EXHIBIT 10(ii)(z)
SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATES OF
J. C. PENNEY COMPANY, INC.
ADOPTED EFFECTIVE JANUARY 1, 1978
AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1995
AS AMENDED THROUGH June 18, 2001
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This document is the amended and restated Plan adopted by the
Benefit Plans Review Committee (BPRC) on July 11, 1995 with an
effective date of August 1, 1995, as amended on the following
dates:
April 1, 1996 by Director of Personnel;
April 10, 1996 by Board of Directors;
April 10, 1996 by Benefit Plans Review Committee;
June 28, 1996 by Personnel Committee;
July 9, 1997 by Benefit Plans Review Committee;
December 30, 1997 by Director of Personnel;
March 18, 1998 by Director of Personnel;
January 13, 1999 by Board of Directors;
July 14, 1999 by Board of Directors;
March 7, 2000 by Benefit Plans Review Committee;
February 6, 2001 by Human Resources Committee;
March 22, 2001 by Human Resources and Compensation Committee; and
June 18, 2001 by Director of Business Planning and Support
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SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATES OF
J. C. PENNEY COMPANY, INC.
Adopted Effective January 1, 1978
Amended and Restated Effective August 1, 1995
As Amended Through June 18, 2001
TABLE OF CONTENTS
Article Page
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ARTICLE I. INTRODUCTION .......................................................................... 4
ARTICLE II. DEFINITIONS .......................................................................... 5
ARTICLE III. PARTICIPATION ....................................................................... 14
ARTICLE IV. BENEFITS ............................................................................. 15
(1) At Early, Traditional, or Delayed Retirement Date......................................... 15
(2) Minimum Benefit........................................................................... 17
(3) Social Security Make-up................................................................... 19
(4) Death Benefit............................................................................. 19
(5) Life Insurance Coverage................................................................... 19
(6) Effect of Certain Payments made in December 1992.......................................... 20
(7) Special Rules for VERP Plan Participants.................................................. 20
(8) Nonduplication of Benefits................................................................ 23
(9) Benefits for Certain Former Financial Services Plan Participants.......................... 23
ARTICLE V. FORM AND COMMENCEMENT OF BENEFIT PAYMENTS ............................................ 25
(1) Delayed Commencement of Benefits.......................................................... 25
(2) Optional Forms of Benefit Payment......................................................... 25
(3) Small Annuities........................................................................... 25
ARTICLE VI. ADMINISTRATION ...................................................................... 26
ARTICLE VII. TYPE OF PLAN ....................................................................... 27
ARTICLE VIII. MISCELLANEOUS....................................................................... 28
(1) Additional Credited Service and Other Adjustments......................................... 28
(2) Amendment and Termination................................................................. 29
(3) Rights of Associates...................................................................... 31
(4) Mistaken Information...................................................................... 31
2
(5) Liability................................................................................. 31
(6) Benefits for Reemployed Eligible Management Associates.................................... 31
(7) Construction.............................................................................. 32
(8) Non-assignability of Benefits............................................................. 32
(9) Governing Law............................................................................. 32
(10) Transferred Eligible Management Associates................................................ 32
(11) Change of Control......................................................................... 33
(12) Separation Allowance Program.............................................................. 35
ARTICLE IX. CLAIMS PROCEDURES ................................................................... 37
APPENDIX I ........................................................................................ 39
APPENDIX II ....................................................................................... 40
APPENDIX III ...................................................................................... 41
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SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATES OF
J. C. PENNEY COMPANY, INC.
Adopted Effective January 1, 1978
Amended and Restated Effective August 1, 1995
As Amended Through June 18, 2001
ARTICLE I. INTRODUCTION
The Supplemental Retirement Program for Management Profit-Sharing
Associates of J. C. Penney Company, Inc. is a plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated associates. This document amends and restates the Plan,
originally adopted effective January 1, 1978, effective August 1, 1995.
With respect to any Eligible Management Associate who terminated employment
prior to August 1, 1995, benefits payable to such Eligible Management Associates
are determined pursuant to the terms and conditions of the Supplemental
Retirement Program for Management Profit-Sharing Associates of J. C. Penney
Company, Inc. in effect as of July 31, 1995.
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ARTICLE II. DEFINITIONS
For the purpose of this Plan the following terms shall have the following
meanings:
Associate: Any person who is employed by a Controlled Group Member if the
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relationship between a Controlled Group Member and such person would constitute
the legal relationship of employer and employee, including an officer who may or
may not be a director, but excluding a director serving only in that capacity,
and excluding any employee of a Controlled Group Member substantially all the
operations of which are outside the United States unless United States Social
Security contributions are made on behalf of such employee.
Average Final Compensation: The average annual Compensation of an Eligible
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Management Associate in respect of the three calendar years of his highest
Compensation determined by taking into account (a) the Compensation attributable
to the Eligible Management Associate's Credited Service in the calendar year in
which occurs such Early Retirement Date, Traditional Retirement Date, or Delayed
Retirement Date, as the case may be, and (b) the Compensation during either of
the following, whichever is appropriate:
(i) the 9 full calendar years of Final Service immediately preceding the
calendar year in which occurs the Eligible Management Associate's Early
Retirement Date, Traditional Retirement Date, or Delayed Retirement Date,
as the case may be; or
(ii) if such Eligible Management Associate has less than 9 full calendar years
of Final Service, the entire number of full calendar years of such Final
Service immediately preceding the calendar year in which occurs the
Eligible Management Associate's Early Retirement Date, Traditional
Retirement Date, or Delayed Retirement Date, as the case may be.
If such Eligible Management Associate has less than three full calendar
years of Final Service prior to the calendar year in which occurs his Early
Retirement Date, Traditional Retirement Date, or Delayed Retirement Date,
Average Final Compensation shall mean the aggregate Compensation earned with
respect to the Eligible Management Associate's Final Service immediately
preceding the calendar year in which occurs his Early Retirement Date,
Traditional Retirement Date or Delayed Retirement Date, divided by the total
number of full months of such Final Service, multiplied by 12.
Benefit Commencement Date: The date upon which payment of a Pension Plan
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Participant's retirement benefit is scheduled to begin pursuant to the terms of
the Pension Plan.
Benefit Restoration Plan: J. C. Penney Company, Inc. Benefit Restoration
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Plan, as amended from time to time.
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Benefits Administration Committee: The committee appointed by the Human
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Resources Committee and authorized by Article VI to administer the Plan.
Board of Directors: Board of Directors of the Company.
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Code: The Internal Revenue Code of 1986, as amended from time to time.
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References to "regulations" are to regulations published by the Secretary of the
Treasury under applicable provisions of the Code, unless otherwise expressly
indicated.
Company: J. C. Penney Company, Inc., a Delaware corporation. The term
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"Company" will also include any successor employer, if the successor employer
expressly agrees in writing as of the effective date of succession to continue
the Plan.
Company Account(s): The account(s) of that name and any successor
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account(s) and/or fund(s) established and maintained pursuant to the Savings and
Profit-Sharing Retirement Plan prior to January 1, 1999, the Savings,
Profit-Sharing and Stock Ownership Plan, and the Mirror Savings Plans in which
are reflected all Company contributions allocated to an Eligible Management
Associate together with all assets attributable thereto.
Compensation: The total cash remuneration (including Profit Incentive
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Compensation, and whether received or deferred (i) Performance Unit Plan
payments and (ii) EVA Performance Plan payments) paid to an Associate by the
Company or a Participating Employer, or, for the purpose of determining Average
Final Compensation only, by a Controlled Group Member, that qualifies as wages
as defined in Code Section 3401(a), determined without regard to any reduction
for workers' compensation and state disability insurance reimbursements, and all
other compensation payments for which the Company or a Participating Employer or
other Controlled Group Member is required to furnish the Associate a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052, reduced by the
following items:
(a) all expatriate and foreign service allowances, including without limitation
cost-of-living adjustments;
(b) tax gross-up payments;
(c) noncash prizes;
(d) income attributable to employer-provided group term life insurance;
(e) income recognized with respect to stock options and stock awards;
(f) tax equalizations payments;
(g) taxable and nontaxable relocation payments;
(h) payments of deferred amounts under the EVA Performance Plan or any other
nonqualified plan of deferred compensation;
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(i) special payments made to an Associate under the Performance Unit Plan or the
EVA Performance Plan in the year of retirement or disability;
(j) severance pay, outplacement pay, and/or critical pay;
(k) third-party disability payments (State of New York);
(l) home sale bonus payments;
(m) mortgage interest assistance payments;
(n) senior management perquisites, tax preparation fees, and allowances for
travel from Alaska and Hawaii;
(o) legal settlements constituting back pay or other wage payments;
(p) non-associate travel reimbursements;
(q) clothing allowance payments; and
(r) payments made pursuant to a non-compete agreement.
In addition, Compensation includes any contributions made by a
Participating Employer or other Controlled Group Member on behalf of an
Associate pursuant to a deferral election under any employee benefit plan
containing a cash or deferred arrangement under Code Section 401(k), and any
amounts that would have been received as cash but for an election to receive
benefits under a cafeteria plan meeting the requirements of Code Section 125,
and amounts deferred by an Associate under the Deferred Compensation Plan and
the Mirror Savings Plans.
Each annual payment to an Associate (i) from the Performance Unit Plan,
(ii) from the EVA Performance Plan, and (iii) of Profit Incentive Compensation
shall be deemed to have been made in the calendar year immediately preceding the
year in which payment was actually made.
For all purposes under the Plan, the Benefits Administration Committee, in
its discretion, may exclude additional items from "Compensation" under the Plan.
An Associate who is in the service of the Armed Forces of the United States
during any period in which his reemployment rights are guaranteed by law will be
considered to have received the same rate of Compensation during his absence he
was receiving immediately prior to his absence, provided he returns to
employment with a Controlled Group Member within the time such rights are
guaranteed.
Controlled Group: The Company and all other corporations, trades and
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businesses, the employees of which, together with employees of the Company, are
required by the first sentence of subsection (b) , by subsection (c) , by
subsection (m) , or by subsection (o) of Code section 414 to be treated as if
they were employed by a single employer.
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Controlled Group Member: Each corporation or unincorporated trade or
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business that is or was a member of a Controlled Group, but only during such
period as it is or was such a member.
