Exhibit 10.2
EXECUTIVE TERMINATION PAY AGREEMENT
MARVIN R. ELLISON

This Executive Termination Pay Agreement (the “Agreement”), dated as of
_______________, 2014 is between J.C. Penney Corporation, Inc. (“Corporation”)
and the undersigned member of the Corporation’s Executive Board (the
“Executive”).

WHEREAS, in order to achieve its long-term objectives, the Corporation
recognizes that it is essential to attract and retain superior executives to
serve on its Executive Board;

WHEREAS, in order to induce the Executive to serve in the Executive’s position
with the Corporation, the Corporation desires to provide the Executive with the
right to receive certain benefits in the event the Executive’s employment is
terminated, on the terms and subject to the conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, it is agreed as follows:

1.
Termination Payments and Benefits.

1.1
Death or Permanent Disability. In the event of a Separation from Service due to
death, or in the event of a Separation from Service within 30 days following a
determination of Permanent Disability (as defined in Section 2) of the
Executive, then as soon as practicable or within the period required by law, but
in no event later than 30 days after Separation from Service, the Corporation
shall pay any (a) accrued and unpaid Base Salary (as defined in Section 2) and
vacation to which the Executive was entitled as of the effective date of
termination of the Executive’s employment with the Corporation (collectively,
the “Compensation Payments”) and (b) the target annual incentive (at $1.00 per
unit) under the Corporation’s Management Incentive Compensation Program 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”). Notwithstanding the foregoing, if the Executive has
elected to defer under the Corporation’s Mirror Savings Plan (or any successor
plan) a portion of the annual incentive to be paid under the Corporation’s
Management Incentive Compensation Program for the fiscal year, then that portion
of the Prorated Bonus will be deferred and paid in accordance with the terms of
the Corporation’s Mirror Savings Plan, and the remaining portion of the Prorated
Bonus will be paid in a lump sum under this Section. The payment of any death
benefits or disability benefits under any employee benefit or compensation plan
that is maintained by the Corporation for the Executive’s benefit shall be
governed by the terms of such plan. Upon Executive’s Separation from Service due
to death or a determination of Permanent Disability, the Executive shall, with
respect to any equity award that constitutes an Inducement Award, immediately
vest in such Inducement Award as provided in the applicable award notice or
agreement evidencing the award.

1.2
Involuntary Separation from Service for Cause; Voluntary Separation from Service
by the Executive other than for Good Reason. In the event of the Involuntary
Separation from Service (as defined in Section 2) of the Executive for Cause (as
defined in Section 2) or voluntary Separation from Service by the Executive
other than for Good Reason, the Corporation shall pay the Compensation Payments
to the Executive as soon as practicable or within the period required by law,
and the Executive shall be entitled to no other compensation, except as
otherwise due to the Executive under applicable law, applicable plan or program.
The

--------------------------------------------------------------------------------

Executive shall not be entitled to the payment of any bonuses for any portion of
the fiscal year in which such Separation from Service occurs.

