Document:

Exhibit 4.1

 

IDT CORPORATION

2015 STOCK OPTION AND INCENTIVE PLAN

Effective January 1, 2015 to September 16, 2024

  

1.         Purpose; Types of Awards; Construction.

 

The purpose of the IDT Corporation 2015 Stock
Option and Incentive Plan (the “Plan”) is to provide incentives to officers, employees, directors and consultants of
IDT Corporation (the “Company”), or any subsidiary of the Company which now exists or hereafter is organized or acquired
by the Company, to acquire a proprietary interest in the Company, to continue as officers, employees, directors or consultants,
to increase their efforts on behalf of the Company and to promote the success of the Company’s business. The provisions of
the Plan are intended to satisfy the requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended, and of Section
162(m) of the Internal Revenue Code of 1986, as amended, and shall be interpreted in a manner consistent with the requirements
thereof.

 

2.         Definitions.

 

As used in this Plan, the following words and
phrases shall have the meanings indicated:

 

(a)       “Agreement” shall
mean a written agreement entered into between the Company and a Grantee in connection with an award under the Plan.

 

(b)       “Board” shall mean
the Board of Directors of the Company.

 

(c)       “Change in Control”
means a change in ownership or control of the Company effected through

 

(i)       any “person,” as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, (C) any corporation or other entity owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as their ownership of common stock, or (D) any person
who, immediately prior to the Initial Public Offering, owned more than 25% of the combined voting power of the Company’s
then outstanding voting securities), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any
securities issued or sold directly by the Company or any of its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company’s then outstanding
voting securities.

 

(d)       “Class B Common Stock”
shall mean shares of Class B Common Stock, par value $.01 per share, of the Company.

 

(e)       “Code” shall mean
the Internal Revenue Code of 1986, as amended from time to time.

 

(f)        “Committee” shall
mean the Compensation Committee of the Board or such other committee as the Board may designate from time to time to administer
the Plan.

 

(g)       “Company” shall
mean IDT Corporation, a corporation incorporated under the laws of the State of Delaware, or any successor corporation.

 

(h)       “Continuous Service”
means that the provision of services to the Company or a Related Entity in any capacity of officer, employee, director or consultant
is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved leave
of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity or any successor in any capacity
of officer, employee, director or consultant, or (iii) any change in status as long as the individual remains in the service of
the Company or a Related Entity in any capacity of officer, employee, director or consultant (except as otherwise provided in the
applicable Agreement). An approved leave of absence shall include, without limitation, sick leave, temporary disability, maternity
leave, military leave (including, without limitation, service in the National Guard or the Army Reserves) or any other personal
leave approved by the Committee. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days unless reemployment
upon expiration of such leave is guaranteed by statute or contract.

 

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(i)        “Corporate Transaction”
means any of the following transactions:

 

(i)       a merger or consolidation of
the Company with any other corporation or other entity, other than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent entity) 80% or more of the combined voting power of the voting
securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B)
a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person”
(as defined in the Exchange Act) acquired 25% or more of the combined voting power of the Company’s then outstanding securities;
or

 

(ii)      a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets (or any transaction
having a similar effect).

 

(j)        “Deferred Stock Units”
mean a Grantee’s rights to receive shares of Class B Common Stock on a deferred basis, subject to such restrictions, forfeiture
provisions and other terms and conditions as shall be determined by the Committee.

 

(k)       “Disability” shall
mean a Grantee’s inability to perform his or her duties with the Company or any of its affiliates by reason of any medically
determinable physical or mental impairment, as determined by a physician selected by the Grantee and acceptable to the Company.

 

(l)        “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended from time to time.

 

(m)      “Fair Market Value”
per share as of a particular date shall mean (i) the closing sale price per share of Class B Common Stock on the national securities
exchange on which the Class B Common Stock is principally traded for the last preceding date on which there was a sale of such
Class B Common Stock on such exchange, or (ii) if the shares of Class B Common Stock are then traded in an over-the-counter market,
the average of the high and low trades for the shares of Class B Common Stock in such over-the-counter market for the last preceding
date on which there was a sale of such Class B Common Stock in such market, or (iii) if the shares of Class B Common Stock are
not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its
sole discretion, shall determine.

 

(n)       “Grantee” shall mean
a person who receives a grant of Options, Stock Appreciation Rights, Limited Rights, Deferred Stock Units or Restricted Stock under
the Plan.

 

(o)       “Incentive Stock Option”
shall mean any option intended to be, and designated as, an incentive stock option within the meaning of Section 422 of the Code.

 

(p)       “Insider” shall mean
a Grantee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

 

(q)       “Insider Trading Policy”
shall mean the Insider Trading Policy of the Company, as may be amended from time to time.

 

(r)        “Limited Right” shall
mean a limited stock appreciation right granted pursuant to Section 10 of the Plan.

 

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(s)       “Non-Employee Director”
means a member of the Board or the board of directors of any Subsidiary (other than a Subsidiary that has either (A) a class of
“equity securities” (as defined in Rule 3a11-1 promulgated under the Exchange Act) registered under the Exchange Act
or a similar foreign statute or (B) adopted any stock option plan, equity compensation plan or similar employee benefit plan in
which non-employee directors of such Subsidiary are eligible to participate), in each of clause (A) and (B), who is not an employee
of the Company or any Subsidiary.

 

(t)        “Non-Employee Director
Annual Grant” shall mean an award of 4,000 shares of Restricted Stock.

 

(u)       “Non-Employee Director
Grant Date” shall mean January 5 of the applicable year (or the following business day if January 5 is not a business day).

 

(v)       “Nonqualified Stock Option”
shall mean any option not designated as an Incentive Stock Option.

 

(w)      “Option” or “Options”
shall mean a grant to a Grantee of an option or options to purchase shares of Class B Common Stock.

 

(x)        “Option Agreement”
shall have the meaning set forth in Section 6 of the Plan.

 

(y)       “Option Price” shall
mean the exercise price of the shares of Class B Common Stock covered by an Option.

 

(z)        “Parent” shall mean
any company (other than the Company) in an unbroken chain of companies ending with the Company if, at the time of granting an award
under the Plan, each of the companies other than the Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other companies in such chain.

 

(aa)     “Plan” means this
IDT Corporation 2015 Stock Option and Incentive Plan, as amended or restated from time to time.

 

(bb)     “Related Entity”
means any Parent, Subsidiary or any business, corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest, directly or indirectly.

 

(cc)     “Related Entity Disposition”
means the sale, distribution or other disposition by the Company of all or substantially all of the Company’s interest in
any Related Entity effected by a sale, merger or consolidation or other transaction involving such Related Entity or the sale of
all or substantially all of the assets of such Related Entity.

