• 0 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YOR K IN RE STEVEN MADDEN LTD . SECURITIES LITIGATION X CIVIL ACTTQX.r N . 03 off c- CV-0D-36 60 C c COUR T y -1 STIPULATION AND AGREEMENT OF SETTLE yN of -1 C This Stipulation and Agreement of Settlement (the "Stipulation") is submitted pursuant t o Rule 23 of the Federal Rules of Civil Procedure . Subject to the approval of the Court, this Stipulation is entered into among Lead Plaintiffs Process Engineering Services, Inc ., Michael Fasci, and Mark and Libby Adams on behalf of themselves and the Class (as hereinafter defined), defendant Steven Madden Ltd . ("SHOO"), and individual defendants Steven Madden, Rhonda J . Brown and Arvind Dharia (collectively, the "Individual Defendants") (SHOO and the Individual Defendants are collectively referred to hereinafter as the "Defendants"), by and through their respective counsel . WHEREAS : A . Beginning on or about June 21, 2000, eight putative class actions allegin g violations of the federal securities laws -- Wilner v . Steven Madden Ltd., et at ., Case No . 00-CV- 3676 (JG) ; Demster v. Steven Madden Ltd ., et al ., Case No . 00-CV-3702 (JG) ; Connor v. Steven Madden Ltd ., et al., Case No . 00-CV-3709 (JG) ; Blumenthal v. Steven Madden Ltd ., et al . , Case No . 00-CV-3727 (JG) ; Curry v . Steven Madden Ltd ., et al . , C as e No . 00-CV-3766 (JG) ; Salafia v . Steven Madden Ltd ., et al . , Case No . 00-CV-4289 (JG) ; Fahey, et al . V . Steven Madden Ltd . , Case No . 00-CV-4712 ( JG); and Process Engineering Services, Inc. v . Steven Madden Ltd ., Cas e No . 00-CV-5002 (JG) -- were filed in this Court by plaintiffs (collectively with the Lea d Plaintiffs, the "Plaintiffs") and subsequently consolidated under the caption above (the foregoin g actions and the consolidated action are collectively referred to hereinaft JAN 1 3 200
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UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
IN RE STEVEN MADDEN LTD .SECURITIES LITIGATION
X CIVIL ACTTQX.rN. 03 off c-CV-0D-36 60C c COURT
y -1STIPULATION AND AGREEMENT OF SETTLE yN of -1C
This Stipulation and Agreement of Settlement (the "Stipulation") is submitted pursuant t o
Rule 23 of the Federal Rules of Civil Procedure . Subject to the approval of the Court, this
Stipulation is entered into among Lead Plaintiffs Process Engineering Services, Inc ., Michael
Fasci, and Mark and Libby Adams on behalf of themselves and the Class (as hereinafter
defined), defendant Steven Madden Ltd . ("SHOO"), and individual defendants Steven Madden,
Rhonda J . Brown and Arvind Dharia (collectively, the "Individual Defendants") (SHOO and the
Individual Defendants are collectively referred to hereinafter as the "Defendants"), by and
through their respective counsel .
WHEREAS :
A. Beginning on or about June 21, 2000, eight putative class actions allegin g
violations of the federal securities laws -- Wilner v . Steven Madden Ltd., et at ., Case No . 00-CV-
3676 (JG); Demster v. Steven Madden Ltd., et al ., Case No . 00-CV-3702 (JG) ; Connor v. Steven
Madden Ltd., et al. , Case No . 00-CV-3709 (JG) ; Blumenthal v. Steven Madden Ltd ., et al . , Case
No. 00-CV-3727 (JG) ; Curry v. Steven Madden Ltd ., et al . , Case No . 00-CV-3766 (JG) ; Salafia
v. Steven Madden Ltd ., et al . , Case No . 00-CV-4289 (JG); Fahey, et al . V . Steven Madden Ltd . ,
Case No. 00-CV-4712 (JG); and Process Engineering Services, Inc. v . Steven Madden Ltd., Case
No. 00-CV-5002 (JG) -- were filed in this Court by plaintiffs (collectively with the Lea d
Plaintiffs, the "Plaintiffs") and subsequently consolidated under the caption above (the foregoing
actions and the consolidated action are collectively referred to hereinaft
JAN 1 3 200
B . Lead Plaintiffs filed the Second Consolidated Amended Class Actio n
Complaint in the Action on October 31, 2001 (the "Complaint") . It generally alleges, among
other things, that Defendants violated Sections 10(b) and/or 20(a) of the Securities Exchange Ac t
of 1934, and Rule IOb-5 promulgated thereunder , by failing to disclose (i) that SHOO's founder
and then-Chief Executive, Steven Madden, had previously committed certain alleged fraudulent
acts in connection with the initial public offerings of SHOO and other companies, and (ii) that a
block of SHOO common stock legally held by BOCAP, Individual Defendant Madden's wholly-
owned company, was allegedly owned secretly by certain principals of Stratton Oakmont, a
brokerage firm closed down by regulators in 1996 ;
C. The Complaint further alleges that Plaintiffs and the other Class Members
purchased the common stock of SHOO during the purported Class Period at prices artificiall y
inflated as a result of the Defendants' alleged violations of the federal securities laws ;
D . Defendants deny all allegations of wrongdoing, fault, liability or damage
to the Plaintiffs or the Class, deny that they engaged in any wrongdoing, deny that the y
committed any violation of law, deny that they acted improperly in any way, believe that the y
acted properly at all times, and believe that the Action has no merit . Defendants, however,
recognize the uncertainty and risk of the outcome of any litigation, especially complex securitie s
litigation, and the potential difficulties and substantial expense and length of time necessary to
defend this proceeding through the conclusion of discovery, summary judgment motions, a
possible trial, possible post-trial motions, and possible appeals . To eliminate the burden and
uncertainty of further litigation, Defendants wish to settle the Action on the terms and condition s
stated in this Stipulation, and to put the Settled Claims to rest finally and forever, without in an y
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way acknowledging any wrongdoing, fault, liability or damage to the Plaintiffs, the othe r
members of the Class or to any other person or entity .
E . The parties to this Stipulation acknowledge that the Action has been file d
by Plaintiffs and defended by Defendants in good faith, that the Action is being voluntarily
settled upon advice of counsel and that the terms of the Settlement are fair, adequate an d
reasonable .
F. Plaintiffs' Co-Lead Counsel have conducted an investigation relating to
the claims and the underlying events and transactions alleged in the Complaint, have analyze d
the evidence adduced during pretrial discovery and have researched the applicable law wit h
respect to the claims of Plaintiffs and the other members of the Class and the potential defense s
thereto. In agreeing to this Settlement, Plaintiffs do not concede that any infirmities exist in thei r
claims, nor. do Defendants concede any infirmities in their defenses to such claims, or that th e
claims are valid or have merit ;
G. Lead Plaintiffs, by their counsel , have conducted discussions and arm' s
length negotiations with counsel for Defendants with respect to a compromise and settlement o f
the Action with a view to settling the issues in dispute and achieving the best relief possible
consistent with the interests of the Class ; and
H. Based upon their investigation and pretrial discovery as set forth above,
Plaintiffs' Co-Lead Counsel have concluded that the terms and conditions of this Stipulation ar e
fair, reasonable, adequate and in the best interests of Plaintiffs and the other members of th e
Class, and have agreed to settle the claims raised in the Action pursuant to the terms an d
conditions of this Stipulation, after considering (a) the substantial benefits that Plaintiffs and th e
other members of the Class will receive from settlement of the Action, (b) the costs and attendan t
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risks of litigation, and (c) the desirability of permitting the Settlement to be consummated as
provided by the terms of this Stipulation .
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and
among the parties to this Stipulation through their respective attorneys, that subject to the Court' s
approval pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and in consideration o f
the benefits flowing to the parties hereto from the Settlement, the Action and all other Settle d
Claims as against the Released Parties shall be fully, finally and forever compromised, settled ,
released, discharged and dismissed with prejudice, upon and subject to the following terms and
conditions :
CERTAIN DEFINITIONS
1 . As used in this Stipulation, the following terms shall have the followin g
meanings :
(a) "Authorized Claimant" means a Class Member who submits a
timely and valid Proof of Claim form to the Claims Administrator .
(b) "Claims Administrator" means the firm of Gilardi & Co. LLC,
which shall administer the Settlement .
(c) "Claims" means any and all claims, demands, actions, causes o f
and other advisors, investment bankers, underwriters, lenders, or other representatives .
6. Upon the Effective Date of the Settlement, each of the Releasors and the
Released Parties shall have waived any and all provisions, rights and benefits conferred by an y
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law of any state or territory of the United States, or principle of common law, or law of an y
foreign jurisdiction, which is similar, comparable or equivalent to Section 1542 of the Californi a
Civil Code, including , without limitation, Section 1542 of the California Civil Code, which
provides-
A GENERAL RELEASE DOES NOT EXTENDTO CLAIMS WHICH THE CREDITOR DOESNOT KNOW OR SUSPECT TO EXIST IN HISFAVOR AT THE TIME OF EXECUTING THERELEASE, WHICH IF KNOWN BY HIM MUSTHAVE MATERIALLY AFFECTED HISSETTLEMENT WITH THE DEBTOR.
Lead Plaintiffs, on behalf of the Releasors and Defendants on behalf of the Released Parties,
acknowledge that they may discover facts in addition to or different from those that they now
know or believe to be true with respect to the subject matter of their respective releases, but that
it is their intention, on behalf of the Releasors and the Released Parties to fully, finally and
forever settle and release the Claims set forth in Paragraphs 2-4, including unknown Claims a s
that term is defined in Paragraph 1(c) .
THE SETTLEMENT CONSIDERATIO N
7. SHOO's directors and officers ' insurance carrier has paid, on behalf o f
Defendants, $9,000,000 (the "Cash Settlement Amount") into escrow for the benefit of the Class .
The Cash Settlement Amount and any interest earned thereon shall be the "Gross Settlement
Fund."
8. (a) The Gross Settlement Fund, net of any Taxes (as defined below) on
the income thereof, shall be used to pay (i) the notice and administration costs referred to i n
Paragraph 10 hereof, (ii) the attorneys' fee and expense award referred to in Paragraph 11 hereof ,
and (iii) the remaining administration expenses referred to in Paragraph 14 hereof. The balance
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of the Gross Settlement Fund after the above payments shall be the "Net Settlement Fund,"
which shall be distributed to the Authorized Claimants as provided in Paragraphs 15-18 hereof .
Any sums required to be held in escrow hereunder shall be held by Plaintiffs' Co-Lead Counsel
as escrow agents for the Settlement Fund . All funds held by Plaintiffs' Co-Lead Counsel shall be
deemed to be in the custody of the Court and shall remain subject to the jurisdiction of the Court
until such time as the funds shall be distributed or returned to the persons paying the same
pursuant to this Stipulation and/or further order of the Court . Plaintiffs' Co-Lead Counsel shal l
invest any funds in excess of $100,000 in short term United States Agency or Treasury
Securities, and shall collect and reinvest all interest accrued thereon . Any funds held in escrow
in an amount of less than $100,000 maybe held in an interest bearing bank account insured by
the FDIC. The parties hereto agree that the Settlement Fund is intended to be a Qualified
Settlement Fund within the meaning of Treasury Regulation § 1 .468B-1 and that Plaintiffs' Co-
Lead Counsel, as administrators of the Settlement Fund within the meaning of Treasury
Regulation § 1 .468B-2(k)(3), shall be responsible for filing tax returns for the Settlement Fund
and paying from the Settlement Fund any Taxes owed with respect to the Settlement Fund.
Counsel for SHOO agrees to provide promptly to Plaintiffs' Co-Lead Counsel the statement
described in Treasury Regulation § 1 .468B-3(e) .
(b) All taxes on the income of the Gross Settlement Fund and al l
expenses and costs incurred in connection with the taxation of the Gross Settlement Fund
(including, without limitation, expenses of tax attorneys and accountants) (collectively "Taxes")
shall be paid out of the Gross Settlement Fund, shall be considered to be a cost of administration
of the Settlement and shall be timely paid by Plaintiffs' Co-Lead Counsel without prior order of
the Court .
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ADMINISTRATION
9. The Claims Administrator shall administer the Settlement under Plaintiffs '
Co-Lead Counsel's supervision and subject to the jurisdiction of the Court . Except as stated in
Paragraph 20 hereof, Defendants shall have no responsibility for the administration of the
Settlement and shall have no liability to the Class or to any other person or entity in connection
with such administration. Defendants' Counsel shall cooperate in the administration of the
Settlement to the extent reasonably necessary to effectuate its terms . Counsel for SHOO shall
provide from SHOO's transfer records, without charge to any of the parties hereto, the identity
and last known addresses of Class Members and their transactions .
10. Plaintiffs' Co-Lead Counsel may expend from the Cash Settlemen t
Amount, without further approval from the Defendants or the Court, the reasonable costs and
expenses associated with the administration of the Settlement, including without limitation, the
costs of identifying members of the Class and effecting mail notice and Publication Notice . Such
amounts shall include, without limitation, the actual costs of publication, printing and mailing the
Notice, reimbursements to nominee owners for identifying beneficial owners and forwarding
notice to their beneficial owners, and the administrative expenses incurred and fees charged by
the Claims Administrator in connection with providing notice and processing the submitted
claims. Except for such payments, no amounts shall be disbursed from the Cash Settlement
Amount except upon written order of the Court .
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ATTORNEYS' FEES AND EXPENSES
11 . At the hearing to consider the approval of the Settlement (the "Settlemen t
Fairness Hearing"), or at such other time in the course of the litigation as the Court may direct ,
Plaintiffs' Co-Lead Counsel will apply to the Court for an award of attorneys' fees an d
reimbursement of expenses, including but not limited to the fees of experts or consultants, in an
amount not to exceed one-third (33-1/3%) of the Gross Settlement Fund and for reimbursement
of expenses, plus interest. Plaintiffs' Co-Lead Counsel shall be solely responsible for allocating .
the attorneys' fees and reimbursement of expenses awarded by the Court among all counse l
representing the Class.
