AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1999
REGISTRATION NO. 333--__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
STEVEN MADDEN, LTD.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 3140 13-3588231
- ------------------------- ---------------------------- -------------------
(STATE OR OTHER JURIS- (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
DICTION OF ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
52-16 BARNETT AVENUE
LONG ISLAND CITY, NEW YORK 11104
(718) 446-1800
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR
INTENDED PRINCIPAL PLACE OF BUSINESS)
STEVEN MADDEN
CHIEF EXECUTIVE OFFICER
52-16 BARNETT AVENUE
LONG ISLAND CITY, NEW YORK 11104
(718) 446-1800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
ALAN N. FORMAN, ESQ.
BERLACK, ISRAELS & LIBERMAN LLP
120 WEST 45TH STREET
NEW YORK, NY 10036
(212) 704-0100
(212) 704-0196 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY THE
SELLING SECURITYHOLDERS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS, PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH
DIVIDEND OR REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE
462(C) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES
ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION
STATEMENT FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. [ ]
CONTINUED OVERLEAF
CALCULATION OF REGISTRATION FEE
==================================================================================================================
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED OFFERING PRICE PER OFFERING PRICE REGISTRATION
SECURITIES FEE
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Common Stock 200,000(1) $7.50(2) $ 1,500,000 $ 417.00
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Total Registration Fee $ 417.00
==================================================================================================================
(1) Includes 200,000 shares of Common Stock issuable upon the exercise of a
Warrant Agreement issued to the Selling Securityholder by the Company.
(2) The proposed maximum offering price per share is based upon designated
exercise price set forth in the Warrant Agreement issued to the Selling
Securityholder by the Company.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
PROSPECTUS SUBJECT TO COMPLETION DATED NOVEMBER 17, 1999
STEVEN MADDEN, LTD.
200,000 Shares of Common Stock
All of the shares of common stock being offered by this prospectus are
being sold by the selling securityholder named under the "Selling
Securityholder" section of this Prospectus beginning on page ___. We are
registering the shares pursuant to Warrant Agreement between us and the selling
securityholder. The term "Shares" shall be used in this Prospectus to refer to
the shares of Steven Madden Ltd. Common stock to be sold by the Selling
Securityholder and the term "Selling Securityholder" shall refer to the selling
securityholder identified on page of this Prospectus.
The Selling Securityholder will sell the Shares issuable pursuant to
warrants they own as described under "Plan of Distribution" beginning on page
11. Steven Madden, Ltd. will not receive any of the proceeds from this offering.
However, we will receive $7.50 for each warrant that is exercised by the Selling
Securityholder, and if all of the warrants owned by the Selling Securityholder
are exercised, we will receive a total of $1,500,000.
Our common stock is quoted on The Nasdaq National Market under the
symbol "SHOO". The closing price of the common stock on November 5, 1999 was
$13.44 per share.
Our principal executive offices are located at 52-16 Barnett Avenue,
Long Island City, New York 11104. Our telephone number is (718) 446-1800.
-------------------------------------
An investment in our common stock involves a high degree of risk. See
"Risk Factors" beginning on page 4.
-------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------------------
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to by these
securities in any state where the offer or sale is not permitted.
THE DATE OF THIS PROSPECTUS IS ______, 1999.
AVAILABLE INFORMATION
We file reports, proxy statements and other information with
the Securities and Exchange Commission. Those reports, proxy statements and
other information may be obtained:
o At the Public Reference Room of the SEC, Room 1023 --
Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549;
o At the public reference facilities at the SEC's
regional offices located at Seven World Trade Center,
13th Floor, New York, New York 10048 or Northwestern
Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661;
o From the SEC, Public Reference Room, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;
o At the offices of The Nasdaq Stock Market, Inc.,
Reports Section, 1735 K Street, N.W., Washington,
D.C. 20006; or
o From the Internet site maintained by the SEC at
http://www.sec.gov, which contains reports, proxy and
information statements and other information
regarding issuers that file electronically with the
SEC.
Some locations may charge prescribed rates or modest fees for copies.
For more information on the public reference rooms, call the SEC at
1-800-SEC-0330.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding our Company and our common stock, including certain
exhibits. You can get a copy of the registration statement from the SEC at the
addresses listed above or from its Internet file.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to you those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the selling shareholders sell all the shares. This prospectus
is part of registration statement we filed with the SEC (Registration No. 333-
_________).
o Quarterly Report on Form 10-Q for the quarter ended September 30,
1999.
o Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
o Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
o Proxy Statement on Schedule 14A dated April 30, 1999.
o Annual Report on Form 10-K for the year ended December 31, 1998.
o The description of the Common Stock, par value $.0001 per share
("Common Stock"), of Steven Madden, Ltd. contained in its
registration statement filed under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating
such description.
2
On request, we will provide at no cost to each person, including any
beneficial owner, who receives a copy of this prospectus, a copy of any or all
of the documents incorporated in this prospectus by reference. We will not
provide exhibits to any of such documents, however, unless such exhibits are
specifically incorporated by reference into those documents. Requests should be
directed to the Chief Financial Officer of Steven Madden, Ltd., 52-16 Barnett
Avenue, Long Island City, New York 11104, telephone number (718) 446-1800.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other that the date on
the front of this document.
THE COMPANY
Steven Madden, Ltd. (together with its subsidiaries will be referred to
as the "Company") designs, sources and sells fashion footwear under the Steve
Madden(R), l.e.i.(R) and David Aaron(R) brands for women and girls ages 8 to 45
years. The Company's branded products are designed to appeal to style-conscious
consumers in the junior and better market segments. As of October 31, 1999, the
Company distributes its products through its website at WWW.STEVEMADDEN.COM
thirty-eight (38) Steve Madden(R) retail stores, one (1) David Aaron(R) store,
three (3) outlet stores and more than three thousand (3,000) department and
specialty store locations in the United States, Australia, Canada, Israel,
Mexico and Venezuela. The Company's product line includes core products, which
are sold year-round, complemented by a broad range of updated styles which are
designed to establish or capitalize on market trends.
The Company's business is comprised of three (3) distinct segments: a
wholesale division which includes Steve Madden(R), l.e.i.(R) and David Aaron(R);
a retail subsidiary; and a private label subsidiary. The Company also has an
aggressive licensing program and has through October 31, 1999 entered into nine
(9) licensing agreements for belts, sportswear and jeanswear, outerwear,
handbags, sunglasses, hosiery, intimate apparel, hair accessory products and
jewelry. Given the strength of brand awareness in the juniors marketplace, the
Company has entered into separate license agreements pursuant to which the
Company has the right to source, distribute and market footwear under the lei(R)
trademark and the Jordache trademark.
Steven Madden, Ltd., was incorporated as a New York corporation on July
9, 1990 and reincorporated under the same name in Delaware in November 1998. The
Company was founded and developed by Steven Madden, its principal designer and
Chief Executive Officer, President and Chairman of the Board, who has
established a reputation for his creative designs, popular styles and quality
products at accessible price points. The Company completed its initial public
offering in December 1993 and its securities traded on The Nasdaq SmallCap
Market until December 1996. In January 1997, the Company's shares of Common
Stock and Class B Common Stock Purchase Warrants began trading on The Nasdaq
National Market under the symbols "SHOO" and "SHOOZ", respectively. In July
1998, the Class B Warrants were called for redemption by the Company, and as a
result, the Company received approximately $10,800,000 in proceeds from the
exercise of the Class B Warrants.
