</TABLE>
- --------------------------
(1) Life insurance premium paid on behalf of Mr. Madden.
(2) Life insurance premium paid on behalf of Mr. Dharia.
7
<PAGE>
The following table sets forth certain information with respect to
options granted during the last fiscal year to the Company's Chief Executive
Officer and the other executive officers named in the above Summary Compensation
Table.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of Securities
Underlying Percent of Total Exercise or
Options/SARS Options/SARS Granted to Base Price
Name Granted(#) Employees in Fiscal Year ($/Sh) Expiration Date
---- ---------- ------------------------ ------ ---------------
<S> <C> <C> <C> <C>
Steven Madden 500,000 [43.4%] 3.31 7/3/2007
20,000 [1.7%] 5.50 7/15/2000
20,000 [1.7%] 6.00 1/2/2000
Rhonda Brown 90,000 [7.8%] 5.50 7/15/2007
66,000 [5.7%] 5.50 7/15/2001
20,000 [1.7%] 6.00 1/2/2000
Arvind Dharia 20,000 [1.7%] 5.50 7/15/2007
20,000 [1.7%] 6.00 1/2/2000
John Basile 20,000 [1.7%] 5.50 7/15/2007
20,000 [1.7%] 6.00 1/2/2000
Gerald Mongeluzo 22,500 [2.0%] 5.50 7/15/2007
----------------
</TABLE>
The following table sets forth certain information with respect to
options exercised during the last fiscal year by the Company's Chief Executive
Officer and the executive officers named in the Summary Compensation Table, and
with respect to unexercised options held by such persons at the end of the last
fiscal year:
8
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
Shares Number of Securities Value of Unexercised in the
Acquired on Value Realized Underlying Unexercised Money Options/SARs at
Name Exercise (#) $ Options/SARS at FY-End (#) FY-End ($) (1)
---- ------------ ------- --------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven Madden 300,000 525,000 520,000 540,000 4,290,000 4,455,000
Rhonda Brown ---- ---- 22,000 154,000 181,000 1,270,500
Arvind Dharia 25,000 137,500 35,000 40,000 288,750 330,000
John Basile ---- ---- 200,000 40,000 1,650,000 330,000
Gerald Mongeluzo ---- ---- 30,000 22,500 247,500 185,625
(1) Based upon a closing bid price on April 3, 1998 of $8.25 per share as reported by The Nasdaq Stock Market.
</TABLE>
9
<PAGE>
1998 STOCK PLAN
As of January 16, 1998, the Board of Directors of the Company, adopted
the 1998 Stock Plan (hereinafter called the "1998 Plan"), subject to approval of
the Company's stockholders. The purpose of the 1998 Plan is to provide a means
whereby directors and selected employees, officers, agents, consultants, and
independent contractors of the Company, may be granted incentive stock options
and/or nonqualified stock options to purchase shares of 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 by encouraging stock ownership in the Company. The 1998 Plan is
expected to provide even greater flexibility to the Company's compensation
methods, after giving due consideration to competitive conditions and the impact
of federal tax laws. See Proposal number 2 - Adoption of the 1998 Stock Plan.
OTHER OPTIONS
In March 1995, the Company issued options to purchase 1,000,000 shares
of its Common Stock to a company wholly owned by the Company's President, Chief
Executive Officer and a stockholder. The options were subsequently transferred
to the President. The options which are fully exercisable, have an exercise
price of $1.75 and an exercise period of 10 years. Unearned compensation was
recorded in the amount of $575,000, which represents the difference between the
exercise price and the fair value of the stock on the date of grant, and was
classified as a component of stockholders' equity. The unearned compensation was
being amortized over four years, however, there was no net charge to earnings
since the amount which would otherwise be recorded as compensation reduced the
President's bonus. If such bonus was not sufficient to offset the amortization
in any of the four years, the President was required to pay to the Company an
amount equal to the shortage. The unamortized portion was charged to operations
in the current year in connection with the President's amended employment
agreement.
EMPLOYMENT AGREEMENTS
In July 1997, the Company entered into a ten (10) year Employment
Agreement with Steven Madden, the Company's founder, Chief Executive Officer,
President and Chairman. The Company agreed to pay Mr. Madden an annual salary of
$275,000 for the two year period commencing January, 1998, $300,000 for the
third year and an incremental increase of ten percent (10%) per annum for each
year thereafter. The agreement provided for payment of a signing bonus of
$200,000, and annual non-accountable expense allowance of $50,000 and use of an
automobile having a retail selling price of no more than $50,000. In addition,
in the event of Mr. Madden's total disability or his death, the Company is
obligated to pay to Mr. Madden's estate an amount equal to the appropriate
salary for the twelve (12) month period immediately subsequent to the date of
total disability or his death. In the event Mr. Madden's employment agreement is
terminated for any reason other than "for cause" or due to his "total
disability", the Company is obligated to pay Mr. Madden the balance of his
salary, fifty percent (50%) upon termination and the remaining fifty percent
(50%) in annual installments
10
<PAGE>
over the life of the agreement. Further, in the event of a "change of control"
of the company, Mr. Madden is entitled to terminate the Employment Agreement and
to receive the balance of his salary upon termination and an amount equal to his
bonus (if any) for the preceding calendar year multiplied by the remaining years
left under his Employment Agreement. Mr. Madden's Employment Agreement contains
other customary provisions.
In July 1996, the Company entered into a three (3) year Employment
Agreement with Rhonda Brown pursuant to which Ms. Brown will serve as the
Company's Chief Operating Officer. The Company agreed to pay Ms. Brown an annual
salary of $200,000 plus a cash bonus based upon the Company's earnings before
the payment of interest and taxes ("EBIT"). The agreement provided that Ms.
Brown received options to purchase 66,000 shares of the Company's Common Stock
at an exercise price equal to the closing bid price of the Company's Common
Stock on June 28, 1996, as quoted on The Nasdaq Stock Market. During the term of
the Agreement, Ms. Brown shall be entitled to receive a cash performance bonus
based upon the Company's consolidated earnings before the payment of interest or
taxes or deduction for depreciation ("EBIT-D") as reflected on the Company's
quarterly reports on Form 10-QSB. By August 31, 1997, 1998 and 1999, Ms. Brown
will be entitled to receive a Cash Bonus equal to four percent (4%) of the
amount by which the aggregate EBIT-D for the four (4) calendar quarters ending
on the most recent June 30th exceed EBIT-D for the four (4) calendar quarters
ending on the preceding June 30th. The agreement also provides that on each
August 30th during the term of the Agreement, Ms. Brown is entitled to receive
options (the "Option Bonus") to purchase a number of shares of Common Stock
equal to the dollar amount of the Cash Bonus. The options comprising the Option
Bonus are exercisable at a price equal to the average closing bid price of the
Company's shares of Common Stock for the five trading days ending on August
29th. The agreement further provides that if at any time during the term of the
agreement, the Company's EBIT-D aggregated over four (4) consecutive fiscal
quarter equals or exceeds $20,000,000, Ms. Brown shall be entitled to receive an
additional bonus equal to two hundred thousand dollars ($200,000). Ms. Brown's
Employment Agreement contains other customary provisions.
