J. C. Penney Corporation, Inc. Change in Control Plan


    Exhibit
      10.7


    


    


    


    


    


    


    


     

    J.
      C. PENNEY CORPORATION, INC.

    


    CHANGE
      IN CONTROL PLAN

    


    


    


    


    Effective
      December 31, 2007

    


    


    


    


    


    



    
      
        
           

        

        
        

      

      
        
        

        
        

      

      
        
        

        
        

      

    



    


    J.
      C. PENNEY CORPORATION, INC.

    CHANGE
      IN CONTROL PLAN

    


    


    


    TABLE
      OF CONTENTS

     

    
 

    
      	
              Article

            	 	
               Page

            
	
              ARTICLE ONE

            	
              INTRODUCTION...............................................................

            	
              1

            
	
              ARTICLE TWO

            	DEFINITIONS....................................................................	
              3

            
	ARTICLE THREE	ELIGIBILITY AND
              PARTICIPATION...........................	
              11

            
	
              ARTICLE FOUR

            	BENEFITS...........................................................................	12
	ARTICLE FIVE	AMENDMENT AND TERMINATION............................	22
	ARTICLE SIX	MISCELLANEOUS............................................................	23
	APPENDIX I	PARTICIPATING
              EMPLOYERS.....................................	29


    

     

    


     

    
 

     

    


    
      
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    J.
      C. PENNEY CORPORATION, INC.

    CHANGE
      IN CONTROL PLAN

    


    ARTICLE
      ONE

    


    INTRODUCTION

    


    
      	
              1.01

            	
              Purpose
                Of Plan

            


    

    


     The
      J. C. Penney Corporation, Inc. Change in Control Plan (the "Plan") consists
      primarily of (i) severance benefits, (ii) additional cash benefits after
      termination of employment to be paid outside of the Corporation’s non-qualified
      retirement plans and (iii) a cash amount payable at Employment Termination
      equal
      to the Corporation’s cost of health and welfare benefits the associate
      participated in immediately prior to the Change in Control. The purpose and
      intent of the Plan is to attract and retain key associates and to improve
      associate productivity by reducing distractions resulting from a potential
      Change in Control situation, all of which are in the best interest of the
      Corporation, and J.C. Penney Company, Inc. and its stockholders. 

    


    Capitalized
      terms used throughout the Plan have the meanings set forth in Article Two
      except as otherwise defined in the Plan, or the context clearly requires
      otherwise.

     

    
      	
              1.02

            	
              Plan
                Status

            


    

    


    The
      Plan is intended to be a plan providing Severance Pay and certain other benefits
      following a Change in Control. The Plan is intended to be a top hat plan for
      a
      select group of management or highly compensated executives, subject only to
      the
      administration and enforcement provisions of ERISA. To
      the extent applicable, it is intended that portions of this Plan either comply
      with or be exempt from the provisions of Code Section 409A. This Plan shall
      be
      administered in a manner consistent with this intent and any provision that
      would cause this Plan to fail to either comply with or be exempt from Code
      Section 409A, as the case may be, shall have no force and effect. 

    


    
      	
              1.03

            	
              Entire
                Plan

            


    

    


    This
      document, including any Appendix hereto, and any documents incorporated by
      reference set forth the provisions of the Plan effective as of the Effective
      Date, except as otherwise provided herein. 

     


    
      
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      	1.04     
              	
              Administration 

            


    

    


    The
      Human Resources and Compensation Committee of the Board (“Committee”) shall
      administer the Plan, provided, however, that none of the members of the
      Committee will be a Participant. The powers and duties of the Committee in
      administering the Plan are set forth in Article Six.


    
      
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    ARTICLE
      TWO

    


    DEFINITIONS

    


    
      	2.01 
                	
              For
                purposes of this Plan the following terms shall have the following
                meanings:

            


    

    


    Accounting
      Firm
      means a nationally recognized accounting firm, or actuarial, benefits or
      compensation consulting firm, (with experience in performing the calculations
      regarding the applicability of Section 280G of the Code and of the tax imposed
      by Section 4999 of the Code) selected by a Participant in his/her sole
      discretion.

    


    Board
      means the Board of Directors of J.C. Penney Company, Inc.

     

    Change
      in Control
      means the occurrence of any of the following events:

     

    
      	(i)  	
              any
                individual, entity or group (within the meaning of Section 13(d)(3)
                or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner
                (within the meaning of Rule 13d-3 promulgated under the Exchange
                Act) of
                20% or more of the combined voting power of the then-outstanding
                Voting
                Stock of the Company or Corporation; provided,
                however,
                that:

            


    

     

    
      	(1)  	
              for
                purposes of this Section (i)(1), the following acquisitions shall not
                constitute a Change in Control: (A) any acquisition of Voting Stock
                of the Company or Corporation directly from the Company or Corporation
                that is approved by a majority of the Incumbent Directors, (B) any
                acquisition of Voting Stock of the Company or Corporation by the
                Company
                or any Subsidiary, (C) any acquisition of Voting Stock of the Company
                or Corporation by the trustee or other fiduciary holding securities
                under
                any employee benefit plan (or related trust) sponsored or maintained
                by
                the Company or any Subsidiary, and (D) any acquisition of Voting
                Stock of
                the Company or Corporation by any Person pursuant to a Business
                Transaction that complies with clauses (A), (B) and (C) of
                Section (iii) below;

            


    

     

    
      	(2)  	
              if
                any Person becomes the beneficial owner of 20% or more of combined
                voting
                power of the then-outstanding Voting Stock of the Company or Corporation
                as a result of a transaction described in clause (A) of
                Section (i)(1) above and such Person thereafter becomes the
                beneficial owner of any additional shares of Voting Stock of the
                Company
                or Corporation representing 1% or more of the then-outstanding Voting
                Stock of the Company or
                Corporation,

            


    

     

    
      
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              other
                than in an acquisition directly from the Company or Corporation that
                is
                approved by a majority of the Incumbent Directors or other than as
                a
                result of a stock dividend, stock split or similar transaction effected
                by
                the Company or Corporation in which all holders of Voting Stock are
                treated equally, such subsequent acquisition shall be treated as
                a Change
                in Control;

            


    

     

    
      	(3)  	
              a
                Change in Control will not be deemed to have occurred if a Person
                becomes
                the beneficial owner of 20% or more of the Voting Stock of the Company
                or
                Corporation as a result of a reduction in the number of shares of
                Voting
                Stock of the Company or Corporation outstanding pursuant to a transaction
                or series of transactions that is approved by a majority of the Incumbent
                Directors unless and until such Person thereafter becomes the beneficial
                owner of any additional shares of Voting Stock of the Company or
                Corporation representing 1% or more of the then-outstanding Voting
                Stock
                of the Company or Corporation, other than as a result of a stock
                dividend,
                stock split or similar transaction effected by the Company or Corporation
                in which all holders of Voting Stock are treated equally; and
                

            


    

     

    
      	(4)  	
              if
                at least a majority of the Incumbent Directors determine in good
                faith
                that a Person has acquired beneficial ownership of 20% or more of
                the
                Voting Stock of the Company or Corporation inadvertently, and such
                Person
                divests as promptly as practicable but no later than the date, if
                any, set
                by the Incumbent Directors a sufficient number of shares so that
                such
                Person beneficially owns less than 20% of the Voting Stock of the
                Company
                or Corporation, then no Change in Control shall have occurred as
                a result
                of such Person’s acquisition; or

            


    

     

    
      	(ii)  	
              a
                majority of the board of the Company or of the Corporation ceases
                to be
                comprised of Incumbent Directors;
                or

