Exhibit 10.2

 

EXECUTIVE TERMINATION PAY AGREEMENT

KENNETH HANNAH

This Executive Termination Pay Agreement (the “Agreement”), dated as of 8/23,
2012 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 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:

 

1.

Termination Payments and Benefits.

 

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.

 

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.

 

(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).

 

(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.

 

(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.

 

(d)

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.

 

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). 

 

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. 

 

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.

 

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. 

 

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.

 

2.

Certain Definitions.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

2.1

“Agreement” shall mean this Executive Termination Pay Agreement.

 

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.

 

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.

 

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.

 

2.5

“CIC Plan” shall have the meaning ascribed thereto in Section 1.6.

 

2.6

“Compensation Payments” shall have the meaning ascribed thereto in Section 1.1.

 

2.7

“Competing Business” shall have the meaning ascribed thereto in Section 3.4.

 

2.8

“Corporation” shall mean J.C. Penney Corporation, Inc.

 

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 the Executive’s implicit
or explicit request, where the Executive was willing and able to continue
performing services, within the meaning of Code section 409A and Treasury
Regulation section 1.409A-1(n)(1) or any successor thereto. 

 

2.11

“Permanent Disability” means the Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, within the meaning of
Code Section 409A and Treasury Regulation section 1.409A-3(i)(4)(i)(A) or any
successor thereto.  A determination of Permanent Disability, for purposes of
payment under this Agreement, will be made by the Corporation’s disability
insurance plan administrator or insurer.

 

2.12

“Proprietary Information” shall have the meaning ascribed thereto in Section 3.

 

2.13

“Prorated Bonus” shall have the meaning ascribed thereto in Section 1.1.

 

2.14

“PTO Policy” shall have the meaning ascribed thereto in Section 1.3.

 

2.15

“Separation from Service” within the meaning of Code section 409A and Treasury
Regulation section 1.409A-1(h) or any successor thereto, shall mean the date an
Executive retires, dies or otherwise has a termination of employment with the
Service Recipient. In accordance with Treasury Regulation  section 1.409A-1(h)
or any successor thereto, if an Executive is on a period of leave that exceeds
six months and the Executive does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship is deemed to
terminate on the first date immediately following such six-month period, and
also, an Executive is presumed to have separated from service where the level of
bona fide services performed (whether as an employee or an independent
contractor) decreases to a level equal to 20 percent or less of the average
level of services performed (whether as an employee or an independent
contractor) by the Executive during the immediately preceding 36-month period
(or the full period of service to the Service Recipient if the employee has been
providing services for less than the 36-month period).

 

2.16

“Service Recipient” shall mean the person, within the meaning of Treasury
Regulation section 1.409A-1(g) or any successor thereto, for whom the services
are performed and with respect to whom the legally binding right to compensation
arises, and all persons with whom such person would be considered a single
employer under Code section 414(b) (employees of controlled group of
corporations), and all persons with whom such person would be considered a
single employer under Code section 414(c) (employees of partnerships,
proprietorships, etc., under common control), using the “at least 50 percent”
ownership standard, within the meaning of Code section 409A and Treasury
Regulation section 1.409A-1(h)(3) or any successor thereto.

 

2.17

“Severance Period” shall mean the following period, based on the Executive’s
title at the time of termination of the Executive’s employment with the
Corporation:

 

Title

Severance Period

Executive Vice Presidents and above

18 months

Senior Vice President

12 months

 

3.

Covenants and Representations of the Executive.  The Executive hereby
acknowledges that the Executive’s duties to the Corporation require access to
and creation of the Corporation’s confidential or proprietary information and
trade secrets (collectively, the “Proprietary Information”).  The Proprietary
Information has been and will continue to be developed by the Corporation and
its subsidiaries and affiliates at substantial cost and constitutes valuable and
unique property of the Corporation.  The Executive further acknowledges that due
to the nature of the Executive’s position, the Executive will have access to
Proprietary Information affecting plans and operations in every location in
which the Corporation (and its subsidiaries and affiliates) does business or
plans to do business throughout the world, and the Executive’s decisions and
recommendations on behalf of the Corporation may affect its operations
throughout the world.  Accordingly, the Executive acknowledges that the
foregoing makes it reasonably necessary for the protection of the Corporation’s
business interests that the Executive agree to the following covenants:

 

3.1

Confidentiality.  The Executive hereby covenants and agrees that the Executive
shall not, without the prior written consent of the Corporation, during the
Executive’s employment with the Corporation or at any time thereafter disclose
to any person not employed by the Corporation, or use in connection with
engaging in competition with the Corporation, any Proprietary Information of the
Corporation.

