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                                                                                              Exhibit
10.3
 
 
 
EMPLOYMENT AGREEMENT
 
THIS AGREEMENT (the “Agreement”), made in New York, New York as of the 16th day
of May 2007, between Steven Madden, Ltd., a Delaware corporation (the
“Company”), and Jeffrey Silverman  (“Executive”).
 
WHEREAS, the Company intends to acquire all of the issued and outstanding
ownership interests of Compo Enhancements, LLC (“Compo”) pursuant to a
Membership Interest Purchase Agreement by and among the Company and the members
of Compo, including Executive (the “Membership Interest Purchase Agreement”);
 
WHEREAS, this Agreement is to be effective upon the Closing (as defined in the
Membership Interest Purchase Agreement);
 
WHEREAS, the Company wishes to ensure that it will continue to have the benefits
of Executive's services after the Closing on the terms and conditions
hereinafter set forth;
 
WHEREAS, the Company and Executive acknowledge and agree that the retention of
Executive's services and Executive's agreement to enter into and adhere to the
noncompetition, nonsolicitation and nondisclosure of proprietary information
provisions contained in this Agreement are critical reasons for the Company
entering into the Membership Interest Purchase Agreement and consummating the
transactions contemplated thereby; and
 
WHEREAS, Executive desires to work for the Company on the terms and conditions
hereinafter set forth;
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as follows:
 
1.  Term.  The term of employment shall commence upon the Closing, if one occurs
(the “Effective Date”) and shall continue until December 31, 2009, subject to
earlier termination as provided herein (the “Term”).
 
2.  Employment.
 
(a)  Employment by the Company.  Executive agrees to be employed by the Company
during the Term upon the terms and subject to the conditions set forth in this
Agreement.  Executive shall serve as the President of the Company and shall
report to the Chief Executive Officer of the Company.
 
(b)  Performance of Duties.  Throughout his employment with the Company,
Executive shall faithfully and diligently perform Executive’s duties in
conformity with the directions of the Company and serve the Company to the best
of Executive’s ability.
 
 
 
 

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Except as otherwise consented to in writing by the Board of Directors of the
Company, Executive shall devote his full business time and best efforts to the
business and affairs of the Company.  In his capacity as the President of the
Company, Executive shall have such duties and responsibilities as he may be
assigned by the Chief Executive Offer or the Board of Directors of the Company,
not inconsistent with his position as President of the Company.  Executive shall
also cooperate as requested by the Company in connection with the Company
obtaining a life insurance policy for the Executive.
 
3.  Compensation and Benefits.
 
(a)  Base Salary.  The Company agrees to pay to Executive a base salary (“Base
Salary”) at the annual rate of $600,000.  Payments of the Base Salary shall be
payable in equal installments in accordance with the Company’s standard payroll
practices.
 
(b)  Annual Bonus.  Upon the approval of this Agreement, the Compensation
Committee of the Board of Directors of the Company (the “Compensation
Committee”) shall approve the following cash bonus opportunity with respect to
each fiscal year occurring during the Term:
 
(i)  After the end of each fiscal year, the Company shall compute the change in
the EBIT (as defined below) between such fiscal year (the “Most Recently
Completed Year”) and the fiscal year immediately preceding the Most Recently
Completed Year (such change, the Company’s “EBIT Growth”).  Based on such EBIT
Growth, and upon the Compensation Committee’s certification of the achievement
of any such EBIT Growth, Executive shall be paid (pursuant to the terms of
3(b)(ii) below) a cash bonus (the “Annual Bonus”) as follows:
 
(A)  
with respect to that portion of the Company’s EBIT Growth that is in range of 0%
to 10% (if any), Executive shall be paid a cash bonus of 2% of such portion of
EBIT Growth;

 
(B)  
with respect to that portion of the Company’s EBIT Growth (if any) that is in
the range of over 10% to 20%, Executive shall be paid a cash bonus of 3% of such
portion of EBIT Growth; and

 
(C)  
with respect to that portion of the Company’s EBIT Growth (if any) that is over
20%, Executive shall be paid a cash bonus of 5% of such  portion of EBIT Growth.