            


    

     

    
      	(iii)  	
              the
                consummation of a reorganization, merger or consolidation, or sale
                or
                other disposition of all or substantially all of the assets of the
                Company
                or the Corporation, or the acquisition of the stock or assets of
                another
                corporation, or other transaction (each, a “Business Transaction”),
                unless, in each case, immediately following such Business Transaction
                (A) the Voting Stock of the Company outstanding immediately prior to
                such Business Transaction continues to represent (either by remaining
                outstanding or by being converted into Voting Stock of
                the

            


    

     

    
      
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              surviving
                entity or any parent thereof), more than 50% of the combined voting
                power
                of the then outstanding shares of Voting Stock of the entity resulting
                from such Business Transaction (including, without limitation, an
                entity
                which as a result of such transaction owns the Company, Corporation
                or all
                or substantially all of the Company’s or Corporation’s assets either
                directly or through one or more subsidiaries), (B) no Person (other
                than the Company, such entity resulting from such Business Transaction,
                or
                any employee benefit plan (or related trust) sponsored or maintained
                by
                the Company or any Subsidiary or such entity resulting from such
                Business
                Transaction) beneficially owns, directly or indirectly, 20% or more
                of the
                combined voting power of the then outstanding shares of Voting Stock
                of
                the entity resulting from such Business Transaction, and (C) at least
                a majority of the members of the Board of Directors of the entity
                resulting from such Business Transaction were Incumbent Directors
                at the
                time of the execution of the initial agreement or of the action of
                the
                Board providing for such Business Transaction;
                or

            


    

     

    
      	(iv)  	
              approval
                by the stockholders of the Company of a complete liquidation or
                dissolution of the Company, except pursuant to a Business Transaction
                that
                complies with clauses (A), (B) and (C) of
                Section (iii).

            


    

     

    Code
      shall mean the Internal Revenue Code of 1986, as amended and the proposed,
      temporary and final regulations promulgated thereunder. Reference to any section
      or subsection of the Code includes reference to any comparable or succeeding
      provisions of any legislation that amends, supplements or replaces such section
      or subsection.

    


    Company
      shall mean J. C. Penney Company, Inc., a Delaware corporation, or any successor
      company.

    


    Compensation
      shall mean the annual base salary rate of a Participant, plus the Participant’s
      target annual incentive compensation (at $1.00 per unit), under the
      Corporation's Management Incentive Compensation Plan (or any successor plans
      thereto) for the fiscal year, all at the greater of the amount in effect on
      the
      date of the Change in Control or as of his/her Employment Termination date.
      As
      applied to a Participant employed by an affiliate or Subsidiary of the
      Corporation, Compensation shall include the same elements of pay to the extent
      the affiliate or Subsidiary maintains similar or comparable pay arrangements.
      

    


    Corporation
      shall mean J. C. Penney Corporation, Inc., a Delaware corporation, or any
      successor company.

    


    Effective
      Date
      shall mean December 31, 2007 at 11:59 P.M.


    
      
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    Employment
      Termination
      shall be deemed to have occurred when a Participant has a Separation from
      Service within two years after a Change in Control (or prior to a Change in
      Control if the Participant has reasonably demonstrated that such termination
      of
      employment (i) was at the request of a third party who has taken steps
      reasonably calculated to effect a Change in Control, or (ii) otherwise
      arose in connection with or in anticipation of a Change in Control) because
      of
      either a Separation from Service for Good Reason or an Involuntary Separation
      from Service other than as a result of a Summary Dismissal. An Employment
      Termination shall not include a termination by reason of the Participant’s
      death, disability, voluntary quit other than a Separation from Service for
      Good
      Reason, or Normal Retirement. 

     

    ERISA
      shall mean the Employee Retirement Income Security Act of 1974, as amended,
      and
      the regulations promulgated thereunder. Reference to any section or subsection
      of ERISA includes reference to any comparable or succeeding provisions of any
      legislation that amends, supplements or replaces such section or
      subsection.

     

    Exchange
      Act
      means the Securities Exchange Act of 1934, as amended, and the regulations
      promulgated thereunder. Reference to any section or subsection of the Exchange
      Act includes reference to any comparable or succeeding provisions of any
      legislation that amends, supplements or replaces such section or
      subsection.

    


    Excise
      Tax
      shall mean, collectively, (i) the tax imposed by Section 4999 of the Code by
      reason of being “contingent on a change in ownership or control” of the Company,
      within the meaning of Section 280G of the Code, or (ii) any similar tax imposed
      by state or local law, or (iii) any interest or penalties with respect to any
      excise tax described in clause (i) or (ii).

    


    Good
      Reason within
      the meaning of Code section 409A and Treasury Regulation section 1.409A-1(n)(2)(i)
      or any successor thereto,
      shall mean a condition resulting from any of the actions listed below taken
      by a
      Service Recipient, without the consent of the Participant, directed at a
      Participant:

    


    (a)    a
      material
      decrease in salary or incentive compensation opportunity (the amount paid at
      target as a percentage of salary under the Corporation’s Management Incentive
      Compensation Program) as in effect immediately prior to the Change in Control,
      or

    


    (b)    failure
      by
      the Service Recipient to pay the Participant a material portion of his/her
      current base salary, or incentive compensation within seven days of its due
      date, or


    
      
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    (c)     a
      material
      adverse change in reporting responsibilities, duties, or authority as compared
      with pre-Change in Control responsibilities, duties, or authority,
      or

    


    (d)    a
      material
      diminution in the authority, duties, or responsibilities of the supervisor
      to
      whom the Participant is required to report, including a requirement that a
      Participant report to a corporate officer or employee instead of reporting
      directly to the Board of the Corporation, or

    


    (e)    a
      material
      diminution in the budget over which the Participant retains authority as
      compared to the pre-Change in Control budget, or

    


    (f)     the
      Service
      Recipient requires the Participant to have the Participant’s principal location
      of work changed to a location more than 50 miles from the location thereof
      immediately prior to the Change in Control, or

    


    (g)     discontinuance
      of any
      material paid time off policy, fringe benefit, welfare benefit, incentive
      compensation, equity compensation, or retirement plan (without substantially
      equivalent compensating remuneration or a plan or policy providing substantially
      similar benefits) in which the Participant participates or any action that
      materially reduces such Participant’s benefits or payments under such plans, as
      in effect immediately before the Change in Control. 

    


    Provided,
      however, that the Participant must provide notice to the Corporation of the
      existence of the condition described above within 90 days of the initial
      existence of the condition, upon the notice of which the Corporation will have
      30 days during which it or a Service Recipient may remedy the condition and
      not
      be required to pay any amount owed under this Plan. Any Separation from Service
      as a result of a Good Reason condition must occur within two years of the
      initial existence of the condition in order for benefits to be due under this
      Plan. A Separation from Service for Good Reason will be treated as an
      Involuntary Separation from Service for purposes of this Plan.

    


    Gross-Up
      Payment within
      the meaning of Code section 409A and Treasury Regulation section
      1.409A-3(i)(1)(v)
      or any successor thereto,
      means a payment to reimburse the Participant in an amount equal to all or a
      designated portion of the Federal, state, local, or foreign taxes imposed upon
      the Participant as a result of compensation paid or made available to the
      Participant by the Service Recipient, including the amount of additional taxes
      imposed upon the Participant due to the Service Recipient's payment of the
      initial taxes on such compensation.

