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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 1, 2006
J. C. PENNEY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-15274 26-0037077
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation ) Identification No.)
6501 Legacy Drive
Plano, Texas 75024-3698
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (972) 431-1000
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13d-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On August 1, 2006, J. C. Penney Company, Inc. (the "Company") adopted a new
form of Notice of Grant of Stock Options to be used in connection with grants of
stock options pursuant to the Company's 2005 Equity Compensation Plan ("2005
Equity Plan") to executive officers who have signed Executive Termination Pay
Agreements, a copy of the form of which was previously filed with the
Commission.
The form of grant notice sets forth the terms and conditions of stock
options granted pursuant to the 2005 Equity Plan. The new form of Stock Option
Grant Notice has been updated to reflect 100% vesting acceleration upon
Involuntary Termination of the executive's employment, as defined in the
Executive Termination Pay Agreement.
A copy of the Form of Notice of Grant of Stock Options is filed herewith as
Exhibit 10.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit 10.1 Form of Notice of Grant of Stock Options
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
J. C. PENNEY COMPANY, INC.
By: /s/ Joanne L. Bober
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Joanne L. Bober
Executive Vice President,
General Counsel and Secretary
Date: August 7, 2006
EXHIBIT INDEX
Exhibit Number Description
Exhibit 10.1 Form of Notice of Grant of Stock Options
Exhibit 10.1
JCPenney
J. C. Penney Company, Inc. Notice of Grant of Stock Options
2005 Equity -----------------------------------------------------------------------------------
Compensation Plan Name Date of Grant Option Price Per Share
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Employee ID Unit Number Area of Responsibility / District Number
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Number of NSO Shares Granted
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This Notice of Non-Qualified (also known as "Non-Statutory") Stock Option
("NSO") gives you the right to purchase the total number of shares of Common
Stock of 50 cent par value ("Common Stock") of J. C. Penney Company, Inc.
("Company") at the price per share as shown above. This option is subject to all
the terms, rules, and conditions of the J. C. Penney Company, Inc. 2005 Equity
Compensation Plan ("Plan") and the implementing resolutions ("Resolutions")
approved by the Human Resources and Compensation Committee of the Board of
Directors. Capitalized terms not otherwise defined herein shall have the
respective meanings assigned to them in the Plan and the Resolutions. In the
event of a change in capitalization of the Company or other similar event, the
option price and number of shares shall be adjusted as provided in the Plan.
Terms of Exercise
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Effective Exercise Date
When an option exercise instruction is given in conjunction with a sell order
for the underlying stock that is a Sell-to-Cover Order, a Same-Day-Sale Exercise
Order, a Limit Order or a Good-till Cancelled Order, the effective exercise date
shall be the date on which such sale order is executed. For a Cash Payment
(Exercise and Hold) transaction, the effective exercise date shall be the date
the requisite funds are received by the Company at its home office in Plano,
Texas, or such other location as the Company may designate, or by a third party
duly designated by the Company at the offices of such third party. For a Stock
Payment transaction, the effective exercise date shall be the date the properly
completed option exercise form/instructions and any necessary accompanying
documents and payment are received by the Company at its home office in Plano,
Texas, or such other location as the Company may designate, or by a third party
duly designated by the Company at the offices of such third party. Exercise
instructions received after the close of the New York Stock Exchange for the day
shall be deemed received as of the opening of the next Business Day (a "Business
Day" being any day on which the New York Stock Exchange is open and operating).
An effective exercise date shall never mean a non-Business Day. If any
"effective exercise date," as defined above, falls on a day Common Stock is not
traded, all transactions shall be postponed until the next trading day, and the
effective exercise date shall be deemed to be the next trading date, unless such
day is after the Normal Expiration Date (as defined below), in which case the
option shall expire.
Transferability
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This option may be assigned or transferred by will or the laws of descent and
distribution. No Stock Option shall be exercisable except by you or (a) upon
your incapacity, by your guardian or legal representative, or (b) upon your
death, by the beneficiary you have designated on the J.C. Penney Company, Inc.,
Equity Compensation Plan Beneficiary Designation Form or in the absence of such
beneficiary, your legal representative (collectively, "Legal Transferees").
Date Option Becomes Exercisable
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This option shall become exercisable ("vest") over a --------------- period in
accordance with the following schedule:
----------------------------- -----------------------------------------------
Normal Vesting Dates Percent of this Option Grant vesting
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
----------------------------- -----------------------------------------------
This option shall be 100% vested on -----------------.