 

(dd)     “Restricted Period”
shall have the meaning set forth in Section 11(b) of the Plan.

 

(ee)     “Restricted Stock”
means shares of Class B Common Stock issued under the Plan to a Grantee for such consideration, if any, and subject to such restrictions
on transfer, rights of refusal, repurchase provisions, forfeiture provisions and other terms and conditions as shall be determined
by the Committee.

 

(ff)       “Retirement” shall
mean a Grantee’s retirement in accordance with the terms of any tax-qualified retirement plan maintained by the Company or
any of its affiliates in which the Grantee participates.

 

(gg)     “Rule 16b-3” shall
mean Rule 16b-3, as from time to time in effect, promulgated under the Exchange Act, including any successor to such Rule.

 

(hh)     “Stock Appreciation Right”
shall mean the right, granted to a Grantee under Section 9 of the Plan, to be paid an amount measured by the appreciation in the
Fair Market Value of a share of Class B Common Stock from the date of grant to the date of exercise of the right, with payment
to be made in cash or Class B Common Stock as applicable, as specified in the award or determined by the Committee.

 

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(ii)       “Subsidiary” shall
mean any company (other than the Company) in an unbroken chain of companies beginning with the Company if each of the companies
other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other companies in such chain.

 

(jj)       “Tax Event” shall
have the meaning set forth in Section 17 of the Plan.

 

(kk)     “Ten Percent Stockholder”
shall mean a Grantee who at the time an Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary.

 

3.         Administration.

 

(a)       The Plan shall be administered
by the Committee, the members of which may be composed of “non-employee directors” under Rule 16b-3 and “outside
directors” under Section 162(m) of the Code.

 

(b)       The Committee shall have the
authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration
of the Plan, including, without limitation, the authority to grant Options, Stock Appreciation Rights, Limited Rights, Deferred
Stock Units and Restricted Stock; to determine which Options shall constitute Incentive Stock Options and which Options shall constitute
Nonqualified Stock Options; to determine which Options (if any) shall be accompanied by Limited Rights; to determine the Option
Price for each Option; to determine the persons to whom, and the time or times at which awards shall be granted; to determine the
number of shares to be covered by each award; to interpret the Plan and any award under the Plan; to reconcile any inconsistent
terms in the Plan or any award under the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine
the terms and provisions of the Agreements (which need not be identical) and to cancel or suspend awards, as necessary; and to
make all other determinations deemed necessary or advisable for the administration of the Plan.

 

(c)       All decisions, determination
and interpretations of the Committee shall be final and binding on all Grantees of any awards under this Plan. No member of the
Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any award
granted hereunder.

 

(d)       The Committee may delegate to
one or more executive officers of the Company the authority to (i) grant awards under the Plan to employees of the Company and
its Subsidiaries who are not executive officers or a member of the Board, (ii) execute and deliver documents or take such other
ministerial actions on behalf of the Committee with respect to awards and (iii) to make interpretations of the Plan. The grant
of authority in this Section 3(d) shall be subject to such conditions and limitations as may be determined by the Committee. If
the Committee delegates authority to any such executive officer or executive officers of the Company pursuant to this Section 3(d),
and such executive officer or executive officers grant awards pursuant to such delegated authority, references in this Plan to
the “Committee” as they relate to such awards shall be deemed to refer to such executive officer or executive officers,
as applicable.

 

4.         Eligibility.

 

Awards may be granted to officers, employees,
members of the Board and consultants of the Company or of any Subsidiary. In addition to any other awards granted to Non-Employee
Directors hereunder, awards shall be granted to Non-Employee Directors pursuant to Section 14 of the Plan. In determining the persons
to whom awards shall be granted and the number of shares to be covered by each award, the Committee shall take into account the
duties of the respective persons, their present and potential contributions to the success of the Company and such other factors
as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan.

 

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5.         Stock.

 

(a)       The maximum number of shares
of Class B Common Stock reserved for the grant of awards under the Plan shall be 500,000, all of which may be granted as Incentive
Stock Options, subject to adjustment as provided in Section 12 of the Plan. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or may be reacquired by the Company.

  

(b)       If any outstanding award under
the Plan should, for any reason expire, be canceled or be forfeited (other than in connection with the exercise of a Stock Appreciation
Right or a Limited Right), without having been exercised in full, the shares of Class B Common Stock allocable to the unexercised,
canceled or terminated portion of such award shall (unless the Plan shall have been terminated) become available for subsequent
grants of awards under the Plan, unless otherwise determined by the Committee.

  

6.         Terms and Conditions of Options.

 

(a)       OPTION AGREEMENT.  Each
Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Option
Agreement”), in such form and containing such terms and conditions as the Committee shall from time to time approve, which
Option Agreement shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided
in such Option Agreement. For purposes of interpreting this Section 6, a director’s service as a member of the Board or a
consultant’s service shall be deemed to be employment with the Company.

 

(b)       NUMBER OF SHARES.  Each
Option Agreement shall state the number of shares of Class B Common Stock to which the Option relates.

 

(c)       TYPE OF OPTION.  Each
Option Agreement shall specifically state that the Option constitutes an Incentive Stock Option or a Nonqualified Stock Option.
In the absence of such designation, the Option will be deemed to be a Nonqualified Stock Option.

 

(d)       OPTION PRICE.  Each
Option Agreement shall state the Option Price, which, in the case of an Incentive Stock Option, shall not be less than one hundred
percent (100%) of the Fair Market Value of the shares of Class B Common Stock covered by the Option on the date of grant. The Option
Price shall be subject to adjustment as provided in Section 12 of the Plan.

 

(e)       MEDIUM AND TIME OF PAYMENT.  The
Option Price shall be paid in full, at the time of exercise, in cash or in shares of Class B Common Stock having a Fair Market
Value equal to such Option Price or in a combination of cash and Class B Common Stock including a cashless exercise procedure through
a broker-dealer; provided, however, that in the case of an Incentive Stock Option, the medium of payment shall be determined at
the time of grant and set forth in the applicable Option Agreement.