The Company maintains its principal executive offices at 52-16 Barnett
Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
3
RISK FACTORS
You should carefully consider the risks described below before
investing in our company. The risks and uncertainties described below are not
the only ones facing our company. Other risks and uncertainties that we have not
predicted or assessed may also adversely affect our company.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe,' "intend," "estimate," and "continue" or other similar
words. You should read statements that contain these words carefully for the
following reasons:
o the statements may discuss our future expectations;
o the statements may contain projections of our future earnings or
of our financial condition; and
o the statements may state other "forward-looking" information.
We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed below, as well as any cautionary language in or incorporated by reference
into this prospectus, provide examples of risks, uncertainties and events that
may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our company,
you should be aware that the occurrence of any of the events described in the
risk factors below, elsewhere in or incorporated by reference into this
prospectus and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition or business. In
such case, the trading price of our securities could decline and you may lose or
all or part of your investment.
RISKS EFFECTING OUR COMPANY
WE ARE DEPENDENT ON KEY PERSONNEL. We are dependent, in particular,
upon the services of Steven Madden, our Chief Executive Officer, President,
Chairman of the Board and chief designer and Rhonda Brown, our Chief Operating
Officer. If Mr. Madden or Ms. Brown are unable to provide services to the
Company for whatever reason, the business could be adversely affected. The
Company therefore maintains a key person life insurance policy on Mr. Madden
with coverage in the amount of $10 million; however, the Company does not
maintain a policy on Ms. Brown. The Company has an employment contract with Mr.
Madden that expires on December 31, 2007, and an employment contract with Ms.
Brown that expires on June 30, 2001. In the event Mr. Madden is terminated for
other than cause or total disability, the Company will be required to pay Mr.
Madden's remaining salary under his contract, half of which must be paid upon
termination. Mr. Madden is also entitled during the term of the contract to an
annual $50,000 non-accountable expense account. In the event of a change in
control, Mr. Madden and Ms. Brown may choose to continue their employment with
the Company or terminate employment and receive the remaining salary under their
respective contracts. Since Mr. Madden and Ms. Brown are involved in all aspects
of the Company's business, there can be no assurance that a suitable replacement
for either could be found if either were unable to perform services for the
Company. As a consequence, a loss of Mr. Madden, Ms. Brown or other key
management personnel could have a material adverse effect upon the Company's
business, results of operations and financial condition. In addition, the
Company's ability to market its products and to maintain profitability will
depend, in large part, on its ability to attract and retain qualified personnel.
Competition for such personnel is intense and there can be no assurance that the
Company will be able to attract and retain such personnel. The inability of the
Company to attract and retain such qualified personnel would have a material
adverse effect on the Company's business, financial condition and results of
operations.
4
OUR SALES ARE SUBJECT TO RAPIDLY CHANGING CONSUMER PREFERENCES. Our
success will depend in significant part upon our ability to anticipate and
respond to product and fashion trends in the womens, juniors and girls
marketplace as well as to anticipate, gauge and react to changing consumer
demands in a timely manner. We cannot be certain that the Company's products
will correspond to the changes in taste and demand or that we will be able to
successfully market products which respond to such trends. If we misjudge the
market for our products, the Company may have significant excess inventories for
some products and missed opportunities with others. In addition, misjudgments in
merchandise selection could adversely affect the our image with our customers
and weak sales and resulting markdown requests from customers could have a
material adverse effect on the Company's business, results of operations and
financial condition.
DEMAND FOR OUR PRODUCTS MAY DECLINE IN A RECESSIONARY ECONOMY. The
fashion footwear industry is cyclical, with purchases tending to decline during
recessionary periods when disposable income is low. Purchases of contemporary
shoes and accessories tend to decline during recessionary periods and also may
decline at other times. While the Company has fared well in recent years in a
difficult retail environment, there can be no assurance that the Company will be
able to maintain its historical rate of growth in revenues and earnings, or
remain profitable in the future. A recession in the national or regional
economies or uncertainties regarding future economic prospects, among other
things, could affect consumer spending habits and have a material adverse effect
on the Company's business, results of operations and financial condition.
CHANGES IN THE RETAIL INDUSTRY MAY EFFECT DEMAND FOR OUR PRODUCTS. In
recent years, the retail industry has experienced consolidation and other
ownership changes, including the rapid expansion of retail sales via the
internet. In addition, some of our customers have operated under the protection
of the federal bankruptcy laws. In the future, retailers in the United States
and in foreign markets may consolidate, undergo restructurings or
reorganizations, or realign their affiliations, any of which could decrease the
number of stores that carry the Company's products or increase the ownership
concentration within the retail industry. This could result in pressure by
retail customers of the Company's products to reduce wholesale prices charged by
the Company and to provide retail customers with additional benefits. While such
changes in the retail industry have not had a material adverse effect on the
Company's business or financial condition, there can be no assurance as to the
future effect of any such changes.
WE MAY NOT EFFECTIVELY MANAGE OUR INVENTORY. Our ability to manage our
inventories properly is an important factor in the success of our operations.
Inventory shortages can adversely affect the timing of shipments to customers
and diminish brand loyalty. Conversely, excess inventories can result in
increased interest costs as well as lower gross margins due to the necessity of
providing discounts to our retail customers. The inability of the Company to
effectively manage its inventory would have a material adverse effect on the
Company's business, financial condition and results of operations.
WE ARE DEPENDENT UPON A LIMITED NUMBER OF CUSTOMERS. The Company's
wholesale customers purchasing footwear consist principally of department stores
and specialty stores, including shoe boutiques. Certain of the Company's
department store customers, including some under common ownership, account for
significant portions of the Company's wholesale net sales. Presently, the
Company sells approximately sixty percent (60%) of its wholesale products to
department stores, including Federated Stores (Bloomingdales, Burdines, Macy's
and Bullocks), Dillards, Nordstrom, Dayton Hudson and May Department Stores
(Famous Barr, Filene's, Foley's, Hecht's, Kaufmann's, Meier & Frank, and
Robinson's May) and approximately forty (40%) percent to specialty stores,
including shoe boutiques. The Company's largest wholesale customers, Federated
Stores and Nordstrom, account for approximately twenty percent (20%) and
seventeen percent (17%) of the Company's wholesale sales, respectively.
5
The Company believes that a substantial portion of sales of the
Company's licensed products by its licensing partners are also made to the
Company's largest department store customers. The Company generally enters into
a number of purchase order commitments with its customers for each of its lines
every season and does not enter into long-term agreements with any of its
customers. Therefore, a decision by Federated Stores, Nordstrom or any other
significant customer, whether motivated by competitive conditions, financial
difficulties or otherwise, to decrease the amount of merchandise purchased from
the Company or its licensing partners, or to change its manner of doing business
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company sells its products primarily to
retail stores across the United States and extends credit based on an evaluation
of each customer's financial condition, usually without requiring collateral.
While various retailers, including some of the Company's customers, have
experienced financial difficulties in the past few years which increased the
risk of extending credit to such retailers, the Company's losses due to bad
debts have been limited. However, financial difficulties of a customer could
cause the Company to curtail business with such customer or require the Company
to assume more credit risk relating to such customer's receivables.
WE ARE DEPENDENT ON FOREIGN MANUFACTURERS. A significant portion of the
Company's products are currently sourced outside the United States through
arrangements with a number of foreign manufacturers in four different countries.
During the year ended December 31, 1998, approximately 95% of the Company's
products were purchased from sources outside the United States, including
Mexico, China, Brazil and Spain.
