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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 15, 2005
STEVEN MADDEN, LTD.
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(Exact name of registrant as specified in its charter)
Delaware 0-23702 13-3588231
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(State or other jurisdiction (Registration Number) (IRS Employer
of incorporation) Identification No.)
52-16 Barnett Avenue, Long Island City, New York 11104
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 446-1800
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On July 15, 2005, Steven Madden, Ltd. (the "Company") and Steven Madden executed
the Third Amended and Restated Employment Agreement, effective as of July 1,
2005 (the "Third Amended Employment Agreement"), which extended the term of Mr.
Madden's employment with the Company until June 30, 2015 and otherwise further
amended the Employment Agreement, dated as of September 1, 1993, by and between
the Company and Steven Madden, as previously amended. Attached hereto and
incorporated herein by reference as Exhibit 10.1 is the Third Amended Employment
Agreement.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 19, 2005, the Company issued a press release announcing its preliminary
results for the second quarter ended June 30, 2005, a copy of which is furnished
as Exhibit 99.1 and incorporated herein by reference.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
(b) On July 15, 2005, Awadhesh Sinha resigned as a member of the
Board of Directors of the Company because he would no longer
be an independent director due to his new position as the
Company's Chief Operating Officer.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable
(b) Not applicable
(c) Exhibit 10.1 Third Amended and Restated Employment Agreement
between the Company and Steven Madden,
effective as of July 1, 2005.
Exhibit 99.1 Press Release of Steven Madden, Ltd., dated
July 19, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Steven Madden, Ltd. has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
STEVEN MADDEN, LTD.
By: /s/ JAMIESON KARSON
-------------------------------
Name: Jamieson A. Karson
Title: Chief Executive Officer
Date: July 20, 2005
EXHIBIT INDEX
DOC. NO. DOCUMENT DESCRIPTION
Exhibit 10.1 Third Amended and Restated Employment Agreement between the
Company and Steven Madden, effective as of July 1, 2005.
Exhibit 99.1 Press Release of Steven Madden, Ltd., dated July 19, 2005.
Exhibit 10.1
THIRD AMENDED EMPLOYMENT AGREEMENT
THIRD AMENDED EMPLOYMENT AGREEMENT, executed as of July 15,
2005, with an effective date of July 1, 2005, by and between STEVEN MADDEN,
LTD., a Delaware corporation with offices at 52-16 Barnett Avenue, Long Island
City, N.Y. 11104 (the "Corporation"), and STEVEN MADDEN, an individual residing
at 175 East 73rd Street, New York, New York 10021 ("Employee').
WITNESSETH:
WHEREAS, Employee is the founder of the Corporation and has
been the Creative and Design Chief since July 1, 2001 and prior thereto had been
the Chief Executive Officer and a director of the Corporation from its inception
through May 21, 2001 and has previously served as President and Chairman of the
Board of the Corporation;
WHEREAS, the Corporation entered into an employment agreement
with Employee dated as of September 1, 1993, which employment agreement was
amended by an amended employment agreement dated as of July 29, 1997 and amended
as of February 28, 2000, and which employment agreement was further amended by a
Second Amended Employment Agreement dated as of May 21, 2001 and amended by the
Stipulation and Agreement of Compromise, Settlement and Release dated July 16,
2003 relating to certain derivative actions referred to therein (the "Prior
Employment Agreement"), which Prior Employment Agreement has a term ending on
June 30, 2012;
WHEREAS, the Corporation and Employee believe that it is in
the best interests of the Corporation for Employee to continue his duties as
Creative and Design Chief;
WHEREAS, the Corporation recognizes that Employee's talents
and abilities are unique and have been integral to the success of the
Corporation and that Employee's contribution to the growth and success of the
Corporation will be substantial and the Corporation desires to provide for the
continued employment of Employee over an extended period of time and to make
employment arrangements that will reinforce and encourage Employee's attention,
dedication and creative talents to the Corporation;
WHEREAS, the Corporation and Employee recognize that the
Corporation's trademarks and/or service marks and other proprietary rights,
including the rights it owns with respect to Employee's name, in whole or in
part, and any derivations thereof, in plain block letters, stylized letters,
logo
formats or signature formats ("Employee's Name"), are critically important to
the Corporation's success and its competitive position in the future; and
WHEREAS, the Corporation and Employee wish to amend and
restate the Prior Employment Agreement in order to, among other things, (i)
provide that Employee continue in the position of Creative and Design Chief,
(ii) extend the term of Employee's employment by the Corporation and (iii)
modify and amend the compensation and other provisions of the Prior Employment
Agreement including to decrease Employee's base salary and amend the bonus
provisions.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual promises, terms, provisions and conditions set forth in this
Agreement, the parties hereby agree as follows:
Section 1. EMPLOYMENT. The Corporation hereby employs Employee
and Employee hereby accepts such employment, as an employee of the Corporation,
subject to the terms and conditions set forth in this Agreement.