Credited Service: The years of credited service, up to a total maximum of
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40 years, credited to an Eligible Management Associate (a) under the terms of
the Pension Plan, determined without regard to any yearly limitation imposed by
the terms of the Pension Plan (excluding any periods of Disability Service), and
(b) under Paragraph (1) of Article VIII.
Deferred Compensation Plan: J. C. Penney Company, Inc. 1995 Deferred
--------------------------
Compensation Plan, as amended from time to time, as in existence prior to
January 1, 1999 before being merged into the J. C. Penney Company, Inc. Mirror
Savings Plan II effective January 1, 1999.
Deferred Performance Unit Plan: J. C. Penney Company, Inc. Deferred
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Compensation Plan originally effective February 1, 1985 and amended to prohibit
further deferrals effective January 26, 1991.
Delayed Retirement Date: The first day of the month immediately following
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the date on which an Eligible Management Associate Separates from Service after
having attained Traditional Retirement Age.
Disability Service: The years of disability service credited to an Eligible
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Management Associate under the terms of the Pension Plan.
Early Retirement Age: The first date on which an Eligible Management
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Associate has attained age 55 and has completed at least 15 years of Service.
Early Retirement Date: The first day of the month immediately following the
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date on which an Eligible Management Associate Separates from Service after
having attained Early Retirement Age but before attainment of such Eligible
Management Associate's Traditional Retirement Age.
Eligible Management Associate: An Associate (excluding an Associate who
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retired from (i) a Participating Employer before January 1, 1978, (ii) J. C.
Penney Life Insurance Company or J. C. Penney Casualty Insurance Company on or
after January 1, 1990, or (iii) Thrift Drug, Inc. on or after April 1, 1991)
classified under the Company's personnel policy as a management associate and
who is participating in a Profit Incentive Compensation program or other profit
sharing compensation program (other than the Savings and Profit-Sharing
Retirement Plan or the Savings, Profit-Sharing and Stock Ownership Plan) of a
Participating Employer on his Traditional Retirement Date or Early Retirement
Date. Notwithstanding the preceding sentence, the Benefits Administration
Committee reserves the right to waive, in its discretion, one or more of the
requirements of this paragraph on a case by case basis for any Associate age 55
who was participating in a Profit Incentive Compensation program on December 31,
1995.
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ERISA: Employee Retirement Income Security Act of 1974, as amended from
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time to time.
Estimated Social Security Benefit: (1) For purposes of the benefit provided
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in Paragraph (3) of Article IV the monthly benefit the Eligible Management
Associate would receive under the Social Security Act at age 62 based on the
following assumptions:
(i) All compensation earned (a) prior to the later of 1951 or the year the
Eligible Management Associate attains age 22 or (b) in the year in
which the Eligible Management Associate Separates from Service if such
separation occurs prior to the last day of the calendar year will be
disregarded;
(ii) Earnings for the years prior to the Eligible Management Associate's
employment with the Participating Employer are in the same proportion
to the Taxable Wage Base in effect for the prior years as that which
the first full year of earnings bore to the Taxable Wage Base in
existence at that time;
(iii) Earnings are averaged over a number of full calendar years as
determined by the following:
Year of Birth Number of Full
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Calendar Years
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1925 31
1926 32
1927 33
1928 34
After 1928 35
If the Eligible Management Associate's total calendar years of
earnings determined under clauses (i) and (ii) above exceed the number
of full years of earnings that are to be averaged based on the year of
such Eligible Management Associate's birth, one or more of the
Eligible Management Associate's lowest years of earnings will be
disregarded until his total years of earnings equals the number of
full years of earnings that are to be averaged based on the year of
such Eligible Management Associate's birth.
(iv) Social Security indexing factors used are those actually used by the
Social Security Administration in determining the Eligible Management
Associate's Social Security benefit, and if those factors are not
available, the latest published factors will be used.
(2) For Eligible Management Associates who reach Traditional Retirement Age on
or prior to August 1, 2000, for purposes of clause (iii) of Subparagraph
(b) of Paragraph (1) of Article IV the lesser of the benefit determined
under (A) or (B) below:
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(A) The product of (a) multiplied by (b) with (a) being the monthly benefit
the Eligible Management Associate would receive under the Social Security
Act at age 62, or if retirement is later than age 62, the benefit payable
at actual retirement, based on the following assumptions:
(i) The benefit is based solely on the compensation earned during the
Eligible Management Associate's calendar years of service and
disregarding the Eligible Management Associate's last calendar year of
service if less than a full year and disregarding completely all other
years;
(ii) Earnings are averaged over the number of years of actual credited
service, as defined in the Pension Plan;
(iii) Social Security indexing factors used are those actually used by the
Social Security Administration in determining the Eligible Management
Associate's social security benefit, and if those factors are not
available, the latest published factors will be used;
and (b) being a fraction, not exceeding one, the numerator of which is the
Eligible Management Associate's years of credited service, as
defined by the Pension Plan and the denominator of which is 30.
(B) The monthly benefit the Eligible Management Associate would receive
under the Social Security Act at age 62, or if retirement is later than age
62, the benefit payable at actual retirement, based on the following
assumptions:
(i) All compensation earned (a) prior to the later of 1951 or the year the
Eligible Management Associate attains age 22 or (b) in the year in
which the Eligible Management Associate Separates from Service if such
separation occurs prior to the last day of the calendar year will be
disregarded;
(ii) The Eligible Management Associate earned no compensation for calendar
years before the Eligible Management Associate was employed by the
Participating Employer, which years will be included in the
calculation as years of zero earnings;
(iii) Earnings are averaged over a number of full calendar years as
determined by the following:
Year of Birth Number of Full
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Calendar Years
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1925 31
1926 32
1927 33
1928 34
After 1928 35
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If the Eligible Management Associate's total calendar years of
earnings determined under clauses (i) and (ii) above exceed the number
of full years of earnings that are to be averaged based on year of
such Eligible Management Associate's birth, one or more of the
Eligible Management Associate's lowest years of earnings will be
disregarded until his total years of earnings equals the number of
full years of earnings that are to be averaged based on the year of
such Eligible Management Associate's birth.
(iv) Social Security indexing factors used are those actually used by the
Social Security Administration in determining the Eligible Management
Associate's Social Security benefit, and, if those factors are not
available, the latest published factors will be used.
For Eligible Management Associates who reach Traditional Retirement Age
after August 1, 2000, for purposes of clause (iii) of Subparagraph (b) of
Paragraph (1) of Article IV, Estimated Social Security Benefit shall be
determined under (B) above.
EVA Performance Plan: The J. C. Penney Company, Inc. 1998 EVA Performance
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Plan, as amended from time to time.
Final Service: An Eligible Management Associate's years of Credited Service
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plus, if he becomes an Associate of a Controlled Group member that is not a
Participating Employer, the years of Service with such Controlled Group Member
that are credited to the Associate after he ceases earning Credited Service.
Calendar years that include a period of Disability Service will not be included
in the determination of Final Service. Calendar years of Service or of Credited
Service that are interrupted by a Separation from Service or by one or more
years in which the Eligible Management Associate did not receive Compensation
for the entire year will be considered to be consecutive for purposes of
determining consecutive years of Final Service.
Human Resources and Compensation Committee: The Human Resources and
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Compensation Committee of the Board of Directors of the Company.
Human Resources Committee: The Human Resources Committee of the Management
-------------------------
Committee of the Company.
Interest Income Account(s): The account(s) of that name and any successor
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account(s) and/or fund(s) established and maintained pursuant to the Savings and
Profit-Sharing Retirement Plan and/or the Savings, Profit-Sharing and Stock
Ownership Plan.
Matched Deposits: An Eligible Management Associate's deposits, not in
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excess of 6% of his compensation (as defined in the Savings and Profit-Sharing
Retirement Plan, the Savings, Profit-Sharing and Stock Ownership Plan and the
Mirror Savings Plans), made pursuant to the Savings and Profit-Sharing
Retirement Plan, the Savings, Profit-Sharing and Stock Ownership Plan, and the
Mirror Savings Plans.
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Mirror Savings Plans: The J. C. Penney Company, Inc. Mirror Savings Plan I,
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the J. C. Penney Company, Inc. Mirror Savings Plan II, and the J. C. Penney
Company, Inc. Mirror Savings Plan III.
Participating Employer: The Company and any other Controlled Group Member
----------------------
or organizational unit of the Company or of a Controlled Group Member which is
designated as a Participating Employer under the Plan by the Human Resources
Committee; provided, however, that if such designation would substantially
increase the cost of the Plan to the Company, such designation shall be subject
to the sole discretion of the Board of Directors.
Penney Stock (Company) Account: The account(s) of that name and any
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successor account(s) and/or fund(s) established and maintained pursuant to the
Savings and Profit-Sharing Retirement Plan and/or the Savings, Profit-Sharing
and Stock Ownership Plan.
Pension Plan: J. C. Penney Company, Inc. Pension Plan, as amended from time
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to time.
Pension Plan Participant: An Associate or former Associate who is treated
------------------------
as a participant under the Pension Plan.
Performance Unit Plan: J. C. Penney Company, Inc. 1984 Performance Unit
---------------------
Plan, as amended from time to time, as in existence prior to February 1, 1998
when terminated effective January 31, 1998.
Plan: Supplemental Retirement Program for Management Profit-Sharing
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Associates of J. C. Penney Company, Inc., as amended from time to time.
Profit Incentive Compensation: The share of store profits to which an
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Associate is entitled as a store manager or as a member of a store's management
staff; the management incentive compensation to which a management Associate is
entitled; the regional or district incentive compensation to which a regional or
district office Associate is entitled; and, if so determined by the Human
Resources Committee, any other compensation based on profits (excluding any
Company contributions to and benefits under the Savings and Profit-Sharing
Retirement Plan and Savings, Profit-Sharing and Stock Ownership Plan) to which
an Associate of a Participating Employer, or, for the purpose of determining
Average Final Compensation only, a Controlled Group Member who is not a
Participating Employer, is entitled.
Savings and Profit-Sharing Retirement Plan: J. C. Penney Company, Inc.
------------------------------------------
Savings and Profit-Sharing Retirement Plan, as amended from time to time, as in
existence prior to January 1, 1999 before being merged into the Savings,
Profit-Sharing and Stock Ownership Plan effective January 1, 1999.
Savings, Profit-Sharing and Stock Ownership Plan: J. C. Penney Company,
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Inc. Savings, Profit-Sharing and Stock Ownership Plan, as amended from time to
time.