Risks inherent in foreign operations include work stoppages,
transportation delays and interruptions, changes in social, political and
economic conditions which could result in the disruption of trade from the
countries in which the Company's manufacturers or suppliers are located, the
imposition of additional regulations relating to imports, the imposition of
additional duties, taxes and other charges on imports, significant fluctuations
of the value of the dollar against foreign currencies, or restrictions on the
transfer of funds, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
does not believe that any such economic or political conditions will materially
affect the Company's ability to purchase products, since a variety of materials
and alternative sources exist. The Company cannot be certain, however, that it
will be able to identify such alternative sources without delay or without
greater cost to the Company, if ever. The Company's inability to identify and
secure alternative sources of supply in this situation would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's imported products are also subject to United States
customs duties. The United States and the countries in which the Company's
products are produced or sold may, from time to time, impose new quotas, duties,
tariffs, or other restrictions, or may adversely adjust prevailing quota, duty
or tariff levels, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations.
MANUFACTURERS' MAY FAIL TO MANUFACTURE IN A TIMELY MANNER, TO MEET
QUALITY STANDARDS OR TO USE ACCEPTABLE LABOR PRACTICES. As is common in the
footwear industry, the Company contracts for the manufacture of a majority of
its products to its specifications through foreign manufacturers. The Company
does not own or operate any manufacturing facilities and is therefore dependent
upon independent third parties for the manufacture of all of its products. The
Company's products are manufactured to its specifications by both domestic and
international manufacturers. The inability of a manufacturer to ship orders of
the Company's products in a timely manner or to meet the Company's quality
standards could cause the Company to miss the delivery date requirements of its
customers for those items, which could result in cancellation of orders, refusal
to accept deliveries or a reduction in purchase prices, any of which could have
a material adverse effect on the Company's business, financial condition and
results of operations.
6
Although the Company enters into a number of purchase order commitments
each season specifying a time frame for delivery, method of payment, design and
quality specifications and other standard industry provisions, the Company does
not have long-term contracts with any manufacturer. As a consequence, any of
these manufacturing relationships may be terminated, by either party, at any
time. Although the Company believes that other facilities are available for the
manufacture of the Company's products, both within and outside of the United
States, there can be no assurance that such facilities would be available to the
Company on an immediate basis, if at all, or that the costs charged to the
Company by such manufacturers will not be greater than those presently paid.
The Company requires its licensing partners and independent
manufacturers to operate in compliance with applicable laws and regulations.
While the Company promotes ethical business practices and the Company's staff
periodically visits and monitors the operations of its independent
manufacturers, the Company does not control such manufacturers or their labor
practices. The violation of labor or other laws by an independent manufacturer
of the Company or by one of the Company's licensing partners, or the divergence
of an independent manufacturer's or licensing partner's labor practices from
those generally accepted as ethical in the United States, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
WE FACE INTENSE COMPETITION. The fashionable footwear industry is
highly competitive and barriers to entry are low. The Company's competitors
include specialty companies as well as companies with diversified product lines.
The recent substantial growth in the sales of fashionable footwear has
encouraged the entry of many new competitors and increased competition from
established companies. Most of these competitors, including Kenneth Cole, Nine
West, DKNY, Sketchers, Nike and Guess, have significantly greater financial and
other resources than the Company and there can be no assurance that the Company
will be able to compete successfully with other fashion footwear companies.
Increased competition could result in pricing pressures, increased marketing
expenditures and loss of market share, and could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company believes effective advertising and marketing, fashionable styling, high
quality and value are the most important competitive factors and plans to employ
these elements as it develops its products. The Company's inability to
effectively advertise and market its products could have a material adverse
effect on the Company's business, financial condition and results of operations.
WE ARE SUBJECT TO RISKS FROM RAPID EXPANSION OF OUR RETAIL BUSINESS.
The Company's continued growth depends to a significant degree on further
developing the Steve Madden and David Aaron brands, creating new product
categories and businesses and operating Company-owned stores on a profitable
basis. The Company plans to open three (3) Steve Madden retail stores during the
fourth quarter of 1999 and ten (10) stores during the year ending December 31,
2000. The Company's recent and planned expansion includes the opening of stores
in new geographic markets. New markets have in the past presented, and will
continue to present, competitive and merchandising challenges that are different
from those faced by the Company in its existing markets. There can be no
assurance that the Company will be able to open new stores, and if opened, that
such new stores will be able to achieve sales and profitability levels
consistent with existing stores. The Company's retail expansion is dependent on
a number of factors, including the Company's ability to locate and obtain
favorable store sites, the performance of the Company's wholesale and retail
operations, and the ability of the Company to manage such expansion and hire and
train personnel. Past comparable store sales results may not be indicative of
future results, and there can be no assurance that the Company's comparable
store sales results will increase or not decrease in the future. In addition,
there can be no assurance that the Company's strategies to increase other
sources of revenue, which may include expansion of its licensing activities,
will be successful or that the Company's overall sales or profitability will
increase or not be adversely affected as a result of the implementation of such
retail strategies.
7
The Company's growth has increased and will continue to increase demand
on the Company's managerial, operational and administrative resources. The
Company has recently invested significant resources in, among other things, its
management information systems and hiring and training new personnel. However,
in order to manage currently anticipated levels of future demand, the Company
may be required to, among other things, expand its distribution facilities,
establish relationships with new manufacturers to produce its products, and
continue to expand and improve its financial, management and operating systems.
There can be no assurance that the Company will be able to manage future growth
effectively and a failure to do so could have a material adverse effect on the
Company's business, financial condition and results of operations.
THERE ARE SEASONAL AND QUARTERLY FLUCTUATIONS IN DEMAND FOR OUR
PRODUCTS. The Company's quarterly results may fluctuate quarter to quarter as a
result of the timing of holidays, weather, the timing of larger shipments of
footwear, market acceptance of the Company's products, the mix, pricing and
presentation of the products offered and sold, the hiring and training of
additional personnel, the timing of inventory write downs, the cost of
materials, the mix between wholesale, retail and licensing businesses, the
incurrence of other operating costs and factors beyond the Company's control,
such as general economic conditions and actions of competitors. In addition, the
Company expects its sales and operating results may fluctuate significantly with
the opening of new retail stores, the amount of revenue contributed by new
stores, changes in comparable store sales and the introduction of new products.
Accordingly, the results of operations in any quarter will not necessarily be
indicative of the results that may be achieved for a full fiscal year or any
future quarter.
WE MAY NOT BE ABLE TO PROTECT OUR TRADEMARKS AND SERVICEMARKS
PROTECTION. The Steve Madden and Steve Madden plus Design trademarks/service
marks have been registered in numerous International Classes (25 clothing &
shoes; 18 leather goods, such as handbags & wallets; 9 eye wear, 14 jewelry, 35
retail store services) in the United States. The Company also has trademark
registrations in the U.S. for the marks Eyeshadows By Steve Madden (Int'l Cl. 9
eye wear), Ice Tea (Int'l Cl. 25 clothing) and Soho Cobbler (Int. Cl. 9, eye
wear, 25 clothing & shoes).
The Company further owns registrations for the Steve Madden and Steve
Madden plus Design trademarks/service marks in various International Classes in
China, Hong Kong, Israel, Japan, Korea, Mexico, Panama, South Africa, Taiwan,
the 15 cooperating countries of Europe and the Benelux countries and has pending
applications for registration for the Steve Madden and Steve Madden plus Design
trademarks/service marks in Argentina, Australia, Brazil, Canada, Chile,
Colombia, Italy, Malaysia, Mexico, Peru, Thailand and Venezuela. There can be no
assurance, however, that the Company will be able to effectively obtain rights
to the Steve Madden mark throughout all of the countries of the world. Moreover,
no assurance can be given that others will not assert rights in, or ownership
of, trademarks and other proprietary rights of the Company or that the Company
will be able to successfully resolve such conflicts. The failure of the Company
to protect such rights from unlawful and improper appropriation may have a
material adverse effect on the Company's business, financial condition and
results of operation.