In January 1998, the Company entered into a four (4) year Employment
Agreement, subject to automatic extension for one (1) year unless either party
terminates the agreement with ninety (90) days' prior notice, with Arvind
Dharia, pursuant to which Mr. Dharia will serve as the Company's Chief Financial
Officer. The Company agreed to pay Mr. Dharia an annual salary of $140,000
subject to annual incremental increases of ten percent (10%) commencing on the
third anniversary of the Employment Agreement. The agreement provides that Mr.
Dharia receive an option to purchase 25,000 shares of the Company's Common Stock
on June 30 of each year during the term of the agreement. The options are to
vest quarterly over a period of one (1) year and are exercisable at an exercise
price equal to the closing bid price of the Company's Common Stock on June 30 of
each year, as quoted on The Nasdaq Stock Market. If the Company does not extend
the term of Mr. Dharia's Employment Agreement (other than "for cause" or "total
disability"), Mr. Dharia shall receive severance pay equal to three months
salary on the expiration of the agreement. In addition, in the event of Mr.
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Dharia's total disability or death the Company is obligated to pay Mr. Dharia or
his estate an amount equal to the appropriate salary for the twelve (12) month
period immediately subsequent to the date of his total disability or death. In
the event Mr. Dharia's employment agreement is terminated for any reason other
than "for cause" or due to his "total disability", the Company is obligated to
pay Mr. Dharia the balance of his salary and benefits, fifty percent (50%) on
January 1 after the date of termination and the remaining fifty percent (50%)
one year after. Further, in the event of a "change in control" of the Company,
Mr. Dharia is entitled to terminate the Employment Agreement and to receive the
balance of his salary upon termination and an amount equal to his bonus (if any)
for the preceding calendar year multiplied by the remaining years left under his
Employment Agreement plus $200,000 as severance pay. Mr. Dharia's Employment
Agreement contains other customer provisions.
As of January 1998, the Company entered into a three (3) year
Employment Agreement with John Basile pursuant to which Mr. Basile will serve as
the Company's Executive Vice President-Product Development and Design. The
Company agreed to pay Mr. Basile an annual salary of $275,000 subject to an
annual increase of $25,000 on each anniversary of the Employment Agreement. The
agreement provides that Mr. Basile receive an option to purchase 50,000 shares
of the Company's Common Stock on the date of execution of the Employment
Agreement at an exercise price of $7.50 per share. In addition, the agreement
provides that Mr. Basile receive on the date on which the Company's 1998 Stock
Plan is approved by stockholders (and subject to such approval being received)
(a) an option to purchase 200,000 shares of the Company's Common Stock which
options shall vest immediately and are exercisable at an exercise price of $7.50
per share, and (b) an option to purchase 100,000 shares of the Company's Common
Stock which options shall vest on December 31, 1999 and are exercisable at a
price equal to the average closing bid price of he Company's Common Stock for
the five (5) trading days ending two (2) trading days prior to the date of such
stockholder approval. The agreement provides for Mr. Basile to receive a lump
sum payment of $250,000 in the event that the stockholders do not approve the
Company's 1998 Stock Plan. During the term of the Employment Agreement, Mr.
Basile shall be entitled to receive a cash performance bonus based on the annual
earnings of the Company's wholesale division (for the sale of Steve Madden(R)
and David Aaron(R) footwear brands) before the payment of interest and taxes
("Wholesale EBIT"). By March 30, 1998, 1999, 2000 and 2001, Mr. Basile will be
entitled to receive a cash bonus equal to four percent (4%) of Wholesale EBIT
for the fiscal year ending on the December 31 preceding such date, calculated in
accordance with generally accepted accounting principles. The agreement further
provides that if the Company records Wholesale EBIT of not less than an
aggregate of $10,000,000 during any four (4) consecutive fiscal quarters during
the term of the Employment Agreement, Mr. Basile shall be entitled to receive an
additional cash bonus of $100,000 and an option to purchase 100,000 shares of
the Company's Common Stock (subject to the approval of the Company's
stockholders) which options shall vest over a period of five (5) years from the
date of grant and are exercisable at a price equal to the average closing bid
price of the Company's shares of Common Stock for the five (5) trading days
ending two (2) trading days prior to the date of issuance. In the event Mr.
Basile's Employment Agreement is terminated for any reason other than "for
cause" or due to his "total disability", the Company is obligated to pay Mr.
Basile's
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salary through the date of termination and severance compensation equal to the
salary due to Mr. Basile for the remainder of the term of his Employment
Agreement (as if it had not been terminated) together with all options due to be
granted to him under the Employment Agreement. Mr. Basile's Employment Agreement
contains other customary provisions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information as of the Record Date with
respect to the beneficial ownership of the outstanding shares of the Company's
Common Stock by (i) each person known by the Company to beneficially own five
percent or more of the outstanding shares; (ii) the Company's officers and
directors; and (iii) the Company's officers and directors as a group. A person
is deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within sixty (60) days. See
"Compensation of Directors and Executive Officers."
Amount and
Nature of Percentage
Name and Address Beneficial (%) of
Of Beneficial Owner(1) Ownership(2) Class(2)
--------------------- ------------ --------
Steven Madden(3) 1,704,816(4) 18.6%
BOCAP Corp.(5) 1,704,816(6) 18.6%
John Madden(7) --- ---
Arvind Dharia(8) 35,000(9) *
John Basile(10) 450,000(11) 4.9%
Leslie Wagner(12) --- ---
Rhonda Brown(13) 22,000(14) *
Gerald Mongeluzo(15) 30,000(16) *
Peter Migliorini(17) --- ---
EGS Partners, LLC 567,800(18) 6.6%
Bev Partners, L.P. 567,800(18) 6.6%
Jonas Partners, L.P. 567,800(18) 6.6%
Robert F. Greenbaum
and Frances S. Greenbaum 747,550(19) 8.6%
Directors and Officers
as a Group (8 persons) 2,241,816 23.1%
- -----------------
* indicates beneficial ownership of less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Steven Madden, Ltd., 52-16 Barnett Avenue, Long Island City, New York
11104.
(2) Beneficial ownership as reported in the table above has been determined
in accordance with Item 403 of Regulation S-B of the Securities Act of
1933 and Rule 13(d)-3 of the Securities Exchange Act.
(3) Mr. Madden is the Chairman of the Board, Chief Executive Officer and
President of the Company.
(4) Includes (i) 1,184,816 shares of Common Stock held by BOCAP, a
corporation owned by Mr. Madden, (ii) 500,000 shares of Common Stock
issuable upon the exercise of an option held by Mr. Madden at an
exercise price of $1.75 per share, and (iii) 20,000 shares of Common
Stock issuable upon the exercise of
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an option granted to Mr. Madden at an exercise price of $5.50 per
share. See "Executive Compensation-Employment Agreements."