12. Such attorneys' fees, expenses, and interest as are awarded by the Cour t
shall be payable from the Gross Settlement Fund to Plaintiffs' Counsel upon award ,
notwithstanding the existence of any timely filed objections thereto, or potential for appea l
therefrom, or collateral attack on the Settlement or any part thereof, provided, however, that
Plaintiffs' Co-Lead Counsel shall be obligated to refund or repay the Settlement Fund, plu s
accrued interest at the same net rate as is earned by the Gross Settlement Fund , if and when, as a
result of any appeal and/or further proceedings on remand, or successful collateral attack or
otherwise, the fee or cost award is reduced or reversed and/or the Settlement is not consummated
and/or the Stipulation is invalidated or held to be null and void and/or the Settlement otherwis e
does not become effective .
13 . The granting by the Court of any application by Plaintiffs' Co-Lead
Counsel for attorneys' fees and reimbursement of expenses or the amount thereof, are no t
conditions of the Settlement. The request by Plaintiffs' Co-Lead Counsel for attorneys' fees an d
reimbursement of expenses is to be considered by the Court separately from the Court' s
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consideration of the question of whether the Settlement is fair, reasonable and adequate . Any
order or proceedings relating to any request for attorneys' fees and reimbursement of expenses or
any appeal from any order or proceedings relating to any of these subjects, shall not affect or
delay the Effective Date and the finality of the Final Order and Judgment approving the
Settlement of the Action.
ADMINISTRATION EXPENSES
14. Plaintiffs' Co-Lead Counsel will apply to the Court, on notice to
Defendants' Counsel, for an order (the "Class Distribution Order") approving the Claims
Administrator's administrative determinations concerning the acceptance and rejection of the
claims submitted herein and approving any fees and expenses not previously applied for,
including the fees and expenses of the Claims Administrator, and, if the Effective Date has
occurred, directing payment of the Net Settlement Fund to Authorized Claimants .
DISTRIBUTION TO AUTHORIZED CLAIMANTS
15 . The Claims Administrator shall determine each Authorized Claimant's pro
rata share of the Net Settlement Fund based upon each Authorized Claimant's Recognized Claim
(as defined in the Plan of Allocation described in the Notice annexed hereto as Exhibit 1 t o
Exhibit A, or in such other Plan of Allocation as the Court approves) .
16. The Plan of Allocation proposed in the Notice is not a necessary term o f
this Stipulation and it is not a condition of this Stipulation that that Plan of Allocation be
approved .
17 . Each Authorized Claimant shall be allocated a pro rata share of the Net
Settlement Fund based on his or her Recognized Claim compared to the total Recognized Claims
of all accepted claimants . This is not a claims-made settlement . The Defendants shall not b e
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entitled to get back any of the settlement monies once the Effective Date of the Settlemen t
occurs . The Defendants shall have no involvement in reviewing or challenging claims, and shal l
have no responsibility or liability for any distributions made or not made .
18. The approval by the Court of the Plan of Allocation is not a condition o f
the Settlement. The Plan of Allocation is to be considered by the Court separately from th e
Court' s consideration of the question of whether the Settlement is fair , reasonable and adequate .
In the event that the Plan of Allocation is not approved by the Court, Plaintiffs' Co-Lead Counsel
will propose an amended Plan of Allocation as necessary to implement the distribution of the
Settlement . Any order or proceedings relating to the Plan of Allocation shall not affect or delay
the Effective Date of the Settlement and the finality of the Final Order and Judgment approvin g
the Settlement.
ADMINISTRATION OF THE SETTLEMENT
19. Any member of the Class who does not submit a valid Proof of Claim wil l
not be entitled to receive any of the proceeds from the Net Settlement Fund but will otherwise b e
bound by all of the terms of this Stipulation and the Settlement, including the terms of the Fina l
Order and Judgment to be entered in the Action and the releases provided for herein .
20. Plaintiffs' Co-Lead Counsel shall be responsible for disseminating notic e
of the Settlement, and supervising the Claims Administrator's administration of the Settlement
and disbursement of the Net Settlement Fund . Except for SHOO's obligation to pay the Cas h
Settlement Amount, which obligation has been satisfied, and SHOO's obligation to provid e
certain information specified in Paragraph 9 with respect to the identification of Class Member s
from SHOO's shareholder transfer records, for which SHOO shall be solely responsible ,
Defendants shall have no liability, obligation or responsibility in connection with the Settlement ,
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including, without limitation, for the administration of the Settlement or disbursement of the Net
Settlement Fund. Plaintiffs' Co-Lead Counsel shall have the right, but not the obligation, t o
waive what they deem to be formal or technical defects in any Proofs of Claim submitted in the
interests of achieving substantial justice .
21 . For purposes of determining the extent, if any, to which a Class Member
shall be entitled to be treated as an "Authorized Claimant," the following conditions shall apply :
(a) Each Class Member shall be required to submit a signed Proof o f
Claim (see attached Exhibit 2 to Exhibit A), supported by such documents as are designate d
therein, including proof of the claimant's loss, or such other documents or proof as Plaintiffs' Co-
Lead Counsel, in their discretion, may deem acceptable ;
(b) All Proofs of Claim must be submitted by the date specified in the
Notice unless such period is extended by Order of the Court . Any Class Member who fails to
submit a Proof of Claim by such date shall be forever barred from receiving any paymen t
pursuant to this Stipulation (unless, by Order of the Court, a later submitted Proof of Claim by
such Class Member is approved), but shall in all other respects be bound by all of the terms o f
this Stipulation and the Settlement including the terms of the Final Order and Judgment to b e
entered in the Action and the releases provided for herein . Provided that it is received before the
motion for the Class Distribution Order is filed, a Proof of Claim shall be deemed to have bee n
submitted when posted, if received with a postmark indicated on the envelope and if mailed b y
first -class mail and addressed in accordance with the instructions thereon. In all other cases, th e
Proof of Claim shall be deemed to have been submitted when actually received by the Claim s
Administrator;
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(c) Each Proof of Claim shall be submitted to and reviewed by th e
Claims Administrator, under the supervision of Plaintiffs' Co-Lead Counsel, who shall determine
in accordance with this Stipulation the extent, if any, to which each claim shall be allowed ,
subject to review by the Court pursuant to subparagraph 21(e) below ;
(d) Proofs of Claim that do not meet the submission requirements may
be rejected. Prior to rejection of a Proof of Claim, the Claims Administrator shall communicat e
with the claimant in order to remedy the curable deficiencies in the Proof of Claim submitted .
The Claims Administrator, under supervision of Plaintiffs' Co-Lead Counsel, shall notify, in a
timely fashion and in writing, all claimants whose Proofs of Claim they propose to reject in
whole or in part, setting forth the reasons therefor, and shall indicate in such notice that the
claimant whose claim is to be rejected has the right to a review by the Court if the claimant s o
desires and complies with the requirements of subparagraph 21(e) below ;
(e) If any claimant whose claim has been rejected in whole or in part
desires to contest such rejection, the claimant must, within twenty (20) days after the date o f
mailing of the notice required in subparagraph 21(d) above, serve upon the Claims Administrato r
a notice and statement of reasons indicating the claimant's grounds for contesting the rejectio n
along with any supporting documentation, and requesting a review thereof by the Court . Ifa
dispute concerning a Proof of Claim cannot be otherwise resolved, Plaintiffs' Co-Lead Counse l
shall thereafter present the request for review to the Court ; and
(f) The administrative determinations of the Claims Administrato r
accepting and rejecting claims shall be presented to the Court, on notice to Defendants' Counsel ,
for approval by the Court in the Class Distribution Order .
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22. Each claimant shall be deemed to have submitted to the exclusiv e
jurisdiction of this Court with respect to the claimant's Proof of Claim, and the Proof of Claim
will be subject to investigation and discovery under the Federal Rules of Civil Procedure ,
provided that such investigation and discovery shall be limited to that claimant's status as a Clas s
Member and the validity and amount of the claimant 's claim . No discovery shall be allowed on
the merits of the Action or Settlement in connection with the processing of Proofs of Claim .
23. Payment pursuant to this Stipulation shall be deemed final and conclusive
against all Class Members . All Class Members whose claims are not approved by the Cour t
shall be barred from participating in distributions from the Net Settlement Fund, and shall b e
bound by all of the terms of this Stipulation and the Settlement, including the terms of the Fina l
Order and Judgment to be entered in the Action and the releases provided for herein .
24. All proceedings with respect to the administration, processing and
determination of claims described by Paragraph 21 of this Stipulation and the determination o f
all controversies relating thereto, including disputed questions of law and fact with respect to th e
validity of claims , shall be subject to the exclusive jurisdiction of this Court .
25. The Net Settlement Fund shall be distributed to Authorized Claimants b y
the Claims Administrator only after the Effective Date and after : (i) all Proof of Claim forms
have been processed, and all claimants whose Proofs of Claim have been rejected or disallowed ,
in whole or in part, have been notified and provided the opportunity to be heard concerning such
rejection or disallowance; (ii) all objections with respect to all rejected or disallowed claims hav e
been resolved by the Court, and all appeals therefrom have been resolved or the time therefor ha s
expired; (iii) all matters with respect to attorneys' fees, costs, and disbursements have been
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resolved by the Court, all appeals therefrom have been resolved or the time therefor has expired ;
and (iv) all costs of administration have been paid .
TERMS OF PRELIMINARY APPROVAL ORDE R
26 . Promptly after this Stipulation has been fully executed, Plaintiffs' Co-Lea d
Counsel and Defendants' Counsel jointly shall apply to the Court for entry of a Preliminar y
Approval Order, substantially in the form annexed hereto as Exhibit A.
27. Lead Plaintiffs and Defendants stipulate to the certification of the Clas s
and certification of Lead Plaintiffs as representatives of the Class solely for the purpose of thi s
Settlement, If the Settlement is not approved by the Court or is not consummated for any othe r
reason, Defendants reserve the right to oppose certification of the Class, or any other class, and
to oppose certification or appointment of Lead Plaintiffs as representatives of the Class, or any
other class , in the Action .
TERMS OF FINAL ORDER AND JUDGMENT
28. If the Settlement contemplated by this Stipulation is approved by th e
Court, Plaintiffs' Co-Lead Counsel and Defendants' Counsel jointly shall request that the Cour t
enter a Final Order and Judgment substantially in the form annexed hereto as Exhibit B .
SUPPLEMENTAL AGREEMENT
29. Simultaneously herewith, Plaintiffs' Co-Lead Counsel and Defendants '
Counsel are executing a "Supplemental Agreement" setting forth certain conditions under whic h
this Stipulation may be terminated by Defendants if potential Class Members who purchased i n
excess of a certain number of shares of SHOO common stock traded during the Class Period
exclude themselves from the Class . The Supplemental Agreement shall not be filed prior to th e
Settlement Fairness Hearing unless a dispute arises as to its terms . In the event of a termination
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of this Stipulation pursuant to the Supplemental Agreement, this Stipulation shall become nul l
and void and of no further force and effect and the provisions of Paragraph 32 shall apply .
Notwithstanding the foregoing, the Stipulation shall not become null and void as a result of th e
election by the Defendants to exercise their option to terminate the Stipulation pursuant to th e
Supplemental Agreement until the conditions for termination set forth in the Supplementa l
Agreement have been satisfied .
EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION
30. The Effective Date of the Settlement shall be one business day followin g
the latest of the following events :
(a) entry of the Preliminary Approval Order in all material respects i n
the form annexed hereto as Exhibit A;
(b) approval by the Court of the Settlement, following notice to the
Class and a hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure; and
(c) (i) entry by the Court of a Final Order and Judgment, in al l
material respects in the form set forth in Exhibit B annexed hereto, and the expiration of any time
for appeal or review of such Final Order and Judgment or, if any appeal is filed and no t
dismissed, after such Final Order and Judgment is upheld on appeal in all material respects and i s
no longer subject to review upon appeal or review by writ of certiorari, or, (ii) in the event that
the Court enters a Final Order and Judgment in a form other than that provided above
("Alternative Judgment") and none of the parties hereto elect to terminate this Settlement, th e
date that such Alternative Judgment becomes final and no longer subject to appeal or review .
31 . Defendants' Counsel or Plaintiffs' Co-Lead Counsel shall have the right t o
terminate the Settlement and this Stipulation by providing written notice of their election to do s o
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("Termination Notice") to all other signato ries hereto within thirty (30) days of. (a) the Court' s
declining to enter the Preliminary Approval Order in any material respect ; (b) the Court's refusal
to approve this Stipulation or any material part of it ; (c) the Court's declining to enter the Final
Order and Judgment in any material respect ; (d) the Court's entry of an Alternative Judgment
that differs in any material respect from the Final Order and Judgment ; (e) the date upon which
the Final Order and Judgment is modified or reversed in any material respect by the Court o f
Appeals or the Supreme Court ; or (f) the date upon which an Alternative Judgment is modifie d
or reversed in any material respect by the Court of Appeals or the Supreme Court . Defendants
also shall have the option of terminating the Settlement and this Stipulation in accordance wit h
the terms of the Supplemental Agreement . The Settlement is not conditioned upon the Court' s
approval of the proposed Plan of Allocation or on the Court's approval of Plaintiffs' Co-Lea d
Counsel's application for attorneys' fees and expenses, and any change in the Final Order an d
Judgment or an Alternative Judgment relating to these items shall not be material .
