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Early Retirement & Consulting Agreement - B. A. Cook

This is an actual contract by Brown Shoe.

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Sectors: Consumer Products (Non-Durables)
Governing Law: Missouri, View Missouri State Laws
Effective Date: July 27, 2001
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EARLY RETIREMENT AND CONSULTING AGREEMENT

THIS EARLY RETIREMENT AND CONSULTING AGREEMENT (the "Agreement"), made and entered into as of the 27 th day of July, 2001 (the "Effective Date"), by and between BROWN SHOE COMPANY, INC., a New York corporation (the "Company"), and BRIAN C. COOK ("Executive").

WITNESSETH THAT:

WHEREAS, Executive currently serves as Executive Vice President of the Company, as well as President of Famous Footwear, a division of the Company;

WHEREAS, Executive is desirous of stepping down as Executive Vice President of the Company and President of Famous Footwear and retiring prior to age 65 and Executive shall voluntarily retire as an employee of the Company, effective on such date as is mutually agreeable to the Company and Executive, but no later than February 1, 2002 (the "Retirement Date");

WHEREAS, Executive possesses skills and leadership experience which the Company is desirous of calling upon from time to time for a period not to exceed the forty-eight month period following the Retirement Date; and

WHEREAS, Executive is willing to provide his skills and the benefit of his leadership from time to time during such period following the Retirement Date as a consultant to the Company.

NOW, THEREFORE, in consideration of the mutual undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:

1. Engagement as Consultant . The Company shall retain Executive as a consultant for the period commencing on the first day after the Retirement Date through the end of the forty-eight (48) month period following the Retirement Date (the "Consulting Period"). During the Consulting Period, Executive shall be an independent contractor. Executive and the Company acknowledge that while Executive will step down as Executive Vice President of the Company and President of Famous Footwear as of his 62 nd birthday, he may still remain as an active employee of the Company after such date and the Consulting Period will not begin until the day after the Retirement Date.

2. Consulting Duties . The Chief Executive Officer and/or the Chairman of the Board of Directors may from time to time request Executive to furnish his services as a consultant. Such services shall include:

(a) consultation concerning the management and overall policy and strategic direction of the businesses of the Company and the financial consequences thereof;




(b) assisting with the transition of leadership at Famous Footwear and maintaining and expanding relationships with vendors;

(c) consultation regarding real estate strategies, which may include site visits to current and prospective store locations;

(d) consultation and strategizing regarding merchandising practices and inventory management; and

(e) consultation with respect to special projects designated by the Chief Executive Officer and/or the Chairman of the Board of the Company.

Executive shall not be required to hold himself available for consulting services at any fixed time, but shall be "available on a reasonable basis." Executive's presence shall not be required at any particular office or place in order to render his consulting services unless such services could not reasonably be performed in another location or by telephone or letter. For purposes of this Agreement, "available on a reasonable basis" shall mean, for each 12-month period during the Consulting Period, either: (i) up to a total of 100 days, or (ii) 8 days per month during each month of the 12-month period.

3. Consulting Fee . Subject to the terms of this Agreement, the Company shall pay Executive a per month consulting fee during the Consulting Period, in each case payable on the last day of the month, in accordance with the following schedule:


Month Consulting Fee Per Month
Months 1-18 $47,917
Months 19-34 $40,000
Months 35-48 $20,000


Executive and the Company acknowledge that it is in both their best interests for Executive to step down as Executive Vice President of the Company and President of Famous Footwear on August 23, 2001 (his 62nd birthday). When Executive does step down as Executive Vice President of the Company and President of Famous Footwear and if he does not at that time retire as an employee of the Company, Executive shall assume the duties of "special assistant" to the Chairman of the Company at the same salary that he was paid as Executive Vice President of the Company and President of Famous Footwear and Executive and the Company agree that the length of time (in months) that the Executive is no longer serving as Executive Vice President of the Company and President of Famous Footwear prior to the Retirement Date shall be deducted from the Consulting Period. (For illustrative purposes, when Executive steps down as Executive Vice President of the Company and President of Famous Footwear as of August 23, 2001 and if he retires as an employee on February 1, 2002, then 5 months will be deducted from the Consulting Period and the Consulting Period will end forty-one (41) months after the Retirement Date. If, however, after Executive steps down as Executive Vice President of the Company and President of Famous Footwear on August 23, 2001, he officially retires as an employee of the

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Company prior to February 1, 2002, the Consulting Period will begin the day after the Retirement Date.)

4. Annual Bonus . Subject to the terms of this Agreement, during the Consulting Period, Executive shall receive three fiscal year bonuses as follows:


Fiscal Year Payment Date Amount*
2001 No later than April, 2002 The greater of (i) the amount actually earned pursuant to the terms of the Company's bonus plan (not to exceed the maximum amount available to Executive thereunder), or (ii) $150,000.
2002 No later than April, 2003 The greater of (i) the amount actually earned pursuant to the terms of the Company's bonus plan (not to exceed the target amount available to Executive thereunder), or (ii) $125,000.
2003 No later than April, 2004 The greater of (i) the amount actually earned pursuant to the terms of the Company's bonus plan (not to exceed the target amount available to Executive thereunder), or (ii) $100,000.


