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)
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
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2) Aggregate number of securities to which transaction applies:
N/A
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
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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
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2) Form, Schedule or Registration Statement No.:
N/A
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3) Filing Party:
N/A
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4) Date Filed:
N/A
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<PAGE>
STEVEN MADDEN, LTD.
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1999
----------------------------------------
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 Delaware corporation (the
"Company"), will be held on June 4, 1999, 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 eight (8) directors to the Board of the Company for a
one (1) year term;
2. To approve the adoption of the Company's 1999 Stock Plan;
3. To ratify the appointment of Richard A. Eisner & Company, LLP
as independent auditors of the Company for fiscal year 1999;
and
4. 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 23, 1999 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
/s/ STEVEN MADDEN
-----------------------------------------------------
May 4, 1999 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
Delaware 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 on June 4, 1999 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 eight (8) directors to the Board of
Directors of the Company for a one (1) year term, (ii) to approve the adoption
of the Company's 1999 Stock Plan, (iii) to ratify the appointment of Richard A.
Eisner & Company, LLP as independent auditors of the Company for fiscal year
1999, and (iv) 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 judgment. 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 23, 1999 (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 May 4, 1999. The Company's Annual Report for the fiscal year
ended December 31, 1998, 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 10,944,843 shares of
Common Stock held by approximately 84 holders of record and 4,000 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 1999
1
<PAGE>
Stock Plan described in Proposal 2 and the ratification of the appointment of
Richard A. Eisner & Company, LLP as independent auditors of the Company for
fiscal year 1999 described in Proposal 3 must be approved by the affirmative
vote of the holders of a majority of the total votes cast on such proposal in
person or by proxy. Abstentions and broker non-votes will have no effect with
respect to any of the Proposals. BROKERS WHO HOLD SHARES IN STREET NAME MAY VOTE
ON BEHALF OF BENEFICIAL OWNERS WITH RESPECT TO PROPOSALS 1,2 AND 3. 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 EIGHT 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 one (1)
director, 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 eight (8) 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 eight (8) candidates to serve as directors
all of whom are currently directors. The names and biographical summaries of the
eight (8) 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 eight (8) 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.
JOHN BASILE was the Director of Operations of the Company from
June 1994 through December 1997 and the Company's Executive Vice President since
January 1998. Mr. Basile has been 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.
CHARLES KOPPELMAN has been a director of the Company since June
1998. Since February 4, 1998, Mr. Koppelman has been the Chairman and Chief
Executive Officer of CAK Universal Credit Corp., a joint venture created with
Prudential Securities to provide financing to the entertainment, sports and
licensing industries. From 1988 to 1997, Mr. Koppelman served as the Chairman
and Chief Executive Officer of EMI Capital Music, N.A.
JOHN L. MADDEN has been a Director of the Company since the
Company's inception. 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 was employed by 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
and the Vice President-Real Estate for Steven Madden Retail, Inc. since January
1, 1999. Mr. Wagner has served in a number of 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). From 1996 through 1998, Mr. Wagner performed
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.
4
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF MS. RHONDA BROWN AND MESSRS. STEVEN MADDEN, ARVIND DHARIA, JOHN
BASILE, CHARLES KOPPELMAN, 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.
DIRECTOR COMPENSATION
Directors who are also employees of the Company are not paid any
fees or other remuneration, as such, for service on the Board or any of its
Committees. Each non-employee director receives an annual grant of an option to
purchase 10,000 shares of Common Stock at an exercise price per share equal to
the fair market value of the Common Stock on the date of grant. In addition,
non-employee directors are reimbursed by the Company for all expenses related to
attending meetings.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met three (3) times during the fiscal year
ended December 31, 1998. 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 was an
employee of the Company during 1998. Effective January 1, 1999, Mr. Wagner
commenced his employment with the Company. This Committee is primarily
responsible for reviewing the services performed by the Company's independent
auditors, evaluating the Company's accounting policies and its system of
internal controls, and reviewing significant finance transactions.
The Compensation Committee of the Board of Directors consists of
directors Charles Koppelman, John Madden and Peter Migliorini. The Compensation
Committee is primarily responsible for approving salaries, bonuses and other
compensation for the Company's Chief Executive Officer and named executive
officers, reviewing management recommendations relating to new incentive
compensation plans and changes to existing incentive compensation plans, and for
administering the Company's stock plans, including granting options and setting
the terms thereof pursuant to such plan (all subject to approval by the Board of
Directors).
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
5
<PAGE>
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, 1998, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were satisfied.
DIRECTORS AND EXECUTIVE OFFICERS
Certain information concerning the Directors and Executive
Officers of the Company is set forth below:
Name Age Position(s) With the Company
- - ---- --- ----------------------------
Steven Madden 42 Chairman of the Board, Chief Executive Officer,
and President
Rhonda Brown 43 Chief Operating Officer and Director
Arvind Dharia 49 Chief Financial Officer, Secretary and Director
John Basile 47 Executive Vice President and Director
Les Wagner 58 Vice President-Real Estate of Steven Madden
Retail, Inc. and Director
Gerald Mongeluzo 58 President of Adesso-Madden, Inc.