(5) BOCAP Corp. is a company wholly-owned by Steven Madden, the Chairman of
the Board, Chief Executive Officer and President of the Company.
(6) Includes (i) 500,000 shares of Common Stock issuable upon the exercise
of an option held by Mr. Madden at an exercise price of $1.75 per
share, and (ii) 20,000 shares of Common Stock issuable upon the
exercise of an option granted to Mr. Madden, at an exercise price of
$5.50 per share.
(7) John Madden, a director of the Company, is the brother of Steven
Madden.
(8) Mr. Dharia is a Director and the Chief Financial Officer of the
Company.
(9) Includes (i) 15,000 shares of Common Stock issuable upon the exercise
of an option at an exercise price of $5.50 per share, and (ii) 20,000
shares of Common Stock issuable upon the exercise of an option at an
exercise price of $6.00 per share.
(10) Mr. Basile is a director and Executive Vice President of the Company.
(11) Includes (i) 100,000 shares of Common Stock issuable upon the exercise
of options at an exercise price of $5.50, (ii) 100,000 shares of Common
Stock issuable upon the exercise of options at an exercise price of
$7.97, (iii) 50,000 shares of Common Stock issuable upon the exercise
of options at an exercise price of $7.50, and (iv) 200,000 shares of
Common Stock issuable upon the exercise of options (which are subject
to the approval of the Company's stockholders) at an exercise price of
$7.50 per share.
(12) Mr. Wagner is a director of the Company.
(13) Ms. Brown is a Director and the Chief Operating Officer of the Company.
(14) Includes 22,000 shares of Common Stock issuable upon the exercise of
options, at an exercise price of $5.50 per share.
(15) Mr. Mongeluzo is the President of Adesso-Madden, Inc., a subsidiary of
the Company.
(16) Includes 30,000 shares of Common Stock issuable upon the exercise of
options, at an exercise price of $5.50 per share.
(17) Mr. Migliorini is a director of the Company.
(18) Includes shares of Common Stock beneficially owned by members of group
(as defined in Section 13(d) of the Securities Exchange Act of 1934) as
follows: (i) EGS Partners, LLC, 321,500, (ii) EGS Associates, L.P.,
103,500, (iii) Bev Partners, L.P., 64,500, (iv) Jonas Partners, L.P.,
52,500 and (v) 25,800 shares owned by Mr. Jonas Gerstle (a member of
EGS Partners and a general partner of EGS Associates, Bev Partners and
Jonas Partners) and certain member of his family.
(19) Includes 85,340 shares of Common Stock issuable upon the exercise of
85,340 of the Company's Class B Company's Redeemable Common Stock
Purchase Warrants.
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CERTAIN TRANSACTIONS
The Company has been advised by BOCAP, Inc. ("BOCAP"), a company
wholly-owned by Steven Madden, the Company's Chairman of the Board, Chief
Executive Officer and President, that a lawsuit brought by Jordan Belfort in
June 1997 in his capacity as a holder of a promissory note (the "Note") issued
by BOCAP in December 1993 in connection with the purchase by BOCAP of shares of
the Company's Common Stock has been settled amicably. In connection with the
settlement with Mr. Belfort, BOCAP borrowed $2.9 million (the "Loan") from the
Company's factor and pledged 899,000 shares of the Company's Common Stock owned
by BOCAP as collateral for the repayment therefor (the "Pledged Shares"). In
addition, the Company guaranteed BOCAP's obligations under the Loan until the
Pledged Shares were registered for sale to the public or the Loan is repaid in
full, whichever occurred first. A registration statement covering the sale of
the Pledged Shares was declared effective on March 5, 1998.
PROPOSAL TWO
ADOPTION OF THE 1998 STOCK PLAN
As of January 16, 1998 the Board of Directors of the Company, subject
to approval of the Company's stockholders, adopted the 1998 Stock Plan
(hereinafter called the "1998 Plan"). The purpose of the 1998 Plan is to provide
a means whereby directors and selected employees, officers, agents, consultants,
and independent contractors of the Company, or of any parent or subsidiary
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.
A copy of the 1998 Plan is attached as Annex A to this Proxy Statement and the
description of the 1998 Plan set forth below is qualified in its entirety by
reference to the full text of the 1998 Plan.
DESCRIPTION OF THE 1998 PLAN
The maximum number of shares of Common Stock with respect to which
awards may be granted pursuant to the 1998 Plan is initially 1,000,000 shares.
Shares issuable under the 1998 Plan may be either treasury shares or authorized
but unissued shares. The number of shares available for issuance will be subject
to adjustment to prevent dilution in the event of stock splits, stock dividends
or other changes in the capitalization of the Company.
Subject to compliance with Rule 16b-3 of the Securities Exchange Act of
1934, the Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the
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Board shall appoint and/or authorize a committee, such as the Compensation
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". 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.
Options granted under the 1998 Plan may be "incentive stock options"
("Incentive Options") within the meaning of Section 422 of the Code or stock
options which are not incentive stock options ("Non-Incentive Options" and,
collectively with Incentive Options, hereinafter referred to as "Options"). 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.
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 otherwise be issued upon
exercise that number of shares of Common Stock having a fair
market value equal to the option exercise price.
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Upon a Change in Control of the Company, any award carrying a right to
exercise that was not previously exercisable shall become fully exercisable, the
restrictions, deferral limitations and forfeiture conditions applicable to any
other award granted shall lapse and any performance conditions imposed with
respect to awards shall be deemed to be fully achieved.
Awards under the 1998 Plan may not be transferred, pledged, mortgaged,
hypothecated or otherwise encumbered other than by will or under the laws of
descent and distribution, except that the Committee may permit transfers of
awards for estate planning purposes if, and to the extent, such transfers do not
cause a participant who is then subject to Section 16 of the Exchange Act to
lose the benefit of the exemption under Rule 16b-3 for such transactions.
The Board may amend, alter, suspend, discontinue or terminate the 1998
Plan at any time, except that any such action shall be subject to stockholder
approval at the annual meeting next following such Board action if such
stockholder approval is required by federal or state law or regulation or the
rules of any exchange or automated quotation system on which the Common Stock
may then be listed or quoted, or if the Board of Directors otherwise determines
to submit such action for stockholder approval. In addition, no amendment,
alteration, suspension, discontinuation or termination to the 1998 Plan may
materially impair the rights of any participant with respect to any award
without such participant's consent. Unless terminated earlier by action of the
Board of Directors, the 1998 Plan shall terminate ten (10) years after adoption
by the shareholders.
OTHER INFORMATION
The closing bid and ask prices of the Common Stock on the Nasdaq
National Market on April 3, 1998 were $8.25 and $8.375, respectively. No options
or other awards will be effective under the 1998 Plan unless and until the 1998
Plan is approved by Stockholders at the Annual Meeting.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 PLAN.
UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED
IN FAVOR OF THE PROPOSED 1998 PLAN.
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PROPOSAL THREE
REINCORPORATION IN THE STATE OF DELAWARE
GENERAL
For the reasons set forth below, the Board of Directors believes that
the best interests of the Company and its shareholders will be served by
changing the state of incorporation of the Company from New York to Delaware
(the "Reincorporation"). Shareholders are urged to read carefully the following
sections of this Proxy Statement, including the related exhibits, before voting
on the Reincorporation. Throughout this Proxy Statement, the term "Company"
refers to the existing New York corporation and the term "SML Delaware" refers
to the new Delaware corporation, a wholly-owned subsidiary of the Company, that
was formed by the Company in preparation for the Reincorporation and is the
proposed successor to the Company.
The Reincorporation will be effected by merging the Company into SML
Delaware (the "Merger"), which is to be effected in accordance with the terms of
an Agreement and Plan of Merger, a form of which is attached hereto as Annex B
(the "Merger Agreement"). Upon completion of the Merger, (i) the Company will
cease to exist, (ii) SML Delaware will continue to operate the business of the
Company under the name "Steven Madden, Ltd.," (iii) the shareholders of the
Company's Common Stock automatically will become the stockholders of SML
Delaware, (iv) the shareholders will have rights, as stockholders of SML
Delaware and no longer as shareholders of the Company and will be governed by
Delaware law, SML Delaware's Certificate of Incorporation and By-laws rather
than by New York law, the existing Certificate of Incorporation and By-laws of
the Company, (v) warrants and options to purchase shares of the Company's Common
Stock automatically will be converted into warrants or options to acquire an
equal number of equivalent shares of SML Delaware's Common Stock, and (vi) no
change will occur in the name, physical location, business, management, assets,
liabilities or net worth of the Company.
The shareholders' approval of the Reincorporation will constitute their
approval of all of the provisions of SML Delaware's Certificate of Incorporation
and SML Delaware's By-laws, including those provisions relating to the
limitation of director liability and expanded scope of indemnification of
directors, officers and key employees under Delaware law, and including those
provisions having "anti-takeover" implications, which may be significant to the
Company and its shareholders in the future. The governance of SML Delaware by
Delaware law, SML Delaware's Certificate of Incorporation and SML Delaware's
By-laws will or may in the future alter certain rights of the shareholders.
Pursuant to the Merger Agreement, each outstanding share of Company
Common Stock, $.0001 par value, automatically will be converted pro-rata into
one share of SML Delaware Common Stock, $.0001 par value, upon the Effective
Date (as defined below). Each stock certificate representing issued and
outstanding shares of Company Common Stock will continue to represent the same
proportionate number of shares of Common Stock of SML Delaware. IT WILL BE
NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING
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COMPANY STOCK CERTIFICATES FOR SML DELAWARE STOCK CERTIFICATES. See "Exchange of
Shares".
Under New York law, the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Common Stock of the Company is required
for approval of the Merger and the other terms of the Reincorporation. The
Reincorporation has been approved unanimously by the Company's Board of
Directors. If approved by the shareholders, and if certain other conditions set
forth in the Merger Agreement are satisfied, the Reincorporation will become
effective upon the filing of the Merger Agreement and related documentation with
both Delaware's and New York's respective Secretary of State (the "Effective
Date") The Board of Directors intends that the Reincorporation be consummated as
soon as practicable following the Annual Meeting of Shareholders. Nonetheless,
the Merger Agreement allows for the Board of Directors to abandon or postpone
the Reincorporation or to amend the Merger Agreement (except that the principal
terms may not be amended without shareholder approval) either before or after
the shareholders' approval has been obtained and before the Effective Date, if
circumstances arise causing the Board of Directors to deem either such action
advisable.
The discussion set forth below is qualified in its entirety by
reference to the Merger Agreement, the Certificate of Incorporation of SML
Delaware (the "Certificate of Incorporation") and the By-laws of SML Delaware
("By-Laws"), a copy of each of which is attached hereto as Annex B, C and D,
respectively.
VOTE REQUIRED
Approval of the Reincorporation, which also will constitute approval of
the Merger Agreement, the Certificate of Incorporation and the By-laws of SML
Delaware, will require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of the Company's Common Stock entitled to
vote.
PRINCIPAL REASONS FOR THE REINCORPORATION
ADVANTAGES OF DELAWARE CORPORATION LAW.
For many years, Delaware has followed a policy of encouraging
incorporation under its jurisdiction. In furtherance of that policy, Delaware
has long been the leading state in adopting, construing and implementing
comprehensive and flexible corporate laws responsive to the legal and business
needs of corporations. As a result, Delaware's General Corporation Law has
become widely regarded as the most extensive and well-defined body of corporate
law in the United States. Because of Delaware's prominence as the state of
incorporation for many major corporations, both the legislature and courts in
Delaware have demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs. Moreover, the Delaware courts have
rendered a substantial number of decisions interpreting and explaining Delaware
law. The Reincorporation accordingly will be beneficial to the Company in that
it will give the Company (i) a greater degree of predictability and certainty
regarding how the Company's affairs should be conducted in order to comply with
applicable laws (such
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predictability and certainty resulting from a large body of case law decided
under those laws) and (ii) the comfort and security resulting from the Company's
awareness of the responsiveness of Delaware's legislature and courts to the
needs of corporations organized under Delaware's jurisdiction. For these
reasons, many American corporations that have initially chosen their home state
for their state of incorporation have subsequently changed their corporate
domicile to Delaware in a manner similar to the Reincorporation.
ANTI-TAKEOVER IMPLICATIONS.
Delaware, like many other states, permits a corporation to adopt a
number of measures (through amendment of the corporate charter or bylaws or
otherwise) designed to reduce a corporation's vulnerability to unsolicited
takeover attempts. The Reincorporation proposal is not being proposed in order
to prevent any known attempt to acquire control of the Company, obtain
representation on the Board of Directors or take any significant action
affecting the Company. Such anti-takeover measures would enhance the ability of
the Board of Directors to negotiate with an unsolicited bidder. Although
"anti-takeover" measures may be implemented under New York law, substantial
judicial precedent exists in the Delaware courts as to the legal principles
applicable to such defensive measures and as to the conduct of the Board of
Directors under the business judgment rule with respect to unsolicited takeover
attempts, and, in the context of a future unsolicited takeover event, such
precedent will give the Board of Directors greater assurance and confidence that
the defensive strategies and conduct of the Board of Directors are in full
compliance with applicable laws and will be effective under the circumstances.