 
Notwithstanding anything in this Section 3(b)(i) to the contrary, (X) the
maximum aggregate Annual Bonus to which Executive shall be eligible pursuant to
this Section 3(b) in any fiscal year shall be $1,400,000 and (Y) with respect to
the 2007 fiscal year, any Annual Bonus shall be pro-rated to reflect the
percentage of the year in which Executive was employed with the Company.  “EBIT”
shall mean the Company’s earnings before interest and taxes as determined in
accordance with United States generally accepted accounting principles
consistently applied.  In calculating EBIT, the following items shall be
disregarded by the Compensation Committee:  (a) the disposal of a business or
discontinued operations; (b) capital transactions undertaken by the
 
 
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Company during the fiscal year (other than the Compo transaction); (c)
unbudgeted changes in accounting principles or to changes in applicable law or
regulations; or (d) extraordinary items and other unusual or non-recurring
charges as provided under applicable accounting principles.

(ii)  The Annual Bonus, if any, shall be paid no later than March 15th after the
end of the Most Recently Competed Fiscal Year, which is the calendar year,
following the Compensation Committee’s certification that the EBIT Growth
targets have been achieved, provided, that the Executive shall be actively
employed through such payment date.
 
(iii)  Other than with respect to the Annual Bonus relating to the 2007 fiscal
year, the Annual Bonus shall be granted under the Company’s 2006 Stock Incentive
Plan as a “Performance-Based Cash Award” (as defined under the Company’s 2006
Stock Incentive Plan) and shall be subject to the terms and conditions under the
Company’s 2006 Stock Incentive Plan.
 
(c)  Stock Options.  Upon the approval of this Agreement, the Compensation
Committee shall grant to the Executive the following stock options under the
Company’s 2006 Stock Incentive Plan to be effective upon, and subject to, the
occurrence of the Closing:
 
(i)  an option to purchase an aggregate of 150,000 shares of common stock, par
value $ 0.0001 per share of the Company (“Common Stock”), which shall vest in
50,000 share increments on the first, second and third anniversaries of the
Effective Date (subject to the Executive’s continued employment through such
dates),  shall have an exercise price of $45.00 per share, shall remain
exercisable for five (5) years from the Effective Date (subject to earlier
termination due to a termination of employment),  and which shall be pursuant to
a Stock Option Grant Agreement of even date herewith between the Company and
Executive, in substantially the form attached hereto as Exhibit A.
 
(ii)  an option to purchase an aggregate of 150,000 shares of Common Stock,
which shall vest in 50,000 share increments on the first, second and third
anniversaries of the Effective Date (subject to the Executive’s continued
employment through such date), shall have an exercise price of $50.00 per share,
shall remain exercisable for five (5) years from the Effective Date, and which
shall be pursuant to a Stock Option Grant Agreement of even date herewith
between the Company and Executive, in substantially the form attached hereto as
Exhibit B.
 
(d)  Benefits.  Executive shall be entitled to participate in, to the extent
Executive is otherwise eligible under the terms thereof, the benefit plans and
programs, and receive the benefits, generally provided by the Company to senior
executives of the Company, including without limitation family medical insurance
(subject to applicable employee contributions).  Executive shall be entitled to
receive vacation days in accordance with Company policy, such days to be accrued
in accordance with Company policy.
 
(e)  Business Expenses.  The Company agrees to reimburse Executive for all
reasonable and necessary travel, business entertainment and other business
expenses incurred by Executive in connection with the performance of his duties
under this Agreement.  
 
 
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Such reimbursements shall be made by the Company on a timely basis upon
submission by Executive of vouchers in accordance with the Company’s standard
procedures.
 
(f)     No Other Compensation or Benefits; Payment.  The compensation and
benefits specified in this Section 3 and in Section 5 of this Agreement shall be
in lieu of any and all other compensation and benefits.  Payment of all
compensation and benefits to Executive specified in this Section 3 and in
Section 5 of this Agreement (i) shall be made in accordance with the relevant
Company policies in effect from time to time to the extent the same are
consistently applied, including normal payroll practices, and (ii) shall be
subject to all legally required and customary withholdings.
 
(g)    Cessation of Employment.  In the event Executive shall cease to be
employed by the Company for any reason, Executive’s compensation and benefits
shall cease on the date of such event, except as otherwise specifically provided
herein or in any applicable employee benefit plan or program or as required by
law.
 
4.  Termination of Employment.  Executive’s employment hereunder may be
terminated prior to the end of the Term under the following circumstances.
 
(a)    Death.  Executive’s employment hereunder shall terminate upon Executive’s
death.
 