 

(f)        TERM AND EXERCISABILITY OF OPTIONS.  Each
Option Agreement shall provide the exercisability schedule for the Option as determined by the Committee, provided, that, the Committee
shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as
it, in its sole discretion, deems appropriate. The exercise period will be ten (10) years from the date of the grant of the Option
unless otherwise determined by the Committee; provided, however, that in the case of an Incentive Stock Option, such exercise period
shall not exceed ten (10) years from the date of grant of such Option. The exercise period shall be subject to earlier termination
as provided in Sections 6(g) and 6(h) of the Plan. An Option may be exercised, as to any or all full shares of Class B Common Stock
as to which the Option has become exercisable, by written notice delivered in person, by mail, e-mail, fax or overnight delivery
to the Company’s transfer agent or other administrator designated by the Company, specifying the number of shares of Class
B Common Stock with respect to which the Option is being exercised.

 

(g)       TERMINATION.  Except
as provided in this Section 6(g) and in Section 6(h) of the Plan, an Option may not be exercised unless the Grantee is then in
the employ of or maintaining a director or consultant relationship with the Company or a Subsidiary thereof (or a company or a
Parent or Subsidiary of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies),
and unless the Grantee has remained in Continuous Service with the Company or any Subsidiary since the date of grant of the Option
unless otherwise determined by the Committee. In the event that the employment or consultant relationship of a Grantee shall terminate
(other than by reason of death, Disability or Retirement), all Options of such Grantee that are exercisable at the time of Grantee’s
termination may, unless earlier terminated in accordance with their terms, be exercised within 180 days after the date of termination
(or such different period as the Committee shall prescribe).

 

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(h)       DEATH, DISABILITY OR RETIREMENT
OF GRANTEE.  If a Grantee shall die while employed by, or maintaining a director or consultant relationship with, the
Company or a Subsidiary thereof, or within thirty (30) days after the date of termination of such Grantee’s employment, director
or consultant relationship (or within such different period as the Committee may have provided pursuant to Section 6(g) of the
Plan), or if the Grantee’s employment, director or consultant relationship shall terminate by reason of Disability, all Options
theretofore granted to such Grantee (to the extent otherwise exercisable) may, unless earlier terminated in accordance with their
terms, be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise such Options
by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within 180 days after the death
or Disability of the Grantee (or such different period as the Committee shall prescribe). In the event that an Option granted hereunder
shall be exercised by the legal representatives of a deceased or former Grantee, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of such legal representative to exercise such Option.
In the event that the employment or consultant relationship of a Grantee shall terminate on account of such Grantee’s Retirement,
all Options of such Grantee that are exercisable at the time of such Retirement may, unless earlier terminated in accordance with
their terms, be exercised at any time within one hundred eighty (180) days after the date of such Retirement (or such different
period as the Committee shall prescribe). All unvested Options shall be terminated upon death, disability or retirement, unless
otherwise determined by the Committee.

 

(i)        OTHER PROVISIONS.  The
Option Agreements evidencing awards under the Plan shall contain such other terms and conditions not inconsistent with the Plan
as the Committee may determine.

 

7.         Nonqualified Stock Options.

 

Options granted pursuant to this Section 7 are
intended to constitute Nonqualified Stock Options and shall be subject only to the general terms and conditions specified in Section
6 of the Plan.

 

8.         Incentive Stock Options.

 

Options granted pursuant to this Section 8 are
intended to constitute Incentive Stock Options and shall be subject to the following special terms and conditions, in addition
to the general terms and conditions specified in Section 6 of the Plan:

 

(a)       LIMITATION ON VALUE OF SHARES.  To
the extent that the aggregate Fair Market Value of shares of Class B Common Stock subject to Options designated as Incentive Stock
Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any
Subsidiary) exceeds $100,000, such excess Options, to the extent of the shares covered thereby in excess of the foregoing limitation,
shall be treated as Nonqualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the shares of Class B Common Stock shall be determined as of the date
that the Option with respect to such shares was granted.

 

(b)       TEN PERCENT STOCKHOLDER.  In
the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option Price shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the shares of Class B Common Stock on the date of grant of such Incentive Stock
Option, and (ii) the exercise period shall not exceed five (5) years from the date of grant of such Incentive Stock Option.

 

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9.         Stock Appreciation Rights.

 

The Committee shall have authority to grant a
Stock Appreciation Right, either alone or in tandem with any Option. A Stock Appreciation Right granted in tandem with an Option
shall, except as provided in this Section 9 or as may be determined by the Committee, be subject to the same terms and conditions
as the related Option. Each Stock Appreciation Right granted pursuant to the Plan shall be evidenced by a written Agreement between
the Company and the Grantee in such form as the Committee shall from time to time approve, which Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

 

(a)       TIME OF GRANT.  A Stock
Appreciation Right may be granted at such time or times as may be determined by the Committee.

 

(b)       PAYMENT.  A Stock Appreciation
Right shall entitle the holder thereof, upon exercise of the Stock Appreciation Right or any portion thereof, to receive payment
of an amount computed pursuant to Section 9(d) of the Plan.

 

(c)       EXERCISE.  A Stock
Appreciation Right shall be exercisable at such time or times and only to the extent determined by the Committee, and will not
be transferable. A Stock Appreciation Right granted in connection with an Incentive Stock Option shall be exercisable only if the
Fair Market Value of a share of Class B Common Stock on the date of exercise exceeds the purchase price specified in the related
Incentive Stock Option. Unless otherwise approved by the Committee, no Grantee shall be permitted to exercise any Stock Appreciation
Right during the period beginning two weeks prior to the end of each of the Company’s fiscal quarters and ending on the second
business day following the day on which the Company releases to the public a summary of its fiscal results for such period.

 

(d)       AMOUNT PAYABLE.  Upon
the exercise of a Stock Appreciation Right, the Optionee shall be entitled to receive an amount determined by multiplying (i) the
excess of the Fair Market Value of a share of Class B Common Stock on the date of exercise of such Stock Appreciation Right over
the exercise or other base price of the Stock Appreciation Right or, if applicable, the Option Price of the related Option, by
(ii) the number of shares of Class B Common Stock as to which such Stock Appreciation Right is being exercised.

 

(e)       TREATMENT OF RELATED OPTIONS
AND STOCK APPRECIATION RIGHTS UPON EXERCISE.  Upon the exercise of a Stock Appreciation Right, the related Option, if
any, shall be canceled to the extent of the number of shares of Class B Common Stock as to which the Stock Appreciation Right is
exercised. Upon the exercise or surrender of an Option granted in connection with a Stock Appreciation Right, the Stock Appreciation
Right shall be canceled to the extent of the number of shares of Class B Common Stock as to which the Option is exercised or surrendered.

 

(f)       METHOD OF EXERCISE.  Stock
Appreciation Rights shall be exercised by a Grantee only by a written notice delivered to the Company in accordance with procedures
specified by the Company from time to time. Such notice shall state the number of shares of Class B Common Stock with respect to
which the Stock Appreciation Right is being exercised. A Grantee may also be required to deliver to the Company the underlying
Agreement evidencing the Stock Appreciation Right being exercised and any related Option Agreement so that a notation of such exercise
may be made thereon, and such Agreements shall then be returned to the Grantee.