The Board of Directors believes that unsolicited takeover attempts may
be unfair or disadvantageous to the Company and its shareholders because: (a) a
non-negotiated takeover bid may be timed to take advantage of temporarily
depressed stock prices; (b) a non-negotiated takeover bid may be designed to
foreclose or minimize the possibility of more favorable competing bids; and (c)
a non-negotiated takeover bid may involve the acquisition of only a controlling
interest in the Company's stock, without affording all shareholders the
opportunity to receive the same economic benefits.
By contrast, in a transaction in which an acquirer must negotiate with
an independent board of directors, such board of directors can and should take
account of the underlying and long-term values of the Company's assets, the
possibilities for alternative transactions on more favorable terms, the possible
advantages of a tax-free reorganization, the anticipated favorable developments
in the Company's business not yet reflected in the stock price and the equality
of treatment of all the Company's shareholders.
POSSIBLE DISADVANTAGES
Despite the unanimous belief of the Board of Directors that the
Reincorporation is in the best interests of the Company and its shareholders, it
should be noted that Delaware law has been criticized by some commentators on
the grounds that it does not afford minority shareholders the same substantive
rights and protections as are available in a number of other states. For a
comparison of shareholders' right and the powers of management under Delaware
and New York
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law see "Significant Differences Between the Corporation Laws of New York and
Delaware."
Despite the unanimous belief of the Board of Directors as to the
benefits to shareholders of the Reincorporation, the Reincorporation may be
disadvantageous to the extent that it has the effect of discouraging a future
takeover attempt that is not approved by the Board of Directors but may be
deemed by a majority of the shareholders to be in their best interests (because,
for example, the possible takeover could cause shareholders to receive a
substantial premium for their shares over their then current market value or
over the shareholders' cost basis in such shares). As a result of such effects
of the Reincorporation, shareholders who might wish to participate in a tender
offer may not have an opportunity to do so. In addition, to the extent that the
Reincorporation will enable the Board of Directors to resist a takeover or a
change in control of the Company, the Reincorporation could make it more
difficult to change the existing Board of Directors and management.
NO CHANGE IN THE NAME, BUSINESS OR LOCATION OF THE COMPANY.
The Reincorporation will effect only a change in the legal domicile of
the Company and other changes of a legal nature, certain of which are described
in this Proxy Statement. The Reincorporation will NOT result in any change in
the name, business, management, fiscal year, or location of the principal
facilities of the Company.
THE CHARTERS AND BY-LAWS OF THE COMPANY AND SML DELAWARE
The provisions of the SML Delaware Certificate of Incorporation and
By-laws are similar to those of the Company's Articles of Incorporation and
By-laws. The Reincorporation includes the implementation of certain provisions
in the SML Delaware Certificate of Incorporation and By-laws that are not
included in the Company's Certificate of Incorporation or By-laws, but whose
effect will be to keep essentially intact the rights of shareholders as they
currently exist under the Company's Certificate of Incorporation and By-laws.
The material differences between the Company's Certificate of Incorporation and
By-laws and SML Delaware's Certificate of Incorporation and By-laws are
described below. Certain changes altering the rights of shareholders and power
of management could be implemented in the future by amendment to the Certificate
of Incorporation following shareholder approval, and certain of such changes
could be implemented by amendment of the By-laws of SML Delaware without
shareholder approval. For a discussion of such changes, see "Significant
Differences Between the Corporation Laws of New York and Delaware." Approval by
the shareholders of the Reincorporation will constitute an approval of the
inclusion in the SML Delaware Certificate of Incorporation and By-laws of each
of the provisions described below. This discussion of the Certificate of
Incorporation and By-laws of SML Delaware is qualified by reference to Annex C
and D hereto, respectively.
NUMBER OF DIRECTORS, See "Significant Differences Between the
Corporation Laws of New York and Delaware Number of Directors".
AUTHORIZED STOCK. The Certificate of Incorporation of the Company
authorizes 60,000,000 shares of capital stock, which consist of 60,000,000
shares of Common Stock $.0001
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par value per share. Each share of Common Stock will be converted into one share
of SML Delaware Common Stock. The Certificate of Incorporation of SML Delaware
will provide for 60,000,000 shares of Common Stock, with a $.0001 par value per
share and 5,000,000 shares of Preferred Stock, $.0001 per share.
COMPLIANCE WITH DELAWARE AND NEW YORK LAW.
NEW YORK. Following the Annual Meeting of Shareholders, if the
Reincorporation is approved, the Company will submit the Merger Agreement to the
office of the New York Secretary of State for filing.
DELAWARE. Following the Annual Meeting of Shareholders, if the
Reincorporation is approved, the Company will submit the Merger Agreement to the
office of the Delaware Secretary of State for filing.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEW YORK AND DELAWARE
The Business Corporation Law of New York ("New York Law") and the
General Corporation Law of Delaware ("Delaware Law") differ in many respects. It
is not practical to summarize all of such differences in this Proxy Statement,
but some of the principal differences that could materially affect the rights of
shareholders are discussed below.
CLASSIFICATION OF THE BOARD OF DIRECTORS.
New York Law permits a classified board with as many as four classes
but forbids fewer than three directors in any class.
Delaware Law permits but does not require the adoption of a classified
board of directors pursuant to which the directors can be divided into as many
as three classes, with staggered terms of office and with only one class of
directors coming up for election each year. Unless otherwise provided for in a
certificate of incorporation, Delaware Law provides that directors who serve on
a classified board can only be removed with cause. The new Certificate of
Incorporation does not provide for such a classified board and does not
contradict the statute with regard to removal.
SHAREHOLDER VOTE FOR MERGERS; ANTI-TAKEOVER PROVISIONS.
Delaware Law relating to mergers and other corporate reorganizations
differs from New York Law in a number of respects.
New York Law requires that a plan of merger or disposition of all or
substantially all assets not in the usual or regular course of business be
approved by the holders of two-thirds of all outstanding shares entitled to
vote.
Under Delaware Law, holders of only a majority (as opposed to
two-thirds under New York Law) of all outstanding shares entitled to vote must
approve a merger or dispositions of all
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or substantially all assets. Furthermore, Delaware Law does not require a
shareholder vote of the surviving corporation in a merger if (a) the merger
agreement does not amend the existing certificate of incorporation, (b) each
outstanding share of the surviving corporation before the merger is unchanged or
becomes a treasury share of the surviving corporation, and (c) the number of
additional shares to be issued by the surviving corporation in the merger does
not exceed 20% of the shares outstanding immediately prior to such issuance.
New York Law contains certain anti-takeover provisions that prohibit
any "business combination" between a "domestic corporation" and an "interested
shareholder" for five years after the date that the interested shareholder
became an interested shareholder unless prior to that date the board of
directors of the domestic corporation approved the business combination or the
transaction that resulted in the interested shareholder becoming an interested
shareholder. After five years, such a business combination is permitted only if
(i) it is approved by a majority of the shares not owned by, or by an affiliate
of, the interested shareholder or (ii) certain statutory fair price requirements
are met. New York Law defines "domestic corporation" as any corporation that (x)
is incorporated in New York, and, (y) has its principal executive offices and
significant business operations in New York or has at least 250 or 25% of its
employees in New York (including employees of its 80% subsidiaries) and (z) has
a least 10% of its stock beneficially owned by New York residents. The Company
is currently a New York "domestic corporation" under this definition. An
"interested shareholder" is any person who beneficially owns, directly or
indirectly 20% or more of the outstanding voting stock of the corporation.