(b)    Executive Becoming Totally Disabled.  The Company may terminate
Executive’s employment hereunder at any time after Executive becomes “Totally
Disabled.”  For purposes of this Agreement, Executive shall be “Totally
Disabled” in the event Executive is unable to perform the duties and
responsibilities contemplated under this Agreement, due to physical or mental
incapacity or impairment, for a period of either (A) 120 consecutive days or (B)
6 months in any 12-month period .  During any period that Executive fails to
perform Executive’s duties hereunder as a result of such incapacity due to
physical or mental illness (the “Disability Period”), Executive shall continue
to receive the compensation and benefits provided by Section 3 of this Agreement
until Executive’s employment hereunder is terminated, provided  that such period
shall not exceed 29 months.  Notwithstanding the foregoing, the amount of base
compensation and benefits received by Executive during the Disability Period
shall be reduced by the aggregate amounts, if any, payable to Executive under
any disability benefit plan or program provided to Executive by the Company.
 
(c)    Termination by the Company for Cause.  The Company may terminate
Executive’s employment hereunder for Cause at any time after providing written
notice to Executive.  For purposes of this Agreement, the term “Cause” shall
mean any of the following:  (i) Executive’s neglect or failure or refusal to
perform his duties under this Agreement (other than as a result of total or
partial incapacity due to physical or mental illness); (ii) any act by or
omission of Executive constituting gross negligence or willful misconduct in
connection with the performance of his duties that could reasonably be expected
to materially injure the reputation, business or business relationships of the
Company or any of its affiliates; (iii) perpetration of an intentional and
knowing fraud against or affecting the Company or any of its affiliates or any
customer, client, agent, or employee thereof; (iv) the commission by or
indictment of Executive for (A) a felony or (B) any misdemeanor involving moral
turpitude,
 
 
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deceit, dishonesty or fraud (“indictment,” for these purposes, meaning a United
States-based indictment, probable cause hearing or any other procedure pursuant
to which an initial determination of probable or reasonable cause with respect
to such offense is made); (v) the breach of a covenant set forth in Section 6;
or (vi) any other material breach of this Agreement.
 
(d)  Termination by the Company Without Cause.  The Company may terminate
Executive’s employment hereunder at any time for any reason or no reason by
giving Executive thirty (30) days prior written notice of the
termination.  Following any such notice, the Company may reduce or remove any
and all of Executive’s duties, positions and titles with the Company.
 
(e)  Termination Upon a Change in Control.  If the Company terminates
Executive’s employment hereunder without Cause within 90 days after the
occurrence of the Change in Control Executive shall be entitled to the payments
provided for by Section 5(d).  For purposes of this Agreement, a “Change in
Control” shall be conclusively deemed to have occurred if any of the following
shall have taken place:
 
(i)   the consummation of a transaction or a series of related transactions
pursuant to which any “person” (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (“Exchange Act”), other than the
Executive, his designee(s) or “affiliate(s)” (as defined in Rule 12b-2 under the
Exchange Act), is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of the
Company’s then outstanding securities;
 
(ii)  stockholders of the Company approve a merger or consolidation of the
Company with any other entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or
 
(iii)  the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of, or
the Company sells or disposes of, all or substantially all of the Company’s
assets.
 
(f)  Termination by Executive.  Executive may terminate his employment hereunder
at any time for any reason or no reason by giving the Company thirty (30) days
prior written notice of the termination.  Following any such notice, the Company
may reduce or remove any and all of Executive’s duties, positions and titles
with the Company.
 
5.  Compensation Following Termination.  In the event that Executive’s
employment hereunder is terminated, Executive shall be entitled only to the
following compensation and benefits upon such termination:
 
(a)    General.  On any termination of Executive’s employment prior to the end
of the Term, Executive shall be entitled to the following (collectively, the
“Standard
 
 
 
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Termination Payments”), which shall be paid within 60 days of termination:
 
(i)    any accrued but unpaid Base Salary for services rendered through the date
of termination; provided, however, that in the event Executive’s employment is
terminated pursuant to Section 4(b), the amount of Base Salary received by
Executive during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Executive under any disability benefit plan or
program provided to Executive by the Company;
 
(ii)    any vacation accrued to the date of termination, in accordance with
Company policy;
 
(iii)   any accrued but unpaid expenses through the date of termination required
to be reimbursed in accordance with Section 3(d) of this Agreement; and
 
(iv)   any benefits to which he may be entitled upon termination pursuant to the
grants referred to in Section 3(c) hereof in accordance with the terms of such
grants.
 
(b)    Termination Prior to the Expiration of the Term by Reason of Death or
Executive Becoming Totally Disabled; Termination Prior to the Expiration of the
Term by the Company for Cause; Termination Prior to the Expiration of the Term
by Executive.  In the event that Executive’s employment is terminated prior to
the expiration of the Term (i) by reason of Executive’s death pursuant to
Section 4(a) or Executive becoming Totally Disabled pursuant to Section 4(b),
(ii) by the Company for Cause pursuant to Section 4(c) or (iii) by Executive
pursuant to Section 4(f), Executive (or his estate, as the case may be) shall be
entitled only to the Standard Termination Payments.
 