Additionally, the Company owns registrations for the David Aaron
trademark and service mark in various International Classes in the United States
(Int'l Cl. 25 clothes, shoes, 18 leather goods, handbags, wallets, 35 retail
store services), Australia, Canada, Hong Kong, Israel, Spain and the 15
cooperating countries in Europe. The Company further has pending applications
for registration of the David Aaron trademark and service mark in Japan, Panama
and South Africa. The Company believes that the David Aaron trademark has a
significant value and is important to the marketing of the Company's products.
8
The Company believes that its trademarks/service marks and
other proprietary rights are important to its success and its competitive
position. Accordingly, the Company devotes substantial resources to the
establishment and protection of its trademarks on a worldwide basis.
Nevertheless, there can be no assurance that the actions taken by the Company to
establish and protect its trademarks and other proprietary rights will be
adequate to prevent imitation of its products by others or to prevent others
from seeking to block sales of the Company's products as violative of the
trademarks and proprietary rights of others. Moreover, no assurance can be given
that others will not assert rights in, or ownership of, trademarks and other
proprietary rights of the Company or that the Company will be able to
successfully resolve such conflicts. In addition, the laws of certain foreign
countries may not protect proprietary rights to the same extent as do the laws
of the United States. The failure of the Company to establish and then protect
such proprietary rights from unlawful and improper appropriation could have a
material adverse impact on the Company's business, financial condition and
results of operations.
FOREIGN CURRENCY FLUCTUATIONS COULD ADVERSELY EFFECT OUR PROFITABILITY.
The Company generally purchases its products in U.S. dollars. However, the
Company sources substantially all of its products overseas and, as such, the
cost of these products may be affected by changes in the value of the relevant
currencies. Changes in currency exchange rates may also affect the relative
prices at which the Company and foreign competitors sell their products in the
same market. There can be no assurance that foreign currency fluctuations will
not have a material adverse impact on the Company's business, financial
condition and results of operations.
WE DO NOT EXPECT TO PAY DIVIDENDS. The Company anticipates that all of
its earnings in the foreseeable future will be retained to finance the continued
growth and expansion of its business and has no current intention to pay cash
dividends.
WE ARE SUBJECT TO RISKS FROM THE YEAR 2000 PROBLEM. The Company
recognizes that a challenging problem exists in that many computer systems
worldwide do not have the capability of recognizing the year 2000 or the years
thereafter. No easy technological "quick fix" has yet been developed for this
problem. The Company has spent a considerable sum of money to assure that all
its software programs are year 2000 compliant and believes that we are presently
year 2000 compliant. This "Year 2000 Computer Problem" creates risk for the
Company from unforeseen problems in its own software and from third parties with
whom the Company deals. Such failures of the Company and/or third parties'
computer systems could have a material adverse effect on the Company and its
ability to conduct its business in the future.
INVESTMENT RISKS
OUR STOCK PRICE HAS HISTORICALLY BEEN VOLATILE, WHICH MAY MAKE IT MORE
DIFFICULT FOR YOU TO RESELL SHARES WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE.
The trading price of our common stock has been and may continue to be subject to
wide fluctuations. During 1998 and the first [nine months] of 1999, the closing
sale prices of our common stock on The Nasdaq Stock Market ranged from $3.56 to
$14.94. The stock price may fluctuate in response to a number of events and
factors, such as quarterly variations in operating results, announcements of
technological innovations or new products by us or our competitors, changes in
financial estimates and recommendations by securities analysts, the operating
and stock price performance of other companies that investors may deem
comparable, and news reports relating to trends in our markets. In addition, the
stock market in general, and the market prices for footwear companies in
particular, have experienced volatility that may have been unrelated to the
operating performance of such companies. These broad market and industry
fluctuations may adversely affect the price of our stock, regardless of our
operating performance.
9
MANAGEMENT BENEFICIALLY OWNS APPROXIMATELY 27% OF OUR STOCK; THEIR
INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES OF STOCK HELD BY THEM
COULD HAVE A NEGATIVE EFFECT ON OUR STOCK PRICE. As of October 31, 1999, our
directors and executive officers beneficially own 3,773,316 shares or
approximately 27% of our outstanding common stock. As a result of their
beneficial ownership (which assumes options owned by them were exercised), our
directors and executive officers could control matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such concentration of ownership along with substantial
payments owed by the Company under the terms of employment may also have the
effect of delaying or preventing a change in control of the Company. In
addition, sales of significant amounts of shares held by our directors and
executive officers or the prospect of these sales, could adversely affect the
market price of our Common stock.
OUTSTANDING OPTIONS AND WARRANTS MAY EFFECT US NEGATIVELY. As of
October 31, 1999, the Company had outstanding options to purchase an aggregate
of approximately 2,811,675 shares of Common Stock. Holders of such options are
likely to exercise them when, in all likelihood, the Company could obtain
additional capital on terms more favorable than those provided by the options.
While options are outstanding, they may adversely affect the terms in which the
Company could obtain additional capital and negatively impact the market price
for the Company's shares of Common Stock.
ANTI-TAKEOVER PROVISIONS COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY
TO ACQUIRE US. Our board of directors has the authority to issue up to five
million (5,000,000) shares of preferred stock and to determine the price,
rights, preferences, privileges and restrictions, including voting rights, of
those shares without any further vote or action by the stockholders. The rights
of the holders of common stock may be subject to, and may be adversely affected
by, the rights of the holders of any Preferred stock that may be issued in the
future. The issuance of preferred stock may have the effect of delaying,
deferring or preventing a change of control of Steven Madden, Ltd. without
further action by the stockholders and may adversely affect the voting and other
rights of the holders of common stock. We have no present plans to issue shares
of preferred stock. In addition, our charter documents do not permit cumulative
voting, which may make it more difficult for a third party to gain control of
the our board of Directors.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares by
the Selling Securityholder. However, we will receive $7.50 for each warrant that
is exercised by the Selling Securityholder, and if all of the warrants owned by
the Selling Securityholder are exercised, we will receive a total of $1,500,000.
We intend to use all of such proceeds for working capital and general corporate
purposes. Pending use of the proceeds, they will be invested in short-term,
interest bearing securities or money market funds.
ISSUANCES OF SECURITIES TO THE SELLING SECURITYHOLDER
On October 12, 1995, our company engaged Ladenburg, Thalmann & Co.
Inc., a registered broker-dealer, as its financial advisor. Under the terms of
the engagement agreement, Ladenberg Thalmann agreed to provide such financial
consulting services as Steven Madden, Ltd. may reasonably request. As part of
the compensation paid to Ladenberg Thalmann, the Company issued to Ladenberg
Thalmann a warrant exercisable for 200,000 shares of common stock at an exercise
price of $7.50 per share (the fair market value of our common stock at the time
of issuance). We also granted Ladenberg Thalmann the right to require the
registration of the shares issuable upon the exercise of the warrant with the
Securities and Exchange Commission for sale to the public. In August 1999,
Ladenberg Thalmann notified us that it was exercising its right to require the
registration of the 200,000 shares of common stock issuable upon the exercise of
the warrant. As a result, we filed a registration statement with the Securities
and Exchange Commission which includes this prospectus. The warrant expires on
September 7, 2000.
10
SELLING SECURITYHOLDER
This prospectus relates to the proposed resale of 200,000 shares of our
common stock by Ladenburg, Thalmann & Co., Inc. or its transferees (referred to
as the "Selling Securityholders"). None of such shares are currently outstanding
and all of such shares are issuable upon exercise of the warrant held by the
Selling Securityholder at $7.50 per share.