    


    Incumbent
      Directors
      means the individuals who, as of the Effective Date hereof, are Directors of
      the
      Company or the Corporation, as the context requires, and any individual becoming
      a Director subsequent to the date 


    
      
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    hereof
      whose election, nomination for election by the Company’s or Corporation’s
      stockholders, or appointment, was approved by a vote of at least two-thirds
      of
      the then Incumbent Directors (either by a specific vote or by approval of the
      proxy statement of the Company in which such person is named as a nominee for
      director, without objection to such nomination); provided,
      however,
      that an individual shall not be an Incumbent Director if such individual’s
      election or appointment to the Board occurs as a result of an actual or
      threatened election contest (as described in Rule 14a-12(c) of the Exchange
      Act) with respect to the election or removal of Directors or other actual or
      threatened solicitation of proxies or consents by or on behalf of a Person
      other
      than the Board.

     

    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 Participant's
      services, other than due to the Participant’s implicit or explicit request,
      where the Participant 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.

     

    Normal
      Retirement
      shall mean retirement at or after a Participant’s normal retirement date as
      determined in accordance with the J. C. Penney Corporation, Inc. Pension Plan
      as
      in effect immediately prior to a Change in Control. 

     

    Participant
      shall mean each person appointed by the Board to the Executive Board allowing
      them to participate in the Plan as provided in Article Three and who continues
      to be an Executive Board member immediately prior to a Change in
      Control.

    


    Participating
      Employer
      shall mean the Corporation and any 

    Subsidiary
      or affiliate of the Corporation which is designated as a Participating Employer
      under the Plan by the Board, excluding, however, any division of the Corporation
      or of a Subsidiary or affiliate that is designated by the Board as ineligible
      to
      participate in the Plan. Appendix I contains a list of the Participating
      Employers currently participating in the Plan that have adopted the Plan
      pursuant to Article Six.

    


    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 a Participant 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 a Participant is on a period
      of
      leave that exceeds six months and the Participant 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, a Participant is presumed to have a Separation
      from
      Service where the level of bona fide services performed 


    
      
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    (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 Participant 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). 

    


    Service
      Recipient
      shall mean the Corporation 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 the Corporation would
      be
      considered a single employer under Code section 414(b) (employees of controlled
      group of corporations), and all persons with whom the Corporation 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.

    


    Severance
      Pay
      shall mean the cash severance payments payable to a Participant pursuant to
      Section 4.01 of the Plan. 

    


    Severance
      Benefits
      shall mean Severance Pay and the other benefits described in Article Four of
      the
      Plan payable to a Participant.

    


    Subsidiary
      shall mean any entity in which the Company, directly or indirectly, beneficially
      owns 50% or more of the Voting Stock.

    


    Summary
      Dismissal
      shall mean a termination due to:

    


    (a) any
      willful or negligent material violation of any applicable securities laws
      (including the Sarbanes-Oxley Act of 2002);

    


    (b) any
      intentional act of fraud or embezzlement from the Corporation or Company;


    


    (c) a
      conviction of or entering into a plea of nolo contendere to a felony that occurs
      during or in the course of the Participant’s employment with the Corporation;


    


    (d) any
      breach of a written covenant or agreement with the Corporation, which is
      material and which is not cured within 30 days after written notice thereof
      from
      the Corporation; and 

    


    (e) willful
      and continued failure of the Participant to substantially perform his/her duties
      for the Corporation (other than as a result of incapacity due to physical or
      mental illness) or to materially comply with Corporation or


    
      
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    Company
      policy after written notice, in either case, from the Corporation and a 30-day
      opportunity to cure. 

    


    For
      purposes hereof, an act, or failure to act, shall not be deemed to be “willful”
or “intentional” unless it is done, or omitted to be done, by the Participant in
      bad faith or without a reasonable belief that the action or omission was in
      the
      best interests of the Corporation.

    


    Voting
      Stock
      means securities entitled to vote generally in the election of
      directors.

     


    
      
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    ARTICLE
      THREE

    


    ELIGIBILITY
      AND PARTICIPATION

    


    3.01       
      Eligibility
      on the Effective Date 

    


    Each
      person who has been appointed to the Executive Board of the Corporation
      (“Executive Board”) by the Board as of the Effective Date will be a Participant
      in the Plan. 

    


    3.02       
      Future
      Eligibility

    


    Each
      person who is appointed to the Executive Board by the Board after the Effective
      Date and prior to the occurrence of a Change in Control will be a Participant
      in
      the Plan. 

    



    
      
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    ARTICLE
      FOUR

    


    BENEFITS

    


    4.01     
      Severance
      Pay

    


    Upon
      an Employment Termination, a Participant shall become entitled to Severance
      Pay
      in accordance with the following schedule.

    


    
      	
               Title

            	
               Severance
                Pay Period

            
	 Chief Executive Officer and direct reports	
               3
                years

            
	 Other Executive Vice Presidents 	
               2.5
                years

            
	 Senior Vice Presidents 	
               2
                years

            


    

     

    Severance
      Pay will be computed by multiplying the Participant’s Compensation times the
      number of years (including any fraction of a year) in the Participant’s
      Severance Pay Period, plus a cash amount equal to the aggregate Corporation’s
      premium cost for active associate medical, dental and life insurance coverage,
      if any, provided to the Participant on the date of the Change in Control, or
      if
      higher, the amount in effect at Employment Termination, times the number of
      years (including any fraction of a year) in the Severance Pay Period. Such
      lump
      sum Corporation contribution toward medical, dental and life insurance coverage
      for the Severance Pay Period will be grossed-up for federal income taxes using
      the applicable federal income tax rate that applied to the Participant for
      his/her prior year’s Compensation. To the extent applicable, Severance Pay will
      be reduced as provided in Section 4.09(g) hereof.

    


    Severance
      Pay shall be paid in a lump sum within 30 days after Employment
      Termination.

    


    In
      the event a Participant is entitled to any cash severance payments that are
      payable in the event of termination of employment pursuant to a written contract
      ("contract payments") between the Participant and the Corporation or an
      affiliate or Subsidiary, Severance Pay otherwise payable to the Participant
      under this Section 4.01 shall be reduced by the amount of such contract
      payments. Notwithstanding the foregoing, if the Participant receives payments
      and benefits pursuant to this Section 4.01, the Participant shall not be
      entitled to any severance pay or benefits under any severance plan, program
      or
      policy of the Company or an affiliate or Subsidiary, unless otherwise
      specifically provided therein in a specific reference to this Plan.

    



    
      
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    4.02          
      Prorated
      Incentive Compensation 

    


    A
      Participant who is covered under the Corporation’s Management Incentive
      Compensation Program (or any successor plan thereto) and who becomes entitled
      to
      Severance Pay under this Plan shall be paid a lump sum equal to the
      Participant’s pro-rated target annual incentive compensation (at $1.00 per
      unit), under the Corporation's Management Incentive Compensation Program for
      the
      fiscal year; provided, however, if the Employment Termination occurs on the
      last
      day of the Corporation’s fiscal year the Participant shall be paid the higher of
      (a) target annual incentive compensation (at $1.00 per unit) or (b) the actual
      annual incentive compensation earned under the Corporation’s Management
      Incentive Compensation Program. Notwithstanding the foregoing, if the
      Participant has elected to defer under the Corporation’s Mirror Savings Plan (or
      any successor plan thereto) 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 incentive compensation will be deferred and
      paid in accordance with the terms of the Corporation’s Mirror Savings Plan, and
      the remaining portion of the prorated incentive compensation will be paid in
      a
      lump sum under this Section. To the extent applicable, prorated incentive
      compensation will be reduced as provided in Section 4.09(g) hereof. Such lump
      sum to be paid with the Severance Pay payable under Section 4.01.