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Separation from Service or Separates from Service: Termination of Service
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after having attained age 55 by reason of disability, discharge, retirement
(including resignation), or death. Termination of Service due to a disability is
deemed to occur upon the later of termination of the Eligible Management
Associate's sick pay or at the end of any leave of absence granted the Eligible
Management Associate.
Service: The period of time credited to an Eligible Management Associate as
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service under the terms of the Pension Plan.
Spouse: The individual to whom an Eligible Management Associate is legally
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married under the laws of the State (within the meaning of section 3(10) of
ERISA) in which the Eligible Management Associate is domiciled, or if domiciled
outside the United States, under the laws of the State of Texas.
Tax Deferred Deposits: Deposits made under the Savings and Profit-Sharing
---------------------
Retirement Plan and/or the Savings, Profit-Sharing and Stock Ownership Plan
which were subject to a cash or deferred election under Section 401(k) of the
Code and designated as Tax Deferred Deposits pursuant to the terms of the
Savings and Profit-Sharing Retirement Plan and/or the Savings, Profit-Sharing
and Stock Ownership Plan.
Taxed Deposits: An Eligible Management Associate's after-tax deposits made
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under the Savings and Profit-Sharing Retirement Plan and/or the Savings,
Profit-Sharing and Stock Ownership Plan and designated as Taxed Deposits
pursuant to the terms of the Savings and Profit-Sharing Retirement Plan and/or
the Savings, Profit-Sharing and Stock Ownership Plan.
Traditional Retirement Age: The date on which an Eligible Management
--------------------------
Associate attains age 60.
Traditional Retirement Date: The first day of the month immediately
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following the date an Eligible Management Associate attains Traditional
Retirement Age if such Eligible Management Associate Separates from Service on
such date.
Valuation Date: With respect to the Company Accounts, excluding the Penney
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Stock (Company) Account, each day of the calendar year. With respect to the
Penney Stock (Company) Account(s), each day of a calendar year on which the New
York Stock Exchange is open. If the New York Stock Exchange is closed, the
Penney Stock (Company) Account(s) will have the same value as of the last
immediately preceding day the Exchange was open.
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ARTICLE III. PARTICIPATION
Each Eligible Management Associate shall participate in the Plan as of such
Eligible Management Associate's Early Retirement Date, Traditional Retirement
Date, or Delayed Retirement Date, as the case may be; provided, however, that
such Eligible Management Associate who has a Separation from Service in the
month of December shall commence participation in the Plan as of the last day of
that December. Notwithstanding the preceding sentence, and except as otherwise
provided in Paragraph (9) of Article IV, effective on and after January 1, 1996,
any Associate who, on December 31, 1995, was not classified as management or who
was not in a Profit Incentive Compensation program shall not be considered an
Eligible Management Associate and shall not participate in the Plan. In
addition, effective as of the Closing (as such term is defined in Paragraph (9)
of Article IV), the Eligible Management Associates whose names are set forth on
Appendix II to the Plan shall cease to participate in the Plan and shall not be
entitled to a benefit under any provision of the Plan. In the event an Eligible
Management Associate whose name is set forth on Appendix II is employed after
the Closing by the Company or any Controlled Group Member, such person will not
thereafter be an Eligible Management Associate and will not participate in the
Plan on or after the date of such employment.
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ARTICLE IV. BENEFITS
(1) At Early, Traditional, or Delayed Retirement Date: The annual amount of
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benefit payable from the Plan in monthly installments to an Eligible Management
Associate commencing on such Eligible Management Associate's Early Retirement
Date, Traditional Retirement Date, or Delayed Retirement Date, as the case may
be, and terminating with the installment payable on the first day of the month
in which such Eligible Management Associate dies, shall be:
(a) the sum of
(i) 3% of the Eligible Management Associate's Average Final
Compensation multiplied by such Eligible Management Associate's
Credited Service not in excess of 10 years;
plus
(ii) 1% of the Eligible Management Associate's Average Final
Compensation multiplied by such Eligible Management Associate's
Credited Service in excess of 10 years but not in excess of 30
years;
plus
(iii) 1/2 of 1% of the Eligible Management Associate's Average Final
Compensation multiplied by such Eligible Management Associate's
Credited Service in excess of 30 years but not in excess of 40
years;
less
(iv) 1/3 of 1% for each month by which the Eligible Management
Associate's Early Retirement Date shall precede such Eligible
Management Associate's Traditional Retirement Date multiplied by
the Eligible Management Associate's Average Final Compensation;
less
(b) the sum of
(i) the single-life, no-death-benefit annuity equivalent of (a) the
annual amount of pension payable pursuant to the Pension Plan
(disregarding Disability Service) assuming that the Eligible
Management Associate's Benefit Commencement Date is the first day
of the month immediately following the date of such Eligible
Management Associate's Separation from Service, (b) the annual
amount payable pursuant to the terms of a domestic relations
order qualified under Code Section 414(p), (A) from the Pension
Plan and (B) from benefits accrued pursuant to Paragraph (1) of
Article IV of the Benefit Restoration Plan and (c) the accrued
benefit payable pursuant to Paragraph (1) of Article IV of the
Benefit Restoration Plan;
plus
(ii) the single-life, no-death-benefit annuity equivalent, as of the
Valuation Date which is the next trading date of the New York
Stock Exchange following the Eligible Management Associate's
Separation from Service, of
(a) the value of all assets allocated to the Eligible Management
Associate in the Company Account(s) under the Savings,
Profit-Sharing and Stock Ownership Plan, including such
assets allocated to him under
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the Savings and Profit-Sharing Retirement Plan prior to
January 1, 1999; and
(b) the value of any additional assets which would have been
allocated to the Eligible Management Associate's Company
Account(s) under the Savings and Profit-Sharing Retirement
Plan, the Savings, Profit-Sharing and Stock Ownership Plan,
and the Mirror Savings Plans, had such Eligible Management
Associate made all further permissible Matched Deposits up
to 6% of his compensation (as such term is defined in each
said plan) under each said plan and had he not made any
withdrawals of taxed Matched Deposits from the plans prior
to January 1, 1989; and
(c) the value of dividends attributable to units in his Company
Account (within the meaning of the Savings, Profit-Sharing
and Stock Ownership Plan) and distributed to the Eligible
Management Associate pursuant to Section 9.04 of the
Savings, Profit-Sharing and Stock Ownership Plan; and
(d) the value of any amounts payable pursuant to the terms of a
domestic relations order qualified under Code Section 414(p)
out of such Eligible Management Associate's Company
Account(s) from the Savings and Profit-Sharing Retirement
Plan and the Savings, Profit-Sharing and Stock Ownership
Plan; and
(e) the value of benefits payable to the Eligible Management
Associate (or another person on behalf of the Eligible
Management Associate from (A) his annual benefit limit
make-up account pursuant to paragraph (2) of Article IV of
the Benefit Restoration Plan prior to January 1, 1999, and
(B) his Company Accounts under the Mirror Savings Plans;
plus
(iii) 50% (less 1/4 of 1% for each month by which the Eligible Management
Associate's Early Retirement Date shall precede such Eligible
Management Associate's Traditional Retirement Date) of the Eligible
Management Associate's Estimated Social Security Benefit;
plus
(iv) in the case of an Eligible Management Associate whose Credited Service
is increased pursuant to Paragraph (1) of Article VIII, the amount of
annual retirement benefit (or any commutations thereof or
substitutions therefor) payable to an Eligible Management Associate
from any other employer, but only to the extent determined by the
Benefits Administration Committee, expressed in the form of a
single-life, no-death-benefit annuity equivalent (as determined by the
Benefits Administration Committee), commencing on such Eligible
Management Associate's Separation from Service.
In determining the amount referred to in clause (ii) of subparagraph (b) of
this Paragraph (1) of this Article IV, it shall be deemed that:
16
(i) an Eligible Management Associate who has not, at all times when he was
eligible to participate in the Savings and Profit-Sharing Retirement
Plan and the Savings, Profit-Sharing and Stock Ownership Plan and the
Mirror Savings Plans, contributed an amount sufficient to share, to
the maximum extent, in the Company contribution to such Plan or such
predecessor plan has so contributed and that an Eligible Management
Associate who did not share, to the maximum extent, in Company
contributions for which he was eligible under the Savings and
Profit-Sharing Retirement Plan due to any withdrawal of taxed Matched
Deposits, be deemed not to have any such withdrawal;
(ii) the share of any such Company contribution deemed to have been
credited to an Eligible Management Associate pursuant to this
Paragraph for plan years ending before January 1, 1989 shall be deemed
to have experienced the same rate of dividends, earnings, and change
in value as the actual rate of dividends, earnings, and change in
value experienced by the Penney Stock (Company) Account under the
Savings and Profit-Sharing Retirement Plan from the time such share of
a Company contribution is deemed to have been credited for said plan
years and that the value of this said amount as of December 31, 1988
under the Savings and Profit-Sharing Retirement Plan, plus the share
of any such Company contribution deemed to have been credited to an
Eligible Management Associate pursuant to this Paragraph for plan
years beginning after December 31, 1988 shall be deemed to have
experienced the same rate of earnings and change in value experienced
by the Interest Income Account under the Savings, Profit-Sharing and
Stock Ownership Plan from the time such share of a Company
contribution is deemed to have been credited for said plan years;
(iii) the value of the amount of the Company Account(s) and annual limit
make-up account paid out pursuant to a domestic relations order
qualified under Section 414(p) of the Code deemed to have been
credited to an Eligible Management Associate pursuant to this
Paragraph shall be deemed to have experienced the same rate of
earnings and change in value experienced by the Interest Income
Account under the Savings, Profit-Sharing and Stock Ownership Plan
from the time such amount is deemed to have been credited; and
(iv) the rates used to determine the single-life, no-death-benefit annuity
equivalent shall be the rates that the Benefits Administration
Committee, in its discretion, shall determine.
