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Exhibit 10.1
As Amended and Restated
Effective September 21, 2007
FORM OF
EXECUTIVE TERMINATION PAY AGREEMENT
This Executive Termination Pay Agreement (the
“Agreement”), dated as of _____________, 2007 is
between J. C. Penney Corporation, Inc.
(“Corporation”) and the undersigned member of the
Corporation’s Executive Board (the
“Executive”).
WHEREAS, in order to achieve its long-term objectives, the
Corporation recognizes that it is essential to attract and retain
superior executives to serve on its Executive Board;
WHEREAS, in order to induce the Executive [to continue] to serve in
the Executive’s position with the Corporation, the
Corporation desires to provide the Executive with the right to
receive certain benefits in the event the Executive’s
employment is terminated, on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
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1. |
Termination Payments and Benefits.
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1.1 |
Death or Permanent Disability.
In the event of a Separation from Service due to death, or in the
event of a Separation from Service within 30 days following a
determination of Permanent Disability (as defined in Section 2) of
the Executive, then as soon as practicable or within the period
required by law, but in no event later than 30 days after
Separation from Service, the Corporation shall pay any (a) accrued
and unpaid Base Salary (as defined in Section 2) and vacation to
which the Executive was entitled as of the effective date of
termination of the Executive’s employment with the
Corporation (collectively, the “Compensation Payments”)
and (b) the target annual incentive (at $1.00 per unit) under the
Corporation’s Management Incentive Compensation Program (or
any successor plan) for the fiscal year in which the date of death
or the determination of Permanent Disability occurs, prorated for
the actual period of service for that fiscal year (the
“Prorated Bonus”). Notwithstanding the foregoing, if
the Executive has elected to defer under the Corporation’s
Mirror Savings Plan (or any successor plan) a portion of the annual
incentive to be paid under the Corporation’s Management
Incentive Compensation Program for the fiscal year, then that
portion of the Prorated Bonus will be deferred and paid in
accordance with the terms of the Corporation’s Mirror Savings
Plan, and the remaining portion of the Prorated Bonus will be paid
in a lump sum under this Section. The payment of any death benefits
or disability benefits under any employee benefit or compensation
plan that is maintained by the Corporation for the
Executive’s benefit shall be governed by the terms of such
plan.
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1.2 |
Involuntary Separation from Service for Cause; Voluntary
Separation from Service by the Executive.
In the event of the Involuntary Separation from Service (as defined
in Section 2) of the Executive for Cause (as defined in Section 2)
or voluntary Separation from Service by the Executive, the
Corporation shall pay the Compensation Payments to the Executive as
soon as practicable or within the period required by law, and the
Executive shall be entitled to no other compensation, except as
otherwise due to the Executive under applicable law, applicable
plan or program. The Executive shall not be entitled to the payment
of any bonuses for any portion of the fiscal year in which such
Separation from Service occurs.
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1.3 |
Involuntary Separation from Service without
Cause.
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(a) |
Form and Amount
. In the event of the Involuntary Separation from Service of the
Executive without Cause, the Corporation shall pay the Compensation
Payments to the Executive as soon as practicable or within the
period required by law. In addition, conditioned upon receipt of
the Executive’s written release of claims in such form as may
be required by the Corporation and the expiration of any applicable
period during which the Executive can rescind or revoke such
release, the Corporation shall pay the Executive a lump sum as
severance pay within 14 days thereafter. In no event will severance
pay be paid later than two and one-half months after the end of the
Executive’s tax year in which the Involuntary Separation from
Service occurs. The lump sum severance pay will be equal to (i) the
Prorated Bonus, except as provided below, (ii) the
Executive’s monthly salary and the target annual incentive
(at $1.00 per unit) under the Corporation’s Management
Incentive Compensation Program for the Severance Period (as defined
in Section 2), (iii) the Corporation’s portion of the premium
cost of Medical, Dental, and Corporation Paid Life Insurance Plans
coverage for the Severance Period as provided in Section 1.3(b),
(iv) Special Bonus Hours to the extent provided under Section
1.3(c), and (v) $25,000 to pay for outplacement services and
financial counseling services. Notwithstanding the foregoing, if
the Executive has elected to defer under the Corporation’s
Mirror Savings Plan a portion of the annual incentive to be paid
under the Corporation’s Management Incentive Compensation
Program for the fiscal year, then that portion of the Prorated
Bonus will be deferred and paid in accordance with the terms of the
Corporation’s Mirror Savings Plan, and the remaining portion
of the Prorated Bonus will be paid in a lump sum under this
Section. In addition to the lump sum payments provided for herein,
following an Involuntary Separation from Service, the Corporation
shall also provide to the Executive Accelerated Vesting as provided
in Section 1.3(d).