 

(g)       FORM OF PAYMENT.  Payment
of the amount determined under Section 9(d) of the Plan may be made solely in whole shares of Class B Common Stock in a number
based upon their Fair Market Value on the date of exercise of the Stock Appreciation Right or, alternatively, at the sole discretion
of the Committee, solely in cash, or in a combination of cash and shares of Class B Common Stock as the Committee deems advisable.
If the Committee decides to make full payment in shares of Class B Common Stock and the amount payable results in a fractional
share, payment for the fractional share will be made in cash.

 

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10.      Limited Stock Appreciation Rights.

 

The Committee shall have authority to grant a
Limited Right, either alone or in tandem with any Option. Each Limited Right granted pursuant to the Plan shall be evidenced by
a written Agreement between the Company and the Grantee in such form as the Committee shall from time to time approve, which Agreement
shall comply with and be subject to the following terms and conditions, unless otherwise specifically provided in such Agreement:

 

(a)       TIME OF GRANT.  A Limited
Right may be granted at such time or times as may be determined by the Committee.

 

(b)       EXERCISE.  A Limited
Right may be exercised only (i) during the ninety-day period following the occurrence of a Change in Control or (ii) immediately
prior to the effective date of a Corporate Transaction. A Limited Right shall be exercisable at such time or times and only to
the extent determined by the Committee, and will not be transferable except to the extent any related Option is transferable or
as otherwise determined by the Committee. A Limited Right granted in connection with an Incentive Stock Option shall be exercisable
only if the Fair Market Value of a share of Class B Common Stock on the date of exercise exceeds the purchase price specified in
the related Incentive Stock Option.

 

(c)       AMOUNT PAYABLE.  Upon
the exercise of a Limited Right, the Grantee thereof shall receive in cash whichever of the following amounts is applicable:

 

(i)      in the case of the realization
of Limited Rights by reason of an acquisition of common stock described in clause (i) of the definition of “Change in Control”
(Section 2(c) of this Plan), an amount equal to the Acquisition Spread as defined in Section 10(d)(ii) below; or

 

(ii)      in the case of the realization
of Limited Rights by reason of stockholder approval of an agreement or plan described in clause (i) of the definition of “Corporate
Transaction” (Section 2(j) of this Plan), an amount equal to the Merger Spread as defined in Section 10(d)(iv) below; or

 

(iii)     in the case of the realization
of Limited Rights by reason of the change in composition of the Board described in clause (ii) of the definition of “Change
in Control” or stockholder approval of a plan or agreement described in clause (ii) of the definition of Corporate Transaction,
an amount equal to the Spread as defined in Section 10(d)(v) of this Plan.

 

Notwithstanding the foregoing provisions of this
Section 10(c) (or unless otherwise approved by the Committee), in the case of a Limited Right granted in respect of an Incentive
Stock Option, the Grantee may not receive an amount in excess of the maximum amount that will enable such option to continue to
qualify under the Code as an Incentive Stock Option.

 

(d)       DETERMINATION OF AMOUNTS PAYABLE.  The
amounts to be paid to a Grantee pursuant to Section 10(c) of this Plan shall be determined as follows:

 

(i)       The term “Acquisition
Price per Share” as used herein shall mean, with respect to the exercise of any Limited Right by reason of an acquisition
of Class B Common Stock described in clause (i) of the definition of Change in Control, the greatest of (A) the highest price per
share shown on the Statement on Schedule 13D or amendment thereto filed by the holder of 25% or more of the voting power of the
Company that gives rise to the exercise of such Limited Right, (B) the highest price paid in any tender or exchange offer which
is in effect at any time during the ninety-day period ending on the date of exercise of the Limited Right, or (C) the highest Fair
Market Value per share of Class B Common Stock during the ninety day period ending on the date the Limited Right is exercised.

 

(ii)      The term “Acquisition
Spread” as used herein shall mean an amount equal to the product computed by multiplying (A) the excess of (1) the Acquisition
Price per Share over (2) the exercise or other base price of the Limited Right or, if applicable, the Option Price per share of
Class B Common Stock at which the related Option is exercisable, by (B) the number of shares of Class B Common Stock with respect
to which such Limited Right is being exercised.

 

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(iii)     The term “Merger Price
per Share” as used herein shall mean, with respect to the exercise of any Limited Right by reason of stockholder approval
of an agreement described in clause (i) of the definition of Corporate Transaction, the greatest of (A) the fixed or formula price
for the acquisition of shares of Class B Common Stock specified in such agreement, if such fixed or formula price is determinable
on the date on which such Limited Right is exercised, (B) the highest price paid in any tender or exchange offer which is in effect
at any time during the ninety-day period ending on the date of exercise of the Limited Right, (C) the highest Fair Market Value
per share of Class B Common Stock during the ninety-day period ending on the date on which such Limited Right is exercised.

 

(iv)    The term “Merger Spread”
as used herein shall mean an amount equal to the product. computed by multiplying (A) the excess of (1) the Merger Price per Share
over (2) the exercise or other base price of the Limited Right or, if applicable, the Option Price per share of Class B Common
Stock at which the related Option is exercisable, by (B) the number of shares of Class B Common Stock with respect to which such
Limited Right is being exercised.

 

(v)      The term “Spread”
as used herein shall mean, with respect to the exercise of any Limited Right by reason of a change in the composition of the Board
described in clause (ii) of the definition of Change in Control or stockholder approval of a plan or agreement described in clause
(ii) of the definition of Corporate Transaction, an amount equal to the product computed by multiplying (i) the excess of (A) the
greater of (1) the highest price paid in any tender or exchange offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right or (2) the highest Fair Market Value per share of Class B Common Stock during
the ninety day period ending on the date the Limited Right is exercised over (B) the exercise or other base price of the Limited
Right or, if applicable, the Option Price per share of Class B Common Stock at which the related Option is exercisable, by (ii)
the number of shares of Class B Common Stock with respect to which the Limited Right is being exercised.

 

(e)       TREATMENT OF RELATED OPTIONS
AND LIMITED RIGHTS UPON EXERCISE.  Upon the exercise of a Limited Right, the related Option, if any, shall cease to be
exercisable to the extent of the shares of Class B Common Stock with respect to which such Limited Right is exercised but shall
be considered to have been exercised to that extent for purposes of determining the number of shares of Class B Common Stock available
for the grant of future awards pursuant to this Plan. Upon the exercise or termination of a related Option, if any, the Limited
Right with respect to such related Option shall terminate to the extent of the shares of Class B Common Stock with respect to which
the related Option was exercised or terminated.