 

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(a)

It is expressly understood and agreed that the Corporation’s Proprietary
Information is all nonpublic information relating to the Corporation’s business,
including but not limited to information, plans and strategies regarding
suppliers, pricing, marketing, customers, hiring and terminations, employee
performance and evaluations, internal reviews and investigations, short term and
long range plans, acquisitions and divestitures, advertising, information
systems, sales objectives and performance, as well as any other nonpublic
information, the nondisclosure of which may provide a competitive or economic
advantage to the Corporation. Proprietary Information shall not be deemed to
have become public for purposes of this Agreement where it has been disclosed or
made public by or through anyone acting in violation of a contractual, ethical,
or legal responsibility to maintain its confidentiality.

 

(b)

In the event the Executive receives a subpoena, court order or other summons
that may require the Executive to disclose Proprietary Information, on pain of
civil or criminal penalty, the Executive will promptly give notice to the
Corporation of the subpoena or summons and provide the Corporation an
opportunity to appear at the Corporation’s expense and challenge the disclosure
of its Proprietary Information, and the Executive shall provide reasonable
cooperation to the Corporation for purposes of affording the Corporation the
opportunity to prevent the disclosure of the Corporation’s Proprietary
Information.

 

3.2

Nonsolicitation of Employees.  The Executive hereby covenants and agrees that
during the Executive’s employment with the Corporation and  for a period equal
to the Severance Period thereafter, the Executive shall not, without the prior
written consent of the Corporation, on the Executive’s own behalf or on the
behalf of any person, firm or company, directly or indirectly, attempt to
influence, persuade or induce, or assist any other person in so persuading or
inducing, any of the employees of the Corporation (or any of its subsidiaries or
affiliates) to give up his or her employment with the Corporation (or any of its
subsidiaries or affiliates), and the Executive shall not directly or indirectly
solicit or hire employees of the Corporation (or any of its subsidiaries or
affiliates) for employment with any other employer.

 

3.3

Noninterference with Business Relations. The Executive hereby covenants and
agrees that during the Executive’s employment with the Corporation and for a
period equal to the Severance Period thereafter, the Executive shall not,
without the prior written consent of the Corporation, on the Executive’s own
behalf or on the behalf of any person, firm or company, directly or indirectly,
attempt to influence, persuade or induce, or assist any other person in so
persuading or inducing, any person, firm or company to cease doing business
with, reduce its business with, or decline to commence a business relationship
with, the Corporation (or any of its subsidiaries or affiliates).

 

3.4

Noncompetition. 

 

(a)

The Executive covenants that during the Executive’s employment with the
Corporation and, in the event the Executive will receive or has received the
severance benefits provided for in Section 1.3, for a period equal to the
Severance Period thereafter, the Executive will not undertake work for a
Competing Business, as defined in Section 3.4(b).  For purposes of this
covenant, “undertake work for” shall include performing services, whether paid
or unpaid, in any capacity, including as an officer, director, owner,
consultant, employee, agent or representative, where such services involve the
performance of similar duties or oversight responsibilities as those performed
by the Executive at any time during the 12-month period preceding the
Executive’s termination from the Corporation for any reason.  Notwithstanding
the foregoing, the Executive may waive the benefits under Section 1.3 by
providing a written notice to the Corporation’s General Counsel and will then
not be subject to this Section 3.4.

 

(b)

As used in this Agreement, the term “Competing Business” shall mean any business
that, at the time of the determination:

 

(i)

operates (A) any retail department store, specialty store, or  general
merchandise store; (B) any retail catalog, telemarketing, or direct mail
business; (C) any Internet-based or other electronic department store or general
merchandise retailing business; (D) any other retail business that sells goods,
merchandise, or services of the types sold by the Corporation, including its
divisions, affiliates, and licensees; or (E) any business that provides buying
office or sourcing services to any business of the types referred to in this
Section 3.4(b)(i); and

 

(ii)

conducts any business of the types referred to in Section 3.4(b)(i) in the
United States, Commonwealth of Puerto Rico, or another country in which the
Corporation, including its divisions, affiliates, and licensees, conducts a
similar business.