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(b) |
Health Care and Life Insurance
. Following an Involuntary Separation from Service, the Executive
will receive a lump sum payment equal to the Corporation’s
premium cost for the Executive’s active Associate Medical,
Dental and Life Insurance Plans coverage, if any, as in effect on
the day prior to the effective date of the Executive’s
Involuntary Separation from Service, in an amount based on the
entire Severance Period. Such amount shall be grossed-up for
applicable federal income taxes using the applicable federal income
tax rate that applied to the Executive for the taxable year prior
to the year in which the Involuntary Separation from Service shall
have occurred.
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(c) |
Special Bonus Hours
. Following an Involuntary Separation from Service, the Corporation
shall pay the Executive a lump sum payment for Special Bonus Hours,
if the Executive is a participant in the Corporation’s Paid
Time Off Policy (“PTO Policy”). Such payment shall be
determined in accordance with the provisions of the PTO Policy
applicable to an involuntary termination resulting from a reduction
in force.
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(d)
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Accelerated Vesting.
Effective on the Involuntary Separation from Service date, all Long
Term Incentive stock awards and stock options in the
Executive’s name shall be immediately vested. To the extent
applicable, if the Executive has elected to make a deferral under
the Corporation’s equity compensation plan (or any successor
plan), then such deferral will be paid in accordance with the terms
of the Corporation’s equity compensation plan.
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1.4 |
Section 409A.
To the extent applicable, it is intended that portions of this
Agreement either comply with or be exempt from the provisions of
Section 409A of the Code (as defined in Section 2). Any provision
of this Agreement that would cause this Agreement to fail to comply
with or be exempt from Code section 409A shall have no force and
effect until such provision is either amended to comply with or be
exempt from Code section 409A (which amendment may be retroactive
to the extent permitted by Code section 409A and the Executive
hereby agrees not to withhold consent unreasonably to any amendment
requested by the Corporation for the purpose of either complying
with or being exempt from Code section 409A).
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1.5 |
Forfeiture
. Notwithstanding the foregoing provisions of this Section 1, in
addition to any remedies to which the Corporation is entitled, any
right of the Executive to receive termination payments and benefits
under Section 1 shall be forfeited to the extent of any
amounts payable or benefits to be provided after a breach of any
covenant set forth in Section 3.
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1.6 |
Non-Eligibility For Other Company Separation Pay
Benefits
. The benefits provided for herein are intended to be in lieu of,
and not in addition to, other separation pay benefits to which the
Executive might be entitled, including those under the
Corporation’s Separation Pay Plan, or any successor plan or
program offered by the Corporation, which the Executive hereby
waives. If the Executive receives benefits under the
Corporation’s Change in Control Plan (the “CIC
Plan”), in the event of Employment Termination (as defined in
the CIC Plan), the covenants set forth in Section 3 hereof shall
automatically terminate and, if the Executive shall receive all
benefits to which the Executive is entitled under the CIC Plan, the
Executive waives all benefits hereunder.