 

(f)       METHOD OF EXERCISE.  To
exercise a Limited Right, the Grantee shall (i) deliver written notice to the Company specifying the number of shares of Class
B Common Stock with respect to which the Limited Right is being exercised, and (ii) if requested by the Committee, deliver to the
Company the Agreement evidencing the Limited Rights being exercised and, if applicable, the Option Agreement evidencing the related
Option; the Company shall endorse thereon a notation of such exercise and return such Agreements to the Grantee. The date of exercise
of a Limited Right that is validly exercised shall be deemed to be the date on which there shall have been delivered the instruments
referred to in the first sentence of this Section 10(f).

 

11.      Restricted Stock.

 

The Committee may award shares of Restricted
Stock to any eligible employee, director or consultant of the Company or of any Subsidiary. Each award of Restricted Stock under
the Plan shall be evidenced by a written Agreement between the Company and the Grantee, in such form as the Committee shall from
time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise
specifically provided in such Agreement:

 

(a)       NUMBER OF SHARES.  Each
Agreement shall state the number of shares of Restricted Stock to be subject to an award.

 

    	9

     

    

 

(b)       RESTRICTIONS.  Shares
of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the
laws of descent and distribution, for such period as the Committee shall determine from the date on which the award is granted
(the “Restricted Period”).. The Committee may also impose such additional or alternative restrictions and conditions
on the shares as it deems appropriate including, but not limited to, the satisfaction of performance criteria. Such performance
criteria may include, without limitation, sales, earnings before interest and taxes, return on investment, earnings per share,
any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. The Company may, at
its option, maintain issued shares in book entry form. Certificates, if any, for shares of stock issued pursuant to Restricted
Stock awards shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares of
stock in contravention of such restrictions shall be null and void and without effect. During the Restricted Period, any such certificates
shall be held in a restricted account a at the transfer agent appointed by the Company. In determining the Restricted Period of
an award, the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded
shares on successive anniversaries or other specified dates of the date of such award.

 

(c)       FORFEITURE.  Subject
to such exceptions as may be determined by the Committee, if the Grantee’s Continuous Service with the Company or any Subsidiary
shall terminate for any reason prior to the expiration of the Restricted Period of an award, any shares remaining subject to restrictions
(after taking into account the provisions of Subsection (e) of this Section 11) shall thereupon be forfeited by the Grantee and
transferred to, and retired by, the Company without cost to the Company or such Subsidiary, and such shares shall become available
for subsequent grants of awards under the Plan, unless otherwise determined by the Committee.

 

(d)       OWNERSHIP.  During
the Restricted Period, the Grantee shall possess all incidents of ownership of such shares, subject to Subsection (b) of this Section
11, including the right to receive dividends with respect to such shares and to vote such shares.

 

(e)       ACCELERATED LAPSE OF RESTRICTIONS.  Upon
the occurrence of any of the events specified in Section 13 of the Plan (and subject to the conditions set forth therein), all
restrictions then outstanding on any shares of Restricted Stock awarded under the Plan shall lapse as of the applicable date set
forth in Section 13. The Committee shall have the authority (and the Agreement may so provide) to cancel all or any portion of
any outstanding restrictions prior to the expiration of the Restricted Period with respect to any or all of the shares of Restricted
Stock awarded on such terms and conditions as the Committee shall deem appropriate.

 

11A.    Deferred Stock Units.

 

The Committee may award Deferred Stock Units
to any outside director, eligible employee or consultant of the Company or of any Subsidiary. Each award of Deferred Stock Units
under the Plan shall be evidenced by a written Agreement between the Company and the Grantee, in such form as the Committee shall
from time to time approve, which Agreement shall comply with and be subject to the following terms and conditions, unless otherwise
specifically provided in such Agreement:

 

(a)       NUMBER OF SHARES.  Each
Agreement for Deferred Stock Units shall state the number of shares of Class B Common Stock to be subject to an award.

 

(b)       RESTRICTIONS.  Deferred
Stock Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws
of descent and distribution, until shares of Class B Common Stock are payable with respect to an award. The Committee may impose
such vesting restrictions and conditions on the payment of shares as it deems appropriate including the satisfaction of performance
criteria. Such performance criteria may include sales, earnings before interest and taxes, return on investment, earnings per share,
any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee.

 

(c)       FORFEITURE.  Subject
to such exceptions as may be determined by the Committee, if the Grantee’s Continuous Service with the Company or any Subsidiary
shall terminate for any reason prior to the Grantee becoming fully vested in the award, then the Grantee’s rights under any
unvested Deferred Stock Units shall be forfeited without cost to the Company or such Subsidiary.

 

    	10

     

    

 

(d)       OWNERSHIP.  Until shares
are delivered with respect to Deferred Stock Units, the Grantee shall not possess any incidents of ownership of such shares, including
the right to receive dividends with respect to such shares and to vote such shares.

 

(e)       ACCELERATED LAPSE OF RESTRICTIONS.  Upon
the occurrence of any of the events specified in Section 13 of the Plan (and subject to the conditions set forth therein), all
restrictions then outstanding on any Deferred Stock Units awarded under the Plan shall lapse as of the applicable date set forth
in Section 13. The Committee shall have the authority (and the Agreement may so provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of any restricted period with respect to any or all of the shares of Deferred Stock Units
awarded on such terms and conditions as the Committee shall deem appropriate.

 

12.      Effect of Certain Changes.

 

(a)       ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  In
the event of any extraordinary liquidating dividend, stock dividend, recapitalization, merger, consolidation, stock split, warrant
or rights issuance, or combination or exchange of such shares, or other similar transactions, the Committee shall equitably adjust
(i) the number of shares of Class B Common Stock available for awards under the Plan, (ii) the number and/or kind of shares covered
by outstanding awards and (iii) the Option Price per share of Options or the applicable market value of Stock Appreciation Rights
or Limited Rights, in each such case so as to reflect such event and preserve the value of such awards; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. This provision shall not apply to cash dividends or returns
of capital.

 

(b)       CHANGE IN CLASS B COMMON STOCK.  In
the event of a change in the Class B Common Stock as presently constituted that is limited to a change of all of its authorized
shares of Class B Common Stock into the same number of shares with a different par value or without par value, the shares resulting
from any such change shall be deemed to be the Class B Common Stock within the meaning of the Plan.