(Rev. 8/06) 1 (continued on back)
However, 100% of this option becomes immediately exercisable, without regard to
these dates, upon a "Change of Control" (as defined in Attachment A) of the
Company or in the event of Involuntary Termination (as defined in the Executive
Termination Pay Agreement between you and J. C. Penney Corporation, Inc.), and a
portion of this option becomes immediately exercisable, without regard to these
dates, in the event of your employment termination due to retirement, death, or
Disability, as described below.
Additional Exercise Terms Of This Option Are:
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While you are Employed
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While you are employed by the Company, subsidiary, or other entity affiliated
with the Company, you may exercise vested options any time on or after the
Normal Vesting Dates until the Expiration Date of -------------- ("Normal
Expiration Date").
This option can be exercised by:
o Cash Payment Method (Exercise and Hold)
o Stock Payment Method
o Same-Day-Sale Method
o Sell To Cover Method
After your Employment Termination
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In all cases, the option exercise period following termination of employment
cannot extend beyond the applicable date described below or the Normal
Expiration Date, whichever comes first.
1) Retirement, Death, or Disability: If your employment terminates due to your:
o Retirement at age 60 or more,
o Retirement between ages 55 and 59 with at least 15 years of service,
o Death, or
o Disability,
before the final Normal Vesting Date, you shall be entitled to a prorated
number of stock options. The proration shall be based on the ratio of (a)
the number of calendar days from the date of grant to the effective date of
termination to (b) the total number of calendar days in the vesting period.
The number of options that have already vested shall be subtracted from the
prorated amount and the remaining prorated options shall become immediately
exercisable. Any options which have not already vested or for which
exercisability is not accelerated shall expire on such employment
termination.
If your employment terminates due to any of the three circumstances listed
above, all vested stock options may be exercised for a period of five years
after employment termination or until the option's Normal Expiration Date,
whichever comes first.
2) Involuntary Termination (as defined in the Executive Termination Pay
Agreement between you and J. C. Penney Corporation, Inc.) - If your
employment terminates due to Involuntary Termination, this option shall
become immediately exercisable and may be exercised until the option's
Normal Expiration Date.
3) Resignation, Summary Dismissal or Resignation in Lieu of Summary Dismissal:
If your employment terminates due to your resignation, summary dismissal or
resignation in lieu of summary dismissal, then this option shall expire as
of the date of your employment termination.
This stock option grant does not constitute an employment contract. It does not
guarantee employment for the length of the vesting period or for any portion
thereof.
2
Attachment A
A Change of Control Event shall have occurred if there is a change of ownership,
a change of effective control, or a change in ownership of a substantial portion
of the assets of the Company (as "Company" is defined in the J. C. Penney
Company, Inc. 2005 Equity Compensation Plan).
1. Change of ownership occurs on the date that a person or persons acting
as a group acquires ownership of stock of the Company that together
with stock held by such person or group constitutes more than 50
percent of the total fair market value or total voting power of the
stock of such corporation.
2. Notwithstanding whether the Company has undergone a change of
ownership, a Change of Effective control occurs (a) when a person or
persons acting as a group acquires within a 12-month period 35 percent
of total voting power of the stock of the Company or (b) a majority of
the board of Directors is replaced within 12 months if not previously
approved by a majority of the members. A change in effective control
also may occur in any transaction in which either of the two
corporations involved in the transaction has a Change in Control
Event, i.e. multiple change in control events.
3. Change in ownership of a substantial portion of the Company's assets
occurs when a person or persons acting as a group acquires assets that
have a total gross fair market value equal to or more than 40 percent
of the total gross fair market value of all assets of the Company
immediately prior to the acquisition. A transfer of assets by the
Company is not treated as a change in the ownership of such assets if
the assets are transferred to -
(i) A shareholder of the Company (immediately before the asset
transfer) in exchange for or with respect to its stock;
(ii) An entity, 50 percent or more of the total value or voting power
of which is owned, directly or indirectly, by the Company;
(iii) A person, or more than one person acting as a group, that owns,
directly or indirectly, 50 percent or more of the total value or
voting power of all the outstanding stock of the Company; or
(iv) An entity, at least 50 percent of the total value or voting power
of which is owned, directly or indirectly, by a person described in
paragraph (iii).
Persons will not be considered to be acting as a group solely because they
purchase assets of the Company at the same time, or as a result of the same
public offering. However persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of assets, or similar business transaction with the
Company.