(2) Minimum Benefit: In no event will the amount payable to an Eligible
---------------
Management Associate under Paragraph (1) of this Article IV at such Eligible
Management Associate's Traditional Retirement Date or Delayed Retirement Date,
as the case may be, be less than the difference between:
(A) the amount of pension payable pursuant to the early retirement pension
benefit provision of the Pension Plan (determined without regard to
any
17
compensation or benefit limits imposed by the Code) that would be
applicable if the Eligible Management Associate elected to receive
benefits pursuant to that provision prior to such Eligible Management
Associate's normal retirement date, as defined in the Pension Plan
(disregarding Disability Service, if any, and including as Credited
Service any increase granted under Article VIII hereof) assuming the
Eligible Management Associate's Benefit Commencement Date is the first
day of the month immediately following the day of such Eligible
Management Associate's Separation from Service under this Plan, and
(B) the amount of pension payable pursuant to the early retirement pension
benefit provision of the Pension Plan (determined without regard to
any compensation or benefit limits imposed by the Code) that would be
applicable if the Eligible Management Associate did not elect to
receive benefits pursuant to that provision prior to the Eligible
Management Associate's normal retirement date, as defined in the
Pension Plan (disregarding Disability Service, if any, and including
as Credited Service any increase granted under Article VIII hereof).
In no event will the amount payable under Paragraph (1) of this Article IV
to an Eligible Management Associate who:
(a) Separates from Service on his Early Retirement Date within one year
prior to his Traditional Retirement Date and who is granted additional
Credited Service pursuant to Paragraph (1) of Article VIII at his
Early Retirement Date, or
(b) Separates from Service because of a reduction in force and is
designated as an individual termination by the Director of Personnel
in accordance with Paragraph (1) of Article VIII and who is granted
deemed additional months of Credited Service thereunder be less than
the difference between
(A) the amount of pension that would be payable (determined without
regard to any compensation or benefit limits imposed by the Code) at
such Eligible Management Associate's normal retirement date, as
defined by the Pension Plan (disregarding Disability Service, if any,
and including as Credited Service, as defined by the Pension Plan, any
increase granted under Article VIII hereof), and
(B) the amount of pension payable pursuant to the early retirement
pension benefit provision of the Pension Plan (determined without
regard to any compensation or benefit limits imposed by the Code) that
would be applicable if the Eligible Management Associate elected to
receive benefits pursuant to that provision prior to such Eligible
Management Associate's normal retirement date, as defined by the
Pension Plan (disregarding Disability Service, if any, and excluding
as Credited Service any increase granted under Article VIII hereof)
assuming the Eligible Management Associate's Benefit Commencement Date
is the first day of the month
18
following such associate's Separation from Service, but in no event
prior to the date such associate reaches age 59.
(3) Social Security Make-up: In addition to any other benefit payable under
-----------------------
this Plan, an annual benefit equal to the Estimated Social Security Benefit
shall be payable in monthly installments to an Eligible Management Associate
commencing on such Eligible Management Associate's Traditional Retirement Date
or Delayed Retirement Date up to age 62, as the case may be, (or, for an
Eligible Management Associate who Separates from Service within one year prior
to his Traditional Retirement Date and who is granted any adjustment pursuant to
either clause (i) or (ii) of Paragraph (1) of Article VIII, on his Early
Retirement Date) and terminating with the installment payable on the first day
of the month in which such Eligible Management Associate dies or with the
installment payable on the first day of the month prior to the month in which
the Eligible Management Associate first becomes eligible for the primary old age
benefit payable under the United States Social Security laws by reason of
disability or attainment of age 62, whichever comes first.
An Eligible Management Associate, who, on his Separation from Service, is
entitled to disability benefits under the United States Social Security laws,
shall not be eligible for any Social Security make-up benefits provided for in
this paragraph.
(4) Death Benefit: If an Eligible Management Associate has elected a form
-------------
of payment with a guaranteed number of payments and the Eligible Management
Associate dies before receiving all benefits payable under that option,
remaining payments will be made to the person designated by the Eligible
Management Associate as his beneficiary at the time the form of payment was
selected.
If an Eligible Management Associate is married at the time such Eligible
Management Associate Separates from Service by reason of death after attaining
Early Retirement Age, or if an Eligible Management Associate who has Separated
from Service after attaining Early Retirement Age and who is married at the time
of his death, dies before payment has begun under the Plan, such Eligible
Management Associate's Spouse will receive the benefit that would have been
payable if the Eligible Management Associate had a Separation from Service
immediately prior to such Eligible Management Associate's death (if he was an
active Associate on the date of his death), and had begun to receive benefits
immediately prior to his death in the form of a 100% (75% if death occurs prior
to January 1, 1996) joint and survivor annuity without payment certain with the
Spouse as the beneficiary.
(5) Life Insurance Coverage: Commencing on an Eligible Management
-----------------------
Associate's Traditional Retirement Date or Delayed Retirement Date, as the case
may be, and ending on such Eligible Management Associate's attainment of age 70,
the Company will continue to provide an Eligible Management Associate who has at
least 10 years of uninterrupted employment with a Participating Employer with
term life insurance coverage at Company expense on a decreasing coverage basis.
The amount of coverage to be provided into retirement shall be equal, at
such Eligible Management Associate's Traditional Retirement Date, to 100% of the
amount of coverage being provided to him at Company expense immediately prior to
the
19
attainment of his Traditional Retirement Age reduced to 90%, 80%, 70%, 60%, 50%,
40%, 30%, 20%, and 10% of such amount of coverage on the first day of the month
following his attainment of age 61, 62, 63, 64, 65, 66, 67, 68, and 69,
respectively.
The amount of coverage to be provided at a Delayed Retirement Date shall be
the applicable percentage based upon the Eligible Management Associate's age on
such Delayed Retirement Date multiplied by the amount of coverage being provided
to him at Company expense immediately prior to his Delayed Retirement Date and
decreasing thereafter as provided in the preceding sentence.
If, on the Eligible Management Associate's Traditional Retirement Date or
Delayed Retirement Date, as the case may be, such Eligible Management Associate
is already covered by term life insurance under the Company's term life
insurance plan on account of the Eligible Management Associate's total
disability, such Eligible Management Associate shall not be eligible for any
term life insurance coverage provided for in this paragraph. Benefits payable
under this Plan will be paid to the beneficiary designated by the Eligible
Management Associate as soon as practicable after receipt of a properly
submitted claim.
A Participant whose group term life insurance coverage under the Plan
terminates because of his attainment of age 70 will have the right to convert
his group term life insurance coverage to an individual policy to the extent,
and only to the extent, permitted under the group policy applicable to the
Participant. Any election to convert to individual coverage must be made within
31 days after the Participant's coverage under the Plan terminates and must be
made in accordance with all requirements specified in such policy. The amount of
coverage that may be converted shall be the amount in effect immediately before
the Participant attained age 70.
(6) Effect of Certain Payments made in December 1992: In the event the
------------------------------------------------
Company, in its discretion, made payments to a current or former Eligible
Management Associate on or before December 31, 1992 under the Company's Profit
Incentive Compensation program and under the Performance Unit Plan and such
payments were attributable to the Company's fiscal year ending on January 30,
1993, this Paragraph shall apply. The effect of such payments on the benefits
payable to such individual under the Pension Plan and under the Savings,
Profit-Sharing and Stock Ownership Plan shall be determined with respect to
whether an increase or decrease in benefits resulted. Benefits payable under
this Plan to such current or former Eligible Management Associate shall be
adjusted (a) to offset any such increase in benefits and/or (b) to restore any
such decrease in benefits so that no advantage or detriment, as the case may be,
shall be experienced by any such current or former Eligible Management Associate
with respect to total retirement benefits under the above-referenced Plans and
this Plan.
(7) Special Rules for VERP Plan Participants: The following special rules
----------------------------------------
shall apply as applicable to an Eligible Management Associate who is a
participant in the J. C. Penney Company, Inc. Voluntary Early Retirement Plan
("VERP Plan") or who is eligible for benefits under Section 4.17(a) of the
Pension Plan.
20
(a) If the Eligible Management Associate has attained at least age 55 but
not age 60 as of April 30, 1998 and has compensation as determined under Section
4.17(d) the Pension Plan for the 1997 calendar year in excess of $80,000 but not
more than $87,000, he shall be entitled to receive a benefit in lieu of the
Minimum Benefit described in Paragraph (2) of Article IV equal to (i) minus (ii)
below:
(i) The annual enhanced normal retirement benefit that would have been
payable to the Eligible Management Associate from the Pension Plan
pursuant to Section 4.17(b) of the Pension Plan but for the
restrictions and limitations of said Section 4.17(b), calculated as
follows:
(A) For purposes of determining the Eligible Management Associate's
normal retirement benefit and supplemental retirement benefit that
would have been payable under the Pension Plan pursuant to Sections
4.1(b) and 4.1(e), 4.2(b) and 4.2(e), 4.3(b) and 4.3(e), or Section
4.3A(b) and 4.3A(e), three additional years of Credited Service, up to
a maximum of 35 such years, will be added to his Credited Service
determined as if he had Separated from Service on December 31, 1997;
and such retirement benefit will be unreduced for early commencement
of benefits. In no event will more than 10 years of Credited Service
be taken into account for purposes of determining his enhanced
supplemental retirement benefit.
(B) The Eligible Management Associate's minimum and protected
retirement benefits determined under the Pension Plan pursuant to
Sections 4.1(c), 4.2(c), 4.3(c), 4.3A(c), and 4.4; his supplemental
retirement benefit calculated under Sections 4.1(e), 4.2(e), 4.3(e) or
4.3A(e), which is to be added to his minimum benefit; and his
Recalculated Pension Benefit (as defined in the Pension Plan) under
Section 4.15 will be calculated without regard to the provisions of
this subparagraph (i), and the applicable early retirement factors set
forth in Section 4.5 of the Pension Plan will be applied.
(C) The Participant's enhanced retirement benefit will be the greater
of the benefit calculated under clause (A) or the benefit under clause
(B).
(ii) The annual enhanced normal retirement benefit actually payable to the
Eligible Management Associate pursuant to Section 4.17(c) of the
Pension Plan subject to the applicable early retirement factors set
forth in Section 4.5 of the Pension Plan, calculated as follows:
(A) For purposes of determining the Eligible Management Associate's
normal retirement benefit and supplemental retirement benefit under
the Pension Plan pursuant to Sections 4.1(b) and 4.1(e), 4.2(b) and
4.2(e), 4.3(b) and 4.3(e), or Section 4.3A(b) and 4.3A(e), three
additional years of Credited Service, up to a maximum of 35 such
years, will be added to his Credited Service determined as if the
Participant had Separated from Service on December 31, 1997; five
years will be added to his age as of April 30, 1998; and the
applicable early retirement factors set forth in Section 4.5 of the
Pension Plan will be applied based on his enhanced age.