 

13.      Corporate Transaction; Change in
Control; Related Entity Disposition.

 

(a)       CORPORATE TRANSACTION.  In
the event of a Corporate Transaction, each award which is at the time outstanding under the Plan shall automatically become fully
vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall be released
from any restrictions on transfer (except with regard to the Insider Trading Policy and such other agreements between the Grantee
and the Company) and repurchase or forfeiture rights, immediately prior to the specified effective date of such Corporate Transaction.
Effective upon the consummation of the Corporate Transaction, all outstanding awards of Options, Stock Appreciation Rights and
Limited Rights under the Plan shall terminate, unless otherwise determined by the Committee. However, all such awards shall not
terminate if the awards are, in connection with the Corporate Transaction, assumed by the successor corporation or Parent thereof.

 

(b)       CHANGE IN CONTROL.  In
the event of a Change in Control (other than a Change in Control which is also a Corporate Transaction), each award which is at
the time outstanding under the Plan automatically shall become fully vested and exercisable and, in the case of an award of Restricted
Stock or an award of Deferred Stock Units, shall be released from any restrictions on transfer and repurchase or forfeiture rights,
immediately prior to the specified effective date of such Change in Control.

 

(c)       RELATED ENTITY DISPOSITION.  The
Continuous Service of each Grantee (who is primarily engaged in service to a Related Entity at the time it is involved in a Related
Entity Disposition) shall terminate effective upon the consummation of such Related Entity Disposition, and each outstanding award
of such Grantee under the Plan shall become fully vested and exercisable and, in the case of an award of Restricted Stock or an
award of Deferred Stock Units, shall be released from any restrictions on transfer (except with regard to the Insider Trading Policy
and such other agreements between the Grantee and the Company). Unless otherwise determined by the Committee, the Continuous Service
of a Grantee shall not be deemed to terminate (and each outstanding award of such Grantee under the Plan shall not become fully
vested and exercisable and, in the case of an award of Restricted Stock or an award of Deferred Stock Units, shall not be released
from any restrictions on transfer) if (i) a Related Entity Disposition involves the spin-off of a Related Entity, for so long as
such Grantee continues to remain in the service of such entity that constituted the Related Entity immediately prior to the consummation
of such Related Entity Disposition (“SpinCo”) in any capacity of officer, employee, director or consultant or (ii)
an outstanding award is assumed by the surviving corporation (whether SpinCo or otherwise) or its parent entity in connection with
a Related Entity Disposition.

 

    	11

     

    

 

(d)       SUBSTITUTE AWARDS.  The
Committee may grant awards under the Plan in substitution of stock-based incentive awards held by employees, consultants or directors
of another entity who become employees, consultants or directors of the Company or any Subsidiary by reason of a merger or consolidation
of such entity with the Company or any Subsidiary, or the acquisition by the Company or a Subsidiary of property or equity of such
entity, upon such terms and conditions as the Committee may determine, and such awards shall not count against the share limitation
set forth in Section 5 of the Plan.

 

14.      Non-Employee Director Restricted
Stock.

 

The provisions of this Section 14 shall apply
only to certain grants of Restricted Stock to Non-Employee Directors, as provided below. Except as set forth in this Section 14,
the other provisions of the Plan shall apply to grants of Restricted Stock to Non-Employee Directors to the extent not inconsistent
with this Section. For purposes of interpreting Section 6 of the Plan and this Section 14, a Non-Employee Director’s service
as a member of the Board or the board of directors of any Subsidiary shall be deemed to be employment with the Company.

 

(a)       GENERAL. Non-Employee Directors
shall receive Restricted Stock in accordance with this Section 14. Restricted Stock granted pursuant to this Section 14 shall be
subject to the terms of such section and shall not be subject to discretionary acceleration of vesting by the Committee. Unless
determined otherwise by the Committee, Non-Employee Directors shall not receive separate and additional grants hereunder for being
a Non-Employee Director of (i) the Company and a Subsidiary or (ii) more than one Subsidiary.

 

(b)       INITIAL GRANTS OF RESTRICTED
STOCK. A Non-Employee Director who first becomes a Non-Employee Director shall receive a pro-rata amount (based on projected quarters
of service to the following Non-Employee Director Grant Date) of a Non-Employee Director Annual Grant on his date of appointment
as a Non-Employee Director.

 

(c)       ANNUAL GRANTS OF RESTRICTED STOCK.
On each Non-Employee Director Grant Date, each Non-Employee Director shall receive a Non-Employee Director Annual Grant.

 

(d)       VESTING OF RESTRICTED STOCK.
Restricted Stock granted under this Section 14 shall be fully vested on the date of grant.

 

15.      Period During which Awards May Be
Granted.

 

Awards may be granted pursuant to the Plan from
time to time commencing on January 1, 2015 until September 16, 2024 (ten (10) years from September 17, 2014, the date the Board
initially adopted the Plan). No awards shall be effective prior to the approval of the Plan by a majority of the Company’s
stockholders.

 

16.      Transferability of Awards.

 

(a)       Incentive Stock Options and Stock
Appreciation Rights may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by the
laws of descent and distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee or his or her guardian
or legal representative.

 

    	12

     

    

 

(b)       Nonqualified Stock Options shall
be transferable in the manner and to the extent acceptable to the Committee, as evidenced by a writing signed by the Company and
the Grantee. Nonqualified Stock Options (together with any Stock Appreciation Rights or Limited Rights related thereto) shall be
transferable by a Grantee as a gift to the Grantee’s “family members” (as defined in Form S-8) under such terms
and conditions as may be established by the Committee; provided that the Grantee receives no consideration for the transfer. Notwithstanding
the transfer by a Grantee of a Nonqualified Stock Option, the transferred Nonqualified Stock Option shall continue to be subject
to the same terms and conditions as were applicable to the Nonqualified Stock Option immediately before the transfer (including,
without limitation, the Insider Trading Policy) and the Grantee will continue to remain subject to the withholding tax requirements
set forth in Section 17 hereof.

 

(c)       The terms of any award granted
under the Plan, including the transferability of any such award, shall be binding upon the executors, administrators, heirs and
successors of the Grantee.

 

(d)       Restricted Stock shall remain
subject to the Insider Trading Policy after the expiration of the Restricted Period. Deferred Stock Units shall remain subject
to the Insider Trading Policy after payment thereof.