Delaware Law contains certain anti-takeover provisions that prohibit
any business combination between a Delaware corporation and an "interested
shareholder" for three years following the date that the interested shareholder
became an interested shareholder unless (i) prior to that date the board
approved the business combination or the transaction that resulted in the
interested shareholder becoming an interested shareholder, (ii) upon
consummation of the transaction that resulted in the interested shareholder
becoming an interested shareholder, the interested shareholder held at least 85%
of the outstanding voting stock of the corporation (not counting shares owned by
officers and directors), or (iii) on or subsequent to such date the business
combination is approved by the board and at least two-thirds of the outstanding
shares of voting stock not owned by the interested shareholder. The Delaware
statute defines "interested shareholder" as any person who beneficially owns,
directly or indirectly, 15% or more of outstanding voting stock of the
corporation. Unlike New York, Delaware does not require that the corporation's
principal executive offices or significant operations or employees be located in
Delaware in order to enjoy the protection of the law.
NUMBER OF DIRECTORS.
Under Delaware Law, a board of directors may fix or change the
authorized number of directors pursuant to a provision of the by-laws. The power
to do so is specifically recognized in the New York By-Laws. Under New York Law,
provided that the number of directors be not less than three, any higher number
may be fixed by the by-laws or by action of the shareholders or of the board
under specific provisions of the by-laws adopted by the shareholders.
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SHAREHOLDER ACTION BY WRITTEN CONSENT.
New York Law permits shareholder action in lieu of a meeting only if
all the shareholders who would have been entitled to vote upon a given action if
a meeting were held on such action consent in writing to such action. Delaware
Law permits shareholder action in lieu of a meeting upon the consent of holders
of the minimum number of votes that would be necessary to take an action, unless
otherwise prohibited by the certificate of incorporation. The new Certificate of
Incorporation does not prohibit such shareholder action by written consent.
INSPECTION OF SHAREHOLDERS' LIST.
New York Law with respect to the inspection of shareholder's lists
provides a right of inspection to any person who shall have been a shareholder
for at least 6 months immediately proceeding his or her demand for any person
holding at least 5% of a class of outstanding shares on at least 5 days' written
demand. The corporation has certain rights calculated to assure itself that the
demand for inspection is not for a purpose or interest other than that of the
corporation. Delaware Law permits any shareholder to inspect the shareholder's
list for a purpose reasonably related to such person's interest as a shareholder
and, during the 10 days preceding the shareholder's meeting, for any purpose
germane to that meeting.
PAYMENT OF DIVIDENDS.
Delaware Law permits the payment of dividends out of surplus or, if
there is no surplus, out of net profits for the current and preceding fiscal
years (provided that the amount of capital of the corporation is not less than
the aggregate amount of the capital represented by the issued and outstanding
stock of all classes having a preference upon a distribution of assets). In
addition, Delaware Law generally provides that a corporation may redeem or
repurchase its shares only if such redemption or repurchase would not impair the
capital of the corporation. The ability of a Delaware corporation to pay
dividends on, or to make repurchases or redemptions of, its shares is dependent
upon the financial status of the corporation standing alone and not on a
consolidated basis. In determining the amount of surplus of a Delaware
corporation, the assets of the corporation, including stock of subsidiaries
owned by the corporation, must be valued at their fair market value as
determined by the board of directors, without regard to their historic book
value.
Under New York Law dividends may be declared and distributions may be
made out of surplus only, so that the net assets of the corporation remaining
after such declaration, payment or distribution shall at least equal the amount
of its stated capital. When any dividend is paid or any other distribution is
made, in whole or in part, from sources other than earned surplus, it shall be
accompanied by a written notice (1) disclosing the amounts by which such
dividend or distribution affects stated capital, capital surplus and earned
surplus, or (2) is such amounts are not determinable at the time of such notice,
disclosing the approximate effect of such dividend or distribution upon stated
capital, capital surplus and earned surplus and stating that such amounts are
not yet determinable.
APPLICATION OF BUSINESS CORPORATION LAW OF NEW YORK TO DELAWARE CORPORATION
New York Law provides that if the Delaware company conducts local
business in New York, then the Delaware company must apply for authority to do
business in New York and will
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become subject to certain provisions of New York Law regardless of its state of
incorporation and can sue and be sued in the New York courts. The Delaware
company would continue to be subject to such provisions until its authority to
do business is surrendered, suspended or annulled.
If the Delaware company were to become subject to the provisions of New
York Law referred to above, and such provisions were enforced by New York courts
in a particular case, many of the Delaware laws described in this Proxy
Statement would not apply to the Delaware company. Instead, the Delaware company
could be governed by certain New York laws.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax
consequences to holders of Company Common Stock who receive SML Delaware Common
Stock in exchange for their Company Common Stock as a result of the
Reincorporation. The discussion does not address all the tax consequences of the
Reincorporation that may be relevant to particular Company shareholders, such as
dealers in securities.
In view of the varying nature of such tax consequences, each
shareholder is urged to consult his or her own tax advisor as to the specific
tax consequences of the Reincorporation with respect to such shareholder,
including the applicability of federal, state, local or foreign tax laws.
The Reincorporation will constitute a tax-free reorganization under the
Internal Revenue Code. No gain or loss will be recognized by holders of Company
Common Stock upon receipt of Common Stock of SML Delaware pursuant to the
Reincorporation. The tax basis of the Common Stock of SML Delaware received by
each shareholder will be the same as the aggregate tax basis of the Company's
Common Stock of SML Delaware held by such shareholder at the time of the
Reincorporation. The holding period of the Common Stock of SML Delaware received
by each shareholder of SML Delaware will include the period for which such
shareholder held the Common Stock of the Company surrendered in exchange
therefore, provided that such SML Delaware Common Stock was held by such
shareholder as a capital asset at the time of the Reincorporation.
State, local or foreign income tax consequences to shareholders may
vary from the federal tax consequences described above.
The Company should not recognize gain or loss for federal tax purposes
as a result of the Reincorporation, and SML Delaware should succeed, without
adjustment, to the federal income tax attributes of the Company.
REGULATORY REQUIREMENTS
In connection with the Reincorporation, the Company will be required to
comply with certain state securities and corporate laws and regulations. It is
anticipated that the Company will comply with such requirements either before or
immediately following approval of the Reincorporation by the shareholders.
EXCHANGE OF STOCK CERTIFICATES.
If the Merger is consummated, the Company will file its Certificate of
Merger with the
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Secretary of State of the State of Delaware promptly after the Annual Meeting.