Section 2. DUTIES. Employee shall serve as the Creative and
Design Chief of the Corporation and shall properly perform such duties as may be
assigned to him from time to time by the Chief Executive Officer of the
Corporation, including (i) managing the design and creative function of the
Corporation, (ii) recommending the hiring of and managing designers and creative
personnel, including artists for shoes, apparel, accessories and other products,
(iii) coordinating the artistic and promotional aspects of the Corporation's
business and (iv) representing the Corporation in the fashion industry. During
the Term (as hereinafter defined) of this Agreement, Employee shall devote
substantially all of his business time and efforts to the performance of his
duties hereunder unless otherwise authorized by the Board of Directors of the
Corporation (the "Board of Directors"). Employee shall not engage in any other
significant business activity that would detract from his ability to perform
services to the Corporation
Section 3. TERM OF EMPLOYMENT. The term of Employee's
employment, unless sooner terminated as provided herein, shall be for a period
of ten (10) years commencing on the date of this Third Amended Employment
Agreement and ending ten (10) years thereafter (the "Term").
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Section 4. COMPENSATION OF EMPLOYEE.
4.1 BASE SALARY. During the Term, the Corporation shall
pay to Employee an annual base salary of Six Hundred Thousand Dollars
($600,000.00) for his services hereunder, less such deductions as shall be
required to be withheld by applicable law and regulations. The annual base
salary shall for each of the third, fifth, seventh and ninth years of this
Agreement increase by seven (7%) percent on a compound basis as an agreed upon
cost of living adjustment. The Board of Directors may increase (but not
decrease) Employee's base salary at any time. Employee's base salary, as in
effect at any time, is hereinafter referred to as the "Base Salary."
4.2 TIME OF PAYMENT. Employee's Base Salary shall be paid
in substantially equal installments on a basis consistent with the Corporation's
payroll practices for the Corporation's employees.
4.3 ANNUAL BONUS. For each fiscal year that occurs during
the Term, the Corporation shall pay Employee a cash bonus in an amount
determined by the Board of Directors, which amount shall be not less than two
percent (2%) of the Corporation's earnings for such fiscal year before interest,
tax, depreciation and amortization (the "Cash Bonus"). Employee's Cash Bonus for
any fiscal year shall be based on audited financial statements of the
Corporation for such fiscal year and shall be paid to Employee no later than
April 15 of the year immediately following such fiscal year. The Corporation
shall not be required to pay, and Employee shall not be entitled to demand, a
Cash Bonus for any fiscal year that Employee is not actively engaged in the
duties of Creative and Design Chief for at least six months, provided, however,
that Employee shall be entitled to demand a pro-rated Cash Bonus for any fiscal
year in which he is actively engaged in the duties of Creative and Design Chief
for at least six (6) months which Cash Bonus shall be prorated in accordance
with the number of full calendar months during such fiscal year that Employee
was actively engaged in the duties of Creative and Design Chief.
4.4 ANNUAL STOCK OPTION GRANT. Subject to the
availability of shares under the Corporation's 1999 Stock Plan (the "1999 Plan")
or any other qualified or non-qualified stock incentive plan designated by the
Board of Directors and approved by the Corporation's stockholders, on or about
the date of the Corporation's annual meeting (but not later than June 30th) for
each year of the Term (beginning in 2006) (each, a "Grant Date"), Employee shall
be eligible for an option ("Annual Option'") to purchase shares of common stock
of the Corporation in an amount equal to not less than 100% of the largest
aggregate amount of annual option grants to any other continuing full-time
employee of the Corporation over the twelve (12) months up to and including the
applicable Grant Date or otherwise with respect to the same option period
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(excluding sign-on or other grants outside of the ordinary course of such
employee's employment) (the "Base Amount"); provided, however, that the Board of
Directors may determine, if consistent with the opinion of a qualified outside
compensation consultant, that Employee is eligible to receive options to
purchase between 100% and 150% of the Base Amount; provided further, however,
that approval by the Corporation's shareholders shall be required if Employee is
to receive options to purchase in excess of 150% of the Base Amount. All Annual
Options shall be subject to the final approval of the Board of Directors. The
Annual Options granted pursuant to this Agreement shall be granted pursuant to
the 1999 Stock Plan or any other qualified or non-qualified stock incentive plan
designated by the Board of Directors, which other plan has been approved by the
stockholders of the Corporation. The Annual Options shall vest quarterly over
the one-year period following the Grant Date and shall be exercisable after
vesting at a price equal to the closing price of the common stock of the
Corporation on the Grant Date for a period of five years from the Grant Date,
provided, however, that if Employee ceases to be an employee of the Corporation,
the exercise period shall be shortened in accordance with the stock plan under
which the Annual Option was granted. Notwithstanding anything to the contrary
herein, if Employee is not actively engaged in the duties of Creative and Design
Chief for at least six months out of the twelve months immediately preceding a
Grant Date, the Corporation shall not be required to grant, and Employee shall
not be eligible to receive, an Annual Option on such Grant Date.
4.5 EXPENSES. During the Term, the Corporation shall
promptly reimburse Employee for all reasonable and necessary travel expenses and
other disbursements incurred by Employee on behalf of the Corporation, in
performance of Employee's duties hereunder, assuming Employee has received prior
approval for such travel expenses and disbursements by the Corporation to the
extent possible, consistent with corporate practice with respect to the
reimbursement of expenses incurred by the Corporation's employees.
4.6 NON-ACCOUNTABLE EXPENSE ALLOWANCE. The Corporation
shall provide to Employee an annual Two Hundred Thousand Dollar ($200,000)
non-accountable expense allowance (the "Non-Accountable Expense Allowance"),
which amount will be payable in equal monthly installments. The Corporation
shall not be required to pay, and Employee shall not be entitled to demand, the
Non-Accountable Expense Allowance for any month that Employee is not actively
engaged in the duties of Creative and Design Chief.
