Exhibit 10.5 STEVEN MADDEN, LTD. STOCK GRANT AGREEMENT ("Agreement") Steven Madden, Ltd., a Delaware corporation (the "Company"), hereby grants the right to receive shares (the "Grant") of its Common Stock (the "Shares") to Grantee named below, on the terms and conditions set forth in this Agreement. The terms and conditions of the Grant are set forth in this Agreement. - -------------------------------------------------------------------------------- Date of Agreement: August 1, 2002 - -------------------------------------------------------------------------------- Name of Grantee: Amelia C. Varela - -------------------------------------------------------------------------------- Grantee's Social Security Number: - -------------------------------------------------------------------------------- Number of Shares Covered by Grant: 20,000 - -------------------------------------------------------------------------------- Grant Schedule: On January 1, 2005 (the "Grant Date"), provided that Grantee shall then be employed by the Company in the same capacity that Grantee is employed by the Company as of the date hereof, Grantee shall then be entitled to and receive a Grant of an aggregate of 20,000 shares of the Company's common stock (the "Granted Shares"). Such Grant shall be personal to Grantee and may not be assigned, transferred, pledged or hypothecated by Grantee. - -------------------------------------------------------------------------------- Withholding The Company or any affiliate thereof Tax Requirement: shall have the right to retain and withhold the amount of taxes required by any government to be withheld or otherwise deducted and paid with respect to the issuance of the Shares. No Grant may be effective unless and until arrangements satisfactory to the Company, in its sole discretion, to pay such withholding taxes are made. At its discretion, the Company may require the Grantee to reimburse the Company for any such taxes required to be withheld by the Company and withhold any distribution in whole or in part until the Company is so reimbursed. In lieu thereof, the Company shall have the right to withhold from any other cash amounts due or to become due from the Company to Grantee an amount equal to such taxes or retain and withhold a number of shares having a market value not less than the amount of such taxes required to be withheld by the Company to reimburse the Company for any such taxes and cancel (in whole or in part) any such Shares so withheld. Although the Company may, in its discretion, accept Shares as payment of withholding taxes, the Company shall not be obligated to do so. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Effect of Liquidation, Upon a merger (other than a merger of the Reorganization, or Company in which the holders of Shares Change in Control: immediately prior to the merger have the same proportionate ownership of common stock in the surviving corporation immediately after the merger), consolidation, acquisition of property or stock, separation, reorganization (other than mere reincorporation or creation of a holding company), or liquidation of the Company (each, an "event"), as a result of which the stockholders of the Company receive cash, stock, or other property in exchange for, or in connection with, their Shares, this Agreement and the Grant shall accelerate and be issued (in the original form or in a substantially equivalent form) no later than six (6) months after such event whether or not the Grant Date set forth in this Agreement has occurred but provided that the Grantee is employed by the Company or the surviving entity upon the date of such issuance in the same or substantially similar capacity that Grantee is employed by the Company as of the date hereof. - -------------------------------------------------------------------------------- Entire Agreement: This Agreement constitutes the entire Agreement of Grantee and the Company with respect to matters set forth herein and supersedes any prior understanding or agreement, oral or written, with respect thereto. - -------------------------------------------------------------------------------- By signing this Agreement sheet, you agree to all of the terms and conditions described in this Agreement. Grantee: /s/ AMELIA C. VARELA ----------------------------------- (Signature) Name: Amelia C. Varela Company: /s/ JAMIE KARSON ----------------------------------- Name: Jamie Karson Title: C.E.O