Exhibit 10 (g)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), made in the City of Plano and
the State of Texas, dated as of ------------------------- , 2002, between J. C.
Penney Corporation, Inc., a Delaware corporation (hereinafter called the "the
Employer"), and Robert B. Cavanaugh (hereinafter called the "the Employee").
WHEREAS, the Employer desires to ensure that it retains the Employee's
management and executive services by directly engaging Employee as its Chief
Financial Officer;
WHEREAS, in order to induce the Employee to continue to serve in such
positions, the Employer desires to provide the Employee with compensation and
other benefits on the terms and conditions set forth in this Agreement; and
WHEREAS, the Employee is willing to accept such employment and perform
services for the Employer, on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, it as agreed as follows:
1. Employment, Position and Duties.
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1.1 The Employer agrees to continue to employ the Employee and the
Employee hereby agrees to continue to undertake employment upon the
terms and conditions herein set forth.
1.2 During the Term (as hereafter defined), the Employee will serve as
Chief Financial Officer, or such other position as may be assigned by
the Employer's Chief Executive Officer, and shall perform such duties
consistent with such position as are determined and directed by the
Chief Executive Officer. The Employee shall devote his full working
time, attention and ability to the business of the Employer,
including, if applicable, its subsidiaries and/or affiliates to which
the Employee may have been assigned responsibilities; provided,
however, that it shall not be a violation of this Agreement for the
Employee to (i) devote reasonable periods of time to charitable and
community activities and, with the approval of the Employer, industry
or professional activities, and (ii) manage personal business
interests and investments, subject to Section 8, so long as such
activities do not materially interfere with the performance of the
Employee's responsibilities under this Agreement.
1.3 Unless otherwise agreed by the Employer and the Employee, throughout
the term of this Agreement, the Employee's principal offices shall be
located in Plano, Texas. The Employee shall undertake normal business
travel on behalf of the Employer, the reasonable expenses of which
shall be paid by the Employer pursuant to Section 4.
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2. Term of Employment.
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2.1 Initial Term. The Employee's employment under this Agreement ("Term")
shall commence on May 1, 2002 (the "Start Date") and, subject to the
provisions of this Agreement, shall terminate (the "Termination Date")
on the earlier of (i) the third anniversary of the Start Date (the
"Initial Term") or (ii) termination of the Employee's employment
pursuant to Section 6.
2.2 Renewal Term. This Agreement shall expire automatically at the end of
the Initial Term, unless extended as provided in this Section 2.2.
Within 60 days after the second anniversary of the Initial Term or any
Renewal Term (as defined below), Employer shall notify Employee
regarding (i) whether the Agreement shall be extended and (ii) the
terms and conditions, if any, for such extension. Any such additional
extension period ("Renewal Term") shall be deemed to be part of the
Term for purposes of this Agreement. If the Employer and the Employee
have not entered into a written agreement to extend this Agreement
within 45 days after such notice, then at the Employer's election the
Employer may release the Employee from his duties during the remaining
Term of the Agreement in accordance with and subject to the conditions
in Sections 6.4 and 7.3. If Employee is not so released and completes
the then remaining Term of the Agreement, Employee shall become
employed at-will upon the expiration of such Term as provided for in
Section 2.3. Nothing in this Section 2.2 shall be deemed to grant a
right of continued employment to the Employee upon expiration of the
Initial Term or any Renewal Term.
2.3 Post-Term At-Will Employment. If (i) this Agreement is not terminated
pursuant to Section 6, and (ii) neither party has otherwise terminated
the Employee's employment, upon expiration of the Term (including any
Renewal Term), this Agreement shall expire and the Employee shall
become employed at-will and may be terminated from employment at any
time, without notice or cause. In the event this Agreement expires and
the Employee becomes employed at-will, the Employee shall not be
entitled to any severance or other termination compensation or
benefits under this Agreement, and the Employee's employment shall be
subject to those policies and procedures that the Employer may adopt
and change in its discretion from time to time. Nothing in this
Section 2.3 shall be deemed to grant a right of continued employment
to the Employee upon expiration of the Term, and the Employer may
terminate the Employee's employment upon expiration of the Term
without any further notice and financial obligation to the Employee
under Section 7.