4.7 BENEFITS. During the period that Employee is actively
engaged in the duties of Creative and Design Chief, Employee shall be entitled
to participate in such pension, profit sharing, group insurance, option
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plans, hospitalization, and group health and benefit plans and all other
benefits and plans as the Corporation provides to its employees.
4.8 DEFERRAL OF COMPENSATION. Notwithstanding anything to
the contrary in this Agreement, any remuneration under this Agreement or any
other agreements to which the Corporation and Employee are parties in respect of
employment that is not deductible for any taxable year of the Corporation
because of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), will be deferred until the first day that any excess remuneration
becomes deductible under Section I62(m) or by virtue of its repeal or amendment.
Any such deferred payment will bear interest at the prime rate plus one
beginning with the date such payment is first deferred. Notwithstanding any
provision in this Agreement to the contrary, this Section 4.8 shall survive the
termination of this Agreement.
4.9 LOANS TO EMPLOYEE. From time to time during the Term,
at Employee's request, Employee may borrow funds from the Corporation, provided,
that, at any time the aggregate amount of any such borrowings shall not exceed
the amount of Employee's remuneration that has been deferred pursuant to Section
4.8. Employee shall be required to pay interest on such borrowings at a rate
equal to the prime rate plus one and such borrowings will be subject to any
additional terms and conditions as reasonably determined by the Board of
Directors.
4.10 NEW BUSINESS BONUS. For each fiscal year that occurs
during the Term, the Corporation shall pay Employee a cash bonus in respect of
new business (as hereinafter defined) in an amount to be determined by the Board
of Directors, which amount shall not be less than two and one-half (2.5%)
percent of new business gross direct revenues (i.e., direct revenues from new
business as hereinafter defined except new business license or other fee income)
and not less than ten (10%) percent of all license or other fee income above two
million ($2,000,000.00) dollars. For the purposes of this paragraph, the term
new business shall mean business that the Corporation is not engaged in as of
the date hereof, including, but not limited to, business from or associated with
(i) new lines, labels or brands, whether they be licensed or owned by the
Corporation and whether they are part of or replace an existing division or are
part of a new division (e.g., a new line, label or brand sold by the Corporation
to department stores and/or mid-tier retailers, including a Steve Madden
diffusion line, label or brand), (ii) the expansion into categories of products
not presently part of the Corporation's products and (iii) the expansion
internationally into territories not presently sold by the Corporation;
provided, however, that new business shall in no event include any line, label
or brand that
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exists as of the date hereof, even if the name thereof shall be changed.
Employee's New Business Bonus for any fiscal year shall be determined, in good
faith, by the Compensation Committee of the Board of Directors, in consultation
with the Corporation's Chief Executive Officer and Chief Financial Officer,
based on audited financial statements of the Corporation for such fiscal year
and the Corporation's accounting books and records (such determination (the
"Committee Amount") to be set forth in a written notice sent to Employee at
least 30 days prior to the payment of such bonus), and shall be paid to Employee
no later than April 15 of the year immediately following such fiscal year. In
the event that Employee objects to the calculation of the New Business Bonus for
any fiscal year, Employee shall set forth his objection, in reasonable detail,
in a written notice sent to the Corporation within 30 business days, whereupon
the Corporation shall cause such calculation to be reviewed by Brian Ziegler of
the firm of Certilman Balin or such other person as shall be mutually agreed
upon by the parties hereto (the "Third Party") within 30 business days of the
receipt of such objection notice. The Third Party shall report to the
Corporation, in writing, his calculation of the New Business Bonus amount (the
"Third Party's Amount"), and if the Third Party's Amount is within 5% of the
Committee Amount, Employee shall pay the cost of such review and the amount of
the New Business Bonus shall remain unchanged. If the Third Party's Amount
differs from the Committee Amount by 5% or more, then the Corporation shall pay
the cost of such review and the amount of the New Business Bonus shall be
adjusted to equal the Third Party's Amount (it being agreed that if the New
Business Bonus shall have already been paid to Employee, in the case of a
decrease in the amount thereof, Employee shall remit the difference to the
Corporation, and in the case of an increase in the amount thereof, the
Corporation shall pay Employee the difference, in each case, promptly, and, in
any event, within 30 business days.
4.11 EFFECT OF RESTATEMENTS. In the event that The
Corporation's financials are restated for any time period for which Employee
pursuant to Section 4.3 or Section 4.10, upon the written request of the
Compensation Committee, Employee shall promptly refund to the Corporation such
amount as the Compensation Committee in good faith determines that Employee
would not have been entitled to if the restated financials had been the
financials on the basis of which the bonus had been paid (net of any taxes
previously paid by Employee thereon with respect to which, in the reasonable
opinion of counsel to Employee, Employee is time-barred from seeking a refund).
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Section 5. TERMINATION.
5.1 DEATH OR TOTAL DISABILITY.
(a) Death. This Agreement shall terminate upon
the death of Employee; provided, however, that the Corporation shall continue to
pay to the estate of Employee the Base Salary as set forth in Section 4.1 hereof
for the twelve (12) month period immediately subsequent to the date of
Employee's death.
(b) Total Disability. In the event Employee is
discharged due to a "Total Disability" (as defined in Section 6.1 below), then
this Agreement shall be deemed terminated and the Corporation shall be released
from all obligations to Employee with respect to this Agreement, except
obligations accrued prior to such termination and as provided in Section 6.2
hereof.