(c)    Termination Prior to the Expiration of the Term by the Company Without
Cause.  In the event that Executive’s employment is terminated prior to the
expiration of the Term by the Company without Cause pursuant to Section 4(d),
Executive shall be entitled only to the following:
 
(i)    the Standard Termination Payments; and
 
(ii)    the continued payment of the Base Salary (as determined pursuant to
Section 3(a)) throughout the Term.  Such sums are to be paid at the times and in
the amounts such Base Salary would have been paid had Executive’s employment not
terminated; provided, however, that (A) no payments in excess of Executive’s
Separation Pay Limit shall be made for a six-month period following the date of
termination, and (B) any amounts delayed pursuant to clause (A) shall be paid in
a lump sum six months following the date of termination.
 
(iii)    For purposes of paragraphs (c) and (d) of this Section 5, Separation
Pay Limit means the lesser of two times Executives annual compensation for the
prior year or two times the Code Section 401(a)(17) limit for the year of
termination
 
(d)    Termination Upon a Change of Control.  In the event that the
 
 
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Company terminates Executive’s employment hereunder without Cause within 90 days
after the occurrence of the Change in Control pursuant to Section 4(e),
Executive shall be entitled only to the following payments:
 
(i)  the Standard Termination Payments; and
 
(ii)  a payment of three times the total average compensation earned by
Executive pursuant to Sections 3(a) and (b) hereof for the last three prior
fiscal years (or since the Effective Date if shorter), up to that amount which
is permitted to be paid pursuant to Section 280G of the Code without the
imposition of any excise or other similar additional tax, which payment is to be
made within 60 days of termination of employment.
 
(e)  Effect of Material Breach of Section 6 on Compensation and Benefits
Following Termination of Employment Pursuant to Sections 5(c)(ii) or
5(d)(ii).  If, at the time of termination of Executive’s employment for any
reason prior to the expiration of the Term or any time thereafter, Executive is
in material breach of any covenant contained in Section 6 hereof, Executive (or
his estate, as applicable) shall not be entitled to any payment (or if payments
have commenced, any continued payment) under Sections 5(c)(ii) or 5(d)(ii).
 
(f)  No Further Liability; Release.  Payment made and performance by the Company
in accordance with this Section 5 shall operate to fully discharge and release
the Company and its directors, officers, employees, affiliates, stockholders,
successors, assigns, agents and representatives from any further obligation or
liability with respect to Executive’s employment and termination of
employment.  Other than providing the compensation and benefits provided for in
accordance with this Section 5, the Company and its directors, officers,
employees, affiliates, stockholders, successors, assigns, agents and
representatives shall have no further obligation or liability to Executive or
any other person under this Agreement.  The payment of any amounts pursuant to
this Section 5 (other than payments required by law) is expressly conditioned
upon the delivery by Executive to the Company of a release in form and substance
reasonably satisfactory to the Company of any and all claims Executive may have
against the Company and its directors, officers, employees, affiliates,
stockholders, successors, assigns, agents and representatives arising out of or
related to Executive’s employment by the Company and the termination of such
employment.
 
6.  Exclusive Employment; Non-competition; Non-solicitation; Nondisclosure of
Proprietary Information; Surrender of Records; Inventions and Patents; Code of
Ethics.
 
(a)  No Conflict; No Other Employment.  During the period of Executive’s
employment with the Company, Executive shall not:  (i) engage in any activity
which conflicts or interferes with or derogates from the performance of
Executive’s duties hereunder nor shall Executive engage in any other business
activity, whether or not such business activity is pursued for gain or profit
and including service as a director of any other company, except as approved in
advance in writing by the Company; provided, however, that Executive shall be
entitled to manage his personal investments and otherwise attend to personal
affairs, including charitable, social and political activities, in a manner that
does not unreasonably interfere with his responsibilities hereunder, or (ii)
accept or engage in any other
 
 
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employment, whether as an employee or consultant or in any other capacity, and
whether or not compensated therefor.
 
(b)  Non-competition; Non-solicitation.
 