 

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3.5

Injunctive Relief.  If the Executive shall breach any of the covenants contained
in this Section 3, the Corporation shall have no further obligation to make any
payment to the Executive pursuant to this Agreement and may recover from the
Executive all such damages as it may be entitled to at law or in equity.  In
addition, the Executive acknowledges that any such breach is likely to result in
immediate and irreparable harm to the Corporation for which money damages are
likely to be inadequate.  Accordingly, the Executive consents to injunctive and
other appropriate equitable relief without the necessity of bond in excess of
$500.00 upon the institution of proceedings therefor by the Corporation in order
to protect the Corporation’s rights hereunder.

 

4.

Employment-at-Will.  Notwithstanding any provision in this Agreement to the
contrary, the Executive hereby acknowledges and agrees that the Executive’s
employment with the Corporation is for an unspecified duration and constitutes
“at-will” employment, and the Executive further acknowledges and agrees that
this employment relationship may be terminated at any time, with or without
Cause or for any or no Cause, at the option either of the Corporation or the
Executive.

 

5.

Miscellaneous Provisions.

 

5.1

Dispute Resolution.  Any dispute between the parties under this Agreement shall
be resolved (except as provided below) through informal arbitration by an
arbitrator selected under the rules of the American Arbitration Association for
arbitration of employment disputes (located in the city in which the
Corporation’s principal executive offices are based) and the arbitration shall
be conducted in that location under the rules of said Association.  Each party
shall be entitled to present evidence and argument to the arbitrator.  The
arbitrator shall have the right only to interpret and apply the provisions of
this Agreement and may not change any of its provisions, except as expressly
provided in Section 3.4 and only in the event the Corporation has not brought an
action in a court of competent jurisdiction to enforce the covenants in Section
3. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the
extent necessary to establish a claim or a defense to a claim, subject to
supervision by the arbitrator.  The determination of the arbitrator shall be
conclusive and binding upon the parties and judgment upon the same may be
entered in any court having jurisdiction thereof.  The arbitrator shall give
written notice to the parties stating the arbitrator’s determination, and shall
furnish to each party a signed copy of such determination.  The expenses of
arbitration shall be borne equally by the Corporation and the Executive or as
the arbitrator equitably determines consistent with the application of state or
federal law; provided, however, that the Executive’s share of such expenses
shall not exceed the maximum permitted by law.  To the extent applicable, in
accordance with Code section 409A and Treasury Regulation section
1.409A-3(i)(1)(iv)(A) or any successor thereto, any payments or reimbursement of
arbitration expenses which the Corporation is required to make under the
foregoing provision shall meet the requirements below.  The Corporation shall
reimburse the Executive for any such expenses, promptly upon delivery of
reasonable documentation, provided, however, all invoices for reimbursement of
expenses must be submitted to the Corporation and paid in a lump sum payment by
the end of the calendar year following the calendar year in which the expense
was incurred.  All expenses must be incurred within a 20 year period following
the Separation from Service.  The amount of expenses paid or eligible for
reimbursement in one year under this Section 5.1 shall not affect the expenses
paid or eligible for reimbursement in any other taxable year.   The right to
payment or reimbursement under this Section 5.1 shall not be subject to
liquidation or exchange for another benefit.

 

Any arbitration or action pursuant to this Section 5.1 shall be governed by and
construed in accordance with the substantive laws of the State of Texas and,
where applicable, federal law, without giving effect to the principles of
conflict of laws of such State.  The mandatory arbitration provisions of this
Section 5.1 shall supersede in their entirety the J.C. Penney Alternative, a
dispute resolution program generally applicable to employment terminations.