21
In no event will more than 10 years of Credited Service be taken into
account for purposes of determining his enhanced supplemental
retirement benefit.
(B) The Eligible Management Associate's minimum and protected
retirement benefits determined under the Pension Plan pursuant to
Sections 4.1(c), 4.2(c), 4.3(c), 4.3A(c), and 4.4; his supplemental
retirement benefit calculated under Sections 4.1(e), 4.2(e), 4.3(e) or
4.3A(e), which is to be added to his minimum benefit; and his
Recalculated Pension Benefit (as defined in the Pension Plan) under
Section 4.15 will be calculated without regard to the provisions of
this subparagraph (ii), and the applicable early retirement factors
set forth in Section 4.5 of the Pension Plan will be applied.
(C) The Participant's enhanced retirement benefit will be the greater
of the benefit calculated under clause (A) or the benefit under clause
(B).
(b) If the Eligible Management Associate has attained at least age 60 but
not age 65 as of April 30, 1998 and has compensation as determined under the
Pension Plan for the 1997 calendar year of $87,000 or less, to avoid duplication
of benefits otherwise payable from the Plan and the Pension Plan,
(i) the Minimum Benefit described in Paragraph (2) of Article IV shall be
offset by the enhanced retirement benefit paid to such Eligible
Management Associate pursuant to Section 4.17(b) of the Pension Plan
calculated as described in paragraph (7)(a)(i)(A), (B) and (C) above,
and
(ii) if the monthly Social Security Make-up benefit described in Paragraph
(3) of Article IV is payable to such Eligible Management Associate,
the benefit shall be paid by the Plan only in the amount that exceeds
the $1,000 per month social security supplement paid to such Eligible
Management Associate pursuant to Section 4.17(f) of the Pension Plan.
(c) An Eligible Management Associate who as of his Separation from Service
has attained at least age 60 but has not attained age 62 shall not receive the
Social Security Make-up benefit described in paragraph (3) of Article IV of the
Plan if he elected to receive the lump sum payment described in subparagraph (b)
of Section 3.02 of the VERP Plan.
(d) Benefits payable from the Plan pursuant to this paragraph (7) shall be
subject to the provisions of paragraph (2) of Article V regarding optional forms
of benefit payments based on the ages of the Eligible Management Associate and
his Spouse on December 1, 1997.
(e) An Eligible Management Associate shall be entitled to life insurance
coverage under paragraph (5) of Article IV effective on the first day of the
month following his Separation from Service by reason of retirement. The amount
of such coverage shall be equal to 100% of the amount being provided to him at
Company expense immediately prior to his Separation from Service by reason of
retirement. Said amount shall be
22
reduced in accordance with paragraph (5) of Article IV starting with the first
day of the month following his attainment of age 61.
(f) In the event an Eligible Management Associate is reemployed by the
Company or a Participating Employer and again participates in the Plan, benefits
payable under the formula described in Paragraph (1) of Article IV, if any,
shall be reduced by the benefits to which the Eligible Management Associate is
entitled under the VERP Plan. Benefits payable under the Minimum Benefit
described in Paragraph (2) of Article IV or the benefit described in
subparagraph (a) above, whichever is applicable, if any, based on the Credited
Service attributable to his reemployment, shall be based on his actual age as of
his retirement date subsequent to his reemployment date.
(g) [Deleted]
(h) Notwithstanding any other provision of the Plan, an Eligible Management
Associate (excluding Officers of the Company) who is entitled to receive a
benefit under the Plan pursuant to the formula described in Paragraph (1) of
Article IV and who retires as part of the Voluntary Early Retirement Program
announced in 1997 shall receive the greater of:
(i) The amount payable under the Plan pursuant to Paragraph (1) of Article
IV as of his Early Retirement Date, Traditional Retirement Date, or
Delayed Retirement Date, as the case may be (the "Plan Benefit"), or
(ii) The amount derived by subtracting the aggregate benefit payable to the
Associate from the Pension Plan and, if applicable, the Benefit
Restoration Plan from the benefit communicated to the Associate in the
personalized VERP communication materials as the aggregate benefit
earned as of January 1, 1998, from the Plan, the Pension Plan and, if
applicable, the Benefit Restoration Plan.
(8) Nonduplication of Benefits: The benefits payable to or on behalf of an
--------------------------
Eligible Management Associate under the Plan shall not duplicate benefits
payable from the Pension Plan, the VERP Plan, the Benefit Restoration Plan, the
Mirror Savings Plans, or any separation pay program of the Company or a
Participating Employer or a Controlled Group Member. To the extent that any
benefits otherwise payable under the Plan are paid from one or more of the plans
or programs described in the prior sentence, such benefits under the Plan shall
be cancelled.
(9) Benefits for Certain Former Financial Services Plan Participants: The
----------------------------------------------------------------
provisions of this Paragraph (9) will become effective on the close of the
transactions ("Closing") contemplated by that certain Stock Purchase Agreement
among Commonwealth General Corporation, J. C. Penney Company, Inc. and J. C.
Penney Direct Marketing Services, Inc. dated as of March 7, 2001, provided that
the Closing occurs on or before September 30, 2001.
The Plan hereby assumes the accrued retirement income benefit obligation
under the Supplemental Retirement Program for Eligible Management Associates of
JCPenney Financial Services (the "Financial Services Plan") for each former
Associate
23
who (i) retired or separated from service prior to the Closing with a right to a
retirement income benefit under the Financial Services Plan and who had not
begun to receive retirement income benefits from the Financial Services Plan as
of the Closing and (ii) whose name is not set forth on Appendix I to the
Financial Services Plan, which Appendix is reproduced and attached as Appendix
III to the Plan. Each such former Associate will be entitled to a retirement
income benefit under this Plan in the amount of such former Associate's
Financial Services Plan accrued retirement income benefit and payable in the
same form and at the same time as such Financial Services Plan accrued
retirement income benefit would have been paid. In addition, the Plan hereby
assumes the obligation of the Financial Services Plan to make continued monthly
retirement income benefit payments to each former Associate who retired prior to
the Closing and had begun to receive retirement income benefits from the
Financial Services Plan as of the Closing in the same amount, the same form and
at the same time as such former Associate's Financial Services Plan retirement
income benefit was being paid.
24
ARTICLE V. FORM AND COMMENCEMENT OF BENEFIT PAYMENTS
(1) Delayed Commencement of Benefits: An Eligible Management Associate may
--------------------------------
elect that the commencement of his annual benefit payable under Paragraph (1) or
(2) of Article IV be delayed to the first day of any month following his Early
Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, as the
case may be (but not beyond the first day of the month in which he attains age
70). In such a case, the amount of annual benefit payable under Paragraph (1) or
(2) of Article IV shall be increased by 1/2 of 1% for each month that the
commencement of such benefits is delayed.
(2) Optional Forms of Benefit Payment: Except as otherwise provided in this
---------------------------------
Plan and subject to such rules and regulations as the Benefits Administration
Committee may establish from time to time with respect to time and manner of
election, an Eligible Management Associate may elect, prior to the commencement
of his annual benefit payable under Paragraph (1) or (2) of Article IV, to
receive a benefit of equivalent actuarial value (applying factors utilized in
the Pension Plan) to such benefit, which may be one of the forms of benefit
options described in the Pension Plan. The Benefits Administration Committee has
full authority to revise the forms of benefit options available under this Plan.
(3) Small Annuities: If the total benefit payable to an Eligible Management
---------------
Associate under Paragraph (1) or (2) of Article IV would not provide monthly
payments exceeding $100, the benefit shall be converted into an actuarially
equivalent lump sum payment (applying the actuarial factors utilized in the
Pension Plan). If an Eligible Management Associate who has begun to receive
payments under the Plan and who has elected a form of payment with a guaranteed
number of payments dies, and if the monthly benefit that becomes payable to the
beneficiaries of the Eligible Management Associate does not exceed $100 per
beneficiary, the monthly benefit shall be converted into an actuarially
equivalent lump sum payment (applying the actuarial factors utilized in the
Pension Plan).
25
ARTICLE VI. ADMINISTRATION
The Benefits Administration Committee will administer the Plan and will
have the full authority and discretion to accomplish that purpose, including
without limitation, the authority and discretion to:
(i) interpret the Plan and correct any defect, supply any omission or
reconcile any inconsistency or ambiguity in the Plan in the manner and
to the extent that the Benefits Administration Committee deems
desirable to carry on the purpose of the Plan;
(ii) resolve all questions relating to the eligibility of Associates to
become Eligible Management Associates and the eligibility of Eligible
Management Associates to participate in the Plan;
(iii) determine the amount of benefits payable to Eligible Management
Associates and authorize and direct the Company with respect to the
payment of benefits under the Plan;
(iv) make all other determinations and resolve all questions of fact
necessary or advisable for the administration of the Plan; and
(v) make, amend, and rescind such rules as it deems necessary for the
proper administration of the Plan.
The Benefits Administration Committee will keep a written record of its
action and proceedings regarding the Plan and all dates, records, and documents
relating to its administration of the Plan.
Any action taken or determination made by the Benefits Administration
Committee will be conclusive on all parties. No member of the Benefits
Administration Committee will vote on any matter relating specifically to such
member. In the event that a majority of the members of the Benefits
Administration Committee will be specifically affected by any action proposed to
be taken (as opposed to being affected in the same manner as each other Eligible
Management Associate in the Plan), such action will be taken by the Human
Resources Committee.
26
ARTICLE VII. TYPE OF PLAN
The Plan is a plan which is unfunded. The Plan is maintained by the Company
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees. The Plan shall be construed
according to the provisions of ERISA applicable to such plans. Benefits under
the Plan (other than the life insurance benefits referred to in Paragraph (5) of
Article IV which may be insured) are paid from the general assets of the
Company.
In the event that it should subsequently be determined by statute or by
regulation or ruling that the Plan is not "a plan which is unfunded and is
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" within the meaning
of sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA and section
2520.104-24 of Chapter 29 of the Code of Federal Regulations, participation in
the Plan shall be restricted by the Benefits Administration Committee to the
extent necessary to assure that it will be such a plan within the meaning of
such sections.