(i)  Executive acknowledges and recognizes the highly competitive nature of the
Company’s business and that access to the Company’s confidential records and
proprietary information renders him special and unique within the Company’s
industry.  In consideration of the payment by the Company to Executive of
amounts that may hereafter be paid to Executive pursuant to this Agreement
(including, without limitation, pursuant to Sections 3 and 5 hereof) and other
obligations undertaken by the Company hereunder, Executive agrees that through
December 31, 2011 (the “Covered Time”), Executive shall not, directly or
indirectly, engage (as owner, investor, partner, stockholder, employer,
employee, consultant, advisor, director or otherwise) in any Competing Business,
provided that  the provisions of this Section 6(b) will not be deemed breached
merely because Executive, (X) owns less than 1% of the outstanding common stock
of a publicly-traded company (Y) owns no more than 50% of the so called
“Preschoolians” business and/or sits on the board of such business, provided
that Executive is not active in the management of such business or (Z)
participates in the so called “Preschoolians” business (including being active
in the management of such business), so long as (i) such participation does not
occur prior to January 1, 2010, and (ii) such “Preschoolians”  business is
substantially similar in scope and business line and is conducted in a
substantially similar manner as it is presently conducted as of the date of this
Agreement. For purposes of this Agreement, “Competing Business” shall mean (i)
any business in which the Company or its affiliates are currently engaged
anywhere in the world; and (ii) any other business in which the Company engages
in anywhere in the world during the Term (including any so called e-commerce
business).
 
(ii)  In further consideration of the payment by the Company to Executive of
amounts that may hereafter be paid to Executive pursuant to this Agreement
(including, without limitation, pursuant to Sections 3 and 5 hereof) and other
obligations undertaken by the Company hereunder, Executive agrees that during
his employment and the Covered Time, he shall not, directly or indirectly, (i)
solicit, encourage or attempt to solicit or encourage any of the employees,
agents, consultants or representatives of the Company or any of its affiliates
to terminate his, her, or its relationship with the Company or such affiliate;
(ii) solicit, encourage or attempt to solicit or encourage any of the employees,
agents, consultants or representatives of the Company or any of its affiliates
to become employees, agents, representatives or consultants of any other person
or entity; (iii) solicit or attempt to solicit any customer, vendor or
distributor of the Company or any of its affiliates with respect to any product
or service being furnished, made, sold or leased by the Company or such
affiliate; or persuade or seek to persuade any customer of the Company or any
affiliate to cease to do business or to reduce the amount of business which any
customer has customarily done or contemplates doing with the Company or such
affiliate, whether or not the relationship between the Company or its affiliate
and such customer was originally established in whole or in part through
Executive’s efforts.  For purposes of this Section 6(b) only, the terms
“customer,” “vendor” and “distributor” shall mean a customer, vendor or
distributor who has done business with the Company or any of its affiliates
within twelve months preceding the termination of Executive’s employment.
 
 
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(iii)  During Executive’s employment with the Company and during the Covered
Time, Executive agrees that upon the earlier of Executive’s (i) negotiating with
any Competitor (as defined below) concerning the possible employment of
Executive by the Competitor, (ii) receiving an offer of employment from a
Competitor, or (iii) becoming employed by a Competitor, Executive will (A)
immediately provide notice to the Company of such circumstances and (B) provide
copies of Section 6 of this Agreement to the Competitor.  Executive further
agrees that the Company may provide notice to a Competitor of Executive’s
obligations under this Agreement, including without limitation Executive’s
obligations pursuant to Section 6 hereof.  For purposes of this Agreement,
“Competitor” shall mean any entity (other than the Company or any of its
affiliates) that engages, directly or indirectly, in any Competing Business.
 
(iv)  Executive understands that the provisions of this Section 6(b) may limit
his ability to earn a livelihood in a business similar to the business of Compo,
the Company or its affiliates but nevertheless agrees and hereby acknowledges
that the consideration provided under this Agreement, including any amounts or
benefits provided under Sections 3 and 5 hereof and other obligations undertaken
by the Company hereunder, is sufficient to justify the restrictions contained in
such provisions.  In consideration thereof and in light of Executive’s
education, skills and abilities, Executive agrees that he will not assert in any
forum that such provisions prevent him from earning a living or otherwise are
void or unenforceable or should be held void or unenforceable.
 