Based upon 11,306,643 shares outstanding as of October 31, 1999, the
Selling Securityholder beneficially owns approximately 1.8% of the Company's
shares of Common Stock outstanding. Following the sale by the Selling
Securityholder of all 200,000 Shares, the Selling Securityholder will not
beneficially own any shares of the Company's Common Stock.
11
PLAN OF DISTRIBUTION
Shares of common stock covered hereby may be offered and sold from time
to time by the Selling Securityholder. The Selling Securityholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The Selling Securityholder may sell the Shares being offered
hereby: (i) on The Nasdaq National Market, or otherwise at prices and at terms
then prevailing or at prices related to the then current market price; or (ii)
in private sales at negotiated prices directly or through a broker or brokers,
who may act as agent or as principal or by a combination of such methods of
sale. The Selling Securityholder and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. We have agreed to indemnify the
Selling Securityholder against certain liabilities arising under the Securities
Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Securityholder (and, if acting as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees may be paid by the Selling Securityholder. Broker-dealers may
agree with the Selling Securityholder to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Securityholder, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the Selling Securityholder. Broker-dealers who acquire shares as principal
may thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or by a
combination of such methods of sale or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
We have advised the Selling Securityholder that the anti-manipulation
rules under the Exchange Act may apply to sales of Shares in the market and to
the activities of the Selling Securityholder and their affiliates. The Selling
Securityholder have advised us that during such time as the Selling
Securityholder may be engaged in the attempt to sell the Shares registered
hereunder, they will:
- not engage in any stabilization activity in connection with any of
our securities;
- not bid for or purchase any of our securities or any rights to
acquire our securities, or attempt to induce any person to purchase
any of our securities or rights to acquire our securities other than
as permitted under the Exchange Act;
- not effect any sale or distribution of the Shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to set forth the terms thereof; and
- effect all sales of Shares in broker's transactions through
broker-dealers acting as agents, in transactions directly with market
makers, or in privately negotiated transaction where no broker or
other third party (other than the purchaser) is involved.
The Selling Securityholder may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act. Any
commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal.
12
In order to comply with the securities laws of certain states, if
applicable, our common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
We have agreed to use its best efforts to maintain the effectiveness of
this registration statement with respect to the shares of common stock offered
hereunder by the Selling Securityholder. There can be no assurance that the
selling securityholders will sell all or any of the shares of common stock
offered hereunder.
We will not receive any of the proceeds from the sale of the Shares by
the Selling Securityholders or their transferees. "Selling Securityholders"
includes donees and pledgees selling shares received from the named Selling
Securityholder after the date of this prospectus.
LEGAL MATTERS
The validity of our securities offered hereby have been passed upon by
Berlack, Israels & Liberman LLP.
EXPERTS
The consolidated financial statements of Steven Madden, Ltd. included
in our annual report on Form 10-K for the year ended December 31, 1998,
incorporated by reference in this Prospectus have been audited by Richard A.
Eisner & Company, LLP, independent auditors, as indicated in their report with
respect thereto, and are incorporated herein by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION OF SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission this indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim of indemnification against these
liabilities, other than our payment of expense incurred or paid by one of our
directors, officers, or controlling persons in the successful defense of any
action, suit or proceeding, is asserted by that director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
this indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of these issues.
13
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other that the date on
the front of this document.
TABLE OF CONTENTS
Page
----
Available Information...................................................... 2
Risk Factors............................................................... 4
Use of Proceeds............................................................ 10
Selling Securityholder..................................................... 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
Disclosure of Commission
Position on Indemnification of
Securities Act Liabilities .............................................. 13
STEVEN MADDEN, LTD.
200,000 SHARES OF COMMON STOCK
PROSPECTUS
________, 1999
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering are as follows:
SEC filing fee.......................................... $ 417.00
Legal fees and expenses*................................ $ 15,000.00
Accounting fees and expenses*........................... $ 10,000.00
Blue Sky fees and expenses*............................. $ --
Printing and engraving*................................. $ 2,000.00
Transfer Agent's and Registrar fees*.................... $ --
Miscellaneous expenses*................................. $ 583.00
------------
Total................................................... $ 28,000.00
============
* Estimated
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify its directors and officers, as well as
other employees and individuals, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification in which the person seeking
indemnification has been found liable to the corporation. The statute provides
that it is not exclusive of other indemnification that may be granted by a
corporation's charter, bylaws, disinterested director vote, stockholder vote,
agreement or otherwise.
Article Tenth of the Company's Certificate of Incorporation states as
follows:
The Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of their heirs,
executors, and administrators of such a person.
II-1
ITEM 16. EXHIBITS.
Exhibits
- --------
4.1 Warrant Agreement issued to the Selling Securityholder
5.1 Opinion of Berlack, Israels & Liberman LLP
23.1 Consent of Berlack, Israels & Liberman LLP (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP
* Incorporated by Reference to the Company's Registration Statement on Form
SB-2, No. 333-11015.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING
The undersigned registrant will:
1. File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Act;
(ii) Reflect in the prospectus any facts or events which, individually
or in the aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) Include any additional or changed material information on the
plan of distribution;
2. For determining liability under the Securities Act, treat each such
post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(c) INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement or otherwise, the Registrant has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
(d) RULE 430A
The undersigned Registrant will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of a
prospectus filed by the Company under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
Registration Statement for the securities offered in the Registration Statement,
and the offering of the securities at that time shall be deemed as the initial
bona fide offering of those securities.
II-3
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended,
the Registrant, certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Long Island City, New York, on the 15th day of November,
1999.
STEVEN MADDEN, LTD.
By: /s/ STEVEN MADDEN
-----------------------------------
Steven Madden
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendments thereto has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ STEVEN MADDEN
- -------------------------- Chairman of the Board, November 15, 1999
Steven Madden President and Chief Executive
Officer
/s/ RHONDA BROWN
- -------------------------- Chief Operating Officer November 15, 1999
Rhonda Brown and Director
/s/ ARVIND DHARIA
- -------------------------- Chief Financial and November 15, 1999
Arvind Dharia Accounting Officer
and Director
/s/ JOHN BASILE
- -------------------------- Executive Vice President November 15, 1999
John Basile and Director
/s/ CHARLES KOPPELMAN
- --------------------------
Charles Koppelman Director November 15, 1999
/s/ JOHN L. MADDEN
- --------------------------
John L. Madden Director November 15, 1999
/s/ PETER MIGLIORINI
- --------------------------
Peter Migliorini Director November 15, 1999
/s/ LES WAGNER
- --------------------------
Les Wagner Director November 15, 1999
II-4
EXHIBIT 4.1
WARRANT AGREEMENT
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. ___________ Shares 200,000
FOR VALUE RECEIVED, Steven Madden, Ltd. (the "Company"), a New York
corporation, hereby certifies that Ladenburg, Thalmann & Co. Inc., or its
permitted assigns are entitled to purchase from the Company, at any time or from
time to time commencing September 7, 1996, and prior to 5:00 p.m., New York City
time then current, on September 7, 2000, 200,000 fully paid and non-assessable
shares of the common stock, $.0001 par value, of the Company at the purchase
price of $7.50 per share. (Hereinafter, (i) said common stock, together with any
other equity securities which may be issued by the Company with respect thereto
or in substitution therefor, is referred to as the "Common Stock," (ii) the
shares of the Common Stock purchasable hereunder are referred to as the "Warrant
Shares," (iii) the aggregate purchase price payable hereunder for the Warrant
Shares is referred to as the "Aggregate Warrant Price," (iv) the price payable
hereunder for each of the shares of the Warrant Shares is referred to as the
"Per Share Warrant Price" and (v) this warrant and all warrants hereafter issued
in exchange or substitution for this warrant are referred to as the 'Warrants.")
The Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
Price is subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised, in whole at any time or in part
from time to time, commencing September 7, 1996 (the "Commencement
Date"), and prior to 5.00 p.m., New York city time then current, on
September 7, 2000 (the "Expiration Date"), by the holder of this
Warrant (the "Holder") by the Surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the address set
forth in Subsection 10(a) hereof, together with proper payment of the
Aggregate Warrant Price, or the proportionate part thereof if this
Warrant is exercised in part. Payment for the Warrant Shares shall be
made by certified or official bank check, payable to the order of the
Company. If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock. and the
Holder is entitled to receive a new Warrant covering the number of
Warrant Shares in respect of which this Warrant has not been exercised
and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon its exercise and
surrender of this Warrant, the Company will (i) issue a certificate or
certificate in the name of the Holder for the number of whole shares
of the Common Stock to which the Holder shall be entitled and, if this
Warrant is exercised in whole, in lieu of any fractional share of the
Common Stock to which the Holder shall be entitled, pay cash equal to
the fair value of such fractional share (determined in such reasonable
manner as the Board of Directors of the Company shall determine), and
(ii) deliver the other securities and properties receivable upon the
exercise of this Warrant, or the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of this
Warrant
2. RESERVATION OF WARRANT SHARES.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will
keep available, solely for issuance or delivery upon the exercise of
this Warrant, such number of shares of the Common Stock and such
amount of other securities and properties as from time to time shall
be deliverable to the Holder upon the exercise of this Warrant, free
and clear of all restrictions on sale or transfer (except such as may
be imposed under applicable federal and state securities laws) and
free and clear of all preemptive rights and all other rights to
purchase Securities of the Company.
3. PROTECTION AGAINST DILUTION.
(a) If, at any time or from time to time after the date of this
Warrant, the Company shall distribute to the holders of its
outstanding Common Stock, (i) securities, other than shares of Common
Stock, or (ii) property other than cash dividends paid in conformity
with past practice, without payment therefor, with respect to Common
Stock, then. and in each such case, the Holder, upon exercise of this
Warrant, shall be entitled to receive the securities and property
which the Holder would have held on the date of such exercise if, on
the date of this Warrant, the Holder had been the holder of record of
the number of shares of the Common Stock subscribed for upon such
exercise and, during the period from the date of this Warrant to and
including the date of such exercise, had retained such shares and the
securities and properties receivable by the Holder during such period.
Notice of each such distribution shall be forthwith mailed to the
Holder.
(b) If, at any time or from time to time after the date of this
Warrant, the Company shall (i) pay a dividend or make a distribution
on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares,
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of its Common Stock
any shares of capital stock of the Company, the Per Share Warrant
Price in effect immediately prior to such action shall he adjusted so
that the Holder of any Warrant thereafter exercised shall be entitled
to receive the number of shares of Common Stock or other capital stock
of the Company which he would have owned or been entitled to received
immediately following the happening of any of the events described
above had such Warrant been exercised immediately prior thereto. An
adjustment made pursuant to this (b) shall become effective
immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to
this (b), the holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive shares of two or more
classes of capital stock or shares of Common Stock and other capital
stock of the Company, the Board of Directors (whose determination
shall be conclusive and shall be described in a written notice to the
Holder of any Warrant promptly after such adjustment) shall determine
2
the allocation of the adjusted Per Share Warrant Price between or
among shares of such classes or capital stock or shares of Common
Stock and other capital stock.
(c) In case of any consolidation or merger to which the Company is a
party other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to
another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory exchange
of securities with another entity (including any exchange effectuated
in connection with a merger of any other corporation with the
Company), the Holder of this Warrant shall have the right thereafter
to convert such Warrant into the kind and amount of securities, cash
or other property which he would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory
exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and in any such case if
necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Section 3 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in
relation to any share of stock or other securities or property
thereafter deliverable on the exercise of this Warrant. The above
provisions of this 3(f) will similarly apply to successive
consolidations, mergers, statutory' exchanges, sales or conveyances.
Notice of any such consolidation, merger, statutory exchange, sale or
conveyance, and of said provisions so proposed to be made, shall be
mailed to the Holder not less than 20 days prior to such event. A sale
of all or substantially all of the assets of the Company for a
consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(d) No adjustment in the Per Share Warrant Price shall be required
unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; PROVIDED, HOWEVER, that any
adjustments which by reason of this (g) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment; and PROVIDED FURTHER however, that adjustments shall be
required and made in accordance with the provisions of this Section 3
(other than this (g)) not later than such time as may be required in
order to preserve the tax-free nature of a distribution to the Holder
of this Warrant or Common Stock. All calculations under this Section 3
shall be made to the nearest cent or to the nearest 1/100th of a
share, as the case may be. Anything in this Section 3 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Per Share Warrant Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in order
that any stock dividend, subdivision of shares or distribution of
rights to purchase stock or securities convertible or exchangeable for
stock hereafter made by the Company to its shareholders shall not be
taxable.
(e) Whenever the Per Share Warrant Price is adjusted as provided in
this Section 3 and upon any modification of the rights of the Holder
of this Warrant in accordance with this Section 3, the Company shall,
at its own expense, within ten (10) days of such adjustment or
modification, deliver to the holder of this Warrant a certificate of
3
the Principal Financial Officer of the Company setting forth the Per
Share Warrant Price and the number of Warrant Shares after such
adjustment or the effect of such modification, a brief statement of
the facts requiring such adjustment or modification and the manner of
computing the same. In addition, within thirty (30) days of the end of
the Company's fiscal year next following any such adjustment or
modification, the Company shall, at its own expense, deliver to the
Holder of this Warrant a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors
(who may be the regular auditors of the Company) setting forth the
same information as required by such Principal Financial Officer
Certificate.
(f) If the Board of Directors of the Company shall declare any
dividend or other distribution in cash with respect to the Common
Stock, other than out of earned surplus, the Company shall mail notice
thereof to the Holder not less than 10 days prior to the record date
fixed for determining shareholders entitled to participate in such
dividend or other distribution.
4. FULLY-PAID STOCK: TAXES.
The Company agrees that the shares of the Common Stock represented by
each and every certificate for Warrant Shares delivered on the
exercise of this Warrant in accordance with the terms hereof shall, at
the time of such delivery, be validly issued and outstanding,
fully-paid and non-assessable and not subject to preemptive rights or
other contractual rights to purchase securities of the Company, and
the Company will take all such actions as may be necessary to assure
that the par value or stated value, if any, per share of the Common
Stock is at all times equal to or less than the then Per Share Warrant
Price. The Company further covenants and agrees that it will pay, when
due, and payable, any end all federal and state stamp, original issue
or similar taxes which may be payable in respect of the issue of any
Warrant Share or certificate therefor.