3. Compensation
3.1 Salary. In consideration of the services of the Employee during the
Term, the Employer shall pay the Employee salary at an annualized rate
of $500,000.00 ("Base Salary") (less applicable withholding for taxes
and authorized deductions) in accordance with the Employer's usual
payroll policies. The Employee's Base Salary shall be reviewed at
least annually with the first review date being the
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Marchfollowing the Start Date. Base Salary may be adjusted by action
of the appropriate committee of the Employer's Board of Directors or
its delegate, and may be increased without the necessity of written
amendment pursuant to Section 10.8.
3.2 Annual Incentive Compensation. The Employee shall be eligible to
participate in the 1989 Management Incentive Compensation Program (the
"Comp Plan"), as set out in Exhibit A hereto.
3.3 Grand Total Earnings. The Employee's "Grand Total Earnings" shall mean
an amount equal to Base Salary plus annual incentive under the Comp
Plan at $1.00 per unit.
4. Expenses.
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During the Term the Employee shall be allowed reimbursement of
reasonable expenses necessary for the performance of Employee's duties
in accordance with the policies of the Employer.
5. Employee Benefits.
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5.1 Benefits. During the Term, the Employee shall be entitled to the
benefits generally provided or made available to senior employees of
the Employer, including group medical insurance benefits (subject in
each case, however, to (i) eligibility and (ii) modification or
elimination in accordance with the Employer's standard policies as in
effect from time to time).
5.2 Vacation and Paid Leave. The Employee will be eligible for five (5)
weeks of vacation each calendar year.
6. Termination of Employment Prior to Expiration of Term.
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6.1 Death. In the event of the Employee's death during the Term, the
Employee's employment shall terminate, and the Employer shall pay or
provide to the Employee's beneficiaries or estate, as appropriate, as
soon as practicable after the Employee's death, the amounts and
benefits provided for in Section 7.1.
6.2 Permanent Disability. If the Employee becomes totally and permanently
disabled (as defined in the Employer's Long-Term Disability Plan)
during the Term ("Permanent Disability"), the Employer may terminate
the Employee's employment on written notice thereof in accordance with
Section 10.5, and the Employer shall provide to the Employee the
amounts and benefits provided for in Section 7.1.
6.3 Termination by the Employer for Cause. During the Term the Employer
may terminate the Employee's employment for "Cause." For purposes of
this Agreement, the Employer will have "Cause" to terminate the
Employee's employment upon a finding that (a) the Employee has been
convicted by a court
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of competent jurisdiction of the commission of a felony, or has
pleaded guilty or no contest to a felony charge, (b) the Employee has
committed a serious breach of the Employer's Statement of Business
Ethics, (c) the Employee materially breached any of the Employee's
covenants set forth in Section 8 or (d) the Employee has materially
breached the Employee's duties and obligations under this Agreement;
provided, however, that termination for Cause based on clause (d)
shall not be effective unless the Employee shall have received written
notice from the Chief Executive Officer in accordance with Section
10.5 (which notice shall include a description of the reasons and
circumstances giving rise to such notice) not less than 30 days prior
to the Employee's termination and the Employee has failed after
receipt of such notice to satisfactorily discharge the Employee's
duties.
6.4 Termination by the Employer without Cause. During the Term the
Employer may terminate the Employee's employment without Cause.
"Without Cause" shall mean for any reason other than death, Permanent
Disability or Cause, as provided for in Sections 6.1, 6.2 and 6.3. The
Employee's employment may be terminated by the Employer without Cause
by delivery to the Employee of notice of termination in accordance
with Section 10.5 not less than 30 days prior to termination.