(c)  Proprietary Information.  Executive acknowledges that during the course of
his employment with the Company he will necessarily have access to and make use
of proprietary information and confidential records of the Company and its
affiliates.  Executive covenants that he shall not during the Term or at any
time thereafter, directly or indirectly, use for his own purpose or for the
benefit of any person or entity other than the Company, nor otherwise disclose,
any proprietary information to any individual or entity, unless such disclosure
has been authorized in writing by the Company or is otherwise required by
law.  Executive acknowledges and understands that the term “proprietary
information” includes, but is not limited to:  (a) inventions, trade secrets,
ideas, processes, formulas, source and object codes, data, programs, other works
of authorship, know-how, improvements, research, discoveries, developments,
designs, and techniques regarding any of the foregoing utilized by the Company
or any of its affiliates; (b) the name and/or address of any customer or vendor
of the Company or any of its affiliates or any information concerning the
transactions or relations of any customer or vendor of the Company or any of its
affiliates with the Company or such affiliate or any of its or their partners,
principals, directors, officers or agents; (c) any information concerning any
product, technology, or procedure employed by the Company or any of its
affiliates but not generally known to its or their customers, vendors or
competitors, or under development by or being tested by the Company or any of
its affiliates but not at the time offered generally to customers or vendors;
(d) any information relating to the pricing or marketing methods, sales margins,
cost of goods, cost of material, capital structure, operating results, borrowing
arrangements or business plans of the Company or any of its affiliates; (e) any
information which is generally regarded as confidential or proprietary in any
line of business engaged in by the Company or any of its affiliates; (f) any
business plans, budgets, advertising or marketing plans; (g) any information
contained in any of the written or oral policies and procedures or manuals of
the Company or any of its affiliates; (h) any information
 
 
 
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belonging to customers or vendors of the Company or any of its affiliates or any
other person or entity which the Company or any of its affiliates has agreed to
hold in confidence; (i) any inventions, innovations or improvements covered by
this Agreement; and (j) all written, graphic and other material relating to any
of the foregoing.   Executive acknowledges and understands that information that
is not novel or copyrighted or patented may nonetheless be proprietary
information.  The term “proprietary information” shall not include information
generally available to and known by the public or information that is or becomes
available to Executive on a non-confidential basis from a source other than the
Company, any of its affiliates, or the directors, officers, employees, partners,
principals or agents of the Company or any of its affiliates (other than as a
result of a breach of any obligation of confidentiality).
 
(d)  Confidentiality and Surrender of Records.  Executive shall not during the
Term or at any time thereafter (irrespective of the circumstances under which
Executive’s employment by the Company terminates), except as required by law,
directly or indirectly publish, make known or in any fashion disclose any
confidential records to, or permit any inspection or copying of confidential
records by, any individual or entity other than in the course of such
individual’s or entity’s employment or retention by the Company.  Upon
termination of employment for any reason or upon request by the Company,
Executive shall deliver promptly to the Company all property and records of the
Company or any of its affiliates, including, without limitation, all
confidential records.  For purposes hereof, “confidential records” means all
correspondence, reports, memoranda, files, manuals, books, lists, financial,
operating or marketing records, magnetic tape, or electronic or other media or
equipment of any kind which may be in Executive’s possession or under his
control or accessible to him which contain any proprietary information.  All
property and records of the Company and any of its affiliates (including,
without limitation, all confidential records) shall be and remain the sole
property of the Company or such affiliate during the Term and thereafter.
 
(e)  Inventions and Patents.
 
(i)    The Executive agrees that all processes, technologies and inventions
(collectively, "Inventions"), including new contributions, improvements, ideas
and discoveries, whether patentable or not, conceived, developed, invented or
made by him during the Term shall belong to the Company, provided that such
Inventions grew out of the Executive's work with the Company or any of its
subsidiaries or affiliates, are related in any manner to the business
(commercial or experimental) of the Company or any of its subsidiaries or
affiliates or are conceived or made on the Company's time or with the use of the
Company's facilities or materials.  The Executive shall further:  (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
 
(ii)    If any Invention is described in a patent application or is disclosed to
third parties, directly or indirectly, by the Executive within two years after
the termination of the Executive's employment by the Company, it is to be
presumed that the Invention was conceived or made during the Term.
 
(iii)    The Executive agrees that the Executive will not assert any rights
 
 
 
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to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
 
(iv)  The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder).  The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
 
(f)  Enforcement.  Executive acknowledges and agrees that, by virtue of his
position, his services and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 6 would cause the Company and/or its affiliates
immediate, substantial and irreparable injury for which it or they have no
adequate remedy at law.  Accordingly, Executive agrees and consents to the entry
of an injunction or other equitable relief by a court of competent jurisdiction
restraining any violation or threatened violation of any undertaking contained
in this Section 6.  Executive waives posting by the Company or its affiliates of
any bond otherwise necessary to secure such injunction or other equitable
relief.  Rights and remedies provided for in this Section 6 are cumulative and
shall be in addition to rights and remedies otherwise available to the parties
hereunder or under any other agreement or applicable law.
 