32. Except as otherwise provided herein, in the event the Settlement i s
terminated or fails to become effective for any reason, then the parties to this Stipulation shall b e
deemed to have reverted to their respective status in the Action as of May 28, 2002, the date an d
time immediately prior to the execution of the memorandum of understanding, and, except a s
otherwise expressly provided, (a) the parties shall proceed in all respects as if this Stipulation an d
any related orders had not been entered, (b) any portion of the Cash Settlement Amoun t
previously paid by Defendants, together with any interest earned thereon , less any Taxes du e
with respect to such income, and less costs of administration and notice actually incurred an d
paid or payable from the Cash Settlement Amount, shall be returned to the persons paying th e
same as soon as is reasonably practicable, (c) if the Class has been certified by the Court for th e
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purpose of the Settlement, then that class certification will be null and void and the Defendant s
shall have the right to object to certification of the Class or any other class at any future time, an d
(d) this Stipulation and the Settlement shall be null and void and have no further force or effect,
and shall not be referred to, admissible in or introduced in any other way for any reason in any
proceeding, except as expressly stated in this Stipulation .
NO ADMISSION OF WRONGDOIN G
33. This Stipulation, the exhibits hereto and the Supplemental Agreement ,
including their respective terms and provisions, and the negotiations or proceedings connected
with these documents, regardless of whether the Settlement becomes effective :
(a) shall not be offered or received against any of the Released Partie s
as evidence of or construed as or deemed to be evidence of any presumption, concession, o r
admission by any of the Released Parties with respect to (i) the truth of any fact alleged b y
Plaintiffs or (ii) the validity of any claim that was or could have been asserted in the Action or i n
any other litigation or proceeding , or (iii) the deficiency of any defense that was or could hav e
been asserted in the Action or in any other litigation or proceeding, or (iv) of any liability,
negligence, fault, or wrongdoing of any of the Released Parties ;
(b) shall not be offered or received against any of the Released Partie s
as evidence of a presumption, concession or admission of any fault, misrepresentation or
omission with respect to any statement or written document approved or made by any Released
Party, or against the Plaintiffs and the Class as evidence of any infirmity in the claims of
Plaintiffs and the Class ;
(c) shall not be offered or received against any of the Released Partie s
or against the Plaintiffs or the Class as evidence of a presumption, concession or admission with
i
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respect to any liability, negligence, fault or wrongdoing, or in any way referred to for any other
reason as against any of the Released Parties, Plaintiffs or Class Members, in any other civil,
criminal, administrative or other proceeding, other than such proceedings as may be necessary to
effectuate or enforce the provisions of this Stipulation; provided, however, that if this Stipulation
is approved by the Court, the Released Parties may refer to it to effectuate or enforce the releases
or any other rights, terms or provisions set forth herein, and to that end may use this Stipulation
or the Final Order and Judgment in any action or other proceeding to support a defense, claim,
counter-claim or cross-claim based on principles of contract law, res judicata, collateral estoppel,
release, good faith settlement, judgment bar or reduction or any other theory of claim preclusion
or similar principle, claim, defense, counter-claim or cross-claim ;
(d) shall not be construed against any of the Released Parties or th e
Plaintiffs and the Class as an admission, concession or presumption that the consideration to be
given hereunder represents the amount which could be or would have been recovered after trial ;
and
(e) shall not be construed as or received in evidence as an admission ,
concession or presumption against Plaintiffs or the Class or any of them that any of their claims
are without merit or that damages recoverable under the Complaint would not have exceeded the
Settlement Fund.
MISCELLANEOUS PROVISION S
34. All ofthe exhibits attached hereto are hereby incorporated by reference as
though fully set forth herein .
35. Each Defendant warrants as to himself, herself or itself that , as to the
payments made on behalf of him, her or it pursuant to Paragraph 7 hereof, at the time of such
22
I . . • • • 0 • • i
payments, he, she or it was not insolvent nor did nor will the payment required to be made by or
on behalf of him, her or it render such Defendant insolvent within the meaning of and/or for the
purposes of the United States Bankruptcy Code, including Sections 101 and 547 thereof. This
warranty is made by each such Defendant and not by such Defendant's Counsel .
36. If a final order is entered by a court of competent jurisdiction determinin g
the transfer of money to the Gross Settlement Fund or any portion thereof to be a preference,
voidable transfer, fraudulent transfer or similar transaction and any portion thereof is required to
be returned, and such amount is not promptly deposited to the Gross Settlement Fund by others,
then, at the election of Plaintiffs' Co-Lead Counsel, the parties shall jointly move the Court to
vacate and set aside the releases given and Final Order and Judgment entered in favor of the
Defendants pursuant to this Stipulation, which releases and Final Order and Judgment shall be
null and void, and the parties shall be restored to their respective positions in the litigation as of
May 28, 2002, the date and time immediately prior to the execution of the memorandum of
understanding, and any cash amounts in the Gross Settlement Fund shall be returned as provided
in Paragraph 32 above, and Plaintiffs' Co-Lead Counsel shall return any funds or monies
previously paid to them in accordance with Paragraph 12 above .
37. The parties to this Stipulation intend the Settlement to be a final and
complete resolution of all disputes that were or could have been asserted by the Releasors against
the Released Parties with respect to the Settled Claims. Lead Plaintiffs and Defendants on behalf
of the Releasors and the Released Parties, respectively, agree not to assert in any forum that the
litigation was brought by Plaintiffs or defended by Defendants in bad faith or without a
reasonable basis. The parties hereto shall assert no claims of any violation of Rule 11 of the
Federal Rules of Civil Procedure relating to the prosecution, defense, or settlement of the Action .
23
The parties agree that the amount paid and the other terms of the Settlement were negotiated at
arm's length in good faith by the parties, and reflect a settlement that was reached knowingly and
voluntarily and without coercion or duress of any kind, after consultation with experienced legal
counsel.
38. This Stipulation and the Exhibits annexed hereto (a) may be amended or
modified only by a written instrument signed by or on behalf of all of the signatories hereto or
their respective successors-in-interest, and (b) cannot be amended or modified in any respect
orally or by the conduct of the parties .
39. The headings herein are used for the purpose of convenience only and are
not meant to have legal effect.
40. The administration and consummation of the Settlement as embodied in
this Stipulation shall be under the authority of this Court and this Court shall retain exclusive
jurisdiction for the purpose of entering orders providing for awards of attorneys' fees and
expenses to Plaintiffs' Counsel and enforcing the terms of this Stipulation .
41. The waiver by one party of any breach of this Stipulation by any other
party shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation .
42. This Stipulation and its exhibits and the Supplemental Agreement
constitute the entire agreement among the parties hereto concerning the Settlement of the Action,
and no oral or written representations, warranties, or inducements have been made by any party
hereto concerning this Stipulation and its exhibits and the Supplemental Agreement other than
those contained and memorialized in such documents . Defendants and Lead Plaintiffs expressly
disclaim reliance upon on any oral or written representations, warranties or inducements i n
24
deciding to enter into the Stipulation and Settlement, other than the representations, warrantie s
and covenants contained and memorialized in this Stipulation and the Exhibits attached thereto .
43 . This Stipulation may be executed in one or more counterpart s . All
executed counterparts and each of them shall be deemed to be one and the same instrumen t
provided that counsel for the parties to this Stipulation shall exchange among themselves origina l
signed counterparts .
44. This Stipulation shall be binding upon, and inure to the benefit of, th e
successors and assigns of the parties hereto .
45 . The construction, interpretation, operation, effect and validity of this
Stipulation, and all documents necessary to effectuate it, shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to any conflicts of
law or choice-of-law rule or principle that might otherwise refer construction or interpretation of
this Stipulation to the substantive law of another jurisdiction, except to the extent that federal law
requires that federal law govern .
46 . This Stipulation shall not be construed more strictly against one party tha n
another merely by virtue of the fact that it, or any part of it, may have been prepared by counse l
for one of the parties, it being recognized that the Stipulation is the result of arm's-length
negotiations between the parties and all parties have contributed substantially and materially to
the preparation of this Stipulation .
47. All counsel and any other person executing this Stipulation or any of the
exhibits hereto, or any related settlement documents, warrant and represent that they have the full
authority to do so and that they have the authority to take appropriate action required or
permitted to be taken pursuant to the Stipulation to effectuate its terms . Lead Plaintiffs and
25
w w w + w - w
Defendants warrant and represent that they have not assigned or otherwise alienated any Settle d
Claim or Settled Defendants' Claim, as the case may be, to any other person or entity in an y
manner, whether by way of operation of law or otherwise .
48. Plaintiffs' Co-Lead Counsel and Defendants' Counsel agree to cooperat e
fully with one another in seeking Court approval of the Preliminary Approval Order, th e
Stipulation and the Settlement, and to promptly agree upon and execute all such othe r
documentation as may be reasonably required to obtain final approval by the Court of th e
Settlement.
49. Any legal suit, action or other proceeding arising from or relating to the
Stipulation or the Settlement contemplated thereby shall be instituted solely in the United State s
District Court for the Eastern District of New York. Each party (a) agrees not to assert any
objection that he, she or it may now or hereafter may have to the laying of venue of any suc h
suit, action or proceeding, and (b) agrees to submit to the exclusive personal jurisdiction of th e
United States District Court for the Eastern District of New York in any such suit, action o r
proceeding .
50. Each of the Lead P laintiffs , and each of the Defendants, through their
respective counsel, represents (a) that he, she or it has read this Stipulation, including the release s
contained herein, and fully understands its contents, (b) that he, she or it has consulted wit h
counsel prior to and in connection with the execution of this Stipulation and the consummatio n
of the Settlement contemplated thereby, and (c) that he, she or it enters into this Stipulation an d
Settlement voluntarily and knowingly and without any coercion or duress of any kind.
26
51 . To the extent that there is any inconsistency or ambiguity between the
Stipulation and any of the Exhibits annexed hereto or the Supplemental Agreement , the terms of
this Stipulation shall gove rn .
52. The parties agree and covenant that they will jointly request that Notice to
the Class be disseminated at the same time as notice is given to the Class in the Derivative
Actions , and further that they will jointly request that the Court schedule any hearing to consider
the Settlement of the Action at the same date and time as the se ttlement in the Derivative Actions
is to be considered . The part ies further agree and "covenant that consideration of the Settlement
in this Action is separate and apart from consideration of the Settlement in the Derivative Action .
DATED : 23 , 2003
MILBERG WEISS BERSHADHYNES & LERACH LLP
B G1~ JY•Robert A. Wallner (RW-51 )George A. Bauer III (GB-2919)
One Pennsylvania Plaza'New York , New York 10119-0165Telephone : (212) 594-5300Facsimile : (212) 868-1229
STULL , STULL & BROD Y
By : av~Jules Brody (JB-9151)Mark Levine (ML-0 180 )
6 East 45th Stree tNew York, New York 10017 .Telephone : (212) 687-7230Facsimile : (212) 490-2022
27
SC14IFFRIN & BARROWAY, LLP
By: <9=P IKessler (DK-7837 )
Three Bala Plaza East, Suite 400Bala Cynwyd, Pennsylvania 19004Telephone: (610) 667-7706Facsimile: (610) 667-705 6
Plaintiffs ' Co-Lead Counsel
WEIL, GOTSHAL & MANGES LLP
By:Joseph S . Allerhand (JA-3201)Seth Goodchild (SG-2296)
767 Fifth AvenueNew York, New York 10153Telephone: (212) 310-8000Facsimile : (212) 310-800 7
Attorneys for Defendants Steven Madden,Ltd., Rhonda J. Brown and Arvind Dhari a
CADWALADER, WICKERSHAM & TAFTLLP
By :Jason M . Halper (JH-8310)Isaac S. Greaney (IG-0922)
100 Maiden LaneNew York, New York 10038Telephone: (212) 504-6000Facsimile : (212) 504-666 6
Attorneys for Defendant Steven Madden,Ltd.
28
SCHIFFRIN & BARROWAY, LL P
By :David Kessler (DK-7837)
Three Bala Plaza East, Suite 400Bala Cynwyd, Pennsylvania 19004Telephone: (610) 667-7706Facsimile : (610) 667-705 6
Plaintiffs' Co-Lead Counsel
WEIL, GOTSHAL & MANGES LL P
By .oseph S . Allerhand (JA-3201)
Seth Goodchild (SG-2296)767 Fifth AvenueNew York, New York 10153Telephone: (212) 310-8000Facsimile : (212) 310-800 7
Attorneys for Defendants Steven Madden,Ltd., Rhonda J. Brown and Arvind Dhari a
CADWALADER, WICKERSHAM & TAFTLLP
By :Jason M . Halper (JH-8310)Isaac S . Greaney (IG-0922)
100 Maiden Lan eNew York, New York 10038Telephone : (212) 504-6000Facsimile : (212) 504-6666
Attorneys for Defendant Steven Madden,Ltd.
28
qW VV i w w qW w . w w
SCHIFFRIN & BARROWAY, LLP
By :David Kessler (DK-7837)
Three Bala Plaza East, Suite 400Bala Cynwyd, Pennsylvania 19004Telephone: (610) 667-7706Facsimile: (610) 667-7056
Plaintiffs ' Co-Lead Counsel
WEIL, GOTSXIAL & MANGES LL P
By:Joseph S. Allerhand (JA-3201)Seth Goodchild (SG-2296)
767 Fifth AvenueNew York, New York 10153Telephone : (212) 310-8000Facsimile : (212) 310-8007
Attorneys for Defendants Steven Madden,Ltd., Rhonda J . Brown and Arvind Dharia
CADWALADER, WICKERSHAM & TAFTLLP
By :son M. Halper (JIB-8310)
saac S. Greaney (IG-0922)Maiden Lane
New York, New York 10038Telephone: (212) 504-6000Facsimile: (212) 504-6666
Attorneys for Defendant Steven Madden,Ltd.