    


    4.03          
      Retiree
      Medical, Dental, Gold Card, and Long Term Care Eligibility 

    


    
      	 	
              For
                the purpose of determining eligibility for retiree coverage under
                the J.
                C. Penney Corporation, Inc. Health and Welfare Benefits Plan (“H&W
                Plan”), a Participant who is covered under the H&W Plan and who
                becomes entitled to Severance Pay under this Plan shall be provided
                with
                up to 12 months of additional age and service credit under the H&W
                Plan to reach a critical age, date or points for retiree eligibility
                purposes the same as any other involuntary termination resulting
                from a
                reduction in force would receive under the terms of the H&W Plan. This
                provision shall apply to retiree eligibility for medical, dental,
                long
                term care insurance and the associate discount benefits provided
                under the
                H&W Plan. Any insurance benefits shall be paid solely from the
                insurance policy or policies provided under said
                plan.

            


    

    


    
      	
              4.04

            	
              Associate-Paid
                Retiree Term Life Insurance
                Eligibility

            


    

    


    
      	 	
              Notwithstanding
                any provision of the J. C. Penney Corporation, Inc. Voluntary Employees’
                Beneficiary Association (“VEBA”) Life and Disability Benefit Plan to the
                contrary, if a Participant becomes entitled to Severance Pay under
                this
                Plan, he/she shall be provided with up to 12 months of additional
                age and
                service credit under the terms of the life insurance portion of the
                VEBA
                Life and Disability Benefit Plan to reach a critical age, date or
                points
                for retiree eligibility purposes the same as any other
                involuntary

            


    


    
      
        13

      

      
        
        

        
        

      

      
        
        

      

    


    termination
      resulting from a reduction in force would receive under the terms of such plan.
      Retiree life insurance benefits shall be paid solely from the insurance policy
      or policies provided under said plan. 

    


    4.05          
      Non-Qualified
      Retirement Plans

    


    If
      a Participant becomes entitled to Severance Pay under this Plan he/she will
      receive an immediate lump sum payment within 30 days after Employment
      Termination, of any incremental benefit provided outside the terms of the
      applicable retirement plan calculated as follows, subject to any reduction
      provided for under Section 4.09(g) hereof, if he/she,

    


    
      	(a)  	
              is
                a participant in the Corporation’s Supplemental Retirement Plan for
                Management Profit-Sharing Associates (“SRP”), or was a participant
                immediately prior to such plan’s termination following a change in control
                as defined in Section 4.09(h) of this Plan, he/she will receive an
                incremental benefit equal to the number of years in the Participant’s
                Severance Pay Period as years of additional age and
                additional service credit from either the date of such plan’s termination
                or the date of Employment Termination, as applicable, to make him/her
                eligible for a benefit, and if eligible, to provide him/her with
                the
                highest benefit available as though the entire amount of his/her
                incremental benefit were provided under such plan (including any
                offsets
                under such plan or offsets calculated under (b) or (c) of this Section
                4.05) and using the higher of his/her Compensation or actual Average
                Final
                Compensation under the SRP, as his/her Average Final Compensation
                for
                purposes of such calculation and then offsetting the amount actually
                paid
                under the SRP as a result of vesting under such plan; and/or
                

            


    

    


    
      	(b)  	
              is
                a participant in the Corporation’s Benefit Restoration Plan (“BRP”), or
                was a participant immediately prior to such plan’s termination following a
                change in control as defined in Section 4.09(h) of this Plan, he/she
                will
                receive an incremental benefit equal to the number of years in the
                Participant’s Severance Pay Period as years of additional age and
                additional service credit from either the date of such plan’s termination
                or the date of Employment Termination, as applicable, to make him/her
                eligible for a benefit, and if eligible, to provide him/her with
                the
                highest benefit available as though the entire amount of his/her
                incremental benefit were provided under such plan and using the higher
                of
                his/her Compensation or actual Average Final Pay under the BRP, as
                his/her
                Average Final Pay for purposes of such calculation and then offsetting
                the
                amount actually paid under the BRP as a result of vesting under such
                plan;
                and/or

            


    


    
      
        14

      

      
        
        

        
        

      

      
        
        

      

    


    is
      a participant in the Corporation’s Mirror Savings Plan, or was a participant
      immediately prior to such plan’s termination following a change in control as
      defined in Section 4.09(h) of this Plan, he/she will receive an incremental
      benefit equal to the Corporation’s match under such plan for each year in the
      Participant’s Severance Pay Period, and assuming the same Corporation
      contribution rate as in effect at the time of the Change in Control to provide
      him/her with the highest benefit available using his Compensation for each
      year
      of the Severance Pay Period and using his/her election in effect immediately
      prior to such plan’s termination date or his/her Employment Termination, as
      applicable, to determine his/her contribution and the Corporation’s matching
      contribution as though the entire amount of his/her incremental matching
      contribution benefit were provided under such plan and then offsetting the
      amount of match actually paid under the Corporation’s Mirror Savings Plan as a
      result of the vesting of matching contributions under such plan;

    


    provided,
      however, that if and to the extent a Participant is otherwise entitled to
      receive any additional age and/or service credit under any such plan as a result
      of Employment Termination, the additional age and/or service credit otherwise
      provided under this Section 4.05 shall not be counted twice for purposes of
      determining eligibility. 

    


    4.06          
      Legal
      Fees

    


    All
      expenses of a Participant incurred in enforcing his/her rights and/or to recover
      his/her benefits under this Article Four, including but not limited to,
      attorney's fees, court costs, arbitration costs, and other expenses shall be
      paid by the Corporation, in accordance with Code section 409A and Treasury
      Regulation section 1.409A-3(i)(1)(iv)(A)
      or any successor thereto and shall
      meet the requirements below. The Corporation shall reimburse the Participant
      for
      any such fees, costs or expenses, promptly upon delivery of reasonable
      documentation, provided, however, all invoices for reimbursement of fees, costs
      or 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 fee,
      cost or expense was incurred. To be eligible for reimbursement, all fees, costs
      or expenses must be incurred within a 20 year period following the latest of
      a
      change in control (as defined in Section 4.09(h)), a Change in Control, or
      Employment Termination. The amount of fees, costs or expenses paid or eligible
      for reimbursement in one year under this Section 4.06 shall not affect the
      fees,
      costs or expenses paid or eligible for reimbursement in any other taxable year.
      The right to payment or reimbursement under this Section 4.06 is not subject
      to
      liquidation or exchange for another benefit.

    



    
      
        15

      

      
        
        

        
        

      

      
        
        

      

    


    4.07          Outplacement
      Services/Financial Counseling

    


    Following
      an Employment Termination, a Participant will be paid a lump sum payment in
      cash
      of $25,000 to allow the Participant to pay for outplacement and financial
      counseling services. To the extent applicable, the benefit will be reduced
      as
      provided in Section 4.09(g) hereof. Such lump sum will be paid with the
      Severance Pay payable under Section 4.01.

    


    4.08         
      Special
      Bonus Hours

    


    In
      the event of an Employment Termination, a Participant will be paid for Special
      Bonus Hours, if he/she is also a participant in the Paid Time Off Policy (“PTO
      Policy”) the same as any other involuntary termination resulting from a
      reduction in force would receive under the terms of the PTO Policy. Such payment
      will be determined in accordance with the provisions of the PTO Policy and
      paid
      within 30 days after the Participant’s Employment Termination date.