The Company's transfer agent will act as its exchange agent (the "Exchange
Agent") to act for holders of Common Stock in implementing the exchange of their
certificates.
As soon as practicable after the Effective Date, stockholders will be
notified and requested to surrender their certificates representing shares of
Company Common Stock to the Exchange Agent in exchange for certificates
representing SML Delaware Common Stock. One share of SML Delaware Common Stock
will be issued in exchange for each one presently issued and outstanding share
of Common Stock. Beginning the Effective Date, each certificate representing
shares of the Company's Common Stock will be deemed for all corporate purposes
to evidence ownership of shares of SML Delaware Common Stock.
DISSENTING SHAREHOLDERS' RIGHTS OF APPRAISAL
Under New York Law, dissenting shareholders of the Company will not be
entitled to appraisal rights if the proposed Merger is consummated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO CHANGE
THE STATE OF INCORPORATION OF THE COMPANY FROM NEW YORK TO DELAWARE BY MEANS OF
A MERGER OF THE COMPANY WITH AND INTO A WHOLLY-OWNED DELAWARE SUBSIDIARY. UNLESS
MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED IN
FAVOR OF THE proposal.
PROPOSAL FOUR
RATIFICATION OF SELECTION OF THE FIRM OF RICHARD A. EISNER & COMPANY, LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
The Board of Directors upon recommendation of the members of the Audit
Committee, concluded that the continued engagement of Richard A. Eisner &
Company, LLP as the Company's independent public accountants for the 1998 fiscal
year was in the best interests of the Company. The Board of Directors recommends
that Stockholders ratify its choice of Richard A. Eisner & Company, LLP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF RICHARD A. EISNER & COMPANY, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE COMPANY. UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM
STOCKHOLDERS WILL BE VOTED IN FAVOR OF THE PROPOSED AMENDMENT.
UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED
IN FAVOR OF THE PROPOSED AMENDMENT.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any Stockholder wishes to present a proposal for inclusion in the proxy
materials to be
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solicited by the Company's Board of Directors with respect to the 1998 Annual
Meeting of Stockholders, that proposal must be presented to the Company's
secretary prior to December 1, 1998.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE A
STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN PERSON,
YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
STEVEN MADDEN, LTD.
April 22, 1998 By: /s/ STEVEN MADDEN
-----------------------------------------
Steven Madden, Chairman of the Board,
President and Chief Executive Officer
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ANNEX A
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
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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.
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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
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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.
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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
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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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ANNEX B
PLAN AND AGREEMENT OF MERGER
AGREEMENT AND PLAN OF MERGER approved on ____________, 1998, by Steven
Madden, Ltd., a business corporation organized under the laws of the State of
New York, and by its Board of Directors on said date ("Madden N.Y."), and
approved on __________, 1998 by Steven Madden, Ltd., a business corporation
organized under the laws of the State of Delaware, and by its Board of Directors
on said date ("Madden Del.").
1. Madden N.Y. and Madden Del. shall pursuant to the
provisions of the New York Business Corporation Law and the
provisions of the laws of the jurisdiction of organization
of Madden Del., be merged with and into a single
corporation, to wit, Madden Del., which shall be the
surviving corporation upon the effective date of the merger
and which is sometimes hereinafter referred to as the
"surviving corporation", and which shall continue to exist
as said surviving corporation under its present name
pursuant to the provisions of the laws of the jurisdiction
of its organization. The separate existence of Madden N.Y.,
which is sometimes hereinafter referred to as the
"terminating corporation", shall cease upon the effective
date of the merger in accordance with the provisions of the
New York Business Corporation Law.
2. The certificate of incorporation of the surviving
corporation upon the effective date of the merger in the
jurisdiction of its organization shall be the certificate of
incorporation of said surviving corporation; and said
certificate of incorporation shall continue in full force
and effect until amended and changed in the manner
prescribed by the provisions of the laws of the jurisdiction
of organization of the surviving corporation.
3. The by-laws of the surviving corporation upon the
effective date of the merger in the jurisdiction of its
organization will be the by-laws of said surviving
corporation and will continue in full force and effect until
changed, altered, or amended as therein provided and in the
manner prescribed by the provisions of the laws of the
jurisdiction of its organization.
4. The directors and officers in office of the surviving
corporation upon the effective date of the merger in the
jurisdiction of its organization shall be the members of the
first Board of Directors and the first officers of the
surviving corporation, all of whom shall hold their
directorships and offices until the election and
qualification of their respective successors or until their
tenure is otherwise terminated in accordance with the
by-laws of the surviving corporation.
5. The number of outstanding shares of the terminating
corporation is ______________shares, all of which are of one
class and are common shares and all of which are entitled to
vote.
Each issued share of the terminating corporation shall, upon
the effective date
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of the merger, be converted into one (1) share of the surviving corporation. The
issued shares of the surviving corporation shall not be converted in any manner,
but each said share which is issued as of the effective date of the merger shall
continue to represent one issued share of the surviving corporation.
6. The Agreement and Plan of Merger herein made and
approved shall be submitted to the shareholders of the
terminating corporation for their approval or rejection in
the manner prescribed by the provisions of the New York
Business Corporation Law, and the merger of the terminating
corporation with and into the surviving corporation shall be
authorized in the manner prescribed by the laws of the
jurisdiction of organization of the surviving corporation.
7. In the event that the Agreement and Plan of Merger
shall have been approved by the shareholders entitled to
vote of the terminating corporation in the manner prescribed
by the provisions of the New York Business Corporation Law,
and in the event that the merger of the terminating
corporation with and into the surviving corporation shall
have been duly authorized in compliance with the laws of the
jurisdiction of organization of the surviving corporation,
the terminating corporation and the surviving corporation
hereby stipulate that they will cause to be executed and
filed and/or recorded any document or documents prescribed
by the laws of the State of New York and of the State of
Delaware, and that they will cause to be performed all
necessary acts therein and elsewhere to effectuate the
merger.
8. The Board of Directors and the proper officers of the
terminating corporation and of the surviving corporation,
respectively, are hereby authorized, empowered and directed
to do any and all things, and to make, execute, deliver,
file, and/or record any and all instruments, papers, and
documents which shall be or become necessary, proper, or
convenient to carry out or put into effect any of the
provisions of this Agreement and Plan of Merger or of the
merger herein provided for.
9. The effective date in the State of New York of the
merger herein provided for shall be the date of filing of
the Certificate of Merger.
IN WITNESS WHEREOF, each of the constituent corporations are
executing this Agreement and Plan of Merger as of the ___ day of ________, 1998.