Charles Koppelman 51 Director
John L. Madden 52 Director
Peter Migliorini 50 Director
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, C. Koppelman, 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.
6
<PAGE>
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.
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.
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, 1998, December 31, 1997 and December 31, 1996 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 COMPENSATION
ANNUAL COMPENSATION
-----------------------------------------------------------------------------
NAME AND FISCAL AWARDS OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) COMPENSATION
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Steven Madden, President 1998 $274,231 $ 0.00 191,189 $315,394(2)
and Chief Executive 1997 $232,692 $473,496 540,000 $243,395(2)
Officer 1996 $207,692 $436,458 20,000 $146,785(2)
Rhonda Brown, Chief 1998 $236,888 $242,493 188,811
Operating Officer 1997 $208,342 $ 57,500 176,000
1996 $ 96,153 $ 0.00 60,000
Arvind Dharia, 1998 $140,000 $ 46,561 32,000 $ 86,891(3)
Chief Financial Officer 1997 $117,000 $ 0.00 40,000 $ 86,968(3)
1996 $165,886 $ 0.00 20,000 $ 48,886(3)
John Basile 1998 $274,711 $189,000 250,000
Director of Operations 1997 $250,000 $ 81,303 40,000
1996 $173,786 $178,000 100,000
Gerald Mongeluzo 1998 $230,992 $ 35,000 50,000
President, Adesso- 1997 $215,615 $ 29,336 22,500
Madden, Inc. 1996 $208,000 $ 0.00 30,000
</TABLE>
- - -------------
(1) Options to purchase shares of Common Stock.
(2) Life insurance premium paid on behalf of Mr. Madden.
(3) Life insurance premium paid on behalf of Mr. Dharia.
7
<PAGE>
The following table sets forth certain 1998 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 Percent of Total Exercise or Base
Underlying Options/sars Granted to Price
Name Options/SARs Granted Employees in Fiscal Year% ($/Sh) Expiration Date
- - ---- -------------------- ------------------------- ------ ---------------
(#)
<S> <C> <C> <C> <C> <C>
Steven Madden 161,189 15.5 6.00 10/16/03
30,000 2.9 5.50 5/31/05
Rhonda Brown 188,811 18.2 7.69 8/30/03
Arvind Dharia 25,000 2.4 6.00 10/16/03
7,000 0.7 5.50 5/31/05
John Basile 250,000 24.1 7.50 7/15/07
Gerald Mongeluzo 50,000 4.8 10.25 5/22/03
</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:
<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>
Steven Madden 100,000 520,041 1,251,189 ---- 6,643,813 ----
Rhonda Brown 22,000 108,125 226,406 116,405 416,587 214,185
Arvind Dharia 25,000 113,313 107,000 ---- 302,810 ----
John Basile ---- ---- 490,000 ---- 715,400 ----
Gerald Mongeluzo ---- ---- 52,500 50,000 35,700 34,000
</TABLE>
- - ----------------
(1) Based upon a closing price on December 31, 1998 of $8.50 per share as
reported by The Nasdaq Stock Market.
8
<PAGE>
1999 STOCK PLAN
As of March 15, 1999, the Board of Directors of the Company,
adopted the 1999 Stock Plan (the "1999 Plan"), subject to approval of the
Company's stockholders. The purpose of the 1999 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 1999 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 1999 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 prior year in connection with the President's
amended employment agreement.
In October 1998, the Company issued options exercisable for
30,000 shares of common stock at an exercise price of $4.00 per share to a
former consultant to the Company in connection with the settlement of a dispute
with such consultant concerning the payment of compensation. The options expire
on October 31, 2001.
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 year commencing January, 2000 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
9
<PAGE>
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 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 10% annual increase in the base salary. 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. Ms. Brown is entitled to receive a cash bonus equal to four percent (4%)
of the amount by which the aggregate EBIT-D (earnings before the payment of
interest or taxes or a deduction for depreciation) 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 provided
that on each August 30th during the term of the Agreement, Ms. Brown was
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). As of May 1, 1998, the Company and Ms. Brown amended her employment
agreement so that her annual base salary increase will be reduced from 10% per
annum to 5% per annum commencing on July 1, 2000. In addition, in the event that
a "change of control" of the Company occurs without Ms. Brown's consent, she is
entitled to receive an amount equal to the greater of (i) the balance of the
Base Salary during the remainder of the Term, and (ii) the Base Salary for two
years and Ms. Brown's most recent annual bonus multiplied by the number of years
remaining under the agreement. As of March 15, 1999, the Company and Ms. Brown
executed a second amendment to her employment agreement. The most recent
amendment accelerates the reduction in her annual base salary increase from July
1, 2000 to July 1, 1999 and reduces by one half (1/2) the number of the options
issuable as an Option Bonus. 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
10
<PAGE>
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. 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
customary 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
provided 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)
11
<PAGE>
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 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.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") is responsible for reviewing
and approving the Company's compensation policies and the compensation paid to
its executive officers, including the Chief Executive Officer and the other
named executive officers. The Compensation Committee is comprised of Charles
Koppelman, Peter Migliorini and John Madden each of whom are non-employee
Directors of the Company.