27
ARTICLE VIII. MISCELLANEOUS
(1) Additional Credited Service and Other Adiustments: For all purposes of
-------------------------------------------------
the Plan, the Credited Service of an Eligible Management Associate may be
increased, and with respect to an Eligible Management Associate whose Early
Retirement Date is within one year prior to his Traditional Retirement Date, (i)
the percentage reduction on account of early retirement referred to in clause
(iv) of Subparagraph (a) of Paragraph (1) of Article IV may be decreased or
waived, and (ii) the entitlement to and the amount of benefits or coverage
referred to in Paragraphs (2), (3), and (5) of Article IV may be accelerated or
increased, as the case may be, in the discretion of:
(a) in the case of an Eligible Management Associate other than members of
the Company's executive or senior management committee (or a successor committee
then in place) described in Subparagraphs (b) and (c) of this Paragraph (1), the
Chairman of the Board or the Chief Human Resources Officer;
(b) in the case of an Eligible Management Associate who is a member of the
Company's executive or senior management committee but who is not a director of
the Company, the Human Resources and Compensation Committee; and
(c) in the case of the Chairman of the Board and an Eligible Management
Associate who is a member of the Company's executive or senior management
committee and who is also a director of the Company, the Board of Directors.
For all purposes of the Plan, the Benefits Administration Committee in its
discretion, may make adjustments in Compensation and Credited Service with
respect to payments of severance pay, including, but not limited to,
outplacement pay and critical pay.
An Eligible Management Associate who terminates employment due to a
reduction in force, as defined below, and who does not satisfy the requirements
for Traditional Retirement Age on the date of termination shall receive deemed
additional months of age and/or Service, based on the following:
Years of Service Deemed Additional Months of Age and/or Service
- ---------------- ----------------------------------------------
0 - 9 0
10-14 12
15-19 18
20 or more 24
A reduction in force shall mean the termination of employment of an Eligible
Management Associate because of:
(a) A partial unit closing or complete unit closing ("unit closing") as
determined by the Director of Personnel of the Company in his sole discretion,
or
(b) Other business reasons of the Company ("individual termination") as
determined by the Director of Personnel of the Company in his sole discretion.
With the approval of the Benefits Administration Committee of the Company, the
Director of
28
Human Resources may increase such award by up to 24 deemed additional months of
age and/or Service for an individual termination.
For the purposes of determining the benefit payable under Paragraph (1) of
Article IV, such Eligible Management Associate is deemed to have attained
Traditional Retirement Age. The deemed additional months of age and/or Service
shall be added, but only to the extent necessary, to the Eligible Management
Associate's age and/or Service, in such amounts necessary to satisfy the minimum
requirements for Traditional Retirement Age or, with the approval of the
Benefits Administration Committee, an Early Retirement Age on or after age 59.
The deemed additional months of Service shall count as Credited Service for
the purpose of entitlement to benefits under this Plan only in the event of an
individual termination as described in (b) of the preceding subparagraph, and
shall not count as Credited Service in the event of a unit closing described in
(a) of the preceding subparagraph.
For the purpose of determining life insurance coverage under paragraph (5)
of Article IV, an Eligible Management Associate deemed to have attained
Traditional Retirement Age in the event of a unit closing described in (a) of
the preceding subparagraph shall be entitled to coverage effective on the first
day of the month following his Separation from Service. The amount of such
coverage shall be equal to 100% of the amount being provided to him at Company
expense immediately prior to his Separation from Service. Said amount shall be
reduced in accordance with paragraph (5) of Article IV starting with the first
day of the month following his attainment of age 61.
Notwithstanding any other provision of the Plan, an Eligible Management
Associate (excluding Officers of the Company) who is entitled to a benefit
pursuant to the formula described in paragraph (1) of Article IV as of the
Associate's Early Retirement Date, Traditional Retirement Date or Delayed
Retirement Date, as the case may be ("formula benefit"), (i) who received from
the Company as part of the Company's offer in 1997 to participate in the
Voluntary Early Retirement Program, a personalized statement showing the
aggregate benefits earned as of January 1, 1998, from the Plan, the Pension Plan
and, if applicable, the Benefit Restoration Plan, ("earned benefit") and (ii)
who retires from the Company prior to January 1, 1999, shall receive the greater
of: (a) the formula benefit, or (b) an amount derived by subtracting the
aggregate benefit payable to the Associate from the Pension Plan and, if
applicable, the Benefit Restoration Plan from the earned benefit.
(2) Amendment and Termination: The Human Resources and Compensation
-------------------------
Committee may amend or modify the Plan at any time, without prior notice;
provided, however, that any such amendment or modification which would
substantially increase the cost of the Plan to the Company shall require
approval of the Board of Directors of the Company. The Board of Directors of the
Company may suspend, discontinue, or terminate the Plan at any time without
prior notice or approval. In no event will any amendment, modification,
suspension, discontinuance, or termination adversely affect existing life
insurance coverage for retirees or the Plan benefit for any Eligible
29
Management Associate for whom benefit payments have already begun in accordance
with the Plan as in effect prior to the effective date of the amendment,
modification, suspension, discontinuance, or termination unless otherwise
required to comply with applicable law.
If the Plan is terminated, any Eligible Management Associate who, as of the
effective date of Plan termination, has reached Traditional Retirement Age but
who has not reached age 65 shall be entitled to receive, at his actual
Separation from Service, the benefits, if any, to which he would have been
entitled under Paragraph (1) or (2) of Article IV had he Separated from Service
on the day before the effective date of Plan termination, reduced by the
percentage derived by dividing the number of months of Credited Service, if any,
from the Plan termination effective date to the date of actual Separation from
Service by the number of months of Credited Service from the Plan termination
effective date to the date the Eligible Management Associate will have reached
age 65. Any such Eligible Management Associate shall also be entitled to receive
at his actual Separation from Service (other than by reason of death) a benefit,
if any, to which he would have been entitled under Paragraph (3) of Article IV
had the Plan not been terminated. If, after Plan termination, such Eligible
Management Associate Separates from Service by reason of death, Paragraph (4) of
Article IV shall apply, if appropriate.
If the Plan is terminated, any Eligible Management Associate who, as of the
effective date of Plan termination, has reached his Early Retirement Date
(assuming a Separation from Service on such date) shall be entitled to receive,
at his actual Separation from Service, the benefits, if any, to which he would
have been entitled under Paragraph (1) or (2) of Article IV calculated as if he
had reached his Traditional Retirement Age and Separated from Service on the day
before the effective date of Plan termination and disregarding the percentage
reduction on account of early retirement referred to in clause (iv) of
Subparagraph (a) of Paragraph (1) of Article IV, reduced by the percentage
derived by dividing the number of months of Credited Service, if any, after his
Traditional Retirement Date by 60. Any such Eligible Management Associate shall
also be entitled to receive at his actual Separation from Service (other than by
reason of death) a benefit, if any, to which he would have been entitled under
Paragraph (3) of Article IV had the Plan not been terminated. If after Plan
termination, such Eligible Management Associate Separates from Service by reason
of death, Paragraph (4) of Article IV shall apply, if appropriate.
If the Plan is terminated, any Eligible management Associate who, as of the
effective date of Plan termination (a) has reached age 50, (b) has 10 or more
years of credited service, as defined by the Pension Plan, as an Eligible
Management Associate, and (c) is not otherwise eligible for benefits under this
Paragraph (2) of this Article VIII, shall be entitled to receive, at his actual
Separation from Service but no earlier than his Traditional Retirement Date, a
benefit equal to the difference between the amount of pension which would be
payable pursuant to the early retirement pension benefit provision of the
Pension Plan that would be applicable if the Eligible Management Associate
elected to receive benefits pursuant to that provision prior to his normal
retirement date, as defined in the Pension Plan (disregarding Disability
Service, if any) and the amount of pension payable pursuant to the early
retirement pension benefit provision of the Pension Plan that would be
applicable if the Eligible Management
30
Associate did not elect to receive benefits pursuant to that provision prior to
his normal retirement date, as defined in the Pension Plan (disregarding
Disability Service, if any) reduced by the percentage derived by dividing the
number of months of Credited Service, if any, after Traditional Retirement Date
(assuming a separation from Service) by 60.
In no event will any future amendment or modification of the Plan adversely
affect the right to Plan benefits which vest on Plan termination as set forth in
this Paragraph (2) without the consent of at least 75 percent of the affected
Eligible Management Associates unless such amendment or modification is
specifically required to comply with applicable law.
Each amendment to the Plan by the Human Resources and Compensation
Committee or the Board of Directors will be made only pursuant to unanimous
written consent or by majority vote at a meeting. Upon such action by the Human
Resources and Compensation Committee or the Board of Directors, the Plan will be
deemed amended as of the date specified as the effective date by such action or
in the instrument of amendment. The effective date of any amendment may be
before, on, or after the date of such action of the Human Resources and
Compensation Committee or the Board of Directors.
(3) Rights of Associates: Except for the Associate's non-forfeitable
--------------------
interest as set forth in Paragraph (2) of this Article VIII, neither the
establishment of the Plan nor any action thereafter taken by the Company or any
Controlled Group Member or by the Benefits Administration Committee shall be
construed as giving to any Associate any vested right to a benefit from the Plan
or a right to be retained in employment or any specific position or level of
employment with the Company, or any Controlled Group Member. Moreover, no
Associate shall have any right or claim to any benefits under this Plan if the
Associate is summarily discharged (including resignation in lieu thereof) unless
the Benefits Administration Committee, in its discretion, determines that such
Associate shall be eligible for such benefits notwithstanding such summary
discharge.
(4) Mistaken Information: If any information upon which an Eligible
--------------------
Management Associate's benefit under the Plan is calculated has been misstated
by the Eligible Management Associate or is otherwise mistaken, such benefit
shall not be invalidated (unless upon the basis of the correct information the
Eligible Management Associate would not have been entitled to a benefit), but
the amount of the benefit shall be adjusted to the proper amount determined on
the basis of the correct information and any overpayments shall be charged
against future payments to the Eligible Management Associate or his beneficiary.
(5) Liability: Neither the Board of Directors (including any committees
---------
thereof) of the Company or of any Participating Employer nor any member of the
Benefits Administration Committee or the Human Resources Committee nor any
person to whom any of them may delegate any duty or power in connection with
administering the Plan shall be personally liable for any action or failure to
act with respect to the Plan.