28
SKADDEN, ARPS, SLATE,MEAGHP& FLOM LLP
By :on an . rner (J -7117)
Fo es quareNew York, New York 10036Telephone : (212) 735-3000Facsimile : (212) 735-2000
Attorneys for Defendant Steven Madde n
29
0 0 . 0 I 0 r 0
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
IN RE STEVEN MADDEN LTD . X CIVIL ACTION NO.SECURITIES LITIGATION : CV-00-3676 (JG)
X
PRELIMINARY APPROVAL ORDER IN CONNECTIONWITH SETTLEMENT PROCEEDING S
WHEREAS, on December 2003, the parties to the above-entitled action (the
"Action") entered into a Stipulation and Agreement of Settlement (the "Stipulation"), which is
subject to review under Rule 23 of the Federal Rules of Civil Procedure ("F .R.Civ .P.") and
which, together with the exhibits thereto, sets forth the terms and conditions for the proposed
settlement of the claims alleged in the Complaint on the merits and with prejudice ; and the Court
having read and considered the Stipulation and the accompanying documents ; and the parties to
the Stipulation having consented to the entry of this Preliminary Approval Order ; and all
capitalized terms not otherwise defined herein having the meanings ascribed to them in th e
Stipulation;
NOW, THEREFORE , IT IS HEREBY ORDERED , this0)~~
day of
200that:
Pursuant to F .R.Civ.P. 23(b)(3), and for the purposes of the Settlement only, thi s
Action is hereby preliminarily certified as a class action on behalf of all persons who purchased
the common stock of Steven Madden Ltd . ("SHOO") during the period from June 21, 1997
through and including June 20, 2000, and are alleged by Lead Plaintiffs to be damaged thereby .
Excluded from the Class are the Defendants and all present and former officers and directors o f
SHOO, members of the immediate families (parents, spouses, siblings, and children) of each of
0 0 0 • 0 0 5
the Individual Defendants, each Defendant's legal representatives, heirs, successors or assigns
and any entity in which any Defendant has had a controlling interest .
2. For purposes of this Preliminary Approval Order only, the Court preliminari ly
finds that the prerequisites for a class action under F .R.Civ.P. 23(a) and (b)(3) have been
satisfied in that : (a) the number of Class Members is so numerous that joinder of all members
thereof is impracticable; (b) there are questions of law and fact common to the Class ; (c) the
claims of the named representatives are typical of the claims of the Class they seek to represent ;
(d) the Lead Plaintiffs will fairly and adequately represent the interests of the Class ; (e) the
questions of law and fact common to the members of the Class predominate over any questions
affecting only individual members of the Class ; and (f) a class action is superior to other
available methods for the fair and efficient adjudication of the controversy.
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Lead Plaintiffs
Process Engineering Services , Inc ., Michael Fasci , and Mark and Libby Adams are preliminari ly
certified as Class representatives .
4. A hearing (the "Settlement Fairness Hearing") pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure is hereby scheduled to be held before the Court o n
2004, at l - : 30P-
.m. for the following purposes :
(a) . to finally determine whether this Action satisfies the applicable
prerequisites for class action treatment under Rule 23(a) and (b) of the Federal Rules of Civi l
Procedure ;
(b) to determine whether the proposed Settlement is fair, reasonable, an d
adequate, and should be approved by the Court ;
2
0 • • 0 ! 0 0 ♦ 0
(c) to determine whether the Final Order and Judgment as provided under th e
Stipulation should be entered, dismissing the Complaint filed herein, on the merits and wit h
prejudice , and to determine whether the release by the Releasors of the Settled Claims, as set
forth in the Stipulation, should be provided to the Released Parties ;
(d) to determine whether the proposed Plan of Allocation for the proceeds o f
the Settlement is fair and reasonable, and should be approved by the Court ;
(e) to consider Plaintiffs' Counsel's application for an award of attorneys '
fees and expenses; and
(f) to rule upon such other matters as the Court may deem appropriate .
5. The Settlement Fai rness Hearing may be adjourned by the Court without notice to
the Class other than by an announcement of the adjournment at the scheduled time of th e
Settlement Fairness Hearing or at the scheduled time of any adjournment of the Settlemen t
Fairness Hearing . The Court may consider modifications of the Settlement (with the consent of
Lead Plaintiffs and the Defendants) without further notice to the Class .
6. The Court reserves the right to approve the Settlement with or without
modification and with or without further notice of any kind. The Court further reserves the righ t
to enter its Final Order and Judgment approving the Stipulation and dismissing the Complaint o n
the merits and with prejudice regardless of whether it has approved the Plan of Allocation o r
awarded attorneys' fees and expenses.
7. The Court approves the form, substance and requirements of the Notice o f
Pendency of Class Action, Hearing On Proposed Settlement and Attorneys' Fee Petition and
Right to Share in Settlement Fund (the "Notice"), annexed hereto as Exhibit I and the Proof of
Claim form, annexed hereto as Exhibit 2 .
8 . The Court approves the selection of Gilardi & Co. LLC by Plaintiffs' Co-Lead
Counsel as the Claims Administrator. The Claims Administrator, under the supervision of
Plaintiffs' Co-Lead Counsel, shall cause the Notice and the Proof of Claim, substantially in the
forms annexed hereto, to be mailed, by first class mail, postage prepaid, on or befor e
2004, to all Class Members who can be identified with reasonable effort by
Plaintiffs' Co-Lead Counsel . SHOO shall make available to Plaintiffs' Co-Lead Counsel or thei r
agent, without charge to any party, sufficient information reasonably required for the purpose o f
identifying and giving notice to the Class . Plaintiffs' Co-Lead Counsel shall use reasonabl e
efforts to give notice to nominee owners such as brokerage firms and other persons or entities
who purchased SHOO common stock during the Class Period as record owners but not a s
beneficial owners. Such nominee purchasers are directed to forward copies of the Notice an d
Proof of Claim to their beneficial owners within seven days of receipt of the Notice or to provid e
the Claims Administrator with lists of the names and addresses of the beneficial owners, and th e
Claims Administrator is ordered to send the Notice and Proof of Claim promptly to such
beneficial owners . Additional copies of the Notice shall be made available to any record holder
requesting such for the purpose of distribution to beneficial owners, and such record holders
shall be reimbursed from the Settlement Fund, upon receipt by the Claims Administrator of
proper documentation, for the reasonable expense of sending the Notices and Proofs of Claim t o
beneficial owners . Plaintiffs' Co-Lead Counsel shall, at or before the Settlement Fairnes s
Hearing, file with the Court proof of mailing of the Notice and Proof of Claim .
9. The Court approves the form of Publication Notice of the pendency of this clas s
action and the proposed Settlement in substantially the form and content annexed hereto as
Exhibit 3 and directs that Plaintiffs' Co-Lead Counsel shall cause the Publication Notice to b e
4
published in the national edition ofThe Wall Street Journal within ten days of the mailing of the
Notice. Plaintiffs' Co-Lead Counsel shall, at or before the Settlement Fairness Hearing, file with
the Court proof of publication of the Published Notice .
10. The form and method set forth herein of notifying the Class of the Settlement and
its terms and conditions meet the requirements of Rule 23 of the Federal Rules of Civi l
Procedure, Section 21D(a)(7) of the Securities Exchange Act of 1934, 15 U .S.C. § 78u-4(a)(7) as
amended by the Private Securities Litigation Reform Act of 1995, and due process, constitute the
best notice practicable under the circumstances, and shall constitute due and sufficient notice to
all persons and entities entitled thereto .
11 . In order to be entitled to participate in the Net Settlement Fund, in the event the
Settlement is effected in accordance with all of the terms and conditions set forth in the
Stipulation, each Class Member shall take the following actions and be subject to the following
conditions :
(a) A properly executed Proof of Claim (the "Proof of Claim"), substantially
in the form attached hereto as Exhibit 2, must be submitted to the Claims Administrator, at th e
Post Office Box indicated in the Notice, postmarked not later than [--e IS' , 2004.
Such deadline may be further extended by Court Order . Each Proof of Claim shall be deemed to
have been submitted when postmarked (if properly addressed and mailed by first class mail,
postage prepaid) provided such Proof of Claim is actually received prior to the motion for an
order of the Court approving distribution of the Net Settlement Fund . Any Proof of Claim
submitted in any other manner shall be deemed to have been submitted when it was actually
received at the address designated in the Notice .
! ! 0 ! • ! t !
(b) The Proof of Claim submitted by each Class Member must satisfy the
following conditions : (i) it must be properly completed, signed and submitted in a timely
manner in accordance with the provisions of the preceding subparagraph ; (ii) it must b e
accompanied by adequate supporting documentation for the transactions reported therein, in th e
form of broker confirmation slips, broker account statements, an authorized statement from th e
broker containing the transactional information found in a broker confirmation slip, or such othe r
documentation as is deemed adequate by Plaintiffs' Co-Lead Counsel ; ( iii) if the person
executing the Proof of Claim is acting in a representative capacity, a certification of his curren t
authority to act on behalf of the Class Member must be included in the Proof of Claim; and (iv )
the Proof of Claim must be complete and contain no material deletions or modifications of any of
the printed matter contained therein and must be signed under penalty of perjury .
(c) As part of the Proof of Claim, each Class Member shall submit to the sole
and exclusive jurisdiction of the Court with respect to the claim submitted, and shall (subject t o
effectuation of the Settlement) release all Settled Claims as provided in the Stipulation .
12. Any member of the Class who does not submit a Proof of Claim form in th e
manner stated in this Order shall be deemed to have waived his, her or its right to share in th e
Net Se ttlement Fund, and shall forever be barred fr om sharing in the Net Settlement Fund. Any
such member of the Class, however, in all other respects shall be subject to and bound by all o f
the terms of the Settlement, including the terms of the Stipulation, the Final Order and Judgmen t
and the releases provided for by the Stipulation and the Final Order and Judgment unless such
member of the Class has submitted a request to be excluded from the Class in the manner
required by this Order,
6
13. Class Members shall be bound by all determinations and judgments in this
Action, whether favorable or unfavorable, unless such persons request exclusion from the Class
in a timely and proper manner, as hereinafter provided. A Class Member wishing to make such
request shall mail the request in written form by first class mail postmarked no later tha n
Pro rt, 2004 to the address designated in the Notice. Such request for exclusion
shall clearly indicate the name and address of the person seeking exclusion, that the sender
requests to be excluded from the Class in the Steven Madden Ltd . Securities Litigation, and must
be signed by such person. Such persons requesting exclusion should also provide the following
information: their daytime telephone number and the date(s), price(s), and number(s) of shares
of all purchases and sales of SHOO common stock during the Class Period . The request for
exclusion shall not be effective unless it provides the required information and is made within
the time stated above, or the exclusion is otherwise accepted by the Court .
14. Class Members requesting exclusion from the Class shall not be entitled to
receive any payment out of the Net Settlement Fund as described in the Stipulation and Notice .
15 . Any member of the Class who does not request exclusion from the Class in th e
manner required by this Order may object to the Settlement, the Plan of Allocation, the adequacy
of representation and/or the request by Plaintiffs' Co-Lead Counsel for attorneys' fees and
reimbursement of expenses in person or by counsel at the Settlement Fairness Hearing . Any
objection, or request to be heard at the Settlement Fairness Hearing must be in writing, must be
received by the Court and the counsel identified in the Notice no later than I ~3 2004
unless good cause is shown for an extension of this deadline, and must include the following
information: (a) the person's name, address and telephone number, (b) the dates the person
purchased and sold SHOO securities during the Class Period, (c) a detailed statement of the basi s
7
V W v w W V
for the person's objections to the Settlement, the Plan of Allocation, the adequacy of
representation, the request by Plaintiffs' Co-Lead Counsel for attorneys' fees and reimbursemen t
of expenses, or any other matter before the Court, and (d) any supporting papers, including all
documents and writings that the person wants the Court to consider. The objection, statement or
request to be heard at the Settlement Fai rness Hearing must be filed with the Clerk of the Cour t
and must be served on the counsel for the parties identified in the Notice at the same time tha t
the objection, or request to be heard is filed with the Clerk of the Court .
16. Any member of the Class who does not object to the Settlement, the Plan o f
Allocation, the adequacy of representation or Plaintiffs' Co-Lead Counsel's request fo r
attorneys' fees and reimbursement of expenses or otherwise request to be heard at the Settlemen t
Fairness Hearing in the manner required by this Order shall be deemed forever to have waived
his, her or its right to object to the Settlement, the Plan of Allocation, the adequacy o f
representation, or Plaintiffs' Co-Lead Counsel's request for attorneys' fees and reimbursement o f
expenses or otherwise be heard concerning these subjects, and shall forever be barred fro m
objecting to the Settlement, the Plan of Allocation, the adequacy of representation, or Plaintiffs '
Co-Lead Counsel's request for attorneys ' fees and reimbursement of expenses or from otherwis e
being heard concerning these subjects in this or any other proceeding .
17. Attendance at the hearing is not necessary ; however, persons wishing to be heard
orally in opposition to the approval of the Settlement, the Plan of Allocation, and/or the reques t
for attorneys' fees are required to indicate in their written objection their intention to appear a t
the hearing. Class Members do not need to appear at the hearing or take any other action t o
indicate their approval .
8
A W W 1W W
18 . Pending final determination of whether the Settlement should be approved, th e
Plaintiffs, all Class Members, and each of them, and anyone who acts or purports to act on thei r
behalf, shall not institute, commence or prosecute any action which asserts Settled Claim s
against any Released Party .
19. Pending the Settlement Fairness Hearing, the Court stays all proceedings in th e
Action, other than those proceedings necessary to carry out or enforce the terms and condition s
of the Stipulation .