    


    4.09         
      Gross-Up
      Payments To Make Participants Whole if Excise Tax Applies 

    


    Anything
      in the Plan to the contrary notwithstanding, but subject to paragraph (g) below,
      if it shall be determined (as hereafter provided) that any payment or
      distribution by the Corporation or an affiliate or Subsidiary to or for the
      benefit of the Participant, whether paid or payable or distributed or
      distributable pursuant to the terms of the Plan or otherwise pursuant to or
      by
      reason of any other agreement, policy, plan, program or arrangement, including
      without limitation any stock option, stock appreciation right or similar right,
      or the lapse or termination of any restriction on or the vesting or
      exercisability of any of the foregoing (a “Payment”), would be subject to the
      Excise Tax, then the Participant shall be entitled to receive a Gross-Up Payment
      in an amount such that, after payment by the Participant of all taxes (including
      any interest or penalties imposed with respect to such taxes other than interest
      and penalties imposed by reason of the Employee’s failure to timely file a tax
      return or pay taxes shown due on his/her return), including any Excise Tax
      imposed upon the Gross-Up Payment, the Participant retains an amount of the
      Gross-Up Payment equal to the Excise Tax imposed upon the Payments. No Gross-Up
      Payment will be made with respect to the Excise Tax, if any, attributable to
      (a) any incentive stock option, as defined by Section 422 of the Code
      (“ISO”) granted prior to the commencement of a Participant’s eligibility under
      the Plan (unless a comparable Gross-Up Payment has theretofore been made
      available with respect to such option), or (b) any stock appreciation or similar
      right, whether or not limited, granted in tandem with any ISO described in
      clause (a) above. Notwithstanding any other provision of this Section 4.09,
      the
      Corporation may, in its sole discretion, withhold and pay over to the Internal
      Revenue Service or any other applicable taxing authority, for the benefit of
      the
      Participant, all or any portion


    
      
        16

      

      
        
        

        
        

      

      
        
        

      

    


    of
      any Gross-Up Payment, and by receiving Severance Pay or Severance Benefits
      under
      this Plan, the Participant hereby consents to such withholding. 

    


    (a)
      Subject to the provisions of paragraph (e) hereof, all determinations required
      to be made under Section 4.09 of the Plan, including whether an Excise Tax
      is
      payable by the Participant and the amount of such Excise Tax and whether a
      Gross-Up Payment is required to be paid by the Corporation to the Participant
      and the amount of such Gross-Up Payment, shall be made by the Accounting Firm.
      The Accounting Firm shall make an initial determination at the time of a change
      in control (as defined in Section 4.09(h)) of any Gross-Up Payment required
      to
      be paid taking into account current payments and estimated future payments
      that
      might affect the amount of the Gross-Up Payment. In addition, the Participant
      shall direct the Accounting Firm to submit its determination and detailed
      supporting calculations to both the Corporation and the Participant within
      15 calendar days after the date of the Participant’s Employment
      Termination, if applicable, and any other such time or times as may be requested
      by the Corporation or the Participant; notwithstanding the foregoing, the first
      two Gross-Up Payments, if otherwise required, shall be made at a time and manner
      specified in Section 4.09(i) hereof in relation to a change in control (as
      defined in Section 4.09(h) hereof) and the Employment Termination of the
      Participant, if applicable. If the Accounting Firm determines that any Excise
      Tax is payable by the Participant, the Corporation shall pay the required
      Gross-Up Payment to the Participant within five business days after the receipt
      of such determination and calculations. If the Accounting Firm determines that
      no Excise Tax is payable by the Participant, it shall, at the same time as
      it
      makes such determination, furnish the Participant with an opinion that he/she
      has substantial authority not to report any Excise Tax on his/her federal,
      state, local income or other tax return. As a result of the uncertainty in
      the
      application of Section 4999 and other applicable provisions of the Code (or
      any
      successor provisions thereto) and the possibility of similar uncertainty
      regarding applicable state or local tax law at the time of any determination
      by
      the Accounting Firm hereunder, it is possible that Gross-Up Payments that shall
      not have been made by the Corporation should have been made (an “Underpayment”),
      consistent with the calculations required to be made hereunder. In the event
      that the Corporation exhausts or fails to pursue its remedies pursuant to
      paragraph (e) hereof and the Participant thereafter is required to make a
      payment of any Excise Tax, the Participant shall direct the Accounting Firm
      to
      determine the amount of the Underpayment that has occurred and to submit its
      determination and detailed supporting calculations to both the Corporation
      and
      the Participant as promptly as possible. Any such Underpayment shall be promptly
      paid by the Corporation to, or for the benefit of, the Participant within five
      business days after receipt of such determination and calculations, provided,
      however, any Underpayment will be paid or reimbursed only in the time and manner
      specified in Section 4.09(i) hereof.


    
      
        17

      

      
        
        

        
        

      

      
        
        

      

    


    (b)
      The Corporation and the Participant shall each provide the Accounting Firm
      access to and copies of any books, records and documents in the possession
      of
      the Corporation or the Participant, as the case may be, reasonably requested
      by
      the Accounting Firm, and otherwise cooperate with the Accounting Firm in
      connection with the preparation and issuance of the determination contemplated
      by paragraph (a) hereof. Any reasonable determination by the Accounting Firm
      as
      the amount of the Gross-Up Payment (and supported by the calculations done
      by
      the Accounting Firm) shall be binding upon the Corporation and the
      Participant.

    


    (c)
      The federal, state and local income or other tax returns filed by the
      Participant shall be prepared and filed on a consistent basis with the
      determination of the Accounting Firm with respect to the Excise Tax, if any,
      payable by the Participant. The Participant shall make proper payment of the
      amount of any Excise Tax, and at the request of the Corporation, provide to
      the
      Corporation true and correct copies (with any amendments) of his/her federal
      income tax return as filed with the Internal Revenue Service and corresponding
      state and local tax returns, if relevant, as filed with the applicable taxing
      authority, and such other documents reasonably requested by the Corporation,
      evidencing such payment. If prior to the filing of Participant’s Federal income
      tax return, or corresponding state or local tax return, if relevant, the
      Accounting Firm determines that the amount of the Gross-Up Payment should be
      reduced, the Participant shall within five business days pay to the Corporation
      the amount of such reduction.

    


    (d)
      The fees and expenses of the Accounting Firm for its services in connection
      with
      the determinations and calculations contemplated by paragraphs (a) and (c)
      hereof shall be borne by the Corporation. If such fees and expenses are
      initially paid by the Participant, the Corporation shall reimburse the
      Participant the full amount of such fees and expenses within five business
      days
      after receipt from the Participant of a statement therefore and reasonable
      evidence of his/her payment thereof. Any reimbursement or payment of such fees
      and expenses will be made by the Corporation in accordance with Code section
      409A and Treasury Regulation section 1.409A-3(i)(1)(iv)(A)
      or any successor thereto
      and shall meet the requirements below. The Corporation shall reimburse the
      Participant for any such fees and expenses, promptly upon delivery of reasonable
      documentation, provided, however, all invoices for reimbursement of fees and
      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 fee or
      expense was incurred. To be eligible, all fees and expenses must be incurred
      within a 20 year period following the latest of a change in control (as defined
      n Section 4.09(h), a Change in Control, or Employment Termination. The amount
      of
      fees and expenses paid or eligible for reimbursement in one year under this
      Section 4.09(d) shall not affect the fees and expenses paid or eligible for
      reimbursement in any other taxable year. The right to payment
      or


    
      
        18

      

      
        
        

        
        

      

      
        
        

      

    


    reimbursement
      under this Section 4.09(d) is not subject to liquidation or exchange for another
      benefit.