* For purposes of determining the bonus amount actually earned for each of three bonuses under the terms of the Company's bonus plan during the Consulting Period, Executive's base salary amount in effect while he was employed by the Company will not be used. Instead, solely for purposes of applying the terms of the Company's bonus plan to determine the bonus amount to which Executive is entitled, Executive's "base salary" for each fiscal year shall be deemed to be an amount equal to the sum of the consulting fees paid for the last full month preceding the end of the fiscal year for which the bonus is being paid, multiplied by 12.

5. Long-Term Incentive Payments. Subject to the terms of this Agreement, during the Consulting Period, Executive shall be eligible to receive a long-term incentive cash payment for each of the three performance periods specified below in the table. The three payments will not be made pursuant to awards granted under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan (the "Incentive Plan"), but the amount of each payment will be based on the achievement of the performance targets established by the Board of Directors of the Company for the corresponding performance periods under the Incentive Plan. In consideration of the foregoing, Executive acknowledges and agrees that all long-term incentive awards which have been granted to him under the Incentive Plan with respect to the performance periods specified below are hereby canceled and forfeited in all respects as of the Effective Date and the Company shall have no obligation to honor such awards. Further, Executive acknowledges that any long-term incentive cash payment to which he may be entitled

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under this Section 5 shall only be paid in the form of cash and not shares of Company common stock. The three long-term incentive payments that Executive is eligible to receive pursuant to this Section 5 shall be made in accordance with the following terms and conditions:


Performance Period Number of Performance Shares/Units Granted Form of Payment/Payment Amount Payment Date
Fiscal Years 99-01 Same number as originally awarded by Company pursuant to Incentive Plan for performance period Cash payment equal to (i) the number of performance shares/units earned over performance period, taking into consideration the extent to which the applicable performance targets established for the performance period under the Incentive Plan have been achieved, multiplied by (ii) the Fair Market Value (as defined in the Incentive Plan) of one share of the Company's common stock as of the date immediately preceding the date on which such cash payment is made to Executive Payment no later than April 30, 2002
Fiscal Years 00-02 Same number as originally awarded by Company pursuant to Incentive Plan for performance period Cash payment determined pursuant to same formula described above Payment no later than April 30, 2003
Fiscal Years 01-03 Same number as originally awarded by Company pursuant to Incentive Plan for performance period Cash payment determined pursuant to same formula described above Payment no later than April 30, 2004


6. Pension Benefits . As of the Retirement Date, pension payments to which Executive is entitled under the Brown Shoe Company, Inc. Retirement Plan and the Brown Shoe Company, Inc. Executive Retirement Plan (the "SERP") shall be determined, and paid, in accordance with the terms of the plans, except that, solely for purposes of calculating retirement benefits under the SERP, Executive shall receive an additional 10 years of service as provided in the agreement dated October, 1997.

7. Restricted Stock and Stock Options . All transfer and forfeiture restrictions on any shares of restricted stock held by Executive as of the Retirement Date shall lapse on such date. With respect to each non-vested option to purchase Company stock held by Executive on the Retirement Date, the Company shall make a cash lump sum payment to Executive in an amount equal to the excess, if any, of the fair market value of the Company



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stock subject to such option, determined as of the close of business on the Retirement Date (or, if the Retirement Date is not a business day, then the next business day), over the exercise price of such option. After Executive shall have received such lump sum payment, all such non-vested options shall be cancelled as of the Retirement Date.

8. Medical and Dental Benefits . Until Executive attains age 65, the Company shall provide Executive and his dependents with medical and dental benefits consistent with the medical and dental benefits being provided to Executive and his dependents immediately prior to the Retirement Date.

9. Perquisites . Executive shall be entitled:

(a) to receive reimbursement from the Company during the Consulting Period for outside office space in an amount not to exceed $2,000 per month;

(b) to keep his office furniture and furnishings from his present office;

(c) to receive and utilize until he attains age 65 a Product Discount Card; and

(d) to receive reimbursement from the Company during the Consulting Period for any club food minimums owed to any club in which Executive was a member immediately prior the Retirement Date.

10. Death or Permanent Disability . In the event of the death or permanent disability (as determined by the Company in good faith) of Executive during the Consulting Period, the Company's obligation to provide the payments, benefits and perquisites described in this Agreement shall cease as of the date of such death or permanent disability; provided , however , monthly consulting fees shall continue to be paid in accordance with the schedule set forth in Section 3 hereof until the earlier of (i) the end of the calendar year in which such death or permanent disability occurs
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