 

17.      Agreement by Grantee regarding Withholding
Taxes.

 

If the Committee shall so require, as a condition
of exercise of an Option, Stock Appreciation Right or Limited Right, the expiration of a Restricted Period or payment of a Deferred
Stock Unit (each, a “Tax Event”), each Grantee shall agree that no later than the date of the Tax Event, the Grantee
will pay to the Company or make arrangements satisfactory to the Committee regarding payment of any federal, state or local taxes
of any kind required by law to be withheld upon the Tax Event. Unless determined otherwise by the Committee, a Grantee shall permit,
to the extent permitted or required by law, the Company to withhold federal, state and local taxes of any kind required by law
to be withheld upon the Tax Event from any payment of any kind due to the Grantee. Unless otherwise determined by the Committee,
any such above-described withholding obligation may, in the discretion of the Company, be satisfied by the withholding by the Company
or delivery to the Company of Class B Common Stock.

 

18.      Rights as a Stockholder.

 

Except as provided in Section 11(d) of the Plan,
a Grantee or a transferee of an award shall have no rights as a stockholder with respect to any shares covered by the award until
the date of the issuance of such shares to him or her. No adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distribution of other rights for which the record date is prior to the date such shares
are issued, except as provided in Section 12(a) of the Plan.

 

19.      No Rights to Employment; Forfeiture
of Gains.

 

Nothing in the Plan or in any award granted or
Agreement entered into pursuant hereto shall confer upon any Grantee the right to continue as a director of, in the employ of,
or in a consultant relationship with, the Company or any Subsidiary or to be entitled to any remuneration or benefits not set forth
in the Plan or such Agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary to terminate
such Grantee’s employment or consulting relationship. Awards granted under the Plan shall not be affected by any change in
duties or position of a Grantee as long as such Grantee continues to be employed by, or in a consultant relationship with, or a
director of the Company or any Subsidiary. The Agreement for any award under the Plan may require the Grantee to pay to the Company
any financial gain realized from the prior exercise, vesting or payment of the award in the event that the Grantee engages in conduct
that violates any non-compete, non-solicitation or non-disclosure obligation of the Grantee under any agreement with the Company
or any Subsidiary, including, without limitation, any such obligations provided in the Agreement.

 

20.      Beneficiary.

 

A Grantee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the Grantee, the executor or administrator of the Grantee’s estate shall
be deemed to be the Grantee’s beneficiary.

 

    	13

     

    

 

21.      Authorized Share Approval; Amendment
and Termination of the Plan.

 

(a)       AUTHORIZED SHARE APPROVAL.  The
Plan was adopted by the Board on September 17, 2014. The Plan was ratified by the Company’s stockholders on December 15,
2014, with 500,000 shares of Class B Common Stock authorized for awards under the Plan. The Plan shall become effective on January
1, 2015 and shall terminate on September 16, 2024.

 

(b)       AMENDMENT AND TERMINATION OF
THE PLAN.  The Board, or the Committee if so delegated by the Board, at any time and from time to time may suspend, terminate,
modify or amend the Plan; however, unless otherwise determined by the Board, or the Committee if applicable, an amendment that
requires stockholder approval in order for the Plan to continue to comply with any law, regulation or stock exchange requirement
shall not be effective unless approved by the requisite vote of stockholders. Except as provided in Section 13(a) of the Plan,
no suspension, termination, modification or amendment of the Plan may adversely affect any award previously granted, unless the
written consent of the Grantee is obtained.

 

22.      Governing Law.

 

The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of Delaware.

 

 

142014-ProjectDogwoodOfferLetterFinal

Exhibit 10.1

October 10, 2014

Marvin R. Ellison

Dear Marvin:

I am pleased to extend to you this offer of employment as President and CEO-Designee of J. C. Penney Company, Inc. (“JCPenney”). Your office will be located in JCPenney’s headquarters building at 6501 Legacy Drive, Plano Texas 75024. Your start date will be November 1, 2014. In addition, effective November 1, 2014 you will become a member of JCPenney’s Board of Directors (“Board”). As an employee director, you will not be entitled to any additional compensation for your service on the Board. Further, as part of the of the Board’s execution of its strategy and succession plan, you will be named Chief Executive Officer of JCPenney effective August 1, 2015. During the period you are President and CEO-Designee you shall report directly to the Chief Executive Officer of JCPenney, and upon becoming Chief Executive Officer of JCPenney you shall report directly to the Board.

Salary Compensation 
Your annualized base salary will be $1,300,000 and will be reviewed annually for adjustment by the Committee of the Whole of JCPenney’s Board (the “Committee”). 

Performance-Based Annual Bonus
You will be eligible to participate in the JCPenney performance-based annual bonus program beginning with the 2015 fiscal year. Your annual target bonus opportunity will be 150% of your then current base salary ($1,950,000 for the 2015 fiscal year, based on your starting base salary) and your maximum bonus opportunity will be 300% of your base salary ($3,900,000 for 2015, based on your starting base salary). The value of your performance-based annual target bonus will be reviewed annually for adjustment by the Committee.  For the 2015 fiscal year, your annual bonus will be the greater of (i) your actual bonus earned under the terms of the annual bonus program for the 2015 fiscal year as established by the Board and Committee, and (ii) 50% of your annual target bonus for the 2015 fiscal year. The timing of your bonus payout will be consistent with the standard payout cycle for bonuses for the 2015 fiscal year. 

Cash Inducement Award
You will receive a one-time cash signing bonus from JCPenney in the amount of $4,140,000 less applicable withholding taxes.  The signing bonus less applicable withholding taxes will be paid to 

6501 Legacy Drive
Plano, TX 75024
jcp.com

Marvin R. Ellison
October 10, 2014
Page 2 

you within 30 days after your start date. The cash signing bonus will be subject to JCPenney’s Compensation Recovery Policy as set forth in JCPenney’s Corporate Governance Guidelines.  The cash signing bonus will also be subject to pro-rata payback if you voluntarily terminate your employment (other than for “Good Reason”, as defined in your individual Executive Termination Pay Agreement, attached as Exhibit A (“ETPA”), or the JCPenney Change in Control Plan, attached as Exhibit B (the “Change in Control Plan”), as applicable) for any reason before August 1, 2015. The amount of the pro rata payback will be determined by multiplying the cash signing bonus by a fraction, (i) the numerator of which is the number of whole calendar months that remain between the date of your termination and the first anniversary of your start date and (ii) the denominator of which is 12.  For the avoidance of doubt, you will not be required to reimburse JCPenney for any portion of your cash signing bonus if your employment is involuntarily terminated by the Company without Cause, or is terminated by you for Good Reason or as a result of your death or “Permanent Disability” (as defined in the EPTA or Change in Control Plan, as applicable).