The Compensation Committee's goal is to develop executive compensation
policies and practices that are consistent with and linked to the Company's long
term goal of maximizing shareholder value. The program is designed to facilitate
the long-term success and growth of the Company through the attraction,
motivation, and retention of outstanding executives.
The objectives of the Company's executive compensation programs are to:
(i) attract and retain the highest quality executives, (ii) inspire and motivate
executive officers to increase Company performance, (iii) align executive
officers' financial interest with those of the Company's long-term investors and
(iv) reward executive officers for exceptional individual contributions to the
achievement of the Company's objectives.
Executive compensation consists of three components: base salary,
annual incentive bonuses and long-term incentive awards (stock options). Each
compensation component is offered to executives in varying combinations,
structured in each case, to meet varying business objectives and to provide a
level of total compensation comparable to similarly situated public companies.
The Company has negotiated employment agreements with respect to base
salary, annual incentive awards and stock option awards for each of the
Company's named executive officers based upon the Company's performance and
individual performance.
Steven Madden, the Company's Chairman of the Board, President and Chief
Executive Officer, is eligible to participate in the same compensation plans
available to the other executive officers.
The Internal Revenue Code of 1986 prohibits the Company from taking a
tax deduction in any year for compensation paid the persons who would be named
executive officers in that year in excess of $1 million unless such compensation
is "performance-based compensation." The Company did not pay in 1998 any officer
compensation which will be subject to the $1 million deduction limitation. The
Compensation Committee will take into consideration the $1 million deduction
limitation when structuring future compensation packages for the Company's
executive
12
<PAGE>
officers and, if appropriate and in the best interests of the Company, will
conform such packages to permit the Company to take a deduction for the full
amount of all compensation.
COMPENSATION COMMITTEE
Charles Koppelman
John Madden
Peter Migliorini
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock during the period
beginning on December 10, 1993 (the date on which the Common Stock began trading
on The Nasdaq SmallCap Market) and ending on December 31, 1998 with the
cumulative total return on the Russell 2000 Index and the Standard & Poor's
Footwear Index. The comparison assumes that $100 was invested on December 31,
1993 in the Company's Common Stock and in the foregoing indices and assumes the
reinvestment of dividends.
GRAPH APPEARS HERE
[PLOT POINTS TO COME]
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Steven Madden, Ltd. 100 147.43 93.18 93.18 137.51 154.55
- - --------------------------------------------------------------------------------------
Russell 2000 Index 100 91.77 122.19 140.23 169.0 163.18
- - --------------------------------------------------------------------------------------
S&P Footwear Index 100 133.63 178.74 295.09 197.4 191.22
- - --------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
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) 1,542,005(4) 12.6%
BOCAP Corp.(5) 1,542,005(6) 12.6%
John Madden(7) 60,000(8) *
Arvind Dharia(9) 107,000(10) 1%
John Basile(11) 490,000(12) 4.3%
Les Wagner(13) 60,000(8) *
Rhonda Brown(14) 226,406(15) 2.0%
Gerald Mongeluzo(16) 102,500(17) *
Peter Migliorini(18) 60,000(8) *
Charles Koppelman(19) 100,000(20) *
EGS Partners, LLC(21) 567,800(22) 5.2%
Bev Partners, L.P. 567,800(22) 5.2%
Jonas Partners, L.P. 567,800(22) 5.2%
J.P. Morgan
& Co. Incorporated(23) 781,400 7.1%
Directors and Officers
as a Group (9 persons) 2,747,911 20.1%
- - ----------
* 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-K of the Securities Act of
1933 and Rule 13(d)-3 of the Securities Exchange Act. and based upon
10,944,843 shares of Common Stock outstanding.
(3) Mr. Madden is the Chairman of the Board, Chief Executive Officer and
President of the Company.
(4) Includes (i) 285,816 shares of Common Stock held by BOCAP, a
corporation owned by Mr. Madden, (ii) 1,251,189 shares of Common Stock
issuable upon the exercise of options held by Mr. Madden at an exercise
price ranging from $1.75 to $6.00 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) 1,251,189 shares of Common Stock issuable upon the
exercise of options held by Mr. Madden at exercise prices ranging from
$1.75 to $6.00 per share, and (ii) 5,000 shares of Common Stock held by
Mr. Madden.
(7) John Madden, a director of the Company, is the brother of Steven
Madden.
(8) Includes 60,000 shares of Common Stock issuable upon the exercise of
option at prices ranging from $5.50 per share to $6.00 per share.
(9) Mr. Dharia is a Director and the Chief Financial Officer of the
Company.
14
<PAGE>
(10) Includes 107,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Dharia at exercise prices ranging from $5.50 to
$6.00 per share.
(11) Mr. Basile is a director and Executive Vice President of the Company.
(12) Includes 490,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Basile at exercise prices ranging from $5.50 to
$7.97.
(13) Mr. Wagner is a director of the Company and the Vice President-Real
Estate of Steven Madden Retail, Inc.
(14) Ms. Brown is a Director and the Chief Operating Officer of the Company.