20. This Order, the Settlement, and any of their terms, and all negotiations ,
discussions and proceedings in connection with this Order and the Settlement, shall no t
constitute any evidence, or an admission by any of the Defendants or the other Released Parties,
that any acts of wrongdoing have or have not been committed and shall not be deemed to create
any inference that there is or is not any liability on the part of any of the Defendants or any other
Released Parties . This Order, the Settlement, and any of their terms, and all negotiations ,
discussions and proceedings in connection with this Order and the Settlement, shall not b e
offered or received in evidence or used for any other purpose in this or any other proceeding i n
any court, administrative agency, arbitration tribunal, or other forum of any kind or character in
the United States or any other country except as necessary to enforce the terms of this Order
and/or the Settlement .
21. If (a) the Settlement is terminated by Defendants pursuant to Paragraph 29 of th e
Stipulation; (b) any specified condition to the Settlement set forth in the Stipulation is no t
satisfied and the Settlement is terminated by Plaintiffs' Co-Lead Counsel or Counsel for th e
Defendants ; (c) the Court rejects, in any material respect, the Final Order and Judgment annexe d
to the Stipulation as Exhibit B and Plaintiffs' Co-Lead Counsel and Counsel for the Defendants
9
fail to consent to the entry of another form of order in lieu thereof ; (d) the Court rejects the
Stipulation , including any amendment thereto approved by Plaintiffs' Co-Lead Counsel and
Counsel for the Defendants; or (e) the Court approves the Stipulation, including any amendment
thereto approved by Plaintiffs' Co-Lead Counsel and Counsel for the Defendants, but suc h
approval is reversed on appeal and such reversal becomes final by lapse of time or otherwise,
then, in any such event listed in subparagraphs (a) through (e) hereof, the Stipulation, includin g
any amendment(s) thereof, and this Preliminary Order certifying the Class and the Clas s
Representatives for purposes of the Settlement shall be null and void, of no further force o r
effect, and without prejudice to any party, and may not be introduced as evidence or referred t o
in any actions or proceedings by any person or entity, and each party shall be restored to his, he r
or its respective position as it existed as of May 28, 2002, the date and time immediately prior t o
the execution of the memorandum of understanding .
22. The Court retains exclusive jurisdiction over the Action to consider all furthe r
matters arising out of or connected with the Settlement .
Dated : Brooklyn, New Yorkj 4 ''i0200f
10
9 • 0 • 0 0 • • •
4
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
IN RE STEVEN MADDEN LTD . X CIVIL ACTION NO.SECURITIES LITIGATION : CV-00-3676 (JG)
X
NOTICE OF PENDENCY OF CLASS ACTION,HEARING ON PROPOSED SETTLEMENT AND ATTORNEYS' FEE PETITION
AND RIGHT TO SHARE IN SETTLEMENT FUN D
TO: ALL PERSONS WHO PURCHASED THE COMMON STOCK OF STEVENMADDEN LTD . ("SHOO") DURING THE PERIOD FROM JUNE 21, 1997THROUGH AND INCLUDING JUNE 20, 2000, AND ARE ALLEGED BY LEA DPLAINTIFFS TO BE DAMAGED THEREBY .
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY . YOUR RIGHTSWILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION . IF YOU ARE A CLASSMEMBER, YOU ULTIMATELY MAY BE ENTITLED TO RECEIVE BENEFIT SPURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN .
CLAIMS DEADLINE: CLAIMANTS MUST SUBMIT PROOFS OF CLAIM, ON THEFORM ACCOMPANYING THIS NOTICE, POSTMARKED ON OR BEFOR E
. 2004 .
EXCLUSION DEADLINE : REQUESTS FOR EXCLUSION MUST BE SUBMITTEDPOSTMARKED ON OR BEFORE , 2004 .
SECURITIES BROKERS AND OTHER NOMINEES : PLEASE SEE INSTRUCTIONS ONPAGE HEREIN .
SUMMARY OF SETTLEMENT AND RELATED MATTER S
I . Purpose of this Notice
1. This Notice is given pursuant to Rule 23 of the Federal Rules of Civil Procedure
and an Order of the Court dated 200 . The purpose of this Notice is to inform
you that this Action, and the proposed Settlement, will affect all Class Members' rights . This
Notice describes rights you may have under the proposed Settlement and what steps you ma y
take in relation to this Action . This Notice is not an expression of any opinion by the Court as to
the merits of any claims or any defenses asserted by any party in this Action, or the fairness or
adequacy of the proposed Settlement .
II . Statement of Plaintiff Recovery
2. Pursuant to the Settlement described herein, a Settlement Fund consisting of
$9,000,000 in cash, plus interest, has been established. Plaintiffs estimate that there were
approximately 14 million shares of SHOO common stock traded during the Class Period which
they allege were damaged as a result of the conduct described at Paragraphs 13-18 below .
Plaintiffs estimate that the average recovery per eligible share of SHOO common stock under th e
Settlement is $0 .64 per eligible share before deduction of Court-awarded attorneys' fees and
expenses. Depending on the number of eligible shares for which claims are submitted, when
during the Class Period a Class Member purchased his or her shares of SHOO common stock,
and whether those shares were held at the end of the Class Period or sold during the Class
Period, and if sold, when they were sold, an individual Class Member may receive more or less
than this average amount .
3 . Under the relevant securities laws, a claimant's recoverable damages are limited
to the losses attributable to the alleged securities law violations . Losses which resulted from
factors other than an alleged securities law violation are not recoverable from the Settlement
Fund. For purposes of the Settlement herein, a Class Member's distribution from the Net
Settlement Fund will be governed by the proposed Plan of Allocation described below at
Paragraphs 36-43, or such other Plan of Allocation as may be approved by the Court.
III . Statement of Potential Outcome of Case
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4. The parties disagreed on both liability and damages and do not agree , inter alia,
on the average amount of damages per share that would be recoverable if Plaintiffs were to hav e
prevailed on each claim alleged . The issues on which the parties disagree include but are not
limited to: (a) the appropriate economic model for determining the amount by which SHOO
common stock was allegedly artificially inflated (if at all) during the Class Period ; (b) the
amount by which SHOO common stock was allegedly artificially inflated (if at all) during th e
Class Period; (c) the effect of various market forces influencing the trading price of SHO O
common stock at various times during the Class Period ; (d) the extent to which the various
matters that Plaintiffs alleged were materially false or misleading influenced (if at all) the tradin g
price of SHOO common stock at various times during the Class Period; (e) the extent to which
the various allegedly adverse material facts that Plaintiffs alleged were omitted influenced (if a t
all) the trading price of SHOO common stock at various times du ring the Class Period; (f)
whether Plaintiffs' claims were barred by the applicable statute of limitations ; and (g) whether
the statements allegedly made or facts allegedly omitted from statements made by Defendant s
were material or otherwise actionable under the federal securities laws .
5 . Plaintiffs' Counsel considered that there was a substantial risk that Plaintiffs and
the Class might not have prevailed on all or any of their claims and that there were risks that th e
decline in the price of SHOO common stock could be attributed, in whole or in part, to othe r
factors . Therefore, Lead Plaintiffs and the other Class Members could have recovered nothing or
substantially less than the amount of the Settlement .
6. For example, at the time the agreement in principle to settle the Action was
reached, Defendants had filed motions to dismiss the Action . The outcome of the motions was
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uncertain, and there was a risk that the Court would have granted the motions in whole or in par t
and dismissed the Action with prejudice, thus resulting in no recovery .
7. The Defendants deny that they are liable to the Plaintiffs or the other Clas s
Members and deny that Plaintiffs or the other Class Members have suffered any damages .
IV. Statement of Attorneys' Fees and Costs Sought
Plaintiffs' Counsel intend to apply for fees of up to one-third (33-1/3%) of the
Gross Settlement Fund, and for reimbursement of expenses incurred in connection with th e
prosecution of this Action in the approximate amount of $100,000. The requested fees and
expenses would amount to an average of $0.22 per share estimated to be damaged in total fo r
fees and expenses . Plaintiffs' Counsel have expended considerable time and effort in th e
prosecution of this litigation on a contingent fee basis, and have advanced the expenses of th e
litigation, in the expectation that if they were successful in obtaining a recovery for the Clas s
they would be paid from such recovery. In this type of litigation it is customary for counsel to b e
awarded a percentage of the common fund recovery as their attorneys' fees .
V . Further Information
9. Further information regarding the Action and this Notice may be obtained by
contacting Plaintiffs' Co-Lead Counsel : Robert A. Wallner, Esq., Milberg Weiss Bershad Hyne s
& Lerach LLP, One Pennsylvania Plaza, New York, New York 10119-0165, Telephone (212 )
594-5300; Mark Levine, Esq ., Stull, Stull & Brody, 6 East 45th Street, New York, New York
10017, Telephone (212) 687-7230; or David Kessler, Esq., Schiffrin & Barroway, LLP, Three
Bala Plaza East, Suite 400, Bala Cynwyd, Pennsylvania 19004, Telephone (610) 667-7706 .
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VI .
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Reasons for the Settlement
10. The principal reason for the Settlement is the benefit to be provided to the Clas s
now. This benefit must be compared to the risk that no recovery or a substantially smaller
recovery might be achieved following the Court's determination of Defendants' motions t o
dismiss the Action, or after the filing and determination of possible motions for summar y
judgment (if the motions to dismiss were denied in whole or in part), or after a contested trial and
likely appeals, possibly years into the future .
[END OF COVER PAGE]
NOTICE OF SETTLEMENT FAIRNESS HEARIN G
11 . NOTICE IS HEREBY GIVEN, pursuant to Rule 23 of the Federal Rules of Civi l
Procedure and an Order of the United States District Court for the Eastern District of New York
(the "Court") dated 200_, that a hearing will be held before the Honorable
John Gleeson, United States District Judge, in the United States Courthouse, 225 Cadman Plaz a
East , Brooklyn, New York 11201 , at _.m., on 2004 (the
"Settlement Fairness Hearing") to determine whether a proposed settlement (the "Settlement") o f
the above-captioned action (the "Action") as set forth in the Stipulation and Agreement o f
Settlement dated December _, 2003 (the "Stipulation"), is fair, reasonable and adequate, and t o
consider the proposed Plan of Allocation for the Settlement proceeds and the application o f
Plaintiffs' Counsel for attorneys' fees and reimbursement of expenses .
12. The Court, by Preliminary Approval Order In Connection With Settlement
Proceedings, dated , 200, has preliminarily certified a plaintiff Class, for
purposes of this Settlement only, consisting of. "all persons who purchased the common stock o f
Steven Madden Ltd . ('SHOO') during the period from June 21, 1997 through and including June
20, 2000, and were damaged thereby." Excluded from the Class are the Defendants and al l
present and former officers and directors of SHOO, members of the immediate families (parents ,
spouses, siblings, and children) of each of the Individual Defendants, each Defendant's legal
representatives , heirs, successors or assigns and any entity in which any Defendant has had a
controlling interest .
BACKGROUND OF THE LITIGATIO N
13 . Throughout the Class Period, Steven Madden Ltd . (NASDAQ : SHOO) was
engaged in the business of designing and marketing footwear for women through SHOO's retai l
stores, department stores, apparel and footwear specialty stores, and on the Internet . In
December 1993, SHOO went public in an initial public offering underwritten by Stratto n
Oakmont, Inc. ("Stratton Oakmont") . Stratton Oakmont closed down in 1996, the same year it s
president and chief executive officer (Daniel Porush) was permanently barred from the securitie s
industry. Before being permanently barred from the securities industry in 1994, Stratto n
Oakmont's founder (Jordon Belfort) helped found Monroe Parker Securities, Inc . ("Monroe
Parker"), an affiliate of Stratton Oakmont, in 1993 . Monroe Parker closed down in Decembe r
1997 .
14. Prior to the Class Period, Individual Defendant Madden allegedly participate d
with Stratton Oakmont and Monroe Parker in fraudulent activities involving at least 22 initia l
public offerings ("IPOs"), including SHOO's IPO. On the morning of June 20, 2000, Mr.
Madden was arrested on charges of securities fraud and money laundering, followin g
indictments by federal grand juries in the Eastern and the Southern Districts of New York. On
that same day, the SEC filed a civil complaint against Mr . Madden seeking to bar him form
serving as an officer or director of a public company for violations of, inter alia, Section 10(b) of
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the Securities Exchange Act of 1934 and Rule 1Ob-5 promulgated thereunder. At 10:59 a.m. on
June 20, 2000, NASDAQ halted trading in SHOO common stock after it had dropped t o
$11 .1875 per share from $13 .125 per share at the close of trading on June 19, 2000 . SHOO
common stock resumed trading on June 22, 2000, falling another $4 .50 per share to close at
$6.6875 per share at the close of trading on June 22 .
15. Lead Plaintiffs filed the Second Consolidated Amended Class Action Complaint
in the Action on October 31, 2001 (the "Complaint") . It generally alleges, among other things,
that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, an d
Rule IOb-5 promulgated thereunder, by failing to disclose (i) that Steven Madden, SHOO' s
founder and then-Chief Executive, had previously committed ce rtain alleged fraudulent acts in
connection with the initial public offerings of SHOO and other companies, and (ii) that a bloc k
of SHOO common stock legally held by BOCAP, Individual Defendant Madden's wholly-owned
company, was allegedly secretly owned by certain principals of Stratton Oakmont, a brokerag e
firm that had been closed down by regulators in 1996 .
16. A principal part of Defendants' alleged scheme included the alleged concealmen t
of and failure to disclose the material risk that Mr . Madden would be unable to continue t o
provide services to SHOO in light of his alleged unlawful conduct in connection with IPO s
underwritten by Stratton Oakmont and Monroe Parker, and the alleged fact that Mr . Madden had
been advised on December 20, 1999 that he would be indicted or otherwise charged for securities
fraud. It was alleged that Defendants were motivated to inaccurately report such information i n
order to, among other things, inflate the price of SHOO common stock (including the pric e
received on stock sales by Individual Defendants Madden, Brown, and Dharia), protect Mr.