6.5 Termination by the Employee for Good Reason. During the Term, the
Employee may terminate his employment, without the Employer's consent,
for Good Reason. Good Reason shall mean (a) the Employer has breached
any material provision of this Agreement and within 30 days after
written notice thereof from the Employee in accordance with Section
10.5, the Employer fails to cure such breach; or (b) a successor or
assign (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Employer fails to assume liability under the Agreement
in accordance with Section 10.2.
6.6 Termination by the Employee without Good Reason. During the term, the
Employee may voluntarily terminate his employment upon 30 days'
written notice (the "Notice Period") to the Employer in accordance
with Section 10.5. The Employer may in its sole discretion elect to
release the Employee from his duties prior to the expiration of the
Notice Period, and pay Base Salary to the Employee for the remaining
Notice Period. The Employer's election to release the Employee from
his duties during the Notice Period shall not be deemed to be a
constructive discharge of the Employee or termination without Cause,
nor shall such release from duties accelerate the Employee's
Termination Date or reduce the total time period during which the
Employee must comply with the covenants contained in Section 8.
7. Termination Payments and Benefits.
7.1 Death or Permanent Disability. In the event of the death or Permanent
Disability of the Employee, as soon as practicable, the Employer shall
pay any (i) accrued
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and unpaid Base Salary and vacation to which the Employee was entitled
as of the date of death or determination of Permanent Disability
(collectively, the "Compensation Payments") and (ii) the target bonus
(at $1.00 per unit) for the Comp Plan for the fiscal year in which the
date of death or the determination of Permanent Disability occurs,
prorated for the actual period of service for that fiscal year (the
"Prorated Bonus"). The payment of any death benefits or disability
benefits under any employee benefit or compensation plan that is
maintained by the Employer for the Employee's benefit shall be
governed by the terms of such plan.
7.2 Termination by the Employer for Cause; Termination by the Employee
without Good Reason. In the event of the termination of the Employee
by the Employer for Cause or by the Employee without Good Reason, the
Employer shall pay the Compensation Payments to the Employee as soon
as practicable or within the period required by law, and the Employee
shall be entitled to no other compensation, except as otherwise due to
the Employee under applicable law. The Employee shall not be entitled
to the payment of any bonuses for any portion of the fiscal year in
which such termination occurs.
7.3 Termination by the Employer without Cause; Termination by the Employee
with Good Reason.
(i) Form and Amount. In the event of the termination of the Employee
by the Employer without Cause or by the Employee with Good
Reason, the Employer shall pay the Compensation Payments to the
Employee as soon as practicable or within the period required by
law. In addition, conditioned upon receipt of the Employee's
written release of claims in such form as may be required by the
Employer, the Employer shall pay or provide to the Employee (a)
as severance pay, an aggregate amount equal to Grand Total
Earnings, multiplied by the result obtained by dividing (x) the
balance of the Term, measured in days, by (y) 365, with such
aggregate amount to be paid in equal installments on the usual
payroll dates for the balance of the Term; (b) for 12 months
following termination, outplacement services by a firm selected
by the Employee at the expense of the Employer, in an amount up
to $30,000.00, and (c) for 24 months following termination (the
"Continuation Period") the continuation of group medical
insurance benefits except as offset by benefits paid or provided
by other sources as set forth in Section 7.6, or as prohibited by
law. For purposes of determining the period of continuation
coverage to which the Employee or any of the Employee's
dependents is entitled under section 4980B of the Internal
Revenue Code of 1986, as amended, (or any successor provision
thereto), the Employee shall be deemed to have remained employed
until the end of the Continuation Period.
(ii) Maintenance of Benefits. During the Continuation Period, the
Employer shall use its best efforts to maintain its group medical
insurance benefits in
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full force and effect for the continued benefit of the Employee
or shall arrange to make available to the Employee group medical
benefits substantially similar to those that the Employee would
otherwise have been entitled to receive if the Employee's
employment had not been terminated. Such benefits shall be
provided on the same terms and conditions (including the Employee
contributions toward the premium payments) under which the
Employee was entitled to participate immediately prior to the
Employee's termination.