(15) Includes 226,406 shares of Common Stock issuable upon the exercise of
options held by Ms. Brown at exercise prices ranging from $5.50 per
share to $7.69 per share.
(16) Mr. Mongeluzo is the President of Adesso-Madden, Inc., a subsidiary of
the Company.
(17) Includes 102,500 shares of Common Stock issuable upon the exercise of
options held by Mr. Mongeluzo at exercise prices ranging from $5.50 per
share to $10.25 per share.
(18) Mr. Migliorini is a director of the Company. (19) Mr. Koppelman is a
director of the Company.
(20) Includes 100,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Koppelman.
(21) Based upon a Schedule 13D filed with the Securities and Exchange
Commission on January 28, 1998. The address for such stockholder is 300
Park Avenue, New York, NY 10022.
(22) 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.
(23) Based upon a Schedule 13G filed with the Securities and Exchange
Commission on February 23, 1999. The address for such stockholder is 60
Wall Street, New York, NY 10260.
CERTAIN TRANSACTIONS
BOCAP Corporation, a company wholly-owned by Steven Madden,
the Company's Chairman of the Board, Chief Executive Officer and President, was
a defendant in a lawsuit which was settled in February 1998. In connection with
the settlement, BOCAP borrowed $2.9 million (the "Loan") from the Company's
factoring company 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 with the Securities and Exchange Commission for
sale to the public or the Loan was repaid in full, whichever occurred first. A
registration statement covering the sale of the Pledged Shares was declared
effective on March 5, 1998 and the Company was released of its obligations under
the Guaranty shortly thereafter.
PROPOSAL TWO
ADOPTION OF THE 1999 STOCK PLAN
As of March 15, 1999 the Board of Directors of the Company, subject to
approval of the Company's stockholders, adopted the 1999 Stock Plan (hereinafter
called the "1999 Plan"). The purpose of the 1999 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 1999 Plan is attached as Annex A to this Proxy Statement and the
15
<PAGE>
description of the 1999 Plan set forth below is qualified in its entirety by
reference to the full text of the 1999 Plan.
DESCRIPTION OF THE 1999 PLAN
The maximum number of shares of Common Stock with respect to which
awards may be granted pursuant to the 1999 Plan is initially 400,000 shares.
Shares issuable under the 1999 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 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 1999 Plan may be "incentive stock options"
("Incentive Options") within the meaning of Section 422 of the Internal Revenue
Code (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
16
<PAGE>
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.
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 1999 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 1999
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 1999 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 1999 Plan shall terminate ten (10) years after adoption
by the shareholders.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 PLAN.
UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED FROM STOCKHOLDERS WILL BE VOTED
IN FAVOR OF THE PROPOSED 1999 PLAN.
PROPOSAL THREE
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 1999 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.
17
<PAGE>
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 solicited by the Company's Board of Directors with respect to
the 1999 Annual Meeting of Stockholders, that proposal must be presented to the
Company's secretary prior to December 1, 1999.
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.
May 4, 1999 By: /s/ STEVEN MADDEN
----------------------------------------
Steven Madden, Chairman of the
Board, President and Chief Executive
Officer
18
<PAGE>
ANNEX A
THE 1999 STOCK PLAN
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS ON MARCH 15, 1999
SECTION 1. PURPOSE. The purpose of the Steven Madden, Ltd.
1999 Stock Plan (the "Plan") is to provide a means whereby directors and
selected employees, officers, agents, consultants, and independent contractors
of Steven Madden, Ltd., a Delaware corporation (the "Company"), or of any parent
or subsidiary (as defined in subsection 5.7 hereof and referred to hereinafter
as "Affiliates") thereof, may be granted incentive stock options and/or
nonqualified stock options to purchase shares of common stock, $.0001 par value
("Common Stock") in order to attract and retain the services or advice of such
directors, employees, officers, agents, consultants, and independent contractors
and to provide additional incentive for such persons to exert maximum efforts
for the success of the Company and its Affiliates by encouraging stock ownership
in the Company.
SECTION 2. ADMINISTRATION. Subject to Section 2.3 hereof,
the Plan shall be administered by the Board of Directors of the Company (the
"Board") or, in the event the Board shall appoint and/or authorize a committee
of two or more members of the Board to administer the Plan, by such committee.
The administrator of the Plan shall hereinafter be referred to as the "Plan
Administrator".
The foregoing notwithstanding, with respect to grants to be
made to directors: (a) the Plan Administrator shall be constituted so as to meet
the requirements of Section 16(b) of the Exchange Act and Rule 16b-3 thereunder,
each as amended from time to time, or (b) if the Plan Administrator cannot be so
constituted, no options shall be granted under the Plan to any directors.