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Madden from criminal and civil charges, and maintain Mr . Madden's ability to continue to serve
as SHOO's Chief Executive Officer.
17. Plaintiffs alleged that Defendants materially misled the investing public by
publicly issuing purportedly false and misleading statements of material fact and by allegedly
concealing and/or failing to disclose material facts necessary to correct such statements,
including, inter aiia, the following allegations : (a) SHOO's proxy statement filed with the SEC
on or about May 29, 1997 (the "1997 Proxy Statement") falsely attributed ownership of
2,374,816 shares, or approximately 29 .9% of SHOO's outstanding common stock, to BOCAP
(Mr. Madden's wholly-owned company) and failed to disclose ownership of 1,284,815 shares, or
approximately 16% of SHOO's outstanding common stock, by Belfort, Porush and another
Stratton Oakmont principal (the "Belfort Group") ; (b) the 1997 Proxy Statement failed to
disclose that Mr. Madden had entered into a secret agreement with members of the Belfort Group
to conceal their ownership interest in SHOO ; (c) SHOO's February 17, 1998 registration
statement and prospectus represented that certain options to be exercised were held by two
individuals (Belfort and Porush's former wife) not affiliated with SHOO when, in fact, Belfort
and Porush were affiliated with SHOO and Mr. Madden; (d) Mr. Madden and his attorneys met
with federal prosecutors and the FBI on December 20, 1999 at which time Mr. Madden was
informed that . he would be indicted or otherwise charged for securities fraud ; (e) Mr. Madden
sold 100,000 shares of SHOO common stock at $16 .00 per share on May 31, 2000 without
disclosing that he had been informed of the impending securities fraud charges against him ; and
(f) SHOO's Forms 10-K for the fiscal years ending December 31, 1998 and 1999 disclosed
SHOO's dependence upon the services of Mr. Madden and the adverse effect his inability to
provide services to SHOO would have on its business, but failed to disclose the material risk tha t
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he would be unable to continue to provide services to SHOO in light of his unlawful conduct i n
connection with IPOs underwritten by Stratton Oakmont and Monroe Parker, and the fact that h e
had been advised on December 20, 1999 that he would be indicted or otherwise charged wit h
securities fraud. As set forth in Paragraph 20 hereto, Defendants have denied all allegations o f
wrongdoing, fault, liability or damage to plaintiffs or the Class, including the allegation s
described above .
18. The Complaint further alleges that plaintiffs and the other Class Member s
purchased the common stock of SHOO during the Class Period at prices artificially inflated as a
result of the Defendants' dissemination of materially false and misleading statements in violation
of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule I Ob-5 promulgated
thereunder.
SUBSEQUENT EVENTS
19. On May 23, 2001, the SEC filed a second civil action against Mr. Madden for
insider trading. Also on that day, Mr. Madden pleaded guilty to several criminal charges fo r
violations of the federal securities laws, for which he has been incarcerated . On or about that
same date , Mr. Madden entered into an agreement with the SEC to settle the two outstanding
SEC actions . On September 24, 2001, SHOO issued a press release announcing Individual
Defendant Brown' s resignation from SHOO .
BACKGROUND TO THE SETTLEMEN T
20. The Defendants (as defined below) have denied all averments of wrongdoing o r
liability in the Action and all other accusations of wrongdoing or violations of law . The
Stipulation, the exhibits thereto, all other documents entered in connection with the Settlement
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and all negotiations or proceedings arising from the Settlement, are not and shall not b e
construed or be deemed to be evidence or an admission or a concession on the part of any of th e
Defendants of any fault or liability or damages whatsoever, and Defendants do not concede an y
infirmity in the defenses which they have asserted or intended to assert in the Action .
21. Prior to entering into the Stipulation, Plaintiffs' Co-Lead Counsel conducted a n
investigation relating to the events and transactions underlying Plaintiffs' claims and conducte d
pretrial discovery on the merits, including, inter alia, analysis of documents produced by
Defendants, depositions of Individual Defendants Brown and Dharia, and the responses o f
Individual Defendant Madden to written interrogatories . Plaintiffs' Co-Lead Counsel's decision
to enter into this Settlement was made with knowledge of the facts and circumstances underlyin g
Plaintiffs' claims and the strengths and weaknesses of those claims . In determining to settle the
Action, they have evaluated the arguments raised in Defendants' motions to dismiss the Actio n
and the discovery obtained in the Action, and taken into account the substantial expense and
length of time necessary to prosecute the Action through trial, post-trial motions, and likely
appeals, taking into consideration the significant uncertainties in predicting the outcome of thi s
complex litigation . Counsel for Lead Plaintiffs believe that the Settlement described herei n
confers very substantial benefits upon the Class . Based upon their consideration of all of thes e
factors, Lead Plaintiffs and their counsel have concluded that it is in the best interest of Lead
Plaintiffs and the Class to settle the Action on the terms described herein .
22, Lead Plaintiffs recognized the uncertainty and the risk of the outcome of an y
litigation, especially complex litigation such as this, and the difficulties and risks inherent in th e
trial of such an action. Lead Plaintiffs desired to settle the claims of the Class agains t
Defendants on the terms and conditions described herein which provide substantial benefits to
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the Class . Plaintiffs' Co-Lead Counsel deem such settlement to be fair, reasonable and adequate,
and in the best interests of the members of the Class .
23. The Defendants, while continuing to deny all allegations of wrongdoing or
liability whatsoever, desired to settle and terminate all existing or potential claims against them,
without in any way acknowledging any fault or liability .
24. The amount of damages, if any, that Lead Plaintiffs could prove was also a matter
of serious and material dispute, and the Settlement's use of a Recognized Claim formula for
distributing the Settlement proceeds does not constitute a finding, admission or concession that
provable damages could be measured by the Recognized Claim formula . No determination has
been made by the Court as to liability or the amount, if any, of damages suffered by the Class,
nor on the proper measure of any such damages. The determination of damages, like the
determination of liability, is a complicated and uncertain process, typically involving conflictin g
expert opinions . During the course of the Action, Defendants, in addition to denying any
liability, disputed that Lead Plaintiffs and the Class were damaged by any conduct, action or
failure to act on the part of any of the Defendants . The Settlement herein provides an immediate
and substantial cash benefit and avoids the risks that liability or damages might not have been
proven at trial .
25 . The Court has not determined the merits of Lead Plaintiffs' claims or the defenses
thereto . This Notice does not imply that there has been or would be any finding of violation of
the law or that recovery could be had in any amount if the Action were not settled .
TERMS OF THE SETTLEMENT
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26. The terms of the Settlement are set forth in detail in the Stipulation , which is on
file with the Court and a copy of the Stipulation is also available at www.gilardi.com. The
following description of the Settlement's terms is only a summary . Reference should be made to
the Stipulation on file with the Court for a full statement of its provisions .
27. In full and complete settlement of the Settled Claims (as defined below), and
subject to the terms and conditions of the Stipulation, SHOO's directors and officers' insuranc e
carrier paid into escrow on behalf of Defendants $9,000,000 (the "Cash Settlement Amount") fo r
the benefit of the Class . The Cash Settlement Amount has been earning interest for the benefit o f
the Class since May 10, 2002 .
28 . Pursuant to the Final Order and Judgment, upon the Effective Date of thi s
Settlement, the Releasors shall forever release and discharge, and shall forever be enjoined fro m
prosecuting, any and all Settled Claims against any of the Released Parties . This means, among
other things, that if the Settlement is approved by the Court, all Settled Claims will be dismisse d
on the merits and with prejudice as to all Class Members and all Class Members shall be foreve r
barred from prosecuting a class action or any other action raising any Settled Claims against an y
Released Party.
29. The "Defendants" in this Action are : (1) SHOO; (2) Steven Madden (SHOO' s
Chairman and Chief Executive Officer throughout the Class Period and its President unti l
February 29, 2000); (3) Rhonda J . Brown (SHOO's Chief Operating Officer and a Director
throughout the Class Period and its President after February 29, 2000 through the Class Period) ;
and (4) Arvind Dharia (SHOO's Chief Financial Officer, Secretary and a Director throughout th e
Class Period).
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30. "Releasors" means each of the Lead Plaintiffs and each of the other Clas s
Members, on behalf of themselves, their respective heirs, executors, estates, administrators ,
predecessors, successors and assigns, and their respective past or present parents, subsidiaries ,
expenses, attorneys' fees and liabilities of whatever kind or nature (upon any legal or equitabl e
theory, whether contractual, common law, statutory or otherwise), whether now known o r
unknown, accrued or unaccrued, absolute or contingent, suspected or unsuspected, determined o r
speculative, and whether or not concealed or hidden. The term "unknown" as used in thi s
definition includes Claims that any or all of the Releasors or the Released Parties do not know o r
suspect to exist, which, if known by him, her or it, might affect his, her or its agreement t o
release the Settled Claims or the Settled Defendants' Claims, as the case may be, or might affect
his, her or its decision to object or not to object to the Settlement .
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33. "Settled Claims" means any and all Claims which the Releasors have had, now
have, or hereafter may have, whether in their own right or in a representative capacity, from the
beginning of the world to the Effective Date of this Settlement, against any of the Released
Parties arising from or relating to any act or omission, failure to act, transaction, dealing,
statement, occurrence, representation, practice or conduct in connection with any Class
Member's purchase of, sale of or other transactions in SHOO common stock during the Class
Period, including, without limitation, all Claims that were or could have been asserted in th e
Action. Notwithstanding anything to the contrary above, the Settled Claims do not include an y
derivative claims .
34. The Stipulation provides that the Defendants may terminate the Settlement in th e
event that in excess of a certain amount of claimants exclude themselves from the Class .
35. The Settlement will become effective one business day after a Final Order and
Judgment entered by the Court approving the Settlement shall become final and not subject t o
appeal or review (the "Effective Date") .
ALLOCATION OF SETTLEMENT PROCEEDS AMONG CLASS MEMBER S
36. The $9,000,000 Cash Settlement Amount, and the interest earned thereon shall be
the "Gross Settlement Fund." The Gross Settlement Fund, less all taxes, approved costs, fees
and expenses (the "Net Settlement Fund") shall be distributed to members of the Class wh o
submit acceptable Proofs of Claim ("Authorized Claimants") . The Claims Administrator shall
determine each Authorized Claimant's pro rata share of the Net Settlement Fund based upo n
each Authorized Claimant's "Recognized Claim . "
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37. The following proposed Plan of Allocation is based on the proposition that th e
price of SHOO common stock was artificially inflated during the Class Period from June 21 ,
1997, until June 20, 2000. Class Members who purchased SHOO common stock during th e
Class Period and held those shares until September 20, 2000, 90 days after the Class Period, wil l
have their claims recognized for the difference, if a loss, between the purchase price paid per
share, and $8 .98 per share, the average closing price for SHOO common stock in the 90 da y
period following the end of the Class Period . Class Members who sold their shares at a los s
during the 90 day period following the Class Period ( i .e . from June 22, 2000 through September
20, 2000) will have their claims recognized for difference between the purchase price paid per
share and the greater of (i) $8 . 98 per share, or (ii) the sale proceeds received . Class Members
who sold their shares at a loss prior to the close of trading on June 20, 2000 will have thei r
claims recognized for one-half of the difference between their purchase price paid and the
proceeds they received on the sale, this discount reflects a potential offset of the inflation
received on the sale .
38. "Recognized Claims" will be calculated for purposes of the Settlement as follows :
For shares of SHOO common stock purchased' during the period rune 21, 1997 through June 20,
2000, inclusive, and
(a) Sold at a loss before the close of trading on June 20, 000, an Authorized
Claimant's "Recognized Claim" shall mean 50% of the difference between the purchase pric e
paid (including commissions , etc .) and the sales proceeds received (net of commissions, etc .) ;
' The date of a purchase or sale is the "trade" or "contract" date as distinguished from the"settlement" or "closing" date .
15
(b) Sold at a loss during the period after the close of trading on June 20, 200 0
through and including September 20, 2000, an Authorized Claimant's "Recognized Claim" shal l
mean the difference between the purchase price paid (including commissions, etc .) and the
greater of (i) the sales proceeds received (net of commissions , etc .), or ( ii) $8.98 per share ;
(c) Held as of the close of trading on Se tember 20, 2000, an Authorize d
Claimant's "Recognized Claim" shall mean the difference between the purchase price pai d
(including commissions, etc .) and $8.98 per share .
39. In calculating claims with multiple transactions, sales during the Class Period wil l
be matched first against any shares held by the claimant p rior to June 21 , 1997, and next against
sales during the Class Period on a First-In-First-Out basis .
40. Shares of SHOO common stock acquired by the exercise of a Call Option shall be
deemed to have been purchased on the exercise date, and the purchase price paid shall be
deemed the strike price paid plus the amount paid for the Call Option . Shares of SHOO common
stock sold by the assignment of a Call Option shall be deemed to have been sold on th e
assignment date, and the sale price received shall be deemed the strike price received plus the
amount received on the sale of the Call Option . Shares of SHOO common stock acquired by the
assignment of a Put Option shall be deemed to have been purchased on the date the Put Option
was sold by the claimant, and the purchase price paid shall be deemed the strike price paid less
the amount received on the sale of the Put Option . Shares of SHOO common stock sold by the
exercise of a Put Option shall be deemed to have been sold on the date the Put Option wa s
purchased, and the sale price received shall be deemed the strike price received less the amount
paid to acquire the Put Option .
41 . Transactions resulting in a gain shall not be included .