5.2 TERMINATION FOR CAUSE: EMPLOYEE'S RESIGNATION. In the
event Employee is discharged "For Cause" (as defined below) or in the event
Employee resigns (other than pursuant to Section 5.5 hereof), then upon such
occurrence, this Agreement shall be deemed terminated and the Corporation shall
be released from all obligations to Employee with respect to this Agreement,
except obligations accrued prior to such termination.
5.3 TERMINATION OTHER THAN FOR CAUSE. In the event
Employee is discharged other than "For Cause" or other than due to his death or
"Total Disability," then the Corporation shall pay Employee the balance of his
Base Salary that would have been paid by the Corporation pursuant to Section 4.1
hereof over the full Term of the Agreement if the Corporation had not terminated
this Agreement. Such amount shall be payable in installments as follows: (i)
fifty (50%) percent of the amount due pursuant to the terms of this Section 5.3
upon termination of the Agreement and (ii) fifty (50%) percent in equal annual
installments beginning on the June 30th immediately following such termination
and each June 30th thereafter until June 30, 2015.
5.4 "FOR CAUSE". As used herein, the term "For Cause"
shall mean:
(a) the conviction of, or pleading guilty or
nolo contendere to, any crime, whether or not involving the Corporation
constituting a felony in the jurisdiction involved, which the Board of
Directors, in its sole discretion, determines may have a material injurious
effect on the Corporation;
(b) the conviction of any crime involving moral
turpitude or fraud; or
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(c) gross negligence or willful misconduct in
the conduct of Employee's duties or willful or repeated failure or refusal to
perform such duties as may be delegated to Employee by the Chief Executive
Officer which are consistent with Employee's position, and that as to any
conduct concerning this subsection (c), such conduct is not corrected by
Employee within fourteen (14) days following receipt by Employee of written
notice from the Chief Executive Officer, such notice to state with specificity
the nature of the breach, failure or refusal, gross negligence or willful
misconduct related to Employee's employment with the Corporation.
5.5 TERMINATION UPON CHANGE OF CONTROL.
(a) If, during the period commencing 120 days
prior to a Change of Control and ending on the first anniversary of a Change of
Control, Employee's employment shall have been terminated by the Corporation
(other than for Cause) or by Employee for Good Reason or if within 30 days
following a Change of Control Employee shall terminate his employment with or
without Good Reason:
(i) all unvested options to acquire stock of the
Corporation held by Employee shall vest on the date of termination;
(ii) the Corporation shall make a lump sum cash
payment to Employee within ten (10) days of the date of termination in an amount
equal to (i) the amount of compensation that is accrued and unpaid through the
date of termination pursuant to Section 4 of this Agreement and (ii) an amount
equal to the product of (A) the number of years remaining in the Term of this
Agreement (but not less than 5) and (B) the sum of (w) the Base Salary for the
12-month period ended on the preceding December 31 (or for the 12-month period
ending on December 31, 2002, if greater), (x) the amount of the Annual Bonus
earned pursuant to Section 4.3 (paid or accrued or which should have been paid
or accrued) for the 12-month period ended on the preceding December 31 (or for
the 12-month period ended on December 31, 2002, if greater), (y) the
non-accountable expense allowance pursuant to Section 4.6 for the 12-month
period ended on the preceding December 31 and (z) the amount of the New Business
Bonus earned pursuant to Section 4.10 (paid or accrued or which should have been
paid or accrued) for the 12-month period ended on the preceding December 31 (or
for the 12-month period ending on December 31 during this Agreement in which the
Employee received the greatest New Business Bonus, if greater).
(b)(i) In the event that any payment (or portion
thereof) payable to Employee (whether pursuant to the terms of this Agreement or
any
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other plan, arrangement or agreement with the Corporation) is determined to be
subject to an excise tax under Section 4999 of the Code (an "Excise Tax"), the
Corporation shall pay to Employee an additional amount (the "Gross Up Payment")
which shall be equal to the sum of (1) the amount of the Excise Tax, plus (2)
the amount of any interest, penalties or additions to tax which are imposed in
connection with the imposition or collection of the Excise Tax, plus (3) the
amount of all Federal, State or local income, excise or other taxes imposed on
Employee by reason of the payments described in clause (1), clause (2) and this
clause (3). For purposes of computing the Gross Up Payment, Employee shall be
deemed to be subject to tax at the highest marginal rate under all applicable
tax laws for the year in which the Gross Up Payment is made.
(ii) All computations under this Section 5.5(b)
shall be initially made by the Corporation and the Corporation shall provide
written notice thereof to Employee in sufficient time to timely file all
applicable tax returns. Upon Employee's request, the Corporation shall provide
Employee with sufficient data to enable Employee or his representative to
independently compute the Gross Up Payment. If Employee gives written notice to
the Corporation of any objection to the Corporation's initial computation of the
Gross Up Payment within 60 days of Employee's receipt of written notice thereof,
the dispute shall be resolved by tax counsel selected by the independent
auditors of the Corporation. The Corporation shall pay all fees and expenses of
such tax counsel. Pending resolution by tax counsel, the Corporation shall pay
Employee the Gross Up Payment determined by it in good faith; if the dispute is
resolved in favor of Employee, the Corporation shall make such additional
payment as may be required within 60 days after tax counsel's determination.