    


    (e)
      The Participant shall notify the Corporation in writing of any claim by the
      Internal Revenue Service that, if successful, would require the payment by
      the
      Corporation of a Gross-Up Payment. Such notification shall be given as promptly
      as practicable but no later than 10 business days after the Participant actually
      receives notice of such claim and the Participant shall further apprise the
      Corporation of the nature of such claim and the date on which such claim is
      requested to be paid (in each case, to the extent known by the Participant).
      The
      Participant shall not pay such claim prior to the earlier of (i) the expiration
      of the 30-calendar-day period following the date on which he gives such notice
      to the Corporation and (ii) the date that any payment of amount with respect
      to
      such claim is due. If the Corporation notifies the Participant in writing prior
      to the expiration of such period that it desires to contest such claim, the
      Participant shall:

    


    (1)
      provide the Corporation with any written records or documents in his/her
      possession relating to such claim reasonably requested by the
      Corporation;

    


    (2)
      take such action in connection with contesting such claim as the Corporation
      shall reasonably request in writing from time to time, including without
      limitation accepting legal representation with respect to such claim by an
      attorney competent in respect to the subject matter and reasonably selected
      by
      the Corporation;

    


    (3)
      cooperate with the Corporation in good faith in order effectively to contest
      such claim; and

    


    (4)
      permit the Corporation to participate in any proceedings relating to such
      claim;

    


    provided,
      however, that the Corporation shall bear and pay directly all costs and expenses
      (including interest and penalties) incurred in connection with such contest
      and
      shall reimburse and hold harmless the Participant, on an after-tax basis, for
      and against any Excise Tax or income tax, including interest and penalties
      with
      respect thereto, imposed as a result of such representation and payment of
      costs
      and expenses, all such taxes, costs and expenses will be reimbursed as specified
      in Section 4.09(i). Without limiting the foregoing provisions of this paragraph
      (e), the Corporation shall control all proceedings taken in connection with
      the
      contest of any claim contemplated by this paragraph (e) and, at its sole option,
      may pursue or forego any and all administrative appeals, proceedings, hearings
      and conferences with the taxing authority in respect of such claim (provided,
      however, that the Participant may participate therein at his/her own cost and
      expense) and may, at its option,


    
      
        19

      

      
        
        

        
        

      

      
        
        

      

    


    either
      direct the Participant to pay the tax claimed and sue for a refund or contest
      the claim in any permissible manner, and the Participant agrees to prosecute
      such contest to a determination before any administrative tribunal, in a court
      of initial jurisdiction and in one or more appellate courts, as the Corporation
      shall determine; provided, however, that if the Corporation directs the
      Participant to pay the tax claimed and sue for a refund, the Corporation shall
      pay to the Participant the amount of such tax (including interest and penalties)
      and shall reimburse and hold the Participant harmless, on an after-tax basis,
      from any Excise Tax or directly related income tax or other tax, including
      interest or penalties imposed with respect to such payment, all such taxes,
      costs and expenses will be reimbursed as specified in Section 4.09(i); and
      provided further, however, that any extension of the statute of limitations
      relating to payment of taxes for the taxable year of the Participant with
      respect to which the contested amount is claimed to be due is limited solely
      to
      such contested amount. Furthermore, the Corporation’s control of any such
      contested claim shall be limited to issues with respect to which a Gross-Up
      Payment would be payable hereunder and the Participant shall be entitled to
      settle or contest, as the case may be, any other issue raised by the Internal
      Revenue Service or any other taxing authority.

    


    (f)
      If the Participant receives any refund with respect to such contested claim
      filed at the Corporation’s request under paragraph (e), the Participant shall
      (subject to the Corporation’s complying with the requirements of paragraph (e)
      hereof) promptly pay to the Corporation the amount of such refund (together
      with
      any interest paid or credited thereon after any taxes applicable thereto).
      If a
      determination is made that the Participant shall not be entitled to any refund
      with respect to such claim and the Corporation does not notify the Participant
      in writing of its intent to contest such denial prior to the expiration of
      30
      calendar days after such determination, then the amount paid to the Participant
      by the Corporation as provided in paragraph (e) shall be in full satisfaction
      of
      the Corporation’s Gross-Up Payment obligation.

    


    (g) Notwithstanding
      any provision of this Plan to the contrary, but giving effect to any
      redetermination of the amount of Gross-Up Payments otherwise required by this
      Section 4.09, if (1) but for this sentence, the Corporation would be
      obligated to make a Gross-Up Payment to the Participant and (2) the
      aggregate “present value” of the “parachute payments” to be paid or provided to
      the Participant under this Plan or otherwise does not exceed 1.10 multiplied
      by
      2.99 times the Participant’s “base amount,” then the payments and benefits to be
      paid or provided under this Plan will be reduced (or repaid to the Corporation,
      if previously paid or provided) to the minimum extent necessary so that no
      portion of any payment or benefit to the Participant, as so reduced or repaid,
      constitutes an “excess parachute payment.” For purposes of this
      paragraph (g), the terms “excess parachute payment,” “present value,”
“parachute payment,” and “base amount” will have the meanings assigned to them
      by Section 280G of the Code. The


    
      
        20

      

      
        
        

        
        

      

      
        
        

      

    


    determination
      of whether any reduction in or repayment of such payments or benefits to be
      provided under this Plan is required pursuant to this paragraph (g) will be
      made at the expense of the Corporation, if requested by the Participant or
      the
      Corporation, by the Accounting Firm. Appropriate adjustments will be made to
      amounts previously paid to the Participant, or to amounts not paid pursuant
      to
      this paragraph (g), as the case may be, to reflect properly a subsequent
      determination that the Participant owes more or less Excise Tax than the amount
      previously determined to be due. In the event that any payment or benefit is
      required to be reduced or repaid pursuant to this paragraph (g), reductions
      will be made, to the extent necessary, to any payments otherwise owed to the
      Participant under Sections 4.01, 4.02 (excluding any amount elected to be
      deferred under the Corporation’s Mirror Savings Plan), 4.05 and 4.07 of the Plan
      (to the extent not previously paid). In the event that additional amounts are
      owed to the Corporation after the imposition of any such reductions, the
      Participant shall be required to repay to the Corporation the additional amount
      owed within 30 days of the determination being made by the Accounting
      Firm.

    


    (h)
      Change
      in Control
      as used in Sections 4.09(a) and (d) shall mean a Change in Control within the
      meaning of Code section 409A and Treasury Regulation section 1.409A-3(i)(5),
      or
      its successor, including a change in the ownership of the corporation, a change
      in the effective control of the corporation, or a change in the ownership of
      a
      substantial portion of the assets of the corporation as such events are defined
      in Treasury Regulation sections 1.409A-3(i)(5)(v), (vi), and (vii). For this
      purpose, “corporation” has the meaning given in Treasury Regulation section
      1.409A-3(i)(5)(ii), or its successor.

    


    (i)
      To the extent applicable, in accordance with Code section 409A and Treasury
      Regulation section 1.409A-3(i)(1)(v)
      or any successor thereto,
      all Gross-Up Payments or Excise Tax reimbursements made under this
      Section 4.09 shall be paid to or on behalf of the Participant by the end of
      the Participant’s taxable year following the Participant’s taxable year in which
      the Excise Tax or directly related income tax or other tax, including interest
      or penalties, was paid to the taxing authority. In addition, a right to the
      reimbursement of expenses incurred due to a tax audit or litigation addressing
      the existence or amount of a tax liability, whether Federal, state, local or
      foreign, will be reimbursed or the payment made by the end of the Participant’s
      taxable year following the Participant’s taxable year in which the taxes that
      are subject to the audit or litigation are remitted to the taxing authority
      or
      where as a result of such audit or litigation no taxes are remitted, the year
      in
      which the audit is completed or there is a final and nonappealable settlement
      or
      other resolution of the litigation.