Notwithstanding the foregoing, the Corporation shall not be required to seek or
participate in arbitration regarding any actual or threatened breach of the
Executive’s covenants in Section 3, but may pursue its remedies, including
injunctive relief, for such breach in a court of competent jurisdiction in the
city in which the Corporation’s principal executive offices are based, or in the
sole discretion of the Corporation, in a court of competent jurisdiction where
the Executive has committed or is threatening to commit a breach of the
Executive’s covenants, and no arbitrator may make any ruling inconsistent with
the findings or rulings of such court.

 

5.2

Binding on Successors; Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Executive, the Corporation and each of their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable;
provided however, that neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to hypothecation by the
Executive (except by will or by operation of the laws of intestate succession)
or by the Corporation except that the Corporation may assign this Agreement to
any successor (whether by merger, purchase or otherwise) to all or substantially
all of the stock, assets or businesses of the Corporation, if such successor
expressly agrees to assume the obligations of the Corporation hereunder.

 

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5.3

Governing Law.  This Agreement shall be governed, construed, interpreted, and
enforced in accordance with the substantive law of the State of Texas and
federal law, without regard to conflicts of law principles, except as expressly
provided herein. In the event the Corporation exercises its discretion under
Section 5.1 to bring an action to enforce the covenants contained in Section 3
in a court of competent jurisdiction where the Executive has breached or
threatened to breach such covenants, and in no other event, the parties agree
that the court may apply the law of the jurisdiction in which such action is
pending in order to enforce the covenants to the fullest extent permissible.

 

5.4

Severability.  Any provision of this Agreement that is deemed invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective, to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.  If any covenant in
Section 3 should be deemed invalid, illegal or unenforceable because its time,
geographical area, or restricted activity, is considered excessive, such
covenant shall be modified to the minimum extent necessary to render the
modified covenant valid, legal and enforceable.

 

5.5

Notices.  For all purposes of this Agreement, all communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service, addressed to the Corporation at
its principal executive office, c/o the Corporation’s General Counsel, and to
the Executive at the Executive’s principal residence, or to such other address
as any party may have furnished to the other in writing and in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.

 

5.6

Counterparts.  This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement.

 

5.7

Entire Agreement.  The terms of this Agreement are intended by the parties to be
the final expression of their agreement with respect to the Executive’s
employment by the Corporation and may not be contradicted by evidence of any
prior or contemporaneous agreement.  The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceedings to vary the terms of this Agreement. 

 

5.8

Amendments; Waivers.  This Agreement may not be modified, amended, or terminated
except by an instrument in writing, approved by the Corporation and signed by
the Executive and the Corporation. Failure on the part of either party to
complain of any action or omission, breach or default on the part of the other
party, no matter how long the same may continue, shall never be deemed to be a
waiver of any rights or remedies hereunder, at law or in equity.  The Executive
or the Corporation may waive compliance by the other party with any provision of
this Agreement that such other party was or is obligated to comply with or
perform only through an executed writing; provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure.

 

5.9

No Inconsistent Actions.  The parties hereto shall not voluntarily undertake or
fail to undertake any action or course of action that is inconsistent with the
provisions or essential intent of this Agreement.  Furthermore, it is the intent
of the parties hereto to act in a fair and reasonable manner with respect to the
interpretation and application of the provisions of this Agreement.

 

5.10

Headings and Section References.  The headings used in this Agreement are
intended for convenience or reference only and shall not in any manner amplify,
limit, modify or otherwise be used in the construction or interpretation of any
provision of this Agreement.  All section references are to sections of this
Agreement, unless otherwise noted.

 

5.11

Beneficiaries.  The Executive shall be entitled to select (and change, to the
extent permitted under any applicable law) a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive’s
death, and may change such election, in either case by giving the Corporation
written notice thereof in accordance with Section 5.5.  In the event of the
Executive’s death or a judicial determination of the Executive’s incompetence,
reference in this Agreement to the “Executive” shall be deemed, where
appropriate, to be the Executive’s beneficiary, estate or other legal
representative.

 

5.12

Withholding.  The Corporation shall be entitled to withhold from payment any
amount of withholding required by law.

 

7

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.

J. C. Penney Corporation, Inc.

 

By:  /s/ Ron Johnson

Name: Ron Johnson

Title: CEO

 

 

Executive

 

/s/ Ken Hannah                         

 

8

 

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