Equity Inducement Award
As a further inducement to your acceptance of this offer, after you commence employment JCPenney shall grant you an equity award in the form of JCPenney time-based restricted stock units (“TBRSUs”). The number of TBRSUs included in your award will be determined by dividing $15,000,000 by the closing price of the common stock of JCPenney (“Common Stock”) on the date of grant.  The date of grant of your equity awards will be the third full trading date following the date of public release of JCPenney’s earnings for the fiscal quarter in which your employment with JCPenney begins.  

Your equity inducement award will vest ratably, on an annual basis, one-third on the first anniversary of the grant date, one-third on the second anniversary of the grant date and one-third on the third anniversary of the grant date provided you are actively employed on each respective vesting date with no break in service, unless otherwise provided in the ETPA or the Change In Control Plan. Each restricted stock unit shall at all times be deemed to have a value equal to the then-current fair market value of a share of Common Stock. At the time of vesting of any TBRSUs, the vested TBRSUs shall be cancelled and JCPenney will issue to you a number of shares of Common Stock equal to the number of vested TBRSUs cancelled. Notwithstanding the foregoing, your equity inducement award will fully vest if your employment with JCPenney terminates for any reason other than your voluntary resignation (other than for Good Reason) or the termination of your employment for ”Cause” (as defined in the ETPA or Change in Control Plan, as applicable).
 
Long-Term Incentive Awards 
You will be eligible to participate in JCPenney’s Long-Term Incentive Award Program under the 2014 Long-Term Incentive Award Plan (“LTIP”) in a manner consistent with other JCPenney senior executive officers and commensurate with your position, beginning with the 2015 fiscal year. Long-Term Incentive Awards are determined each fiscal year, typically in the first quarter.  For the 2015 fiscal year your Long-Term Incentive Award will have a grant date, target economic value of 

6501 Legacy Drive
Plano, TX 75024
jcp.com

Marvin R. Ellison
October 10, 2014
Page 3 

$6,750,000. The structure of your 2015 Long-Term Incentive Award will be determined by the Committee and will be consistent with the structure of the award for the Chief Executive Officer position. Past awards have consisted of stock options, performance-contingent stock options, time-based restricted stock units, and performance-based restricted stock units. 
 
Termination Arrangements 
We recognize the need to provide protection to our executive officers in the event of the executive officer’s voluntary termination for Good Reason or the executive officer’s involuntary termination of employment without Cause, or following a change in control of JCPenney.  Accordingly, we have put in place separate arrangements consisting of an individual ETPA and a Change in Control Plan in which you will participate, to address termination situations not precipitated by the conduct of the executive officer.

The ETPA provides severance benefits to you in connection with your voluntary termination of employment for Good Reason or your involuntary termination other than for Cause in exchange for your agreement to comply with certain covenants. The benefits payable under the ETPA are not available if benefits are received under the Change in Control Plan. JCPenney provides the Change in Control Plan if an executive’s employment is involuntarily terminated other than for Cause or where the executive voluntarily terminates employment for Good Reason (as defined in the Change in Control Plan), generally, within two years following a change in control of JCPenney.

Relocation
You agree to relocate to the Dallas/Fort Worth area by January 1, 2015.  In connection with your relocation, JCPenney will provide you with relocation benefits under the Executive Level Home Owner relocation policy (“Relocation Policy”) as such policy may be amended from time to time. A copy of the Relocation Policy is included as Exhibit C.

Health Exam
As an executive of JCPenney, you will be eligible for an allowance of up to $3,000 for an annual health exam.  JCPenney does not provide a gross-up for taxes on perquisites.

Indemnification 
As an executive officer of JCPenney you will be entitled to enter into JCPenney’s standard indemnification agreement that is offered to all of its executive officers and shall be provided with directors & officers liability insurance on the same basis that it is provided to all executive officers and members of the Board including, if applicable, “tail” coverage.  This indemnification agreement is effective upon signed acceptance by you.

6501 Legacy Drive
Plano, TX 75024
jcp.com

Marvin R. Ellison
October 10, 2014
Page 4 

Benefits
We offer a comprehensive benefits package. A listing of our benefit programs is attached as Exhibit D.  

Outside Board Memberships
It is our understanding that you currently serve as a member of the Board of Directors of FedEx Corporation (“FedEx”).  You may continue to serve on the FedEx board of directors or, subject to the reasonable approval of the Board, on the board of directors of another company in lieu of FedEx, following commencement of your employment with JCPenney.

Reasonable Attorney’s Fees
JCPenney agrees to reimburse you for up to $25,000 in legal fees incurred in connection with the negotiation of the terms of your employment with JCPenney.

Terms, Conditions, and Contingencies
The terms and conditions of this offer letter supersede any previous representations concerning any terms or conditions of your employment with JCPenney.  Additionally, this offer, including referenced agreements, is governed by federal law and the laws of the State of Texas, without regard to choice of law provisions of any other state.  While we are confident that we will have a mutually beneficial employment relationship, employment with JCPenney is voluntary and at-will and this offer letter does not create a contract for employment. Under this relationship, JCPenney may, at any time, decide to end an individual’s employment with or without cause, prior notice or discipline at JCPenney’s sole discretion. Likewise, any employee is free to end his or her employment at any time for any reasons with or without notice. Nothing in this offer or any attached agreement is intended to alter the at-will employment relationship.

This offer of employment is expressly contingent upon JCPenney’s receiving the following:

	
		
	•
	I-9 Required documentation. 

	
		
	•
	Your signed agreement to respect confidential information (this agreement is attached to your offer letter).

	
		
	•
	Your signed agreement to certify your compliance with JCPenney’s Statement of Business Ethics. You will sign the associated Certificate of Compliance on your first day of employment.

If any one of the above conditions is not satisfied this offer shall not be effective. 

6501 Legacy Drive
Plano, TX 75024
jcp.com

Marvin R. Ellison
October 10, 2014
Page 5 

Please confirm your acceptance of this offer by signing below and returning the signed offer letter along with signed agreements to Janet Dhillon (email: jdhillon@jcp.com), EVP, General Counsel and Secretary of JCPenney. 

On behalf of the Board of Directors, we are excited about the opportunity to work with you and welcome you to the JCPenney team!  I look forward to partnering with you as we work to return to profitable growth.

Regards,

/s/ Thomas J. Engibous

Thomas J. Engibous
Chairman of the Board
JCPenney

My signature acknowledges that I am accepting your offer of employment as outlined above. I acknowledge that this is not a contract of employment.

Name (Print):    Marvin R. Ellison                

Signature:    /s/ Marvin R. Ellison                

Date:        October 10, 2014                

6501 Legacy Drive
Plano, TX 75024
jcp.com

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