2.1 PROCEDURES. The Board shall designate one of
the members of the Plan Administrator as chairman. The Plan Administrator may
hold meetings at such times and places as it shall determine. The acts of a
majority of the members of the Plan Administrator present at meetings at which a
quorum exists, or acts approved in writing by all Plan Administrator members,
shall be valid acts of the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and
conditions explicitly set forth herein, the Plan Administrator shall have the
authority, in its discretion, to determine all matters relating to the options
to be granted under the Plan, including, without limitation, selection of
whether an option will be an incentive stock option or a nonqualified stock
option, selection of the individuals to be granted options, the number of shares
to be subject to each option, the exercise price per share, the timing of grants
and all other terms and conditions of the options. Grants under the Plan need
not be identical in any respect, even when made simultaneously. The Plan
Administrator may also establish, amend, and revoke rules and regulations for
the administration of the Plan. The interpretation and construction by the Plan
Administrator of any terms or provisions of the Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to
A-1
<PAGE>
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
400,000 shares as such Common Stock was constituted on the effective date of the
Plan. If any option granted under the Plan shall expire, be surrendered,
exchanged for another option, canceled, or terminated for any reason without
having been exercised in full, the unpurchased shares subject thereto shall
thereupon again be available for purposes of the Plan, including for replacement
options which may be granted in exchange for such surrendered, canceled, or
terminated options.
SECTION 4. ELIGIBILITY. An incentive stock option may be
granted only to any individual who, at the time the option is granted, is a
director, employee, officer, agent, consultant, or independent contractor of the
Company or any Affiliate thereof. A nonqualified stock option may be granted to
any director, employee, officer, agent, consultant, or independent contractor of
the Company or any Affiliate thereof, whether an individual or an entity. Any
party to whom an option is granted under the Plan shall be referred to
hereinafter as an "Optionee".
A director shall in no event be eligible for the benefits of
the Plan unless at the time discretion is exercised in the selection of a
director as a person to whom options may be granted, or in the determination of
the number of shares which may be covered by options granted to the director,
the Plan complies with the requirements of Rule 16b-3 under the Exchange Act.
A-2
<PAGE>
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted
under the Plan shall be evidenced by written agreements which shall contain such
terms, conditions, limitations, and restrictions as the Plan Administrator shall
deem advisable and which are not inconsistent with the Plan.
5.2 TERM AND MATURITY. Subject to the restrictions
contained in Section 6 hereof with respect to granting stock options to greater
than ten percent stockholders, the term of each stock option shall be as
established by the Plan Administrator and, if not so established, shall be ten
years from the date of its grant, but in no event shall the term of any
incentive stock option exceed a ten year period.
5.3 EXERCISE. Each option may be exercised in whole
or in part; provided, that only whole shares may be issued pursuant to the
exercise of any option. Subject to any other terms and conditions herein, the
Plan Administrator may provide that an option may not be exercised in whole or
in part for a stated period or periods of time during which such option is
outstanding; provided, that the Plan Administrator may rescind, modify, or waive
any such limitation (including by the acceleration of the vesting schedule upon
a change in control of the Company) at any time and from time to time after the
grant date thereof. During an Optionee's lifetime, any incentive stock options
granted under the Plan are personal to such Optionee and are exercisable solely
by such Optionee. Options shall be exercised by delivery to the Company of
notice of the number of shares with respect to which the option is exercised,
together with payment of the exercise price in accordance with Section 5.4
hereof.
5.4 PAYMENT OF EXERCISE PRICE. Except as set forth
below, payment of the option exercise price shall be made in full at the time
the notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check, or personal check (unless at the time
of exercise the Plan Administrator in a particular case determines not to accept
a personal check) for shares of Common Stock being purchased.
The Plan Administrator can determine at the time the option is
granted in the case of incentive stock options, or at any time before exercise
in the case of nonqualified stock options, that additional forms of payment will
be permitted. To the extent permitted by the Plan Administrator and applicable
laws and regulations (including, without limitation, federal tax and securities
laws and regulations and state corporate law), an option may be exercised by:
(a) delivery of shares of Common Stock of the
Company held by an Optionee having a fair market value equal to the exercise
price, such fair market value to be determined in good faith by the Plan
Administrator;
(b) delivery of a properly executed Notice of
Exercise, together with irrevocable instructions to a broker, all in accordance
with the regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price and any
federal, state, or local withholding tax obligations that may arise in
connection with the exercise; or
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(c) delivery of a properly executed Notice of
Exercise, together with instructions to the Company to withhold from the shares
of Common Stock that would otherwise be issued upon exercise that number of
shares of Common Stock having a fair market value equal to the option exercise
price.
5.5 WITHHOLDING TAX REQUIREMENT. The Company or any
Affiliate thereof shall have the right to retain and withhold from any payment
of cash or Common Stock under the Plan the amount of taxes required by any
government to be withheld or otherwise deducted and paid with respect to such
payment. No option may be exercised unless and until arrangements satisfactory
to the Company, in its sole discretion, to pay such withholding taxes are made.
At its discretion, the Company may require an Optionee to reimburse the Company
for any such taxes required to be withheld by the Company and withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due or to become due from the Company to the Optionee an amount equal to
such taxes or retain and withhold a number of shares having a market value not
less than the amount of such taxes required to be withheld by the Company to
reimburse the Company for any such taxes and cancel (in whole or in part) any
such shares of Common Stock so withheld. If required by Section 16(b) of the
Exchange Act, the election to pay withholding taxes by delivery of shares of
Common Stock held by any person who at the time of exercise is subject to
Section 16(b) of the Exchange Act shall be made either six months prior to the
date the option exercise becomes taxable or at such other times as the Company
may determine as necessary to comply with Section 16(b) of the Exchange Act.