16
42. Class Members who do not submit acceptable Proofs of Claim will not share in
the settlement proceeds . Class Members who do not either submit a request for exclusion or
submit acceptable Proofs of Claim will nevertheless be bound by the Order and Final Judgmen t
and the Settlement . No payment shall be made to any otherwise Authorized Claimant whose pro
rata share of the Net Settlement Fund would be $10 .00 or less based on the initial proration of
the Net Settlement Fund to Authorized Claimants .
43. Distributions to Authorized Claimants will be made only after all claims have
been processed and after the Court has finally approved the Settlement . If any funds remain in
the Net Settlement Fund by reason of un-cashed distribution checks or otherwise, then, after th e
Claims Administrator has made reasonable and diligent efforts to have Class Members who ar e
entitled to participate in the distribution of the Net Settlement Fund cash their distributio n
checks, any balance remaining in the Net Settlement Fund one (1) year after the initia l
distribution of such funds shall be re-distributed to Class Members who have cashed their check s
and who would receive at least $10.00 from such re-distribution. If after six months after suc h
re-distribution any funds shall remain in the Net Settlement Fund, then such balance shall b e
contributed to non-sectarian , not-for-profit, 501(c)(3) organization(s) designated by Plaintiffs '
Co-Lead Counsel.
THE RIGHTS OF CLASS MEMBERS
44. The Court has certified this Action to proceed as a class action. If you purchased
the common stock of SHOO during the period from June 21, 1997 through and including Jun e
20, 2000, and were damaged thereby, and you are not excluded by the definition of the Class an d
do not elect to exclude yourself, then you are a Class Member. Class Members have the
following options pursuant to Rule 23(c)(2) of the Federal Rules of Civil Procedure :
17
(a) If you wish to remain a member of the Class, you may share in the
proceeds of the Settlement, provided that you timely submit an acceptable Proof of Claim . Class
Members will be represented by the Lead Plaintiffs and their counsel, unless you enter an
appearance through counsel of your own choice at your own expense. You are not required to
retain your own counsel, but if you choose to do so, such counsel must file an appearance on
your behalf on or before 2004, and must serve copies of such appearance o n
the attorneys listed in Paragraph 52 below .
(b) If you do not wish to remain a member of the Class, you may exclud e
yourself from the Class by following the instructions in Paragraph 50 below. Persons who
exclude themselves from the Class will NOT receive any share of the Settlement proceeds and
will not be bound by the Settlement .
(c) If you object to the Settlement or any of its terms, or to Plaintiffs '
Counsel's application for fees and expenses, and if you do not exclude yourself from the Class ,
you may present your objections by following the instructions in Paragraph 52 below.
SUBMISSION AND PROCESSING OF PROOFS OF CLAIM
45 . In order to be eligible to receive any distribution from the Settlement Fund, yo u
must complete and sign the accompanying Proof of Claim and Release form and send it and the
required documentation by first class mail postmarked on or befor e
addressed as follows :
In re Steven Madden Ltd . Securities Litigationc/o Gilardi & Co. LLCClaims AdministratorPost Office Box 990Corte Madera, CA 94976-0990
18
2004,
9 • • • • • • 0 •
46. If you do not submit a proper Proof of Claim form, you will not be entitled to any
share of the Settlement Fund .
47. If you are a Class Member and you do not properly exclude yourself from th e
Class, you will be bound by the Settlement and the Final Order and Judgment of the Court
dismissing this Action, even if you do not submit a Proof of Claim . If you exclude yourself from
the Class, you will not be bound by the judgment but you will not be entitled to any share of the
Settlement Fund.
48. All Proofs of Claim must be submitted by the date specified in this Notice unless
such period is extended by Order of the Court.
49. Each Claimant shall be deemed to have submitted to the exclusive personal
jurisdiction of the United States District Court for the Eastern District of New York with respect
to his, her or its Proof of Claim .
EXCLUSION FROM THE CLAS S
50. Each Class Member shall be bound by all determinations and judgments in thi s
Action concerning the Settlement, whether favorable or unfavorable, unless such person shal l
mail, by first class mail, a written request for exclusion from the Class, postmarked no later tha n
, 2004, addressed to Steven Madden Ltd. Securities Litigation Exclusions, c/o
Gilardi & Co . LLC, P .O. Box 990, Corte Madera , CA 94976-0990 . No person may exclude
himself from the Class after that date. In order to be valid, each such request for exclusion mus t
set forth the name and address of the person or entity requesting exclusion, must state that such
person or entity "requests exclusion from the Class in the In re Steven Madden Ltd . Securities
Litigation, Civil Action No. CV-00-3676 (JG)" and must be signed by such person or entity .
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Persons and entities requesting exclusion should also provide the following infonnation: their
daytime telephone number, the date(s), price(s), and number(s) of shares of all purchases and
sales of SHOO common stock during the Class Period . The request for exclusion shall not be
effective unless the request for exclusion provides the required information and is made within
the time stated above, or the exclusion is otherwise accepted by the Court .
SETTLEMENT FAIRNESS HEARING
51 . At the Settlement Fairness Hearing, the Court will consider whether to finally
approve this Settlement and dismiss the Action and the claims of the Class Members . The Court
will also determine whether the Plan of Allocation for the Settlement proceeds is fair and
reasonable. The Settlement Fairness Hearing may be adjourned from time to time by the Court
without further written notice to the Class. If you intend to attend the Settlement Fairness
Hearing, you should confirm the date and time with Plaintiffs' Co-Lead Counsel . If the
Settlement is approved, the Court will also consider the application of Plaintiffs' Counsel for
attorneys' fees.
52. At the Settlement Fairness Hearing, any Class Member who has not properly
submitted a request for exclusion from the Class may appear in person or by counsel and be
heard to the extent allowed by the Court in opposition to the fairness, reasonableness and
adequacy of the Settlement, the Plan of Allocation, or the application for an award of attorneys'
fees and reimbursement of expenses, provided, however, that in no event shall any person be
heard in opposition to the Settlement, the Plan of Allocation, or Plaintiffs' Counsel's application
for attorneys' fees and expenses and in no event shall any paper or brief submitted by any such
person be accepted or considered by the Court, unless, on or before , 2004,
such person (a) files with the Clerk of the Court notice of such person's intention to appear ,
20
showing proof of such person's membership in the Class, and providing a statement that
indicates the basis for such opposition, along with any documentation in support of suc h
objection, and (b) simultaneously serves copies of such notice, proof, statement an d
documentation, together with copies of any other papers or briefs such person files with th e
Court, in person or by mail upon Plaintiffs' Co-Lead Counsel :
Robert A. Wallner, Esq . Mark Levine, Esq.MILBERG WEISS STULL, STULL & BRODYBERSHAD HYNES & 6 East 45th StreetLERACH LLP New York, New York 10017One Pennsylvania Plaza (212) 687-7230New York, New York 10119(212) 59-5300
and upon Defendants' Counsel :
Jonathan J . Lerner, Esq .SKADDEN, ARPS,SLATE, MEAGHER &FLOM LLPFour Times SquareNew York, New York10036(212) 735-3000
Joseph S . Allerhand, EsqWEIL, GOTSHAL &MANGES LLP767 Fifth AvenueNew York, New York10153(212) 310-8000
David Kessler, Esq .SCHIFFRIN &BARROWAY, LLPThree Bala Plaza EastBala Cynwyd, Pennsylvania10994(610) 667-7706
Jason M . Halper, Esq .CAD WALADER, WICKERSHAM& TAFT LLP100 Maiden LaneNew York, New York 10038(212) 504-6000
Attendance at the hearing is not necessary; however, persons wishing to be heard orally in
opposition to the approval of the Settlement, the Plan of Allocation, and/or the request for
attorneys' fees are required to indicate in their written objection their intention to appear at the
hearing. Persons who intend to object to the Settlement, the Plan of Allocation, and/or counsel's
application for an award of attorneys' fees and expenses and desire to present evidence at th e
Settlement Fairness Hearing must include in their written objections the identity of any witnesse s
they may call to testify and exhibits they intend to introduce into evidence at the Settlement
21
0 1~ • 0 S S S • ~I
Fairness Hearing . Class Members do not need to appear at the hearing or take any other action
to indicate their approval .
ATTORNEYS ' FEES AND DISBURSEMENTS
53. At the Settlement Fairness Hearing or at such other time as the Court may direct,
Plaintiffs' Counsel intend to apply to the Court for an award of attorneys' fees from th e
Settlement Fund in an amount not greater than one-third (33-1/3%) of the Gross Settlement Fund
and for reimbursement of their expenses up to a maximum amount of $100,000, plus interest at
the same net rate as earned by the Settlement Fund . Plaintiffs' Counsel, without further notice to
the Class, may subsequently apply to the Court for fees and expenses incurred in connection with
administering and distributing the Settlement proceeds to the members of the Class and any
proceedings subsequent to the Settlement Fairness Hearing .
FURTHER INFORMATION
54 . For a more detailed statement of the matters involved in this Action, reference i s
made to the pleadings, to the Stipulation, to the Orders entered by the Court and to the other
papers filed in the Action, which may be inspected at the Office of the Clerk of the United State s
District Court for the Eastern District of New York, United States Courthouse, 225 Cadman
Plaza East , Brooklyn, New York 11201 , during regular business hours .
55 . ALL INQUIRIES CONCERNING THIS NOTICE OR THE PROOF OF CLAI M
FORM BY CLASS MEMBERS SHOULD BE MADE TO THE CLAIMS ADMINISTRATO R
IN WRITING AT THE ADDRESS INDICATED BELOW .
22
W W W qW q
SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES
56. If you purchased the common stock of Steven Madden Ltd . ("SHOO") during th e
period from June 21, 1997 through and including June 20, 2000 for the beneficial interest of a
person or organization other than yourself, the Court has directed that, WITHIN SEVEN (7 )
DAYS OF YOUR RECEIPT OF THIS NOTICE, you either (a) provide to the Claims
Administrator the name and last known address of each person or organization for whom o r
which you purchased such stock during such time period or (b) request additional copies of thi s
Notice and the Proof of Claim form, which will be provided to you free of charge, and withi n
seven (7) days mail the Notice and Proof of Claim form directly to the beneficial owners of th e
securities referred to herein. If you choose to follow alternative procedure (b), the Court ha s
directed that, upon such mailing, you send a statement to the Claims Administrator confirmin g
that the mailing was made as directed . You are entitled to reimbursement from the Settlement
Fund of your reasonable out-of-pocket expenses actually incurred in connection with th e
foregoing, including reimbursement of postage expense and the cost of ascertaining the name s
and addresses of beneficial owners . Those expenses will be paid upon request and submission o f
appropriate supporting documentation. All communications concerning the foregoing should be
addressed to the Claims Administrator :
In re Steven Madden Ltd . Securities Litigationc/o Gilardi & Co . LLC, Claims AdministratorP .O. Box 990Corte Madera, CA 94976 -0990(800) 654-576 3
Dated : Brooklyn, New York2004
By Order of the CourtCLERK OF THE COURT
23
`G C- iF Apr :,W ~p `o ~-e
i w i i i • s
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
IN RE STEVEN MADDEN LTD .SECURITIES LITIGATION
X CIVIL ACTION NO .: CV-00-3676 (JG)X
PROOF OF CLAIM AND RELEASE
DEADLINE FOR SUBMISSION: 2004 .
IF YOU PURCHASED THE COMMON STOCK OF STEVEN MADDEN LTD .("SHOO") DURING THE PERIOD FROM JUNE 21, 1997 THROUGH ANDINCLUDING JUNE 20, 2000 ("CLASS PERIOD"), AND WERE ALLEGED BY LEADPLAINTIFFS TO BE DAMAGED THEREBY, YOU ARE A "CLASS MEMBER"AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT PROCEEDSFROM THE ABOVE REFERENCED ACTION . (EXCLUDED FROM THE CLASSARE THE DEFENDANTS AND ALL PRESENT AND FORMER OFFICERS ANDDIRECTORS OF SHOO, MEMBERS OF THE IMMEDIATE FAMILIES (PARENTS,SPOUSES, SIBLINGS, AND CHILDREN) OF EACH OF THE INDIVIDUALDEFENDANTS, EACH DEFENDANT'S LEGAL REPRESENTATIVES, HEIRS,SUCCESSORS OR ASSIGNS AND ANY ENTITY IN WHICH ANY DEFENDANTHAS HAD A CONTROLLING INTEREST . )
IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THISFORM IN ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS .
YOU MUST COMPLETE AND SIGN THIS PROOF OF CLA IM AND MAIL IT BYFIRST CLASS MAIL, POSTMARKED NO LATER THAN , 2004 TOTHE FOLLOWING ADDRESS :
In re Steven Madden Ltd. Securities Litigationc/o Gilardi & Co . LLCClaims AdministratorPost Office Box 990Corte Madera, CA 94976-099 0
YOUR FAILURE TO SUBMIT YOUR CLAIM BY , 2004 WILLSUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOU FROMRECEIVING ANY MONEY IN CONNECTION WITH THE SETTLEMENT OF THISLITIGATION. DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURT ORTO ANY OF THE PARTIES OR THEIR COUNSEL AS ANY SUCH CLAIM WILLBE DEEMED NOT TO HAVE BEEN SUBMITTED . SUBMIT YOUR CLA IM ONLYTO THE CLAIMS ADMINISTRATOR
• • • ! • ! • • 0
1 . I purchased the common stock of Steven Madden Ltd . ("SHOO") durin g
the period from June 21, 1997 through and including June 20, 2000, and believe I was damage d
thereby. (Do not submit this Proof of Claim if you did not purchase SHOO common stock
during this period.)