5. REGISTRATION UNDER SECURITIES ACT OF 1933.
(a) The Company agrees that if, at any one time during the period
commencing on September 7, 1996 and ending on September 7, 2000, the
Holder and/or the Holders of any other Warrants and/or Warrant Shares
who or which shall hold not less than 50% of the Warrants and/or
Warrant Shares outstanding at such time and not previously sold
pursuant to this Section 5, request that the Company file a
registration statement under the Securities Act of 1933 (the "Act")
covering all or any of the Warrant Shares, the Company will (i)
promptly notify the Holder and all other registered holders, if any.
of other Warrant and/or Warrant Shares that such registration
statement will be filed and that the Warrant Shares which are then
held, and/or which way be acquired upon the exercise of Warrants, by
the Holder and such holders will be included In such registration
statement at the Holder's and such Holders' request. (ii) cause such
registration statement to cover ill Warrant Shares which it has been
so requested to include, (iii) use its best efforts to cause such
registration statement to become effective as soon as practicable and
to remain effective and current and (iv) take all other action
necessary under any federal or state law or regulation of any
4
governmental authority to permit all Warrant Shares which it has been
so requested to Include in such registration statement to be sold or
otherwise disposed of and will maintain such compliance with each such
federal and state law and regulation of any governmental authority for
the period necessary for the Holder and such Holders to effect the
proposed sale or other disposition.
The Company agrees that if, at any time and, from time to time
during the period commencing on September 7, 1996 and ending on
September 7, 2000, the Board of Directors of the Company shall
authorize the filing of a registration statement (any such
registration statement being sometimes hereinafter called a
"Subsequent Registration Statement") under the Act (otherwise than
pursuant to Section 5(a) hereof) in connection with the proposed offer
of any of Its securities by it or any of its shareholders, the Company
will (i) promptly notify the Holder and all other registered Holders,
if any, of other Warrants and/or Warrant Shares that such Subsequent
Registration Statement will be filed and that the Warrant Shares which
are then held, and/or which may be acquired upon the exercise of the
Warrants, by the Holder and such Holders will be included in such
Subsequent Registration Statement at the Holder's and such Holders'
request, (ii) cause such Subsequent Registration Statement to cover
all Warrant Shares which it has been so requested to include, (iii)
cause such Subsequent Registration Statement to become effective as
soon as practicable and to remain effective and current and (iv) take
all other action necessary under any federal or state law or
regulation of any governmental authority to permit all Warrant Shares
which it has been so requested to include in such Subsequent
Registration Statement to be sold or otherwise disposed of and will
maintain such compliance with each such federal and state law and
regulation of any governmental authority for the period necessary for
the Holder and such Holders to effect the proposed sale or other
disposition.
(c) Whenever the Company is required pursuant to the provisions of
this Section 5 to include Warrant Shares in a registration statement,
the Company shall (i) furnish each Holder of any such Warrant Shares
and each underwriter of such Warrant Shares with such copies of the
prospectus, including the preliminary prospectus, conforming to the
Act (and such other documents as each such Holder or each such
underwriter may reasonably request) in order to facilitate the sale or
distribution of the Warrant Shares, (ii) use its best efforts to
register or qualify such Warrant Shares under the blue sky laws (to
the extent applicable) of such jurisdiction or jurisdictions as the
Holders of any such Warrant Shares and each underwriter of Warrant
Shares being sold by such Holder shall reasonably request and (iii)
take such other actions as may be reasonably necessary or advisable to
enable such Holders and such underwriters to consummate the sale or
distribution In such jurisdiction or jurisdictions in which such
Holders shall have reasonably requested that the Warrant Shares be
sold.
(d) The Company shall pay all expenses incurred in connection with any
registration or other action pursuant to the provisions of this
Section, including the attorneys' fees and expenses of the Holder(s)
of the Warrant Shares covered by such registration incurred in
connection with such registration or other action, other than
underwriting discounts and applicable transfer taxes relating to the
Warrant Shares.
5
(e) The market price of Common Stock shall mean the price of a share
of Common Stock on the relevant date, determined on the basis of the
last reported sale price of the Common Stock as reported on the NASDAQ
National Market System ("NASDAQ"), or, if there is no such reported
sale on the day in question, on the basis of the average of the
closing bid and asked quotations as so reported, or, if the Common
Stock is not listed on NASDAQ, the last reported sale price of the
Common Stock on such other national securities exchange upon which the
Common Stock is listed, or, if the Common Stock is not listed on any
national Securities exchange, on the basis of the average of the
closing bid and asked quotations on the day in question in the
over-the-counter market as reported by the National Association of
Securities Dealers' Automated Quotations System, or, if not so quoted,
is reported by National Quotation Bureau, Incorporated or a similar
organization.
6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each selling
holder of Warrant Shares and each person who controls any such selling
holder within the meaning of Section 15 of the Act, and each and all
of them, from and against any and all losses. claims, damages,
liabilities or actions, joint or several, to which any selling holder
of Warrant Shares or they or any of them may become subject under the
Act or otherwise and to reimburse the persons indemnified as above for
any legal or other expenses (including the cost of any investigation
and preparation) incurred by them in connection with any litigation or
threatened litigation, whether or not resulting in ally liability, but
only insofar as such losses, claims, damages, Liabilities or actions
arise out of, or are based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement pursuant to which Warrant Shares were registered under the
Act hereinafter called a "Registration Statement"), any preliminary
prospectus, the final prospectus or any amendment or supplement
thereto (or in any application or document filed in connection
therewith) or document executed by the Company based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify the Warrant Shares under
die securities laws thereof or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances wider which they were made, not misleading, or (ii) the
employment by the Company of any device, scheme or artifice to
defraud, or the engaging by the Company in any act, practice or course
of business which operates or would operate as a fraud or deceit, or
any conspiracy with respect thereto, in which the Company shall
participate, in connection with the issuance and sale of any of the of
the Warrant Shares; PROVIDED, HOWEVER, that (i) the indemnity
agreement contained in this (a) shall not extend to any selling holder
of Warrant Shares in respect if any such losses, claims, damages.
liabilities or actions arising out of, or based upon. any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was based upon and made in
conformity with information furnished in writing to the Company by a
selling holder of Warrant shares specifically for use in connection
with the preparation of such Registration Statement, any final
prospectus, any preliminary prospectus or any such amendment or
supplement thereto. The Company agrees to pay any legal and other
6
expenses for which it is liable under this (a) from time to time (but
not more frequently than monthly) within 30 days after its receipt of
a bill therefor.
(b) Each selling holder of Warrant Shares, severally and not jointly,
will indemnify and hold harmless the Company, its directors, its
officers who shall have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section
15 of the Act to the same extent as the foregoing indemnity from the
Company, but in each case to the extent, and only to the extent, that
any statement in or omission from or alleged omission from such
Registration Statement, any final prospectus, any preliminary
prospectus or any amendment or supplement thereto was made in reliance
upon information furnished in writing to the Company by such selling
holder specifically for use in connection with the preparation of the
Registration Statement, any final prospectus or the preliminary
prospectus or any such amendment or supplement thereto; pROVIDED,
hOWEVER that the obligation of any holder of Warrant Shares to
indemnify the Company under the provisions of this (b) shall be
Limited to the product of the number of Warrant Shares being sold by
the selling holder and the market price of the Common Stock on the
dale of the sale to the public of these Warrant Shares. Each selling
holder of Warrant Shares agrees to pay any legal and other expenses
for which it is Liable under this (b) from time to time (but not more
frequently than monthly) within 30 days after receipt of a bill
therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing Sections 6 (a) or (b) (an
"indemnified party") in respect of which indemnity may be sought
against a person granting indemnification (an "indemnifying party")
pursuant to such Sections, such indemnified party shall promptly notify
such indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party of any such action shall
not release the indemnifying party from any liability it may have to
such indemnified party otherwise than on account of the indemnity
agreement contained in (a) or (b) of this Section 6. In case any such
action is brought against an indemnified party and it notifies an
indemnified party of the commencement thereof, the indemnifying party
against which a claim is to be made will be entitled to Participate
therein at its own expense and, to the extent that it may wish, to
assume at its own expense the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that (i) if
the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have
reasonably concluded based upon advice of counsel that there may be
legal defenses available to It and/or other indemnified parties which
are different from or additional to those available to the indemnifying
party, the indemnified party shall have the right to select separate
counsel to assume such legal defenses and otherwise to participate in
the defense of such action on behalf of such indemnified party or
parties and (ii) in any event, the indemnified party Shall be entitled
to have counsel chosen by such indemnified party participate in, but
not conduct, the defense at the expense of the indemnifying party. Upon
receipt of notice from the indemnifying party to such indemnified party
of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be
7
liable to such indemnified party under this Section 6 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed such counsel in connection with the assumption of
legal defenses in accordance with proviso (i) to the next preceding
sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate
counsel), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement
of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. An indemnifying party shall not be liable for any
settlement of any action or proceeding effected without its written
consent.