Although the Company may, in its discretion, accept Common Stock as payment of
withholding taxes, the Company shall not be obligated to do so.
5.6 NONTRANSFERABILITY.
5.6.1 OPTION. Options granted under the Plan and
the rights and privileges conferred hereby may not be transferred, assigned,
pledged, or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
Section 414(p) of the Code, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder, and shall not be
subject to execution, attachment, or similar process. Any attempt to transfer,
assign, pledge, hypothecate, or otherwise dispose of any option under the Plan
or of any right or privilege conferred hereby, contrary to the Code or to the
provisions of the Plan, or the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby shall be null and void ab
initio. The designation by an Optionee of a beneficiary does not, in and of
itself, constitute an impermissible transfer under this subsection 5.6.1.
5.6.2 STOCK. The Plan Administrator may provide
in the agreement granting the option that (a) the Optionee may not transfer or
otherwise dispose of shares acquired upon exercise of an option without first
offering such shares to the Company for purchase on the same terms and
conditions as those offered to the proposed transferee or (b) upon termination
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of employment of an Optionee, the Company shall have a six month right of
repurchase as to the shares acquired upon exercise, which right of repurchase
shall allow for a maximum purchase price equal to the fair market value of the
shares on the termination date. The foregoing rights of the Company shall be
assignable by the Company upon reasonable written notice to the Optionee.
5.7 TERMINATION OF RELATIONSHIP. If the Optionee's
relationship with the Company or any Affiliate thereof ceases for any reason
other than termination for cause, death, or total disability, and unless by its
terms the option sooner terminates or expires, then the Optionee may exercise,
for a three month period, that portion of the Optionee's option which is
exercisable at the time of such cessation, but the Optionee's option shall
terminate at the end of the three month period following such cessation as to
all shares for which it has not theretofore been exercised, unless, in the case
of a nonqualified stock option, such provision is waived in the agreement
evidencing the option or by resolution adopted by the Plan Administrator within
90 days of such cessation. If, in the case of an incentive stock option, an
Optionee's relationship with the Company or Affiliate thereof changes from
employee to nonemployee (i.e., from employee to a position such as a
consultant), such change shall constitute a termination of an Optionee's
employment with the Company or Affiliate and the Optionee's incentive stock
option shall terminate in accordance with this subsection 5.7.
If an Optionee is terminated for cause, any option granted
hereunder shall automatically terminate as of the first discovery by the Company
of any reason for termination for cause, and such Optionee shall thereupon have
no right to purchase any shares pursuant to such option. "Termination for cause"
shall mean dismissal for dishonesty, conviction or confession of a crime
punishable by law (except minor violations), fraud, misconduct, or disclosure of
confidential information. If an Optionee's relationship with the Company or any
Affiliate thereof is suspended pending an investigation of whether or not the
Optionee shall be terminated for cause, all Optionee's rights under any option
granted hereunder likewise shall be suspended during the period of
investigation.
If an Optionee's relationship with the Company or any
Affiliate thereof ceases because of a total disability, the Optionee's option
shall not terminate or, in the case of an incentive stock option, cease to be
treated as an incentive stock option until the end of the 12 month period
following such cessation (unless by its terms it sooner terminates and expires).
As used in the Plan, the term "total disability" refers to a mental or physical
impairment of the Optionee which is expected to result in death or which has
lasted or is, in the opinion of the Company and two independent physicians,
expected to last for a continuous period of 12 months or more and which causes
or is, in such opinion, expected to cause the Optionee to be unable to perform
his or her duties for the Company and to be engaged in any substantial gainful
activity. Total disability shall be deemed to have occurred on the first day
after the Company and the two independent physicians have furnished their
opinion of total disability to the Plan Administrator.
For purposes of this subsection 5.7, a transfer of
relationship between or among the Company and/or any Affiliate thereof shall not
be deemed to constitute a cessation of 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
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be deemed to continue beyond the first 90 days of such leave, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
As used herein, the term "Affiliate" shall be defined as
follows: (a) when referring to a subsidiary corporation, "Affiliate" shall mean
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, the stock
possessing 50% or more of the total combined voting power of all classes of
stock of each of the corporations other than the Company is owned by one of the
other corporations in such chain; and (b) when referring to a parent
corporation, "Affiliate" shall mean any corporation in an unbroken chain of
corporations ending with the Company if, at the time of the granting of the
option, each of the corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
5.8 DEATH OF OPTIONEE. If an Optionee dies while he
or she has a relationship with the Company or any Affiliate thereof or within
the three month period (or 12 month period in the case of totally disabled
Optionees) following cessation of such relationship, any option held by such
Optionee, to the extent that the Optionee would have been entitled to exercise
such option, may be exercised within one year after his or her death by the
personal representative of his or her estate or by the person or persons to whom
the Optionee's rights under the option shall pass by will or by the applicable
laws of descent and distribution.