(g)  Code of Ethics.  Nothing in this Section 6 is intended to limit, modify or
reduce Executive’s obligations under the Company’s Code of Ethics.  Executive’s
obligations under this Section 6 are in addition to, and not in lieu of,
Executive’s obligations under the Code of Ethics.  To the extent there is any
inconsistency between this Section 6 and the Code of Ethics which would permit
Executive to take any action or engage in any activity pursuant to this Section
6 which he would be barred from taking or engaging in under the Code of Ethics,
the Code of Ethics shall control.
 
7.  Assignment and Transfer.
 
(a)  Company.  This Agreement shall inure to the benefit of and be enforceable
by, and may be assigned by the Company without Executive’s consent to, any
purchaser of all or substantially all of the Company’s business or assets, or to
any successor to the Company or any assignee thereof (whether direct or
indirect, by purchase, merger, consolidation or otherwise).
 
(b)  Executive. The parties hereto agree that Executive is obligated under this
Agreement to render personal services during his employment of a special,
unique, unusual, extraordinary and intellectual character, thereby giving this
Agreement special value.  Executive’s rights and obligations under this
Agreement shall not be transferable by Executive
 
 
 
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by assignment or otherwise, and any purported assignment, transfer or delegation
thereof shall be void; provided, however, that if Executive shall die, all
amounts then payable to Executive hereunder shall be paid in accordance with the
terms of this Agreement to Executive’s estate.
 
8.  Miscellaneous.
 
(a)  Cooperation.  Following termination of employment with the Company for any
reason, Executive shall cooperate with the Company, as requested by the Company,
to effect a transition of Executive’s responsibilities and to ensure that the
Company is aware of all matters being handled by Executive.
 
(b)  Mitigation.  Executive shall not be required to mitigate damages or the
amount of any payment provided to him under Section 5 of this Agreement by
seeking other employment or otherwise, nor shall the amount of any payments
provided to Executive under Section 5 be reduced by any compensation earned by
Executive as the result of employment by another employer after the termination
of Executive’s employment or otherwise.
 
(c)  Protection of Reputation.  During the Term and thereafter, Executive agrees
that he will take no action which is intended, or would reasonably be expected,
to harm the Company or any of its affiliates or its or their reputation or which
would reasonably be expected to lead to unwanted or unfavorable publicity to the
Company or its affiliates.  Nothing herein shall prevent Executive from making
any truthful statement in connection with any legal proceeding or investigation
by the Company or any governmental authority.
 
(d)  Governing Law; Consent to Jurisdiction.  This Agreement shall be governed
by and construed (both as to validity and performance) and enforced in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed wholly within such jurisdiction, without
regard to the principles of conflicts of law or where the parties are located at
the time a dispute arises.  In the event of any controversy or claim arising out
of or relating to this Agreement or the breach or alleged breach hereof, each of
the parties hereto irrevocably (a) consents to the jurisdiction of any state
court sitting in the County of New York, State of New York, or federal court
sitting in the County of New York, State of New York. (b) waives any objection
which it may have at any time to the laying of venue of any action or proceeding
brought in any such court and (c) waives any claim that such action or
proceeding has been brought in an inconvenient forum.
 
(e)  Injunctive Relief.  Notwithstanding anything to the contrary contained
herein, the Company and any affiliate of the Company (if applicable) shall have
the right to seek injunctive or other equitable relief from a court of competent
jurisdiction to enforce Section 6 of this Agreement without any obligation to
post a bond.
 
(f)  Entire Agreement.  This Agreement (including the plans referenced in
Section 3(d) of this Agreement) contain the entire agreement and understanding
between the parties hereto in respect of Executive’s employment from and after
the date hereof and supersede, cancel and annul any prior or contemporaneous
written or oral agreements, understandings, commitments and practices between
them respecting Executive’s employment from and after the date hereof, including
all prior employment agreements between the Company
 
 
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and Executive.
 
(g)  Amendment.  This Agreement may be amended only by a writing which makes
express reference to this Agreement as the subject of such amendment and which
is signed by Executive and, on behalf of the Company, by its duly authorized
officer.
 