(6) Benefits for Reemployed Eligible Management Associates: If a retired
------------------------------------------------------
Eligible Management Associate subsequently is reemployed by a Participating
31
Employer, the payment of benefits hereunder shall continue. Any life insurance
coverage in effect pursuant to Paragraph (5) of Article IV shall cease effective
on the date a rehired (whether or not participating in a Profit Incentive
Compensation program) Associate becomes eligible for coverage under the
Company's term life insurance plan. Upon such Associate's Separation from
Service he shall be entitled to receive applicable benefits, if any, under
Article IV pursuant to uniform rules approved by the Benefits Administration
Committee.
(7) Construction: In determining the meaning of any provision 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
paragraphs and Articles in the Plan are for convenience only and are not
intended to modify or affect the meaning of the substantive provisions of the
Plan.
(8) Non-assignability of Benefits: The benefits payable hereunder or the
-----------------------------
right to receive future benefits under the Plan may not be anticipated,
alienated, pledged, encumbered, or subjected to any charge or legal process, and
if any attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the Plan of the person affected may be terminated
by the Benefits Administration Committee which, in its sole discretion, may
cause the same to be held or applied for the benefit of one or more of the
dependents of such person or make any other disposition of such benefits that it
deems appropriate.
(9) 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, former Associate, or beneficiary with respect to the Plan shall
be barred after the expiration of three years from the date of Separation of
Service of the Eligible Management Associate or the date of receipt of the
notice of denial of a claim for benefits, if earlier. In the event ERISA's
limitations on legal actions do not apply, the laws of the State of Texas with
respect to 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.
(10) Transferred Eligible Management Associates: In the event of the
------------------------------------------
transfer of an Eligible Management Associate after December 31, 1995 from a
Participating Employer to a "non-participating employer" as defined below, said
Eligible Management Associate shall continue to be eligible to participate in
this Plan in accordance with Article III.
In the event of the transfer of an Eligible Management Associate on or
after March 8, 1995 but on or before December 31, 1995 to a non-participating
employer, said Eligible Management Associate will continue to be eligible to
participate in this Plan in accordance with Article III provided that on
December 31, 1995 the Eligible Management Associate (a) is in the employ of the
non- participating employer and (b) is not eligible to participate in the
Supplemental Retirement Program for Eligible Management Associates of JCPenney
Financial Services, or Supplemental Retirement Program for Management
Profit-Sharing Associates of Thrift Drug, Inc.
32
The Service and Compensation of the Eligible Management Associate with the
non-participating employer shall be recognized as attributable to a
Participating Employer to the extent permitted by the Plan in determining
benefits under the Plan. A non-participating employer shall mean a participating
employer in the (a) Supplemental Retirement Program for Eligible Management
Associates of JCPenney Financial Services, or (b) Supplemental Retirement
Program for Management Profit-Sharing Associates of Thrift Drug, Inc.
Notwithstanding the foregoing provisions of this Paragraph (10), an entity
that ceases to be a member of the Controlled Group immediately after the Closing
(as such term is defined in Paragraph (9) of Article IV) will not be a
"non-participating employer" for any purpose of this Plan.
(11) Change of Control: Solely for the purposes of this Paragraph (11), the
-----------------
term Eligible Management Associate shall include all active associates who upon
their retirement would qualify as an Eligible Management Associate as of the
date of a "Change of Control" (as hereinafter defined).
Upon a Change of Control, assets of the Company in an amount sufficient to
pay benefits that have accrued under the Plan up to that date shall immediately
be transferred to a grantor trust to be established by the Company for the
purpose of paying benefits hereunder. Each Eligible Management Associate's
vested benefits shall thereafter be paid to him from such trust in accordance
with the terms of the Plan; provided that at the time of such Change of Control,
the Eligible Management Associate may make an irrevocable election to have his
Plan benefits paid in a single-sum immediately upon the later of (i) the date of
the Change of Control, or (ii) the Eligible Management Associate's retirement
date; in which event his benefits shall be reduced by 10% as a penalty for early
payment. The amount transferred to the grantor trust shall include the amount
necessary to pay benefits for Eligible Management Associates who have not yet
retired, determined as if they retired on the date of the Change of Control. On
each anniversary date of the date of a Change of Control, the Company shall
transfer to the grantor trust an amount necessary to pay all benefits that have
accrued under the plan during the preceding twelve months.
For purposes of this paragraph (11), a Change of Control shall be deemed to
have occurred if the event set forth in any one of the following subparagraphs
shall have occurred:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing 50% or more of the combined voting power of the
Company's then outstanding securities; or
(b) during any period of two consecutive calendar years, the following
individuals cease for any reason to constitute a majority of the number of
directors then serving as directors of the Company: individuals, who on July 14,
1999 constitute the Board of Directors of the Company and any new director
(other than a director whose initial assumption of office is in connection with
the settlement of an actual or threatened
33
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board of Directors of the Company or nomination for election by the
Company's stockholders was approved or recommended by a vote of at least
two-thirds of the directors then still in office who either were directors on
July 14, 1999 or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation or
entity, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any Parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected solely to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 50% or more of the combined
voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company, or there is consummated a sale or disposition by
the Company or any of its subsidiaries of any assets which individually or as
part of a series of related transactions constitute all or substantially all of
the Company's consolidated assets, other than any such sale or disposition to an
entity at least 50% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the voting securities of the Company
immediately prior to such sale or disposition; or
(e) the execution of a binding agreement that if consummated would result
in a Change of Control of a type specified in subparagraphs (a) or (c) above (an
"Acquisition Agreement") or of a binding agreement for the sale or disposition
of assets that, if consummated, would result in a Change of Control of a type
specified in subparagraph (d) above (an "Asset Sale Agreement") or the adoption
by the Board of Directors of the Company of a plan of complete liquidation or
dissolution of the Company that, if consummated, would result in a Change of
Control of a type specified in subparagraph (d) above (a "Plan of Liquidation"),
provided, however, that a Change of Control of the type specified in this
subparagraph (e) shall not be deemed to exist or have occurred as a result of
the execution of such Acquisition Agreement or Asset Sale Agreement, or the
adoption of such a Plan of Liquidation, from and after the Abandonment Date. As
used in this subparagraph (e), the term "Abandonment Date" shall mean the date
on which (i) an Acquisition Agreement, Asset Sale Agreement or Plan of
Liquidation is terminated (pursuant to its terms or otherwise) without having
been consummated, (ii) the parties to an Acquisition Agreement or Asset Sale
Agreement abandon the transactions contemplated thereby, (iii) the Company
abandons a Plan of Liquidation, or (iv) a court
34
or regulatory body having competent jurisdiction enjoins or issues a cease and
desist or stop order with respect to or otherwise prevents the consummation of,
or a regulatory body notifies the Company that it will not approve an
Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the
transactions contemplated thereby and such injunction, order or notice has
become final and not subject to appeal; or
(f) the Board adopts a resolution to the effect that, for purposes of this
Plan, a Change of Control has occurred.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity (i) which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions, (ii) which is
intended to reflect or track the value or performance of a particular division,
business segment or subsidiary of the Company, or (iii) which is an affiliated
company, subsidiary, or spin-off entity owned by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company
on the date of such spin off.
As used in connection with the foregoing definition of Change of Control,
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 50% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of it Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation or entity owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(12) Separation Allowance Program: If an Eligible Management Associate
----------------------------
becomes entitled to Severance Pay under the J. C. Penney Company, Inc. 1999
Separation Allowance Program for Profit-Sharing Management Associates ("SAP") or
if this Plan is terminated within five years after a Change of Control (as
defined in Paragraph (11) above) and, at that time, in either case, is age 45 or
older with at least five years of Credited Service, he also shall become
entitled to the same Plan benefits (as adjusted by this Paragraph (12) ) he
would have become vested in under Article VIII, Paragraph (2) of this Plan as if
this Plan had been terminated on the day before his Employment Termination
(within the meaning of the SAP). In calculating such Plan benefit, an Eligible
Management Associate
35
(a) shall receive credit for an additional five years of Credited Service
(provided that total Credited Service under the Plan does not exceed 40 years)
and
(b) shall, if age 55 or less, be deemed to be five years older than his
actual age, or if age 56 to 59 be deemed to be age 60, and
(c) shall have his Severance Pay counted as Compensation under this Plan as
if paid in monthly installments commencing with his Employment Termination
(within the meaning of the SAP),
provided that, for purposes of clause (ii) of Subparagraph (b) of Paragraph (1)
of Article IV of this Plan, the single life, no-death-benefit annuity equivalent
shall not exceed the equivalent determined by ascribing to the Common Stock of
the Company, as of the Valuation Date, a value equal to the average of the mean
of the high and low sales prices (as reported in the composite transaction table
covering transactions of New York Stock Exchange-listed securities) for each
trading day in the two calendar quarters immediately preceding the calendar
quarter in which a Change of Control (as defined in Paragraph (11) above)
occurs, and the amount payable under this Plan at age 60 assuming such Eligible
Management Associate remained in employment up to such age at a Compensation
level equal to that of the calendar year immediately preceding his Employment
Termination (within the meaning of the SAP).
36
ARTICLE IX. CLAIMS PROCEDURES
If an Associate does not receive the benefits which he believes he is
entitled to receive under the Plan, he may file a claim for benefits with the
Benefits Director. All claims will be made in writing and will be signed by the
claimant. If the claimant does not furnish sufficient information to determine
the validity of the claim, the Benefits Director will indicate to the claimant
any additional information which is required.
Each claim will be approved or disapproved by the Benefits Director within
90 days following the receipt of the information necessary to process the claim.
In the event the Benefits Director denies a claim for benefits in whole or in
part, the Benefits Director will notify the claimant in writing of the denial of
the claim. Such notice by the Benefits Director will also set forth, in a manner
calculated to be understood by the claimant, the specific reasons for such
denial, the specific Plan provisions on which the denial is based, a description
of any additional material or information necessary to perfect the claim with an
explanation of the Plan's claim review procedure as set forth below. If no
action is taken by the Benefits Director on a claim within 90 days, the claim
will be deemed to be denied for purposes of the review procedure.
A claimant may appeal a denial of his claim by requesting a review of the
decision by the Benefits Administration Committee or a person designated by the
Committee, which person will be a named fiduciary under Section 402(a) (2) of
ERISA for purposes of this Article IX. An appeal must be submitted in writing
within 60 days after the denial and must (i) request a review of the claim for
benefits under the Plan; (ii) set forth all of the grounds upon which claimant's
request for review is based and any facts in support thereof; and (iii) set
forth any issues or comments which the claimant deems pertinent to the appeal.