    
      
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     ARTICLE
      FIVE

    


    AMENDMENT
      AND TERMINATION

    


    5.01         
      Amendment

    


    The
      Plan may be amended by the Board at any time; provided, however, that


    


    (a)  any
      amendment which would have an adverse effect on any Participant’s Plan benefits
      and/or rights, except as may be otherwise required to comply with changes in
      applicable laws or regulations, including, but not limited to, Code Section
      409A, or 

    


    (b)  any
      amendment within one year before or two years after a Change in
      Control,

    


    cannot
      be applied to any Participant who would be adversely affected by such amendment
      without such Participant’s consent. After a Change in Control, any amendment
      shall also require the consent of the Committee. 

     

    


    5.02         
      Termination
      

    


    The
      Plan shall continue indefinitely after the Effective Date, unless the Board
      shall decide to terminate the Plan by duly adopting resolutions terminating
      the
      Plan; provided, however, following the commencement of any discussion with
      a
      third party that ultimately results in a Change in Control, the Plan shall
      continue subject to Section 5.01, until such time as the Corporation and each
      affiliate or Subsidiary (as appropriate) shall have fully performed all of
      their
      obligations under the Plan with respect to all Participants, and shall have
      paid
      all Severance Benefits under the Plan in full to all
      Participants.


    
      
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    ARTICLE
      SIX

    


    MISCELLANEOUS

    


    6.01          
      Participant
      Rights

    


    The
      Corporation and each affiliate or Subsidiary intend this Plan to constitute
      a
      legally enforceable obligation between (a) the Corporation or an affiliate
      or
      Subsidiary (as appropriate) and (b) each Participant. 

    


    It
      is also intended that the Plan shall confer vested and non-forfeitable rights
      for each Participant to receive benefits to which the Participant is entitled
      under the terms of the Plan with Participants being third party
      beneficiaries.

    


    Except
      as provided in the definitions of Summary Dismissal or Good Reason, nothing
      in
      this Plan shall be construed to confer on any Participant any right to continue
      in the employ of the Corporation or an affiliate or Subsidiary or to affect
      in
      any way the right of the Corporation or an affiliate or Subsidiary to terminate
      a Participant’s employment without prior notice at any time for any reason or no
      reason. 

    


    6.02         
      Authority
      of Committee 

    


    The
      Committee will administer the Plan and have the full authority and discretion
      necessary to accomplish that purpose, including, without limitation, the
      authority and discretion to: (i) resolve all questions relating to the
      eligibility of Executive Board members to become or continue as Participants,
      (ii) determine the amount of benefits, if any, payable to Participants
      under the Plan and determine the time and manner in which such benefits are
      to
      be paid, to either comply with or be exempt from Code Section 409A, as the
      case
      may be, (iii) engage any administrative, legal, tax, actuarial, accounting,
      clerical, or other services it deems appropriate in administering the Plan,
      (iv) construe and interpret the Plan, supply omissions from, correct
      deficiencies in and resolve inconsistencies or ambiguities in the language
      of
      the Plan, resolve inconsistencies or ambiguities between the provisions of
      this
      document, and adopt rules for the administration of the Plan which are not
      inconsistent with the terms of the Plan document and that are intended to make
      any benefits provided under the Plan either comply with or be exempt from Code
      Section 409A, as the case may be, (v) compile and maintain all records it
      determines to be necessary, appropriate or convenient in connection with the
      administration of the Plan, and (vi) resolve all questions of fact relating
      to any matter for which it has administrative responsibility. The
      Committee shall perform all of the duties and may exercise all of the powers
      and
      discretion that the Committee deems necessary or appropriate for the proper
      administration of the Plan, and shall do so in a uniform, nondiscriminatory
      manner. Any failure by the Committee to apply any provisions of this Plan to
      any
      particular situation


    
      
        23

      

      
        
        

        
        

      

      
        
        

      

    


    shall
      not represent a waiver of the Committee’s authority to apply such provisions
      thereafter. Every interpretation, choice, determination or other exercise of
      any
      power or discretion given either expressly or by implication to the Committee
      shall be conclusive and binding upon all parties having or claiming to have
      an
      interest under the Plan or otherwise directly or indirectly affected by such
      action, without restriction, however, on the right of the Committee to
      reconsider and redetermine such action. Any decision rendered by the Committee
      and any review of such decision shall be limited to determining whether the
      decision was so arbitrary and capricious as to be an abuse of discretion. The
      Committee may adopt such rules and procedures for the administration of the
      Plan
      as are consistent with the terms hereof.

    


    6.03          
      Claims
      Procedure 

    


    A.
      Allocation
      of Claims Responsibility:
      With respect to any claim for benefits which are provided exclusively under
      this
      Plan, the claim shall be approved or denied by the Committee within 60 days
      following the receipt of the information necessary to process the claim. In
      the
      event the Committee denies a claim for benefits in whole or in part, it will
      give written notice of the decision to the claimant or the claimants authorized
      representative, which notice will set forth in a manner calculated to be
      understood by the claimant, stating the specific reasons for such denial, make
      specific reference to the pertinent Plan provisions on which the decision was
      based, and provide any other additional information, as applicable, required
      by
      29 Code of Federal Regulations Section 2560.503-1 applicable to the Plan.


    


    With
      respect to any claim for benefits which, under the terms of the Plan, are
      provided under another employee benefit plan maintained by the Corporation
      (i.e., life insurance, H&W Plan, PTO/MTO Policy, Pension, Savings, Mirror
      Savings, BRP, and SRP benefits), the Committee shall determine claims regarding
      the Participant's eligibility under the Plan in accordance with the preceding
      paragraph, but the administration of any other claim with respect to such
      benefits (including the amount of such benefits) shall be subject to the claims
      procedure specified in such other employee benefit plan or program.

    


    B.
      Litigation
      or Appeal
      In the event the Committee denies a claim in whole or in part for benefits
      which
      are provided exclusively under the Plan, or denies a claim regarding the
      claimant’s eligibility under the Plan, Participants will then be allowed to file
      a lawsuit in Federal Court as provided under ERISA. 

    


    Appeals
      with respect to any claim for benefits which, under the terms of the Plan,
      are
      provided under another employee benefit plan maintained by the Corporation
      (i.e., life insurance, H&W Plan, PTO/MTO Policy, Pension, Savings, Mirror
      Savings, BRP, and SRP benefits), shall be subject to the claims and appeals
      procedure specified in such other employee benefit plan.


    
      
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    6.04          
      Records
      and Reports 

    


    The
      Committee will maintain adequate records of all of their proceedings and acts
      and all such books of account, records, and other data as may be necessary
      for
      administration of the Plan. The Committee will make available to each
      Participant upon his request such of the Plan's records as pertain to him for
      examination at reasonable times during normal business hours.

    


    6.05         
      Reliance
      on Tables, Etc. 

    


    In
      administering the Plan, the Committee is entitled to the extent permitted by
      law
      to rely conclusively upon all tables, valuations, certificates, opinions and
      reports which are furnished by accountants, legal counsel or other experts
      employed or engaged by the Committee. The Committee will be fully protected
      in
      respect of any action taken or suffered by the Committee in good faith reliance
      upon all such tables, valuations, certificates, reports, opinions or other
      advice. The Committee is also entitled to rely upon any data or information
      furnished by a Participating Employer or by a Participant as to any information
      pertinent to any calculation or determination to be made under the provisions
      of
      the Plan, and, as a condition to payment of any benefit under the Plan the
      Committee may request a Participant to furnish such information as it deems
      necessary or desirable in administering the Plan.