5.9 STATUS OF STOCKHOLDER. Neither the Optionee nor
any party to which the Optionee's rights and privileges under the option may
pass shall be, or have any of the rights or privileges of, a stockholder of the
Company with respect to any of the shares issuable upon the exercise of any
option granted under the Plan unless and until such option has been exercised.
5.10 CONTINUATION OF EMPLOYMENT. Nothing in the Plan
or in any option granted pursuant to the Plan shall confer upon any Optionee any
right to continue in the employ of the Company or of an Affiliate thereof, or to
interfere in any way with the right of the Company or of any such Affiliate to
terminate his or her employment or other relationship with the Company at any
time.
5.11 MODIFICATION AND AMENDMENT OF OPTION. Subject to
the requirements of Section 422 of the Code with respect to incentive stock
options and to the terms and conditions and within the limitations of the Plan,
including, without limitation, Section 9.1 hereof, the Plan Administrator may
modify or amend outstanding options granted under the Plan. The modification or
amendment of an outstanding option shall not, without the consent of the
Optionee, impair or diminish any of his or her rights or any of the obligations
of the Company under such option. Except as otherwise provided herein, no
outstanding option shall be 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.
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5.12 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS.
As to all incentive stock options granted under the terms of the Plan, to the
extent that the aggregate fair market value (determined at the time of the grant
of the incentive stock option) of the shares of Common Stock with respect to
which incentive stock options are exercisable for the first time by the Optionee
during any calendar year (under the Plan and all other incentive stock option
plans of the Company, an Affiliate thereof or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
foregoing sentence shall not apply, and the limitation shall be that provided by
the Code or the Internal Revenue Service, as the case may be, if such annual
limit is changed or eliminated by (a) amendment of the Code or (b) issuance by
the Internal Revenue Service of (i) a Revenue ruling, (ii) a Private Letter
ruling to any of the Company, any Optionee, or any legatee, personal
representative, or distributee of any Optionee, or (iii) regulations.
5.13 VALUATION OF COMMON STOCK RECEIVED UPON
EXERCISE.
5.13.1 EXERCISE OF OPTIONS UNDER SECTIONS 5.4(A)
AND (C). The value of Common Stock received by the Optionee from an exercise
under Sections 5.4(a) and 5.4(c) hereof shall be the fair market value as
determined by the Plan Administrator, provided, that if the Common Stock is
traded in a public market, such valuation shall be the average of the high and
low trading prices or bid and asked prices, as applicable, of the Common Stock
for the date of receipt by the Company of the Optionee's delivery of shares
under Section 5.4(a) hereof or delivery of the Notice of Exercise under Section
5.4(c) hereof, determined as of the trading day immediately preceding such date
(or, if no sale of shares is reported for such trading day, on the next
preceding day on which any sale shall have been reported).
5.13.2 EXERCISE OF OPTION UNDER SECTION 5.4(B).
The value of Common Stock received by the Optionee from an exercise under
Section 5.4(b) hereof shall equal the sales price received for such shares.
SECTION 6. GREATER THAN TEN PERCENT STOCKHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK
OPTIONS. If incentive stock options are granted under the Plan to employees who,
at the time of such grant, own greater than ten percent of the total combined
voting power of all classes of stock of the Company or any Affiliate thereof,
the term of such incentive stock options shall not exceed five years and the
exercise price shall be not less than 110% of the fair market value of the
Common Stock at the time of grant of the incentive stock option. This provision
shall control notwithstanding any contrary terms contained in an option
agreement or any other document. 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.
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6.2 ATTRIBUTION RULE. For purposes of subsection
6.1, in determining stock ownership, an employee shall be deemed to own the
stock owned, directly or indirectly, by or for his or her brothers, sisters,
spouse, ancestors, and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership estate, or trust shall be deemed to be
owned proportionately by or for its stockholders, partners, or beneficiaries. If
an employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock owned by him or her which is actually issued and
outstanding immediately before the grant of the incentive stock option to the
employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The
aggregate number and class of shares for which options may be granted under the
Plan, the number and class of shares covered by each outstanding option, and the
exercise price per share thereof (but not the total price), and each such
option, shall all be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock of the Company resulting from a
split or consolidation of shares or any like capital adjustment, or the payment
of any stock dividend.
7.1. EFFECT OF LIQUIDATION, REORGANIZATION, OR
CHANGE IN CONTROL.
7.1.1 CASH, STOCK, OR OTHER PROPERTY FOR STOCK.Except
as provided in subsection 7.1.2 hereof, upon a merger (other than a merger of
the Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than mere reincorporation
or creation of a holding company), or liquidation of the Company (each, an
"event"), as a result of which the stockholders of the Company receive cash,
stock, or other property in exchange for, or in connection with, their shares of
Common Stock, any option granted hereunder shall terminate, but the time during
which such options may be exercised shall be accelerated as follows: the
Optionee shall have the right immediately prior to any such event to exercise
such Optionee's option in whole or in part whether or not the vesting
requirements set forth in the option agreement have been satisfied.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR EXCHANGE
STOCK. If the stockholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation,
or reorganization (other than mere reincorporation or creation of a holding
company), all options granted hereunder shall be converted into options to
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purchase shares of Exchange Stock unless the Company and corporation issuing the
Exchange Stock, in their sole discretion, determine that any or all such options
granted hereunder shall not be converted into options to purchase shares of
Exchange Stock but instead shall terminate in accordance with the provisions of
subsection 7.1.1 hereof. The amount and price of converted options shall be
determined by adjusting the amount and price of the options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition, separation, or reorganization. Unless the Board determines
otherwise, the converted options shall be fully vested whether or not the
vesting requirements set forth in the option agreement have been satisfied.