The Benefits Administration Committee or the named fiduciary designated by
the Benefits Administration Committee will make a full and fair review of each
appeal and any written materials submitted in connection with the appeal. The
Benefits Administration Committee or the named fiduciary designated by the
Benefits Administration Committee will act upon each appeal within 60 days after
receipt thereof unless special circumstances require an extension of the time
for processing, in which case a decision will be rendered as soon as possible
but not later than 120 days after the appeal is received. The claimant will be
given the opportunity to review pertinent documents or materials upon submission
of a written request to the Benefits Administration Committee or named
fiduciary, provided the Benefits Administration Committee or named fiduciary
finds the requested documents or materials are pertinent to the appeal. On the
basis of its review, the Benefits Administration Committee or named fiduciary
will make an independent determination of the claimant's eligibility for
benefits under the Plan.
The decision of the Benefits Administration Committee or named fiduciary on
any claim for benefits will be final and conclusive upon all parties thereto. In
the event the Benefits Administration Committee or named fiduciary denies an
appeal in whole or in part, it will give written notice of the decision to the
claimant, which notice will set forth in a manner calculated to be understood by
the claimant the specific reasons for such
37
denial and which will make specific reference to the pertinent Plan provisions
on which the decision was based.
38
APPENDIX I
Participating Employers
-----------------------
J. C. Penney Company, Inc.
JCPenney National Bank
(from and after August 1, 1994 until December 17, 1997)
JCP Internet Commerce Solutions, Inc.
(from and after February 1, 1999)
JCP Logistics L. P.
(from and after February 1, 1999)
JCP Media L. P.
(from and after February 1, 1999)
JCP Overseas Services, Inc.
(from and after July 1, 1996)
JCP Portfolio, Inc.
(dissolved July 18, 1995)
J. C. Penney Private Brands, Inc.
(from and after January 1, 2000)
JCP Procurement L. P.
(from and after February 1, 1999)
JCP Publications Corp.
(formerly JCP Media Corporation)
(from and after April 3, 1996)
JCPenney Puerto Rico, Inc.
JCP Receivables, Inc.
StepInside, Inc.
(from and after January 1, 2000)
39
APPENDIX II
FORMER ELIGIBLE MANAGEMENT ASSOCIATES
WHOSE BENEFITS HAVE BEEN ASSUMED BY
THE SUPPLEMENTAL RETIREMENT PROGRAM FOR
ELIGIBLE MANAGEMENT ASSOCIATES OF
JCPENNEY FINANCIAL SERVICES
John Camillo
Yumin Chen
Donald S. Creveling
Stephen Duran
David Foster
Jerry R. Geyer
Paul A. Heleski
Robert Iorio
Judy Johnston
Deborah Litwak
Karen A. Nelson
Larry J. Tracey
Robert Valliere
40
APPENDIX III
ELIGIBLE MANAGEMENT ASSOCIATES
WHOSE NAMES ARE SET FORTH ON
APPENDIX I TO THE
SUPPLEMENTAL RETIREMENT PROGRAM FOR
ELIGIBLE MANAGEMENT ASSOCIATES OF
JCPENNEY FINANCIAL SERVICES
John Camillo
Yumin Chen
Donald S. Creveling
John DiJoseph
Stephen Duran
David Foster
Walter Gatewood
Jerry R. Geyer
Paul A. Heleski
Robert Iorio
Judy Johnston
Deborah Litwak
Thomas McGahey
Deborah Megee
Lynn Morris
Karen A. Nelson
Karen Newton
Leslie Pierce
Alvin Prudhomme
Regina V. Rohner
41
Joseph Sartoris
Sue E. Stewart
George Suiter
Mark Thornton
Larry J. Tracey
Robert Valliere
R. Michael Williams
42
APPROVAL FORM
-------------
Pursuant to authority granted to me by the Board of Directors of J.C.
Penney Company, Inc. at its meeting held on December 5, 2001, I hereby approve
the amendments to the J.C. Penney Company, Inc. Pension Plan, the J.C. Penney
Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan, the J.C. Penney
Company, Inc. Benefit Restoration Plan, the Supplemental Retirement Program for
Management Profit-Sharing Associates of J.C. Penney Company, Inc., the J.C.
Penney Company, Inc. Voluntary Early Retirement Plan, the J.C. Penney Company,
Inc. Mirror Savings Plans I, II, and III, the J.C. Penney Company, Inc.
Separation Pay Plan, and the JCP Telecom Systems, Inc. Early Retirement Plan in
the forms annexed hereto as Exhibit A.
Dated as of January 27, 2002.
/s/ Gary L. Davis
--------------------------------
Gary L. Davis
Executive Vice President,
Chief Human Resources and
Administration Officer
Approval of Counsel:
/s/ T.P. Blaylock
- -------------------------------------
T.P. Blaylock
/s/ M.E. White
- -------------------------------------
M.E. White
EXHIBIT A
---------
WHEREAS, the Board of Directors of J.C. Penney Company, Inc. authorized an
Agreement and Plan of Merger (the "Merger Agreement") between J.C. Penney
Company, Inc. ("Company"), J.C. Penney Holdings, Inc., a Delaware corporation
("Holdings"), and JCP Merger Sub, Inc., a Delaware corporation and wholly-owned
subsidiary of Holdings ("Merger Sub");
WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and
into the Company, with Company surviving as a wholly-owned subsidiary of
Holdings (the "Merger");
WHEREAS, pursuant to the Merger, Holdings will amend and restate its
certificate of incorporation to inter alia, change its name to "J.C. Penney
Company, Inc.";
WHEREAS, pursuant to the Merger, the Company will amend and restate its
certificate of incorporation to inter alia, change its name to "J.C. Penney
Corporation, Inc.";
NOW, THEREFORE, as authorized by the Board of Directors on December 5,
2001, the J.C. Penney Company, Inc. Pension Plan (As Amended and Restated
Effective January 1, 2001); the J.C. Penney Company, Inc. Savings,
Profit-Sharing and Stock Ownership Plan; the J.C. Penney Company, Inc. Benefit
Restoration Plan, the Supplemental Retirement Program for Management
Profit-Sharing Associates of J.C. Penney Company, Inc.; the J.C. Penney Company,
Inc. Voluntary Early Retirement Plan; the J.C. Penney Company, Inc. Mirror
Savings Plans I, II, and III, the J.C. Penney Company, Inc. Separation Pay Plan,
and the JCP Telecom Systems, Inc. Early Retirement Plan be, and they hereby are,
amended, effective as of January 27, 2002, as set forth in Exhibits 1, 2, 3, 4,
5, 6, 7, and 8, respectively.
EXHIBIT 4
---------
AMENDMENT TO
SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATE OF
J. C. PENNEY COMPANY, INC.
1. The name of the Plan is changed effective January 27, 2002 to
Supplemental Retirement Program for Management Profit-Sharing Associates
of J. C. Penney Corporation, Inc. in each place it appears.
2. The definitions in Article II entitled Benefit Restoration Plan, Company,
------------------------- -------
Mirror Savings Plans, Pension Plan, Plan, and Savings. Profit-Sharing
-------------------- ------------ ---- -----------------------
and Stock Ownership Plan are amended effective January 27, 2002 and a
------------------------
new definition entitled Parent Company is added effective January 27,
--------------
2002 to read as follows:
Benefit Restoration Plan: Prior to January 27, 2002, the J. C. Penney
------------------------
Company, Inc. Benefit Restoration Plan, as amended from time to time,
and on and after January 27, 2002, the J. C. Penney Corporation, Inc.
Benefit Restoration Plan, as amended from time to time.
Company: Prior to January 27, 2002, J. C. Penney Company, Inc., a
-------
Delaware corporation, and on and after January 27, 2002, J. C. Penney
Corporation, Inc., a Delaware corporation. The term "Company" will also
include any successor employer, if the successor employer expressly
agrees in writing as of the effective date of succession to continue the
Plan.
Mirror Savings Plans: Prior to January 27, 2002, the J. C. Penney
--------------------
Company, Inc. Mirror Savings Plan I, the J. C. Penney Company, Inc.
Mirror Savings Plan II, and the J. C. Penney Company, Inc. Mirror
Savings Plan III, all as amended from time to time, and on and after
January 27, 2002, the J. C. Penney Corporation, Inc. Mirror Savings Plan
I, the J. C. Penney Corporation, Inc. Mirror Savings Plan II, and the
J. C. Penney Corporation, Inc. Mirror Savings Plan III, all as amended
from time to time.
Parent Company: J. C. Penney Company, Inc., a Delaware corporation, and
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any successor corporation.
Pension Plan: Prior to January 27, 2002, the J. C. Penney Company, Inc.
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Pension Plan, as amended from time to time, and on and after January 27,
2002, the J. C. Penney Corporation, Inc. Pension Plan, as amended from
time to time.
Plan: Prior to January 27, 2002, the Supplemental Retirement Program for
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Management Profit-Sharing Associates of J. C. Penney Company, Inc.,
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as amended from time to time, and on and after January 27, 2002, the
Supplemental Retirement Program for Management Profit-Sharing Associates
of J. C. Penney Corporation, Inc. as amended from time to time.
Savings, Profit-Sharing and Stock Ownership Plan: Prior to January 27,
------------------------------------------------
2002, the J. C. Penney Company, Inc. Savings, Profit-Sharing and Stock
Ownership Plan, as amended from time to time, and on and after January
27, 2002, the J. C. Penney Corporation, Inc. Savings, Profit-Sharing and
Stock Ownership Plan, as amended from time to time.
3. Paragraph (7) of Article IV is amended effective January 27, 2002 to add
the following sentence after sentence one:
Effective January 27, 2002, the name of the VERP Plan was changed to the
J. C. Penney Corporation, Inc. Voluntary Early Retirement Plan.
4. Paragraph (11) of Article VIII is amended effective January 27, 2002 to
delete the word "Company" and to substitute therefor the words "Parent
Company" in each place in which it appears.
5. Paragraph (12) of Article VIII is amended effective January 27, 2002 to
delete in sentence one the words "J. C. Penney Company, Inc. 1999
Separation Allowance Program for Profit-Sharing Management Associates
("SAP")" and to substitute therefor the words "J. C. Penney Corporation,
Inc. 1999 Separation Allowance Program for Profit-Sharing Management
Associates ("SAP")".
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