    


    6.06          
      Availability
      of Plan Information and Documents

    


    Any
      Participant having a question concerning the administration of the Plan or
      the
      Participant's eligibility for participation in the Plan or for the payment
      of
      benefits under the Plan may contact the Committee and request a copy of the
      Plan
      document. Each Participating Employer will keep copies of this Plan document,
      exhibits and amendments hereto, and any related documents on file in its
      administrative offices, and such documents will be available for review by
      a
      Participant or a designated representative of the Participant at any reasonable
      time during regular business hours. Reasonable copying charges for such
      documents will be paid by the requesting party.

    


    
      	
              6.07

            	
              Expenses 

            


    

    


    All
      Plan administration expenses incurred by the Committee shall be paid by the
      Corporation and all other administration expenses incurred by the Corporation
      or
      an affiliate or Subsidiary shall be paid by the Corporation or an affiliate
      or
      Subsidiary (as appropriate). 


    
      
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              6.08

            	
              Adoption
                Procedure for Participating Employer 

            


    

    


    Any
      Subsidiary or affiliate of the Corporation may become a Participating Employer
      under the Plan provided that (i) the Board approves the adoption of the
      Plan by the Subsidiary or affiliate and designates the Subsidiary or affiliate
      as a Participating Employer in the Plan and (ii) by appropriate resolutions
      of the board of directors or other governing body of the Subsidiary or
      affiliate, the Subsidiary or affiliate agrees to become a Participating Employer
      under the Plan and also agrees to be bound by any other terms and conditions
      which may be required by the Board or the Committee, provided that such terms
      and conditions are not inconsistent with the purposes of the Plan. A
      Participating Employer may withdraw from participation in the Plan, subject
      to
      approval by the Committee, by providing written notice to the Committee that
      withdrawal has been approved by the board of directors or other governing body
      of the Participating Employer; provided, however, following the commencement
      of
      any discussion with a third party that ultimately results in a Change in
      Control, the Committee shall have no authority to approve the withdrawal of
      any
      Participating Employer until such time as the Corporation and each affiliate
      or
      Subsidiary (as appropriate) shall have fully performed all of their obligations
      under the Plan with respect to all Participants, and shall have paid all
      Severance Benefits under the Plan in full to all Participants. The Board may
      at
      any time remove a Participating Employer from participation in the Plan by
      providing written notice to the Participating Employer that it has approved
      removal; provided, however, following the commencement of any discussion with
      a
      third party that ultimately results in a Change in Control, the Board shall
      have
      no authority to remove or approve the withdrawal of any Participating Employer
      until such time as the Corporation and each affiliate or Subsidiary (as
      appropriate) shall have fully performed all of their obligations under the
      Plan
      with respect to all Participants, and shall have paid all Severance Benefits
      under the Plan in full to all Participants. The Board will act in accordance
      with this Article pursuant to unanimous written consent or by majority vote
      at a
      meeting.

    


    6.09          
      Effect
      on Other Benefits

    


    Except
      as otherwise provided herein, the Plan shall not affect any Participant’s rights
      or entitlement under any other retirement or employee benefit plan offered
      to
      him/her by the Corporation or an affiliate or Subsidiary (as appropriate) as
      of
      his/her Employment Termination.

    


    6.10         
      Successors

    


    The
      Plan shall be binding upon any successor in interest of the Corporation or
      an
      affiliate or Subsidiary (as appropriate) and shall inure to the benefit of,
      and
      be enforceable by, a Participant’s assigns or heirs.


    
      
        26

      

      
        
        

        
        

      

      
        
        

      

    


    


    6.11           Severability

    


    The
      various provisions of the Plan are severable and any determination of invalidity
      or unenforceability of any one provision shall not have any effect on the
      remaining provisions.

    


    6.12         
      Construction

    


    In
      determining the meaning of the Plan, words imparting the masculine gender shall
      include the feminine and the singular shall include the plural, unless the
      context requires otherwise. Headings of sections and subsections of the Plan
      are
      for convenience only and are not intended to modify or affect the meaning of
      the
      substantive provisions of the Plan.

    


    6.13          
      References
      to Other Plans and Programs

    


    Each
      reference in the Plan to any plan, policy or program, the Plan or document
      of
      the Corporation or an affiliate or Subsidiary, shall include any amendments
      or
      successor provisions thereto without the necessity of amending the Plan for
      such
      changes.

    


    
      	6.14  	
                      
                Notices

            


    
 

    
      	(a)  	
              General.
                Notices and all other communications contemplated by this Plan shall
                be in
                writing and shall be deemed to have been duly given when personally
                delivered or when mailed by U.S. registered or certified mail, return
                receipt requested and postage prepaid. In the case of the Participant,
                (i)
                mailed notices shall be addressed to the Participant at the Participant’s
                home address which was most recently communicated to the Corporation
                in
                writing or (ii) in the case of a Participant who is an employee,
                distributed to the employee at his or her place of employment in
                compliance with 29 CFR Section 2520.104b-1(c). In the case of the
                Corporation, mailed notices shall be addressed to its corporate
                headquarters, and all notices shall be directed to the attention
                of its
                General Counsel at J.C. Penney Corporation, Inc., 6501 Legacy Drive,
                Plano, Texas 75024.

            


    

    


    
      	(b)  	
              Notice
                of Termination.
                Any notice of Summary Dismissal by the Corporation or by the Participant
                for Good Reason shall be communicated by a notice of termination
                to the
                other party given in accordance with this Section 6.14. Such notice
                shall
                indicate the specific termination provision in this Plan relied upon,
                shall set forth in reasonable detail the facts and circumstances
                claimed
                to provide the basis for termination under the provision so indicated,
                and
                shall specify the Employment Termination
                date.

            


    


    
      
        27

      

      
        
        

        
        

      

      
        
        

      

    

     

    6.15    No
      Duty to Mitigate

    


    The
      Participant shall not be required to mitigate the amount of any payment
      contemplated under this Plan, nor shall such payment be reduced by any earnings
      that the Participant may receive from any other source.

    


    6.16    Employment
      Taxes

    


    All
      payments made pursuant to this Plan shall be subject to withholding of
      applicable income and employment taxes.

    


    6.17    Governing
      Law

    


    Except
      to the extent that the Plan may be subject to the provisions of ERISA, the
      Plan
      will be construed and enforced according to the laws of the State of Texas,
      without giving effect to the conflict of laws principles thereof. Except as
      otherwise required by ERISA, every right of action by an Associate with respect
      to the Plan shall be barred after the expiration of three years from the date
      of
      termination of employment or the date of receipt of the notice of denial of
      a
      claim for benefits or eligibility, if earlier. In the event ERISA's limitation
      on legal action does not apply, the laws of the State of Texas with respect
      to
      the limitations of legal actions shall apply and the cause of action must be
      brought no later than four years after the date the action accrues.


     

    



    
      
        28

      

      
        
        

        
        

      

      
        
        

      

    


    APPENDIX
      I

    


    Participating
      Employers

    


    J.C.
      Penney Corporation, Inc.

    


    J.C.
      Penney Company, Inc.

    


    JCP
      Publications Corp.

    


    JCP
      Overseas Services, Inc.

    


    J.C.
      Penney Puerto Rico, Inc.

    


    JCP
      Logistics L. P.

    


    JCP
      Media L.P.

    


    JCP
      Procurement L.P.

    


    J.C.
      Penney Private Brands, Inc.

    


    JCP
      Construction Services, Inc. 

    


    The
      Original Arizona Jean Company

    
 

     

     

     

    29