(iii) The determination by such tax counsel shall
be conclusive and binding upon all parties, other than the Internal Revenue
Service, a court of competent jurisdiction, or another duly empowered government
agency (a "Tax Authority"). In the event that a Tax Authority finally determines
that an additional Excise Tax is owed by Employee, the Corporation shall
promptly make an additional Gross Up Payment, determined as provided herein,
with respect to such additional Excise Tax. If the Excise Tax paid by Employee
is finally determined by a Tax Authority to exceed the amount required to have
been paid, then Employee shall promptly repay any excess Gross Up Payment to the
Corporation.
5.6 "CHANGE OF CONTROL". As used herein, the term "Change
of Control" shall mean:
(a) When any "person" as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and as
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used in Section 13(d) and 14(d) thereof including a "group" as defined in
Section 13(d) of the Exchange Act, but excluding the Corporation or any
subsidiary or any affiliate of the Corporation or any employee benefit plan
sponsored or maintained by the Corporation or any subsidiary of the Corporation
(including any trustee of such plan acting as trustee), becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Corporation representing a majority of the combined voting power of the
Corporation's then outstanding securities; or
(b) When, during any period of twenty-four (24)
consecutive months, the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof provided,
however, that a director who was not a director at the beginning of such
24-month period shall be deemed to have satisfied such 24-month requirement (and
be an Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually ('because they were
directors at the beginning of such 24-month period) or through the operation of
this proviso; or
(c) The occurrence of a transaction requiring
stockholder approval for the acquisition of the Corporation by an entity other
than the Corporation or a subsidiary or an affiliated company of the Corporation
through purchase of assets, or by merger, or otherwise.
5.7 "GOOD REASON" As used herein, the term "Good Reason"
shall mean the occurrence of any of the following:
(a) the assignment to Employee, without his consent, of
any duties inconsistent in any substantial and negative respect with his
positions, duties, responsibilities and status with the Corporation as
contemplated hereunder, if not remedied by the Corporation within thirty (30)
days after receipt of written notice thereof from Employee;
(b) any removal of Employee, without his consent, from
any positions Employee held as contemplated hereunder (except in connection with
the termination of Employee's employment by the Corporation For Cause or on
account of Total Disability pursuant to the requirements of this Agreement or
during any temporary removal due to disability so long as the Corporation
continues to pay Employee the Base Salary hereunder), if not remedied by the
Corporation within thirty (30) days after receipt of written notice thereof from
Employee;
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(c) a reduction by the Corporation of Employee's Base
Salary as in effect as contemplated hereunder or a reduction in any formula used
in computing Employee's compensation pursuant to Section 4 of this Agreement,
except in connection with the termination of Employee's employment by the
Corporation For Cause or due to Total Disability pursuant to the requirements of
this Agreement;
(d) any termination of Employee's employment by the
Corporation during the Term that is not effected pursuant to the requirements of
this Agreement;
(e) any material breach by the Corporation of the terms
of this Agreement that is not remedied by the Corporation within thirty (30)
days after receipt of written notice thereof from Employee;
(f) the relocation of Employee's work location, without
Employee's consent, to a place more than seventy five (75) miles from the
location set forth herein; or
(g) failure by any successor to the Corporation to
expressly assume all obligations of the Corporation under this Agreement, which
failure is not remedied by the Corporation within thirty (30) days after receipt
of written notice thereof from Employee.
5.8 RELEASE. Payment of severance hereunder pursuant to
Section 5.3 or Section 5.5 is conditioned on Employee's executing and not
revoking a general release in such form as shall be reasonably requested by the
Corporation. The Corporation shall also execute a similar release in favor of
Employee.
Section 6. DISABILITY.
6.1 TOTAL DISABILITY. In the event that after Employee
has failed, due to a disability, to have performed his regular and customary
duties during a period of one hundred eighty (180) consecutive days (including
weekends and holidays) or for any two hundred seventy (270) days (including
weekends and holidays) out of any three hundred and sixty (360) day period, and
before Employee has become "Rehabilitated" (as defined below) a majority of the
unaffiliated members of the Board of Directors may vote to determine that
Employee is mentally or physically incapable or unable to continue to perform
such regular and customary duties of employment and upon the date of such
majority vote, Employee shall be deemed to be suffering from a "Total
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Disability." As used herein, the term "Rehabilitated" shall mean such time as
Employee is willing, able and commences to devote his time and energies to the
affairs of the Corporation to the extent and manner that he did so prior to his
disability.
6.2 PAYMENT DURING DISABILITY. In the event Employee is
unable to perform his duties hereunder by reason of a disability in accordance
with the provisions of Section 6.1 above, the Corporation shall continue to pay
Employee his Base Salary pursuant to Section 4.1 during the continuance of any
such disability. Upon a determination of any Total Disability pursuant to the
provisions of Section 6.1 above, the Corporation shall pay to Employee his Base
Salary pursuant to Section 4.1 for the twelve (12) month period immediately
subsequent to the date of determination of Total Disability.
Section 7. VACATIONS. Employee shall be entitled to a vacation
of four (4) weeks per year, during which period his Base Salary shall be paid in
full. Employee shall take his vacation at such time or times as Employee and the
Corporation shall determine is mutually convenient.