(iii) Forfeiture. Notwithstanding the foregoing provisions of this
Section 7, any right of the Employee to receive termination
payments and benefits under Section 7 shall be forfeited to the
extent of any amounts payable or benefits to be provided after a
material breach of any covenant set forth in Section 8.
7.4 Non-Eligibility For Other Company Separation Pay. The Employee shall
not be eligible for any payments under any severance program
(excluding the 1999 Separation Allowance Program) offered by the
Employer.
7.5 Employer's Right of Offset. If the Employee is at any time indebted to
the Employer, or otherwise obligated to pay money to the Employer for
any reason, the Employer, at its election, may offset amounts
otherwise payable to the Employee under this Agreement, including, but
without limitation, Base Salary and incentive compensation payments,
against any such indebtedness or amounts due from the Employee to the
Employer, to the extent permitted by law.
7.6 Mitigation. In the event of the termination of the Employee by the
Employer without Cause, or by the Employee with Good Reason, the
Employee shall not be required to mitigate damages by seeking other
employment or otherwise as a condition to receiving termination
payments or benefits under this Agreement. No amounts earned by the
Employee after the Employee's termination by the Employer without
Cause or by the Employee with Good Reason, whether from
self-employment, as a common law employee, or otherwise, shall reduce
the amount of any payment or benefit under any provision of this
Agreement. Notwithstanding the foregoing, the Employee's coverage
under the Employer's group medical insurance as provided in Section
7.3(i) shall terminate as soon as the Employee becomes covered under
any group medical plan made available by another employer. The
Employee shall report to the Employer any such coverage actually
received by the Employee.
7.7 Resignations. Except to the extent requested by the Employer, upon any
termination of the Employee's employment with the Employer, the
Employee shall immediately resign all positions and directorships with
the Employer and each of its subsidiaries and affiliates.
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8. Covenants and Representations of the Employee.
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8.1 Confidentiality. During the Term, and in consideration for the
Employee's agreement to enter into this Agreement, the Employer agrees
that it will disclose to the Employee its confidential or proprietary
information and trade secrets (together, the "Proprietary
Information") to the extent necessary for the Employee to carry out
his obligations under this Agreement. The Employee hereby covenants
and agrees that the Employee shall not, without the prior written
consent of the Employer, during the Term or at any time thereafter
disclose to any person not employed by the Employer, or use in
connection with engaging in competition with the Employer, any
Proprietary Information of the Employer.
(i) It is expressly understood and agreed that the Employer's
Proprietary Information is all nonpublic information relating to
the Employer's business, including but not limited to
information, plans and strategies regarding suppliers, pricing,
marketing, customers, hiring and terminations, employee
performance and evaluations, internal reviews and investigations,
short term and long range plans, acquisitions and divestitures,
advertising, information systems, sales objectives and
performance, as well as any other nonpublic information, the
nondisclosure of which may provide a competitive or economic
advantage to the Employer. Proprietary Information shall not be
deemed to have become public for purposes of this Agreement where
it has been disclosed or made public by or through anyone acting
in violation of a contractual, ethical, or legal responsibility
to maintain its confidentiality.
(ii) In the event the Employee receives a subpoena, court order or
other summons that may require the Employee to disclose
Proprietary Information, on pain of civil or criminal penalty,
the Employee will promptly give notice of the subpoena or summons
pursuant to Section 10.5 and provide the Employer an opportunity
to appear at the Employer's expense and challenge the disclosure
of its Proprietary Information, and the Employee shall provide
reasonable cooperation to the Employer for purposes of affording
the Employer the opportunity to prevent the disclosure of the
Employer's Proprietary Information.
8.2 Nonsolicitation of Employees. The Employee hereby covenants and agrees
that during the Term and for two years thereafter, the Employee shall
not, without the prior written consent of the Employer, on the
Employee's own behalf or on the behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or
assist any other person in so persuading or inducing, any of the
employees of the Employer (or any of its subsidiaries or affiliates)
to give up his or her employment with the Employer (or any of its
subsidiaries or affiliates), and the Employee shall not directly or
indirectly solicit or hire employees of the Employer (or any of its
subsidiaries or affiliates) for employment with any other employer.
