Exhibit 10.2
JCPenney
J. C. Penney Company, Inc.                              Notice of Stock Option
Grant
Name
    [Associate Name]
 Employee ID
                 [EEID]
Date of Grant
[Grant Date]
 Option Grant Price Per Share
 [Grant Price]
Number of NSO Shares Granted
 [Grant Amount]

2009 Long-Term Incentive Plan

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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¢ par value ("Common Stock") of J. C. Penney Company, Inc.
("Company") at the option grant price per share as shown above.  This option is
subject to all the terms, rules, and conditions of the J. C. Penney Company,
Inc. 2009 Long-Term Incentive 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 the capitalization of the Company or
other similar event, the option grant price and number of shares shall be
adjusted as provided in the Plan.
 
Terms of Exercise
 
Effective Exercise Date
 
When an option exercise instruction is given in conjunction with a sell order
for the underlying stock that is an Exercise-and-Sell to Cover, an
Exercise-and-Sell Order, a Limit Order or a Good ‘til 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.  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
 
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 Equity
Plan Beneficiary Designation Form or in the absence of such beneficiary, your
legal representative (collectively, "Legal Transferees").
 
Date Option Becomes Exercisable
 
This option shall become  exercisable (“vest”) in accordance with the following
schedule:
 
Normal Vesting Date
Percent Vesting
(Date)
100%

 
However, 100% of this option becomes immediately exercisable, without regard to
this date, upon  Employment Termination (as defined in the Plan) following a
Change of Control (as defined in Attachment A) of the Company or an Involuntary
Separation from Service without Cause under, and as defined in, the Executive
Termination Pay Agreement, and a portion of this option becomes immediately
exercisable, without regard to this date, in the event of your employment
termination due to Retirement, Disability, death, or job restructuring/reduction
in force/unit closing as described below.
 
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Additional Exercise Terms Of This Option Are:
 
While you are Employed
 
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 Date until the expiration date which is (date) ("Normal
Expiration Date").
 
This option can be exercised by: 
     
 
·
·
·
Cash Payment Method (Exercise-and-Hold)
Exercise-and-Sell Method
Exercise-and-Sell To Cover Method

 
After your Employment Termination
 
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:

 
·      Retirement at age 60 or more,
·      Retirement between ages 55 and 59 with at least 15 years of service,
·      Death, or
·      Disability,
 
before the 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 four 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)
Job Restructuring, Reduction in Force or Unit Closing: If your employment
terminates due to a job restructuring, reduction in force or unit closing before
the 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 a job restructuring, reduction in force or
unit closing, all vested options may be exercised for a period of two years
after employment termination or until the option’s Normal Expiration Date,
whichever comes first.
 
 
3)
Resignation, Summary Dismissal or Resignation in Lieu of Summary Dismissal,
Discretionary Dismissal or Resignation in Lieu of Discretionary Dismissal
(excluding Reduction In Force or Unit Closing): If your employment terminates
due to your resignation, summary dismissal or resignation in lieu of summary
dismissal, discretionary dismissal or resignation in lieu of a discretionary
dismissal, then this option shall expire as of the date of your employment
termination.

 
 4)
 Involuntary Separation from Service without Cause under the Executive
Termination Pay Agreement:  If your employment terminates due to an Involuntary
Separation from Service without Cause under, and as defined, in the Executive
Termination Pay Agreement, any outstanding options will vest and become
immediately exercisable subject to (a) the execution and delivery of a release
in such form as may be required by the Company and (b) the expiration of the
applicable revocation period for such release.

 
 

 
If your employment terminates due to an Involuntary Separation from Service
without Cause under, and as defined in, the Executive Termination Pay Agreement,
all vested stock options may be exercised for a period of 120 days after the
effective date of employment termination or until the option’s Normal Expiration
Date, whichever comes first.

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.
 
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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. 2009 Long-Term Incentive 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 the Company.

 
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 30 percent of the 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.
 
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