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1.7 |
Corporation’s Right of Offset
. If the Executive is at any time indebted to the Corporation, or
otherwise obligated to pay money to the Corporation for any reason,
to the extent exempt from or otherwise permitted by Code section
409A and the Treasury Regulations thereunder, including Treasury
Regulation section 1.409A-3(j)(4)(xiii) or any successor thereto,
the Corporation, at its election, may offset amounts otherwise
payable to the Executive under this Agreement, including, but
without limitation, Base Salary and incentive compensation
payments, against any such indebtedness or amounts due from the
Executive to the Corporation, to the extent permitted by
law.
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1.8 |
Mitigation
. In the event of the Involuntary Separation from Service of the
Executive, the Executive shall not be required to mitigate damages
by seeking other employment or otherwise as a condition to
receiving termination payments or benefits under this Agreement. No
amounts earned by the Executive after the Executive’s
Involuntary Separation from Service, whether from self-employment,
as a common law employee, or otherwise, shall reduce the amount of
any payment or benefit under any provision of this
Agreement.
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1.9 |
Resignations
. Except to the extent requested by the Corporation, upon any
termination of the Executive’s employment with the
Corporation, the Executive shall immediately resign all positions
and directorships with the Corporation and each of its subsidiaries
and affiliates.
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As used in this Agreement, the following terms shall have the
following meanings:
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2.1 |
“Agreement
” shall mean this Executive Termination Pay
Agreement.
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2.2 |
“Base Salary”
shall mean the Executive’s annual base salary as in effect at
the effective date of termination of the Executive’s
termination of employment with the Corporation.
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2.3 |
“Cause”
shall mean (a) an intentional act of fraud, embezzlement, theft or
any other material violation of law that occurs during or in the
course of Executive’s employment with the Corporation; (b)
intentional damage to the Corporation’s assets; (c)
intentional disclosure of the Corporation’s confidential
information contrary to Corporation’s policies; (d) material
breach of Executive’s obligations under this Agreement; (e)
intentional engagement in any competitive activity which would
constitute a breach of Executive’s duty of loyalty or of
Executive’s obligations under this Agreement; (f) the willful
and continued failure to substantially perform Executive’s
duties for the Corporation (other than as a result of incapacity
due to physical or mental illness); or (g) intentional breach of
any of Corporation’s policies or willful conduct by Executive
that is in either case demonstrably and materially injurious to
Corporation, monetarily or otherwise; provided, however, that
termination for Cause based on clause (d) shall not be
effective unless the Executive shall have written notice from the
Chief Executive Officer of the Corporation (which notice shall
include a description of the reasons and circumstances giving rise
to such notice) not less than 30 days prior to the
Executive’s termination and the Executive has failed after
receipt of such notice to satisfactorily discharge the
Executive’s duties. For purposes hereof, an act, or a failure
to act, shall not be deemed “willful” or
“intentional” unless it is done, or omitted to be done,
by the Executive in bad faith or without a reasonable belief that
the Executive’s action or omission was in the best interest
of Corporation. Failure to meet performance standards or
objectives, by itself, does not constitute “Cause.”
“Cause” also includes any of the above grounds for
dismissal regardless of whether the Corporation learns of it before
or after terminating Executive’s employment.
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2.4 |
“
Code
” shall mean the Internal Revenue Code of 1986, as amended,
including proposed, temporary or final regulations or any other
guidance issued by the Secretary of the Treasury or the Internal
Revenue Service with respect thereto.
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2.5 |
“
CIC Plan
” shall have the meaning ascribed thereto in Section
1.6.
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2.6 |
“
Compensation Payments
” shall have the meaning ascribed thereto in Section
1.1.
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2.7 |
“
Competing Business
” shall have the meaning ascribed thereto in
Section 3.4.
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2.8 |
“
Corporation”
shall mean J.C. Penney Corporation, Inc.
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2.9 |
“
Executive
” shall mean the undersigned member of the
Corporation’s Executive Board.
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2.10 |
“
Involuntary Separation from Service
” shall mean Separation from Service due to the independent
exercise of the unilateral authority of the Service Recipient to
terminate the Executive's services, other than due to
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the Executive’s implicit or explicit request, where the
Executive was willing and able to continu
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