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8.3 Noninterference with Business Relations. The Employee hereby covenants
and agrees that during the Term and for two years thereafter, the
Employee shall not, without the prior written consent of the Employer,
on the Employee's own behalf or on the behalf of any person, firm or
company, directly or indirectly, attempt to influence, persuade or
induce, or assist any other person in so persuading or inducing, any
person, firm or company to cease doing business with, reduce its
business with, or decline to commence a business relationship with,
the Employer (or any of its subsidiaries or affiliates).
8.4 Noncompetition. It is recognized by the Employee and the Employer that
the Employee's duties hereunder will require the receipt and creation
of Proprietary Information, as defined in Section 8.1. The Proprietary
Information has been and will continue to be developed by the Employer
and its subsidiaries and affiliates at substantial cost and
constitutes valuable and unique property of the Employer. The Employee
further acknowledges that due to the nature of the Employee's
position, the Employee will have access to Proprietary Information
affecting plans and operations in every location in which the Employer
(and its subsidiaries and affiliates) does business or plans to do
business throughout the world, and the Employee's decisions and
recommendations on behalf of the Employer may affect its operations
throughout the world. Accordingly, the Employee acknowledges that the
foregoing makes it reasonably necessary for the protection of the
Employer's business interests that the Employee not compete with the
Employer or any of its subsidiaries or affiliates during the Term and
for a reasonable and limited period thereafter, as provided below.
(i) The Employee covenants that during the Term of this Agreement and
for a period of one year following the later of either a
termination of employment pursuant to Section 6 or a termination
of at-will employment following expiration of the Term, the
Employee will not undertake work for a Competing Business, as
defined in Section 8.4(ii). For purposes of this covenant,
"undertake work for" shall include performing services, whether
paid or unpaid, in any capacity, including as an officer,
director, owner, consultant, employee, agent or representative,
where such services involve the performance of similar duties or
oversight responsibilities as those performed by the Employee
during the 18-month period preceding the Employee's termination
from the Employer for any reason.
(ii) As used in this Agreement, the term "Competing Business" shall
mean any business that, at the time of the determination:
(A) operates (1) any retail department store, specialty store,
general merchandise store, or drug store; (2) any retail
catalog, telemarketing, or direct mail business; (3) any
Internet-based or other electronic retailing business; (4)
any other retail business that sells goods, merchandise, or
services of the types sold by the Employer, including its
divisions, affiliates, and licensees; or
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(5) any business that provides buying office or sourcing
services to any business of the types referred to in this
Section 8.4(ii)(A);
(B) conducts any business of the types referred to in Section
8.4(ii)(A) in the United States or another country in which
the Employer, including its divisions, affiliates, and
licensees, conducts a similar business; and
(C) from any business(es) of the types referred to in Section
8.4(ii)(A), had aggregate net sales or revenues of
$500,000,000 in the fiscal year preceding the determination
or is reasonably expected to have aggregate net sales or
revenues of $500,000,000 in either the current fiscal year
or the next following fiscal year.
(iii)Notwithstanding the foregoing, in the case of a termination of
the Employee by the Employer without Cause or by the Employee
with Good Reason, the above referenced definition of "Competing
Business" in Section 8.4(ii) may be modified with approval of the
Chief Executive Officer.
8.5 Injunctive Relief. If the Employee shall breach the covenants
contained in this Section 8, the Employer shall have no further
obligation to make any payment to the Employee pursuant to this
Agreement and may recover from the Employee all such damages as it may
be entitled to at law or in equity. In addition, the Employee
acknowledges that any such breach is likely to result in immediate and
irreparable harm to the Employer for which money damages are likely to
be inadequate. Accordingly, the Employee consents to injunctive and
other appropriate equitable relief without the necessity of bond in
excess of $500.00 (five hundred dollars) upon the institution of
proceedings therefor by the Employer in order to protect the
Employer's rights hereunder.