(h)  Severability. If any provision of this Agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction or arbitration panel to be invalid or unenforceable to
any extent, the remainder of this Agreement, or the application of such
provision to such person or circumstances other than those to which it is so
determined to be invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be enforced to the fullest extent permitted by
law.  If any provision of this Agreement, or any part thereof, is held to be
invalid or unenforceable because of the scope or duration of or the area covered
by such provision, the parties hereto agree that the court or arbitration panel
making such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such invalid or
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be
enforced.  The parties hereto recognize that if, in any judicial or arbitral
proceeding, a court or arbitration panel shall refuse to enforce any of the
separate covenants contained in this Agreement, then that invalid or
unenforceable covenant contained in this Agreement shall be deemed eliminated
from these provisions to the extent necessary to permit the remaining separate
covenants to be enforced.  In the event that any court or arbitration panel
determines that the time period or the area, or both, are unreasonable and that
any of the covenants is to that extent invalid or unenforceable, the parties
hereto agree that such covenants will remain in full force and effect, first,
for the greatest time period, and second, in the greatest geographical area that
would not render them unenforceable.
 
(i)  Construction.  The headings and captions of this Agreement are provided for
convenience only and are intended to have no effect in construing or
interpreting this Agreement.  The language in all parts of this Agreement shall
be in all cases construed according to its fair meaning and not strictly for or
against the Company or Executive.  As used herein, the words “day” or “days”
shall mean a calendar day or days.
 
(j)  Section 409A Consistency.  Any payments made pursuant to this Agreement are
intended to comply with Section 409A of the Code, and any ambiguities in the
Agreement shall be resolved so as to comply with the requirements of Section
409A of the Code.
 
(k)  Non-waiver.  Neither any course of dealing nor any failure or neglect of
either party hereto in any instance to exercise any right, power or privilege
hereunder or under law shall constitute a waiver of any other right, power or
privilege or of the same right, power or privilege in any other instance.  All
waivers by either party hereto must be contained in a written instrument signed
by the party to be charged and, in the case of the Company, by its duly
authorized officer.
 
(l)  Notices.  Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given if personally delivered or if sent by registered
or certified
 
 
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mail, postage prepaid, with return receipt requested, addressed:
 
(i)  in the case of the Company, to :
 
If to the Company:
 
Steven Madden, Ltd
52-16 Barnett Ave.
Long Island City, New York 11104
Attention:
Chief Executive Officer
Telephone Number:
(718) 446-1800
Facsimile Number:
(718) 446-5999

With a copy to:
 
James A. Grayer, Esq.
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
Telephone Number:
(212) 715-7616
Facsimile Number:
(212) 715-8050

(ii)  in the case of Executive, to Executive’s last known address as reflected
in the Company’s records, or to such other address as Executive shall designate
by written notice to the Company.
 
Any notice given hereunder shall be deemed to have been given at the time of
receipt thereof by the person to whom such notice is given if personally
delivered or at the time of mailing if sent by registered or certified mail.

(m)  Assistance in Proceedings, Etc.  Executive shall, without additional
compensation, during and after the Term, upon reasonable notice, furnish such
information and proper assistance to the Company as may reasonably be required
by the Company in connection with any legal or quasi-legal proceeding, including
any external or internal investigation, involving the Company or any of its
affiliates.
 
(n)  Survival.  Cessation or termination of Executive’s employment with the
Company shall not result in termination of this Agreement.  The respective
obligations of Executive and the Company as provided in Sections 5, 6, 7 and 8
of this Agreement shall survive cessation or termination of Executive’s
employment hereunder.
 
(o)  Section 409A of the Code.
 
(i)  It is the parties’ intention that this Agreement not result in any tax
being imposed under Section 409A of the Code and in the case of any ambiguity
the Agreement shall be construed in such manner.
 
 
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(ii)  Notwithstanding the foregoing, the Company makes no representations
regarding the tax implications of the compensation and benefits to be paid to
Executive under this Agreement, including, without limitation, under Section
409A of the Code.  The parties agree that in the event a qualified tax advisor
to the Company or to Executive (neither party being required to retain such
advisor) reasonably advises that the terms hereof would result in Executive
being subject to tax under Section 409A of the Code, Executive and the Company
shall negotiate in good faith to amend this Agreement to the extent necessary to
prevent the assessment of any such tax, including by delaying the payment dates
of any amounts hereunder.
 
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on
its behalf by an individual thereunto duly authorized and Executive has duly
executed this Agreement, all as of the date and year first written above.
 
                                                                STEVEN MADDEN,
LTD
   
                                                                By:
/s/ Jamieson A. Karson                          
 
Name:
Jamieson A. Karson
 
Title:
Chairman and Chief Executive Officer

                                                                /s/ Jeffrey
Silverman                                         
                                                                Name:
Jeffrey Silverman

 
 
 
 
 
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