Section 8. DISCLOSURE OF CONFIDENTIAL INFORMATION. Employee
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Corporation or any of its affiliates,
including, but not limited to, confidential information and trade secrets
concerning the Corporation's (or any of its affiliate's) working methods,
processes, business and other plans, programs, designs, marketing, promotion,
sales activities, trading, investment, products, know-how, costs, credit and
financial data, manufacturing processes, financing methods, profit formulas,
customer names, customer requirements and supplier names. Employee acknowledges
that such information is of great value to the Corporation, is the sole property
of the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, Employee
will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any information acquired by Employee during the
course of his employment, which is treated as confidential by the Corporation,
including but not limited to its customer list, and not otherwise in the public
domain. The provisions of this Section 8 shall survive Employee's employment
hereunder.
Section 9. COVENANT NOT TO COMPETE.
(a) Employee recognizes that the services to be performed
by him hereunder are special, unique and extraordinary. The parties confirm that
12
it is reasonably necessary for the protection of the Corporation that Employee
agree, and accordingly, Employee does hereby agree that, except as provided in
Subsection (c) below, he shall not, directly or indirectly, at any time during
the "Restricted Period" within the "Restricted Area" (as those terms are defined
in Section 9(d) below), engage in any Competitive Business (as defined in
Section 9(d) below), either on his own behalf or as an officer, director,
stockholder, partner principal, trustee, investor, consultant, associate,
employee, owner, agent, creditor, independent contractor, co-venturer of any
third party or in any other relationship or capacity.
(b) Employee hereby agrees that he will not directly or
indirectly, for or on behalf of himself or any third party, at any time during
the Restricted Period (i) solicit any customers of the Corporation or (ii)
solicit, employ or engage, or cause, encourage or authorize, directly or
indirectly, to be employed or engaged, for or on behalf of himself or any third
party, any employee or agent of the Corporation or any of its subsidiaries.
(c) This Section 9 shall not be construed to prevent
Employee from owning, directly and indirectly, in the aggregate, an amount not
exceeding one percent (1%) of the issued and outstanding voting securities of
any class of any corporation whose voting capital stock is traded on a national
securities exchange or in the over-the-counter market.
(d) The term "Restricted Period" as used in this Section
9 shall mean the period commencing on the date hereof and ending on the later of
(1) June 30, 2015 or (ii) the date which is twelve (12) months after the date
Employee is no longer employed by the Corporation. The term "Restricted Area" as
used in this Section 9 shall mean anywhere in the world. The term "Competitive
Business" as used in this Agreement shall mean the design, manufacture, sale,
marketing or distribution of (i) branded or designer footwear, apparel,
accessories and other products in the categories of products sold by, or under
license from, the Corporation or any of its affiliates, (ii) jewelry and other
giftware, (iii) cosmetics, fragrances and other health and beauty care items,
(iv) housewares, furniture, home furnishings and related products and (v) other
branded products related to fashion, cosmetics or lifestyle.
(e) During and after Employee's employment with the
Corporation, Employee shall not disparage or otherwise make negative statements
with regard to the Corporation, its past or then present officers, directors,
employees, agents, representatives or products or services. The Corporation
shall direct its employees, officers and directors not to disparage or make
negative statements with regard to Employee. The foregoing shall not apply in
the case of a termination For Cause nor shall it apply to prohibit truthful
testimony in connection with legal process.
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(f) The provisions of this Section 9 shall survive the
termination of Employee's employment as provided hereunder.
(g) Notwithstanding anything elsewhere contained herein,
in the event Employee is no longer employed by the Corporation then Employee may
work for any organization in any business that acts as an agent to sell and/or
create products, as long as Employee sells and/or creates products solely and
exclusively for the Corporation, and the same shall not be considered a
violation of Employee's covenants hereunder.
Section 10. USE AND REGISTRATION OF E.MPLOYEE'S NAME.
(a) CONSENT. The Corporation and Employee recognize that
the Corporation's trademarks and/or service marks and other proprietary rights,
including its rights to Employee's Name, are important to the Corporation's
success and its competitive position. In addition to any previous assignments,
Employee consents to the use of Employee's Name as trademarks, service marks,
corporate names and/or Internet domain name addresses of the Corporation (the
"Marks"). Without limitation, Employee specifically consents to the registration
by the Corporation of Employee's Name as the Corporation's Marks in perpetuity
in any and all countries and jurisdictions throughout the world.
(b) ASSIGNMENT. To the extent not previously assigned to
the Corporation, Employee hereby sells, transfers and assigns to the Corporation
and any successors or assignees of the Corporation, the exclusive right, title
and interest to Employee's Name, including the good will attached thereto, to
use in connection with a Competitive Business. Employee acknowledges that as
between Employee and the Corporation, the Corporation shall be deemed the sole
owner of all right, title and interest in and to Employee's Name throughout the
world. Employee retains the right to the use of Employee's Name for all
non-commercial purposes and for use in connection with any business that is not
a Competitive Business.
(c) ADDITIONAL DOCUMENTS. Each of the Corporation and
Employee hereby agree to execute any consent or similar form that the other
reasonably believes is necessary to evidence and/or effectuate the rights
granted under this Section. Employee agrees that from time to time, at the
request of the Corporation or its successors, assignees or related companies, he
shall, without the payment of additional consideration, execute such additional
documents as are required or useful in obtaining registrations for any of the
Marks that incorporate Employee's Name, in whole or in part, in any country or
jurisdiction. In furtherance of the Corporation's rights in and to Employee's
Name and to the Marks, Employee grants the Corporation an irrevocable power of
attorney to execute any and all documents as may be
14
necessary or appropriate to effectuate such rights and confirm the Corporation's
ownership and registration rights in and to Employee's Name and the Marks.