8.6 Representations of the Employee. The Employee represents and warrants
to the Employer that:
(i) (a) There are no restrictions, agreements or understandings
whatsoever to which the Employee is a party that would prevent or
make unlawful the Employee's execution of this Agreement or the
Employee's employment under this Agreement, or that is or would
be inconsistent, or in conflict with this Agreement or the
Employee's employment under this Agreement, or would prevent,
limit or impair in any way the performance by the Employee of the
obligations under this Agreement; and (b) the Employee has
disclosed to the Employer all restraints, confidentiality
commitments or other employment restrictions that the Employee
has with any other employer, person or entity.
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(ii) Upon and after the Employee's termination or cessation of
employment with the Employer, including any post-Term at-will
employment, and until such time as no obligations of the Employee
to the Employer hereunder exist, the Employee: (a) shall provide
a complete copy of this Agreement to any prospective employer or
other person, entity or association in a Competing Business with
whom or which the Employee proposes to be employed, affiliated,
engaged, associated or to establish any business or remunerative
relationship prior to the commencement thereof, provided that
Employee shall first cause the compensation amounts hereunder to
be deleted or not disclosed; and (b) shall notify the Employer of
the name and address of any such person, entity or association
prior to the Employee's employment, affiliation, engagement,
association or the establishment of any business or remunerative
relationship.
9. Survival. The expiration or termination of the Term shall not impair the
rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated
herein. In addition to the foregoing, the Employee's covenants and
warranties contained in Section 8, and the parties' agreements under
Section 10 shall survive the expiration of this Agreement and the
termination of the Employee's employment, including any post-Term at-will
employment.
10. Miscellaneous Provisions.
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10.1 Dispute Resolution. Any dispute between the parties under this
Agreement shall be resolved (except as provided below) through
informal arbitration by an arbitrator selected under the rules of the
American Arbitration Association for arbitration of employment
disputes (located in the city in which the Employer's principal
executive offices are based) and the arbitration shall be conducted in
that location under the rules of said Association. Each party shall be
entitled to present evidence and argument to the arbitrator. The
arbitrator shall have the right only to interpret and apply the
provisions of this Agreement and may not change any of its provisions,
except as expressly provided in Section 10.4 and only in the event
Employer has not brought an action in a court of competent
jurisdiction to enforce the covenants in Section 8. The arbitrator
shall permit reasonable pre-hearing discovery of facts, to the extent
necessary to establish a claim or a defense to a claim, subject to
supervision by the arbitrator. The determination of the arbitrator
shall be conclusive and binding upon the parties and judgment upon the
same may be entered in any court having jurisdiction thereof. The
arbitrator shall give written notice to the parties stating the
arbitrator's determination, and shall furnish to each party a signed
copy of such determination. The expenses of arbitration shall be borne
equally by the Employer and the Employee or as the arbitrator
equitably determines consistent with the application of state or
federal law; provided, however, that the Employee's share of such
expenses shall not exceed the maximum permitted by law. Any
arbitration or action pursuant to this Section 10.1 shall be governed
by and construed in accordance with the substantive laws of the State
of Texas and,
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where applicable, federal law, without giving effect to the principles
of conflict of laws of such State. The mandatory arbitration
provisions of this Section 10.1 shall supersede in their entirety the
J. C. Penney Alternative, a dispute resolution program generally
applicable to employment terminations.
Notwithstanding the foregoing, the Employer shall not be required to
seek or participate in arbitration regarding any actual or threatened
breach of the Employee's covenants in Section 8, but may pursue its
remedies, including injunctive relief, for such breach in a court of
competent jurisdiction in the city in which the Employer's principal
executive offices are based, or in the sole discretion of the
Employer, in a court of competent jurisdiction where the Employee has
committed or is threatening to commit a breach of the Employee's
covenants, and no arbitrator may make any ruling inconsistent with the
findings or rulings of such court.