2. By submitting this Proof of Claim, I state that I believe in good faith that I
am a Class Member as defined above and in the Notice of Pendency of Class Action, Hearing on
Proposed Settlement and Attorneys' Fee Petition and Right to Share in Settlement Fund (th e
"Notice"), or am acting for such person; that I am not a Defendant in the Action or anyon e
excluded from the Class, that I have not submitted any other claim covering the same transactio n
in SHOO common stock ; that I have read and understand the Notice ; that I believe that I am
entitled to receive a share of the Net Settlement Fund ; that I elect to participate in the proposed
Settlement described in the Notice; and that I .have not filed a request for exclusion. (If you are
acting in a representative capacity on behalf of a Class Member (e .g., as an executor,
administrator, trustee, or other representative), you must submit evidence of your current
authority to act on behalf of that Class Member . Such evidence would include, for example,
letters testamentary, letters of administration, or a copy of the trust documents .)
3 . I have set forth where requested below all relevant information wit h
respect to my position in SHOO common stock on the indicated dates, each purchase of SHOO
common stock during the Class Period, and each sale , if any, of SHOO common stock .
4. I have enclosed photocopies of the stockbroker's confirmation slips ,
stockbroker's statements, relevant portions of my tax returns or other documents evidencing each
purchase, sale or retention of SHOO common stock listed below in support of my claim. (IF
ANY SUCH DOCUMENTS ARE NOT IN YOUR POSSESSION, PLEASE OBTAIN A COPY
2
• • • • 0 a • 0 •
OR EQUIVALENT DOCUMENTS FROM YOUR BROKER OR TAX ADVISOR BECAUS E
THESE DOCUMENTS ARE NECESSARY TO PROVE AND PROCESS YOUR CLAIM . )
5 . I understand that the information contained in this Proof of Claim i s
subject to such verification as the Claims Administrator may request or as the Court may direct ,
and I agree to cooperate in any such verification . (The information requested herein is designe d
to provide the minimum amount of information necessary to process most simple claims. The
Claims Administrator may request additional information as required to efficiently and reliably
calculate your Recognized Claim. In some cases the Claims Administrator may conditio n
acceptance of the claim based upon the production of additional information, including, wher e
applicable, information concerning transactions in any derivatives of the subject securities suc h
as options.)
6. Upon the occurrence of the Effective Date (as defined in the Notice) m y
signature hereto will constitute a full and complete release, remise and discharge by me or, if I
am submitting this Proof of Claim on behalf of a corporation, a partnership, estate or one or more
other persons, by it, him, her or them, and by my, its, his, her or their heirs, executors ,
administrators, successors, and assigns of each of the "Released Parties" of all "Settled Claims, "
as defined in the Notice.
7. Statement of Claim
Name(s) of Beneficial Owner(s) :
Name
Joint Owner's Name (if any)
3
• a • . • . • •
Address of Beneficial Owner(s) :
Street No .
City State Zip Code
( ) ( )Telephone No . (Day) Telephone No. (Night)
Employer I .D. No. or Social Security No .
E-mail Address
Check one :Individual IRA AccountEstate Trustee/CustodianCorporation Other (specify)
8. At the close of business on June 20, 1997, 1 owned shares of
SHOO common stock .
9. I made the following purchases of SHOO common stock during the period
from June 21, 1997 through and including June 20, 2000 . (Persons who received SHOO
common stock during the Class Period other than by purchase are not eligible to submit claims
for those transactions .) :
Date(s) of Purchase Number of Shares of Purchase Price Per Aggregate Cost(List Common Stock Share of Common (includingChronologically) Purchased Stock commissions, taxes,(Month/Day/Year) and fees)
4
10
• 0 0 0 0 •
I made the following sales of SHOO common stock during the period
from June 21, 1997 through and including September 20, 2000 :
Date(s) of Sale(ListChronologically)(Month/Day/Year)
Number of Shares of Sale Price Per ShareCommon Stock Sold of Common Stock
11 . At the close of business on September 20, 2000, I still owne d
shares of SHOO common stock .
IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PHOTOCOPY THIS PAGE
12. Substitute Form W- 9
Request for Taxpayer Identification Number:
Enter the taxpayer identification number below for the Beneficial Owner(s) . For most
individuals, this is your Social Security Number . The Internal Revenue Service ("I.R.S.")
requires such taxpayer identification number . If you fail to provide this information, your claim
maybe rejected .
Social Security Number (for individuals) o r
r mployer menu ucatuou IN uuioer
(for estates, trusts, corporations, etc .)
13 . Certification
I (We) certify that I am (we are) NOT subject to backup withholding under the provisions
of Section 3406 (a)(1)(c) of the Internal Revenue Code because : (a) I am (we are) exempt from
backup withholding, or (b) I (we) have not been notified by the I .R.S . that I am (we are) subject
Amount Received(net of commissions,taxes, and fees)
$ $
$ $
$ $
$ $
5
to backup withholding as a result of a failure to report all interest or dividends, or (c) the I .R.S.
has notified me (us) that I am (we are) no longer subject to backup withholding .
NOTE: if you have been notified by the I .R.S. that you are subject to backup
withholding, please strike out the language that you are not subject to backup withholding in th e
certification above .
UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT ALL OF THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
Signature of Claimant (If this claim is beingmade on behalf of Joint Claimants, theneach must sign)
(Signature)
Date :
(Signature)
(Capacity of person(s) signing,,beneficial purchaser(s), executor,administrator, trustee, etc . )
THIS PROOF OF CLAIM MUST BE SUBMITTED NO LATER THAN
2004 , AND MUST BE MAILED TO :
In re Steven Madden Ltd . Securities Litigationc/o Gilardi & Co. LLCClaims AdministratorPost Office Box 990Corte Madera, CA 94976-0990
A Proof of Claim received by the Claims Administrator shall be deemed to have bee n
submi tted when posted, if mailed by 2004, and if a postmark is indicated on
6
w w w w w
the envelope and it is mailed first class, and addressed in accordance with the above instructions .
In all other cases, a Proof of Claim shall be deemed to have been submitted when actually
received by the Claims Administrator .
If you wish to be assured that your Proof of Claim is actually received by the Claims
Administrator, then you should send it by Certified Mail, Return Receipt Requested . No
acknowledgment will be made as to the receipt of claim forms . You should be aware that it will
take a significant amount of time to process fully all of the Proofs of Claim and to administer the
Settlement. This work will be completed as promptly as time permits, given the need to
investigate and tabulate each Proof of Claim . Please notify the Claims Administrator of an y
change of address .
7
• w 0 • • 0 0 0 •
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK
IN RE STEVEN MADDEN LTD. X CIVIL ACTION NO.SECURITIES LITIGATION : CV-00-3676 (JG)
X
SUMMARY NOTICE OF PENDENCY OF CLASS ACTION,PROPOSED SETTLEMENT AND SETTLEMENT HEARING
TO: ALL PERSONS WHO PURCHASED THE COMMON STOCK OF STEVENMADDEN LTD . DURING THE PERIOD FROM JUNE 21, 1997 THROUGH ANDINCLUD ING JUNE 20, 2000, AND ARE ALLEGED BY LEAD PLAINTIFFS TO BEDAMAGED THEREBY (THE "CLASS") .
YOU ARE HEREBY NOTIFIED that the above-captioned action has been certified as a
class action and that a settlement for $9,000,000 has been proposed. A hearing will be hel d
before the Honorable John Gleeson, United States District Judge, in the United States
Courthouse, 225 Cadman Plaza East , Brooklyn, New York 11201, at _ _.m., on
2004 to determine whether the proposed settlement should be approved b y
the Court as fair, reasonable, and adequate, and to consider the application of Plaintiffs' Counse l
for attorneys' fees and reimbursement of expenses .
IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHT S
WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMEN T
FUND. If you have not yet received (i) the full printed Notice of Pendency of Class Action,
Hearing on Proposed Settlement and Attorneys' Fee Petition and Right to Share in Settlement
Fund and (ii) a Proof of Claim form, you may obtain copies of these documents by identifying
yourself as a member of the Class and by contacting :
In re Steven Madden Ltd . Securities Litigationc/o Gilardi & Co. LLC, Claims AdministratorPost Office Box 99 0Corte Madera, CA 94976-0990(800) 654-5763
www.gilardi .com
Inquiries, other than requests for Notice forms or Proof of Claim forms, may be made t o
Plaintiffs' Co-Lead Counsel :
Robert A. Wallner, Esq .MILBERG WEISSBERSHAD HYNES &LERACH LLPOne Pennsylvania PlazaNew York, NY 10119-0165(212) 594-5300
Mark Levine, Esq .STULL, STULL & BRODY6 East 45th StreetNew York, NY 10017(212) 687-7230
David Kessler, Esq.SCHIFFRIN &BARROWAY, LLPThree Bala Plaza EastSuite 400Bala Cynwyd, PA 19004(610) 667-7706
To participate in the Settlement, you must submit a Proof of Claim no later tha n
2004. If you are a Class Member and do not exclude yourself from th e
Class, you will be bound by the Final Order and Judgment of the Court. To exclude yourself
from the Class, you must submit a request for exclusion postmarked no later than
2004. If you are a Class Member and do not submit a proper Proof of Claim ,
you will not share in the Settlement but you nevertheless will be bound by the Final Order an d
Judgment of the Court .
Further information may be obtained by directing your inquiry in writing to the Claim s
Administrator.
By Order of The Cour t
2
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0 0 0 • 0 0 0 0 •
UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YOR K
IN RE STEVEN MADDEN LTD. X CIVIL ACTION NO .SECURITIES LITIGATION : CV-00-3676 (7G)
X
FINAL ORDER AND JUDGMENT
On the day of , 2004, a hearing having been held before thi s
Court to determine : (1) whether the terms and conditions of the Stipulation and Agreement o f
Settlement dated December 2003 (the "Stipulation") are fair, reasonable and adequate and
should be approved by the Court ; (2) whether judgment should be entered dismissing the Action
on the merits and with prejudice in favor of the Defendants and as against all persons or entities
who are members of the Class herein who have not requested exclusion therefrom; (3) whether
to approve the Plan of Allocation as a fair and reasonable method to allocate the settlemen t
proceeds among the members of the Class ; and (4) whether and in what amount to award
Plaintiffs' Counsel fees and reimbursement of expenses .
The Court having considered all matters submitted to it at the hearing and otherwise ; and
it appearing that a notice of the hearing substantially in the form approved by the Court wa s
mailed to all persons or entities reasonably identifiable, who purchased the common stock o f
Steven Madden Ltd . ("SHOO") during the period from June 21, 1997 through and including June
20, 2000 (the "Class Period"), and who are alleged to have been damaged thereby, except thos e
persons or entities excluded from the definition of the Class, as shown by the records of SHOO' s
transfer agent, at the respective addresses set forth in such records, and including those additiona l
members of the Class identified by nominee owners to the Claims Administrator as set forth i n
the [Affidavit of dated , 2004], and that a summary notice
of the hearing substantially in the form approved by the Court was published in the national
r • • • • • 0 0 0
edition of The Wall Street Journal pursuant to the specifications of the Court ; and the Court
having considered and determined the fairness and reasonableness of the award of attorneys' fees
and expenses requested ; and all capitalized terms used herein having the meanings as set forth
and defined in the Stipulation .
NOW, THEREFORE, IT IS HEREBY ORDERED THAT :
1 . The Court has jurisdiction over the subject matter of the Action, the Plaintiffs, all
Class Members, and the Defendants .
2 . For purposes of this Settlement, the Court finds that the prerequisites for a class
action under Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been satisfied in
that: (a) the number of Class Members is so numerous that joinder of all members thereof is
impracticable ; (b) there are questions of law and fact common to the Class ; (c) the claims of the
Class representatives are typical of the claims of the Class they seek to represent ; (d) the Class
representatives have and will fairly and adequately represent the interests of the Class ; (e) the
questions of law and fact common to the members of the Class predominate over any questions
affecting only individual members of the Class; and (f) a class action is superior to other
available methods for the fair and efficient adjudication of the controversy .
3. Pursuant to Rule 23 of the Federal Rules of Civil Procedure and for the purposes
of the Settlement; this Court hereby finally certifies this action as a class action on behalf of all
persons who purchased the common stock of SHOO during the period from June 21, 1997
through and including June 20, 2000, and were damaged thereby. Excluded from the Class are
the Defendants and all present and former officers and directors of SHOO, members of the
immediate families (parents, spouses, siblings, and children) of each of the Individual
Defendants, each Defendant's legal representatives, heirs, successors or assigns and any entity i n
2
0 • • 0 • / • 0 •
which any Defendant has had a controlling interest . Also excluded from the Class are the
persons and/or entities who requested exclusion from the Class as listed on Exhibit A annexed
hereto . For purposes of this Settlement, the Court finally appoints as Class representatives Lead
Plaintiffs Process Engineering Services, Inc ., Michael Fasci, and Mark and Libby Adams .
4. As set forth in the [Affidavit of dated
2004], notice of the pendency of this Action as a class action and of the proposed Settlement was
given to all Class Members who could be identified with reasonable effort . The Court finds and
concludes that notice was given to members of the Class in compliance with the Court' s
Preliminary Approval Order. The form and method of notifying the Class of the pendency of the
action as a class action and of the terms and conditions of the proposed Settlement met th e
requirements of Rule 23 of the Federal Rules of Civil Procedure, Section 21D(a)(7) of the
Securities Exchange Act of 1934, 15 U .S.C. § 78u-4(a)(7), as amended by the Private Securities
Litigation Reform Act of 1995 (the "PSLRA"), due process, and any other applicable law,
constituted the best notice practicable under the circumstances, and constituted due and sufficien t
notice to all persons and entities entitled thereto .
5 . The Court finds and concludes that the Settlement is fair, reasonable and adequat e
and in the best interests of the Class, approves the Settlement, adopts the terms of the Settlement ,
and directs the parties to consummate the Settlement in accordance with the terms and provision s
of the Stipulation .
6. As used herein, "Claims" means any and all claims, demands, actions, causes o f