(d) ADDITIONAL RESTRICTIONS. Employee agrees never to
challenge the Corporation's ownership of Employee's Name, or the validity of the
Corporation's ownership of the Marks or of any registration or application for
registration thereof. Employee agrees that he shall not at any time use
Employee's Name, the Marks, or any other trademark, service mark, tradename,
corporate name or domain name, or any other form of indicator of source, which
is confusingly similar to Employee's name or any derivative thereof or to the
Marks, except for (i) the personal use of Employee's name (ii) the use of
Employee's name in any business that is not a Competitive Business and (iii)
uses which are specifically permitted in writing by the Corporation.
(e) The obligations of this Section shall survive the
termination of this Agreement.
Section 11. INTELLECTUAL PROPERTY. All designs, copyright and
other intellectual property created by or at the direction of Employee in the
course of his employment by the Corporation shall be and remain the property of
the Corporation without further act of either party. All copyrightable works
that Employee creates shall be considered "works made for hire." Employee shall,
at the reasonable request of the Corporation, execute such documents as may be
necessary to confirm or evidence the Corporation's ownership of such property.
The obligations of this Section shall survive the termination of this Agreement.
Section 12. REASONABLENESS OF COVENANTS. Employee acknowledges
that he has carefully read and considered all the terms and conditions of this
Agreement, including the restraints imposed upon him pursuant to Sections 8, 9,
10, and 11 hereof. Employee agrees that said restraints are necessary for the
reasonable and proper protection of the Corporation and its subsidiaries and
affiliates, and that each and every one of the restraints is reasonable in
respect to subject matter, length of time, geographic area and otherwise.
Employee further acknowledges that, in the event any provision of Sections 8, 9,
10 and 11 hereof shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too
large a geographic area, too great a range of activities or otherwise, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.
Section 13. MISCELLANEOUS.
15
13.1 ENFORCEMENT OF COVENANTS. The parties hereto agree
that Employee is obligated under this Agreement to render personal services
during the Term of a special, unique, unusual, extraordinary and intellectual
character, thereby giving this Agreement peculiar value, and in the event of a
breach of any covenant of Employee herein, the injury or imminent injury to the
value and goodwill of the Corporation's business could not be reasonably or
adequately compensated in damages in an action at law. Employee therefore agrees
that the Corporation, in addition to any other remedies available to it shall be
entitled to seek specific performance, preliminary and permanent injunctive
relief or any other equitable remedy against Employee, without the posting of a
bond, in the event of any breach or threatened breach by Employee of any
provision of this Agreement (including, but not limited to, the provisions of
Sections 8, 9, 10, and 11). Without limiting the generality of the foregoing, if
Employee breaches any provision of Section 8, 9, 10, or 11 hereof, such breach
will entitle the Corporation to enjoin Employee from disclosing any confidential
information to any Competitive Business, to enjoin such Competitive Business
from receiving confidential information from Employee or using any such
confidential information, and/or to enjoin Employee from rendering personal
services to or in connection with such Competitive Business. Subject to Section
13.12, the rights and remedies of the parties hereto are cumulative and shall
not be exclusive, and each party shall be entitled to pursue all legal and
equitable rights and remedies and to secure performance of the obligations and
duties of the other under this Agreement, and the enforcement of one or more of
such rights and remedies by a party shall in no way preclude such party from
pursuing, at the same time or subsequently, any and all other rights and
remedies available to it.
13.2 SEVERABILITY. The invalidity or partial invalidity of
one or more provisions of this Agreement shall not invalidate any other
provision of this Agreement. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction or by a governmental agency, the remainder of this Agreement, or
the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
13.3 NO DURESS; CONSULTATION OF COUNSEL. Employee hereby
represents and warrants that Employee has entered into this Agreement
voluntarily and not as a result of coercion, duress or undue influence. In
addition, Employee hereby represents and warrants that Employee has read and
fully understands the terms of this Agreement and has consulted with an attorney
prior to executing this Agreement, including with respect to Section 12 hereof.
16
13.4 ASSIGNMENTS. Neither Employee nor the Corporation may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other, except the Corporation may transfer
its rights and duties in connection with a sale of all or substantially all of
its assets or in connection with a business combination (subject to Section 5.5
hereof) and the Corporation may, at any time sell, assign or license the rights
held by the Corporation with respect to Employee's Name as set forth under
Section 10 hereof.
13.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement
constitutes and embodies the full and complete understanding and agreement of
the parties with respect to Employee's employment by the Corporation, supersedes
all prior understandings and agreements, whether oral or written, between
Employee and the Corporation, including, but not limited to, the Prior
Employment Agreement, and shall not be amended, modified or changed except by an
instrument in writing executed by Employee and by an expressly authorized
officer of the Corporation.
13.6 WAIVER. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party. The failure of
either party to require the performance of any term or obligation of this
Agreement, or the waiver by either party of any breach of this Agreement, shall
not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
13.7 BINDING EFFECT. This Agreement shall inure to the
benefit of, be binding upon and enforceable against the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.
13.8 HEADINGS. The headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.9 NOTICES. Any and all notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
sent by registered or certified mail, return receipt requested, postage prepaid,
or by private overnight mail service (e.g., Federal Express) to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day
after sending.