10.2 Binding on Successors; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Employee, the Employer and each
of their respective successors, assigns, personal and legal
representatives, executors, administrators, heirs, distributees,
devisees, and legatees, as applicable; provided however, that neither
this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by the Employee
(except by will or by operation of the laws of intestate succession)
or by the Employer except that the Employer may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Employer,
if such successor expressly agrees to assume the obligations of the
Employer hereunder.
10.3 Governing Law. This Agreement shall be governed, construed,
interpreted, and enforced in accordance with the substantive law of
the State of Texas and federal law, without regard to conflicts of law
principles, except as expressly provided herein. In the event the
Employer exercises its discretion under Section 10.1 to bring an
action to enforce the covenants contained in Section 8 in a court of
competent jurisdiction where the Employee has breached or threatened
to breach such covenants, and in no other event, the parties agree
that the court may apply the law of the jurisdiction in which such
action is pending in order to enforce the covenants to the fullest
extent permissible.
10.4 Severability. Any provision of this Agreement that is deemed invalid,
illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective, to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or
any other provisions of this Agreement invalid, illegal or
unenforceable in any other jurisdiction. If any covenant in Section 8
should be deemed invalid, illegal or unenforceable because its time,
geographical area, or restricted activity, is considered excessive,
such covenant shall be modified to the minimum extent necessary to
render the modified covenant valid, legal and enforceable.
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10.5 Notices. For all purposes of this Agreement, all communications
required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, or three business days after having been sent by a nationally
recognized overnight courier service, addressed to the Employer at its
principal executive office and to the Employee at the Employee's
principal residence, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
10.6 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
10.7 Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to
the Employee's employment by the Employer and may not be contradicted
by evidence of any prior or contemporaneous agreement. The parties
further intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other
legal proceedings to vary the terms of this Agreement.
10.8 Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, approved by the
Employer and signed by the Employee and the Employer. Failure on the
part of either party to complain of any action or omission, breach or
default on the part of the other party, no matter how long the same
may continue, shall never be deemed to be a waiver of any rights or
remedies hereunder, at law or in equity. The Employee or the Employer
may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or
perform only through an executed writing; provided, however, that such
waiver shall not operate as a waiver of, or estoppel with respect to,
any other or subsequent failure.
10.9 No Inconsistent Actions. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential intent of this
Agreement. Furthermore, it is the intent of the parties hereto to act
in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
10.10Headings and Section References. The headings used in this Agreement
are intended for convenience or reference only and shall not in any
manner amplify, limit, modify or otherwise be used in the construction
or interpretation of any provision of this Agreement. All section
references are to sections of this Agreement, unless otherwise noted.
<page>
10.11Beneficiaries. The Employee shall be entitled to select (and change,
to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following the Employee's death, and may change such election, in
either case by giving the Employer written notice thereof in
accordance with Section 10.5. In the event of the Employee's death or
a judicial determination of the Employee's incompetence, reference in
this Agreement to the "Employee" shall be deemed, where appropriate,
to the Employee's beneficiary, estate or other legal representative.
10.12Withholding. The Employer shall be entitled to withhold from payment
any amount of withholding required by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
J. C. PENNEY CORPORATION, INC.
By: /s/ Allen Questrom
------------------------------
Name: Allen Questrom
Title:
EMPLOYEE
/s/ Robert B. Cavanaugh
------------------------------
Robert B. Cavanaugh
EXHIBIT A
1989 Management Incentive Compensation
Comp Plan
Employee's annual target incentive units shall be 50% of Base Salary unless
changed by the Human Resources and Compensation Committee.
The performance measures for the Comp Plan shall be determined by the Human
Resources and Compensation Committee to include the following measures for the
Total Company
Sales
Operating Profit
Performance against plan for these measures produces a unit value that is
multiplied by the target incentive units to produce an annual award. The minimum
unit value under this Plan shall be 0% and the maximum shall be 200%.