7.2 FRACTIONAL SHARES. In the event of any
adjustment in the number of shares covered by an option, any fractional shares
resulting from such adjustment shall be disregarded and each such option shall
cover only the number of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. Except as
otherwise required for the Plan to qualify for the exemption afforded by Rule
16b-3 under the Exchange Act, all adjustments under this Section 7 shall be made
by the Board, and its determination as to what adjustments shall be made, and
the extent thereof, shall be final, binding, and conclusive. Unless an Optionee
agrees otherwise, any change or adjustment to an incentive stock option shall be
made in such a manner so as not to constitute a "modification" as defined in
Section 424(h) of the Code and so as not to cause the incentive stock option
issued hereunder to fail to continue to qualify as an incentive stock option as
defined in Section 422(b) of the Code.
SECTION 8. SECURITIES LAW COMPLIANCE. Shares shall not be
issued with respect to an option granted under the Plan unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, any
applicable state securities laws, the Securities Act of 1933, as amended (the
"Act"), the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance, including, without limitation, the availability of
an exemption from registration for the issuance and sale of any shares
hereunder. Inability of the Company to obtain from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
As a condition to the exercise of an option, if, in the
opinion of counsel for the Company, assurances are required by any relevant
provision of the aforementioned laws, the Company may require the Optionee to
give written assurances satisfactory to the Company at the time of any such
exercise (a) as to the Optionee's knowledge and experience in financial and
business matters (and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
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<PAGE>
and business matters) and that such Optionee is capable of evaluating, either
alone or with the purchaser representative, the merits and risks of exercising
the option or (b) that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares. The foregoing
requirements shall be inoperative if the issuance of the shares upon the
exercise of the option has been registered under a then currently effective
registration statement under the Act.
At the option of the Company, a stop-transfer order against
any shares may be placed on the official stock books and records of the Company,
and a legend indicating that the stock may not be pledged, sold, or otherwise
transferred unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. NONE OF THE ABOVE SHALL BE
CONSTRUED TO IMPLY AN OBLIGATION ON THE PART OF THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as
the stock subject to options granted hereunder be listed on a national
securities exchange or on the Nasdaq National Market, all stock issued hereunder
if not previously listed on such exchange or market shall, if required by the
rules of such exchange or market, be authorized by that exchange or market for
listing thereon prior to the issuance thereof.
SECTION 9. USE OF PROCEEDS. The proceeds received by the
Company from the sale of shares pursuant to the exercise of options granted
hereunder shall constitute general funds of the Company.
SECTION 10. AMENDMENT AND TERMINATION.
10.1 BOARD ACTION. The Board may at any time
suspend, amend, or terminate the Plan, provided, that no amendment shall be made
without stockholder approval within 12 months before or after adoption of the
Plan if such approval is necessary to comply with any applicable tax or
regulatory requirement, including any such approval as may be necessary to
satisfy the requirements for exemptive relief under Rule 16b-3 of the Exchange
Act or any successor provision. Rights and obligations under any option granted
before amendment of the Plan shall not be altered or impaired by any amendment
of the Plan unless the Company requests the consent of the person to whom the
option was granted and such person consents in writing thereto.
10.2 AUTOMATIC TERMINATION. Unless sooner terminated
by the Board, the Plan shall terminate ten years from the earlier of (a) the
date on which the Plan is adopted by the Board or (b) the date on which the Plan
is approved by the stockholders of the Company. No option may be granted after
such termination or during any suspension of the Plan. 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.
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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 shares of voting capital stock cast with
respect to the proposal to adopt the Plan at any time within 12 months before or
after the adoption of the Plan by the Board.
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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 JUNE 4, 1999, 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 BASILE, CHARLES KOPPELMAN,
JOHN L. MADDEN, PETER MIGLIORINI, AND LES WAGNER
2. ADOPTION OF THE 1999 STOCK PLAN
[ ] FOR THE ADOPTION OF THE 1999 STOCK PLAN
[ ] WITHHOLD AUTHORITY
[ ] ABSTAIN
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<PAGE>
3. RATIFICATION OF THE APPOINTMENT OF RICHARD A. EISNER &
COMPANY, LLP. AS INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL YEAR 1999.
[ ] 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 EIGHT (8) NOMINEES NAMED
IN ITEM 1, THE ADOPTION OF THE 1999 STOCK PLAN IN ITEM 2, AND THE RATIFICATION
OF THE APPOINTMENT OF RICHARD A. EISNER & CO., LLP. AS INDEPENDENT AUDITORS OF
THE COMPANY FOR FISCAL YEAR 1999 IN ITEM 3.
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:
---------------------------
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