13.10 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
17
giving effect to such State's conflicts of laws principles and, subject to
Section 13.12, each of the parties hereto irrevocably consents to the
jurisdiction and venue of the federal and state courts located in the State of
New York, County of New York.
13.11 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
13.12 ARBITRATION. In the event of any dispute under or
relating to any term of this Agreement (other than Sections 8, 9, 10 and 11), or
the breach, validity or legality thereof, it is agreed that the same shall be
submitted to binding arbitration before one arbitrator in New York City, New
York pursuant to the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. This arbitration provision shall remain in full force and
effect in perpetuity notwithstanding the nature of any claim or defense
hereunder.
13.13 IRC SECTION 409A. The parties agree that the intent
of the parties is that the provisions of this Agreement be in full compliance
with Internal Revenue Code Section 409A. Accordingly, the parties shall promptly
amend this Agreement as necessary to bring the provisions of this Agreement into
full compliance with the provisions of such Section and, in any event, the
parties agree that this Agreement shall be administered and interpreted in full
compliance with such Section.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
STEVE MADDEN, LTD.
by /s/ JAMIESON KARSON
-----------------------------------
Name: Jamieson A. Karson
Title: CEO
/s/ STEVEN MADDEN
-----------------------------------
STEVEN MADDEN
18
Exhibit 99.1
Company Contact: Richard Olicker
President
Steven Madden, Ltd.
(718) 446-1800
Investor Relations: Cara O'Brien
Press: Melissa Merrill
Financial Dynamics
(212) 850-5600
FOR IMMEDIATE RELEASE
- ---------------------
STEVEN MADDEN, LTD. ANNOUNCES POSITIVE
PRELIMINARY RESULTS FOR THE SECOND QUARTER
LONG ISLAND CITY, N.Y. - July 19, 2005 - Steven Madden, Ltd. (NASDAQ: SHOO), a
leading designer, wholesaler and marketer of fashion footwear for women, men and
children, today announced preliminary results for the second quarter ended June
30, 2005.
Based on stronger than anticipated trends in both the wholesale and
retail divisions, the Company expects to report second quarter net sales in the
range of approximately $100 million to $101 million, compared with $86.2 million
in the same period of the prior year, an increase of approximately 16%. This
reflects an increase in total retail sales of approximately 23% and a same-store
sales increase of approximately 13% for the quarter on top of a 15% same-store
sales increase in the second quarter last year. Net sales also includes an
approximate 14% increase in wholesale revenues reflecting particularly strong
results in Madden Mens and improvements in Candie's.
In addition, while the market has remained challenging, increased
shipments out of the high-margin Madden Mens open stock program and expanded
gross margin in Candie's and l.e.i. improved overall gross margin. Further, SG&A
as a percentage of sales declined versus the comparable period last year,
contributing to increased operating margin for the quarter. As a result, the
Company anticipates that second quarter earnings will exceed plan, ranging
between approximately $0.36 and $0.39 per diluted share based on approximately
13.5 million diluted weighted average shares outstanding. This compares to
earnings per diluted share of $0.28 on 14.4 million diluted weighted average
shares outstanding in the second quarter last year.
With respect to the outlook for the balance of the year, based on the
positive year to date sales trends, coupled with projections for the business in
the second half, the Company currently expects 2005 net sales to increase in the
mid single digits over 2004. With respect to expectations for earnings per
diluted share, previous guidance already assumed an improvement in the second
half of 2005 versus the comparable period in the prior year. Further, the
Company remains cautious about the balance of the year and continues to expect
challenges related to sustained margin pressure in the wholesale and retail
businesses. Taking all of these factors into account, the Company currently
anticipates that full year earnings will be between approximately $0.90 and
$0.93 per diluted share.
"Our performance during the second quarter shows that we are making
significant strides in the effort to strengthen the business and effectively
combat the various challenges we are facing in the marketplace," said Jamieson
Karson, Chairman and Chief Executive Officer. "Specifically, we are delivering
on a number of the goals we communicated in the recent timeframe - we are
driving top line growth, increasing gross margin, leveraging our cost structure,
improving inventory productivity, further building the Steve Madden brand, and
enhancing shareholder value. While we believe it is prudent to remain cautious
about the future, we remain focused on continuing to improve our operations and
positioning the Company for long-term success."
The Company intends to report its final second quarter results on
Tuesday, August 2, 2005 and will hold a conference call the same day at 10 a.m.
Eastern Time.
Steven Madden, Ltd. designs and markets fashion-forward footwear for women, men
and children. The shoes are sold through Steve Madden retail stores, department
stores, apparel and footwear specialty stores, and on-line at
www.stevemadden.com. The Company has several licenses for the Steve Madden
brand, including eyewear, hosiery, and belts, owns and operates two retail
stores under its Steven brand, and is the licensee for l.e.i Footwear, Candie's
Footwear and UNIONBAY Men's Footwear.
Statements in this press release that are not statements of historical or
current fact constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other unknown
factors that could cause the actual results of the Company to be materially
different from the historical results or from any future results expressed or
implied by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties readers are urged to consider
statements labeled with the terms "believes", "belief", "expects", "intends",
"anticipates" or "plans" to be uncertain and forward-looking. The forward
looking statements contained herein are also subject generally to other risks
and uncertainties that are described from time to time in the Company's reports
and registration statements filed with the Securities and Exchange Commission.
###