STEVEN MADDEN, LTD. (a New York Corporation)
By: ________________________________________
Name:
Title:
STEVEN MADDEN, LTD. (a Delaware Corporation)
By: ________________________________________
Name:
Title:
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Title: ANNEX C
CERTIFICATE OF INCORPORATION OF SML DELAWARE
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is Steven Madden, Ltd.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 1013 Centre
Road, Wilmington, Delaware 19805-1297; and the name of the registered agent of
the corporation in the State of Delaware at such address is CSC The United
States Corporation Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is sixty five million, which are
divided into five million shares of Preferred Stock of a par value of one tenth
of a mill ($.0001) each and sixty million shares of Common Stock of a par value
of one tenth of a mill ($.0001) each.
The shares of Preferred Stock may be issued from time to time in one or
more series, in any manner permitted by law, as determined from time to time by
the Board of Directors, and stated in the resolution or resolutions providing
for the issuance of such shares adopted by the Board of Directors pursuant to
authority hereby vested in it. Without limiting the generality of the foregoing,
shares in such series shall have such voting powers, full or limited, or no
voting powers, and shall have such designations, preferences and relative,
participating, optional, or other special rights, and qualifications,
limitations, or restrictions thereof, permitted by law, as shall be stated in
the resolution or resolutions providing for the issuance of such shares adopted
by the Board of Directors pursuant to authority hereby vested in it. The number
of shares of any such series so set forth in such resolution or resolutions may
be increased (but not above the total number of authorized shares of Preferred
Stock) or decreased (but not below the number of shares thereof then
outstanding) by further resolution or resolutions adopted by the Board of
Directors pursuant to authority hereby vested in it.
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No holder of any of the shares of the stock of the corporation, whether
now or hereafter authorized and issued, shall be entitled as of right to
purchase or subscribe for any unissued stock of any class, or any additional
shares of any class to be issued by reason of any increase of the authorized
capital stock of any class of the corporation, or bonds, certificates of
indebtedness, debentures, or other securities convertible into stock of any
class of the corporation, or carrying any right to purchase stock of any class
of the corporation, but any such unissued stock or any such additional
authorized issue of any stock or of other securities convertible into stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations, or
associations, and upon such terms, as may be deemed advisable by the Board of
Directors in the exercise of its discretion.
FIFTH: The name and mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss. 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
ss. 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of the
corporation
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shall be vested in its Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed by, or in the manner
provided in, the Bylaws. The phrase "whole Board" and the phrase "total number
of directors" shall be deemed to have the same meaning, to wit, the total number
of directors which the corporation would have if there were no vacancies. No
election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of ss. 109 of the General Corporation Law of the State of Delaware,
and, after the corporation has received any payment for any of its stock, the
power to adopt, amend, or repeal the Bylaws of the corporation may be exercised
by the Board of Directors of the corporation; provided, however, that any
provision for the classification of directors of the corporation for staggered
terms pursuant to the provisions of subsection (d) of ss. 141 of the General
Corporation Law of the State of Delaware shall be set forth in an initial Bylaw
or in a Bylaw adopted by the stockholders entitled to vote of the corporation
unless provisions for such classification shall be set forth in this certificate
of incorporation.
3. Whenever the corporation shall be authorized to issue only one class
of stock, each outstanding share shall entitle the holder thereof to notice of,
and the right to vote at, any meeting of stockholders. Whenever the corporation
shall be authorized to issue more than one class of stock, no outstanding share
of any class of stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the right to
vote at any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of ss. 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss. 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of SS 145 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
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ELEVENTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
Signed on _______________, 1998.
_______________________________
Incorporator
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ANNEX D
BY-LAWS OF SML DELAWARE
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in
the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions
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are determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
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are recorded. Delivery made to the corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested. If no record
date has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the
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corporation in the State of Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the
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stock ledger, the list required by this section or the books of the corporation,
or to vote at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the stockholders.
The Secretary of the corporation, or in his absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present the Chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions of
that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders
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present may adjourn the meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of two persons. Thereafter the number
of directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be two. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal.
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Any director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal. Except as the General Corporation Law may otherwise
require, in the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of directors and/or for the
removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except
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as otherwise provided by the General Corporation Law, the vote of the majority
of the directors present at a meeting at which a quorum is present shall be the
act of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these Bylaws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
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ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to him. Any officer may be removed,
with or without cause, by the Board of Directors. Any vacancy in any office may
be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
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ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the Bylaws of Steven Madden, Ltd., a Delaware corporation, as in effect on
the date hereof.
Dated:
___________________________________________
Arvind Dharia, Secretary
(SEAL)
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<PAGE>
STEVEN MADDEN, LTD. PROXY
STEVEN MADDEN, LTD.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING EITHER THE PROXY (THE "PROXY")
[FOR] OR [AGAINST] BOX NEXT TO EACH OF THE THREE (3) PROPOSALS
The undersigned hereby appoint(s) Mr. Steven Madden with the power of
substitution and resubstitution to vote any and all shares of capital stock of
Steven Madden, Ltd. (the "Company") which the undersigned would be entitled to
vote as fully as the undersigned could do if personally present at the Annual
Meeting of the Company, to be held on May 22, 1998, at 10:00 A.M. local time,
and at any adjournments thereof, hereby revoking any prior proxies to vote said
stock, upon the following items more fully described in the notice of any proxy
statement for the Annual Meeting (receipt of which is hereby acknowledged):
1. ELECTION OF DIRECTORS
VOTE
[ ] FOR ALL nominees list below EXCEPT as marked to the
contrary below
[ ] WITHHOLD AUTHORITY to vote for ALL nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee strike a line through the nominee's name below.)
[ ] ABSTAIN
Steven Madden, Rhonda J. Brown, Arvind Dharia, John L. Madden, John Basile, Les
Wagner, and Peter Migliorini.
2. ADOPTION OF THE 1998 STOCK PLAN
[ ] FOR the adoption of the 1998 Stock Plan
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
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<PAGE>
3. REINCORPORATION IN DELAWARE
[ ] FOR the reincorporation in the State of Delaware
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
4. RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP. AS
INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL YEAR 1998.
[ ] FOR the ratification of the appointment of Richard A. Eisner &
Company, LLP.
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE SEVEN (7) NOMINEES NAMED
IN ITEM 1, THE ADOPTION OF THE 1998 STOCK PLAN IN ITEM 2, THE REINCORPORATION OF
THE COMPANY IN DELAWARE IN ITEM 3 AND THE RATIFICATION OF THE APPOINTMENT OF
RICHARD A. EISNER & CO., LLP. AS INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL
YEAR 1998 IN ITEM 4.
In his discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
Please mark, sign date and return this Proxy promptly using the
accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF STEVEN MADDEN, LTD.
Dated:_____________________
___________________________
Signature
___________________________
Signature if jointly owned:
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<PAGE>
___________________________
Print name:
Please sign exactly as the name appears on
your stock certificate. When shares of
capital stock are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee, guardian,
or corporate officer, please include full
title as such. If the shares of capital stock
are owned by a corporation, sign in the full
corporate name by an authorized officer. If
the shares of capital stock are owned by a
partnership, sign in the name of the
partnership by an authorized officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
3