(d) In order to provide for just an equitable contribution in
circumstances in which the Indemnity agreement provided for in (a) of
this Section 6 is unavailable to a selling holder of Warrant Shares in
accordance with its terms, the Company and the selling holder of
Warrant Shares shall contribute to the aggregate losses, claims,
damages and liabilities. of the nature contemplated by said indemnity
agreement, incurred by the Company and the selling holder of Warrant
Shares, in such proportions as is appropriate to reflect the relative
benefits received by the Company and the selling holder of Warrant
Shares from any offering of the Warrant Shares; PROVIDED, HOWEVER, that
if such allocation is not permitted by applicable law or if the
indemnified party failed to give the notice required under (c) of this
Section 6, then the relative fault of the Company and the selling
holder of Warrant Shares in connection with the statements or omissions
which resulted in such losses, claims, damages and liabilities and
other relevant equitable considerations will he considered together
with such relative benefits.
(e) The respective indemnity and contribution agreements by the Company
and the selling holder of Warrant Shares in section (a), (b), (c) and
(d) of this Section 6 shall remain operative and in full force and
effect regardless of (i) any investigation made by any selling holder
of Warrant Shares or by or on behalf of any person who controls such
selling holder or by the Company or any controlling person of the
Company or any director or any officer of the company, (ii) payment for
any of the Warrant Shares or (iii) any termination of this Agreement,
and shall survive the delivery of the Warrant Shares, and any successor
of the Company, or of any selling holder of Warrant Shares, or of any
person who controls the Company or of any selling holder of Warrant
Shares, as the case may be, shall be entitled to the benefit of such
respective indemnity and contribution agreements. The respective
indemnity and contribution agreements by the Company and the selling
holder of Warrant Shares in (a), (b), (c) and (d) of this Section 6
shall be in addition to any liability which the Company and the selling
holder of Warrant Shares may otherwise have.
7. LIMITED TRANSFERABILITY.
(a)This Warrant is not transferable or assignable by the Holder except
(1) to Ladenburg, Thalmann & Co. Inc., any successor firm or
corporation of Ladenburg, Thalmann & Co. Inc., (ii) to any of the
8
officers or employees of Ladenburg, Thalmann & Co. Inc., or of any
such successor firm or (iii) in the case of an individual, pursuant to
such individual's last will and testament or the laws of descent and
distribution and is so transferable only upon the books of the Company
which it shall cause to be maintained for the purpose. The Company may
treat the registered holder of this Warrant as he or it appears on the
Company's books at any time as the Holder for all purposes. The
Company shall permit any holder of a Warrant or his duly authorized
attorney, upon written request during ordinary business hours, to
inspect and copy or make extracts from its books showing the
registered holders of Warrants. All Warrants will be dated the same
date as this Warrant.
(b) By acceptance hereof, the Holder represents and warrants that this
Warrant is being acquired, and all Warrant Shares to be purchased upon
the exercise of this Warrant will be acquired, by the Holder solely
for the account of such Holder and not with a view to the
fractionalization and distribution thereof and will not be sold or
transferred except in accordance with the applicable provisions of the
Act and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, and the Holder agrees that neither
this Warrant nor any of the Warrant Shares may be sold or transferred
except under cover of a Registration Statement under the Act which is
effective and current with respect to such Warrant Shares or pursuant
to an opinion, in form and substance reasonably acceptable to the
Company's counsel, that registration under the Act is not required in
connection with such sale of transfer. Any Warrant Shares issued upon
exercise of this Warrant shall bear the following legend:
"The Securities represented by this certificate
have not been registered under the Securities Act
of 1933 and are restricted securities within the
meaning thereof. Such securities may not be sold or
transferred except pursuant to a Registration
Statement wider such Act which is effective and
current with respect to such securities or pursuant
to an opinion of counsel reasonably satisfactory to
the issuer of such securities that such sale or
transfer is exempt from the registration
requirements of such Act."
8. LOSS, ETC. OF WARRANT
Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant, if mutilated, and
upon reimbursement of the Company's reasonable incidental expenses,
the Company shall execute and deliver to the Holder a new Warrant of
like date, tenor and denomination.
9. WARRANT HOLDER NOT SHAREHOLDERS.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder any right to vote or to consent to or receive notice as a
shareholder of the Company, as such, in respect of any matters
whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
9
10. COMMUNICATION.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and
shall be deemed to have been given if, the same is in writing and is
mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at 52-16 Barnett Avenue, Long Island City, NY
11104, or such other address as the Company has designated in writing
to the Holder, or
(b) the Holder at 540 Madison Avenue, New York, NY 10022, or
such other address as the Holder has designated in writing to the
Company.
11. HEADINGS.
The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
12. APPLICABLE LAW.
This Warrant shall be governed by and construed in accordance with the
Laws of the State of New York without giving effect to the principles
of conflicts of law thereof.
IN WITNESS WHEREOF, Steven Madden, Ltd. has caused this Warrant to be signed by
its Chairman of the Board and its corporate seal to be hereunto affixed and
attested by its Secretary this 13th day of October, 1995.
Attest: STEVEN MADDEN, LTD.
/s/ ARVIND DHARIA
- ----------------------------
Name: Arvind Dharia By: /s/ STEVEN MADDEN
Title: Secretary ----------------------------
Name: Steven Madden
Title: Chief Executive Officer
10
EXHIBIT 5.1
OPINION OF BERLACK, ISRAELS & LIBERMAN LLP
[LETTERHEAD OF BERLACK, ISRAELS & LIBERMAN LLP]
November 17, 1999
Steven Madden, Ltd.
52-16 Barnett Avenue
Long Island City, NY 11104
REGISTRATION STATEMENT ON FORM S-3 ( FILE NO. 333-_____)
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about November 17, 1999
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933 of shares of your common stock (the "Shares"), to be sold
by a certain selling securityholder set forth in the Registration Statement (the
"Selling Securityholder"). As your legal counsel in connection with this
transaction, we have examined the proceedings taken and are familiar with the
proceedings proposed to be taken by you in connection with the sale of the
Shares.
It is our opinion that the Shares, when issued in accordance with the
terms of the Warrant Agreement granted by the Company to the Selling
Securityholder and sold by the Selling Securityholder in the manner described in
the Registration Statement, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and in any amendment to it.
Very truly yours,
/s/ Berlack, Israels & Liberman LLP
BERLACK, ISRAELS & LIBERMAN LLP
EXHIBIT 23.2
CONSENT OF RICHARD A. EISNER & COMPANY, LLP
CONSENT OF INDEPENDENT AUDITORS
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of our report dated February 19, 1999 on our audit of the consolidated
financial statements of Steven Madden, Ltd. and subsidiaries included in the
Annual Report on Form 10-K for the year ended December 31, 1998 and to the
reference to our firm under the caption "Experts" in the prospectus.
Richard A. Eisner & Company, LLP
New York, New York
November 15, 1999