1.3
Involuntary Separation from Service without Cause or Voluntary Separation from
Service for Good Reason.

(a)
Form and Amount. In the event of the Involuntary Separation from Service of the
Executive without Cause or Executive’s voluntary Separation from Service for
Good Reason, the Corporation shall pay the Compensation Payments to the
Executive as soon as practicable or within the period required by law. In
addition, conditioned upon receipt of the Executive’s written release of claims
in such form as may be required by the Corporation and the expiration of any
applicable period during which the Executive can rescind or revoke such release,
the Corporation shall pay the Executive a lump sum as severance pay within 14
days following the expiration of such period; provided, that if the applicable
revocation or rescission period described in this sentence begins in one taxable
year and ends in a second taxable year, such payments and other rights shall not
commence until the second taxable year. In no event will severance pay be paid
later than two and one-half months after the end of the Executive’s tax year in
which the Involuntary Separation from Service or the voluntary Separation from
Service for Good Reason occurs. The lump sum severance pay will be equal to (i)
the Severance Bonus, except as provided below, (ii) the Executive’s Base Salary
and the target annual incentive (at $1.00 per unit) under the Corporation’s
Management Incentive Compensation Program for the Severance Period (as defined
in Section 2), (iii) the Corporation’s portion of the premium cost of Medical,
Dental, and Corporation Paid Life Insurance Plans coverage for the Severance
Period as provided in Section 1.3(b), and (iv) $25,000 to pay for outplacement
services and financial counseling services. Notwithstanding the foregoing, if
the Executive has elected to defer under the Corporation’s Mirror Savings Plan a
portion of the annual incentive to be paid under the Corporation’s Management
Incentive Compensation Program for the fiscal year, then that portion of the
Severance Bonus will be deferred and paid in accordance with the terms of the
Corporation’s Mirror Savings Plan, and the remaining portion of the Severance
Bonus will be paid in a lump sum under this Section. In addition to the lump sum
payments provided for herein, following an Involuntary Separation from Service
other than for Cause or a voluntary Separation from Service for Good Reason, the
Corporation shall also provide to the Executive Accelerated Vesting as provided
in Section 1.3(c). Notwithstanding the foregoing, if the Executive experiences
an Involuntary Separation from Service other than for Cause or a voluntary
Separation from Service for Good Reason before January 31, 2015, the end of the
2014 fiscal year, the Executive’s target annual incentive under the
Corporation’s Management Incentive Compensation Program for purposes of Section
1.3(a)(ii) shall be deemed to be the Executive’s target annual incentive under
the Corporation’s Management Incentive Compensation Program for the 2015 fiscal
year, which ends February 2, 2016, provided in connection with the Executive’s
offer of employment.

(b)
Health Care and Life Insurance. Following an Involuntary Separation from Service
other than for Cause or a voluntary Separation from Service for Good Reason, the
Executive will receive a lump sum payment equal to the Corporation’s premium
cost for the Executive’s active Associate Medical, Dental and Life Insurance
Plans

--------------------------------------------------------------------------------

coverage, if any, as in effect on the day prior to the effective date of the
Executive’s Involuntary Separation from Service other than for Cause or
voluntary Separation from Service for Good Reason, in an amount based on the
entire Severance Period. Such amount shall be grossed-up for applicable federal
income taxes (so that the Executive is made whole for all such taxes) using the
applicable federal income tax rate that applied to the Executive for the taxable
year prior to the year in which the Involuntary Separation from Service or
voluntary Separation from Service for Good Reason shall have occurred.

(c)
Accelerated Vesting. On Executive’s Involuntary Separation from Service other
than for Cause or voluntary Separation from Service for Good Reason, Executive
shall:

(i)
with respect to any equity award that constitutes an Inducement Award,
immediately vest in such Inducement Award as provided in the applicable award
notice or agreement evidencing the award.

(ii)
with respect to any award of stock options, stock appreciation rights, or
time-based restricted stock or restricted units, immediately vest in a prorated
number of the stock options, stock appreciation rights, and/or time-based
restricted stock or restricted stock units based on the Executive’s length of
employment during the vesting period provided in the applicable award notice or
agreement. Generally, the pro-rata vesting of the applicable award will be
determined by multiplying the number of stock options, stock appreciation
rights, or time-based restricted stock or restricted units awarded by a
fraction, the numerator of which is the number of months from the first month of
the vesting period to the effective date of executive’s Separation from Service,
inclusive, and the denominator of which is the total number of months in the
vesting period.

  
(iii)
with respect to any award of performance-based restricted stock or restricted
stock unit awards, vest in a prorated number of such performance-based
restricted stock or restricted stock units based on (X) Executive’s length of
employment during the performance period, and (Y) the attainment of the
performance goal as of the end of the performance period, all as provided under
the terms of the respective award notice or agreement. Generally, the pro-rata
vesting of the performance-based restricted stock or restricted stock unit
awards will be determined at the end of the performance period by multiplying
the number of performance-based restricted stock or restricted stock unit awards
earned in the performance period under the applicable payout matrix by a
fraction, the numerator of which is the number of months from the first month of
the performance period to the effective date of the executive’s Separation from
Service, inclusive, and the denominator of which is the total number of months
in the performance period.

1.4
Section 409A. To the extent applicable, it is intended that portions of this
Agreement either comply with or be exempt from the provisions of Section 409A of
the Code (as defined in Section 2). Any provision of this Agreement that would
cause this Agreement to fail to comply with or be exempt from Code section 409A
shall have no force and effect until such provision is either amended to comply
with or be exempt from Code section 409A (which amendment may be retroactive to
the extent permitted by Code section 409A and the Executive hereby

--------------------------------------------------------------------------------

agrees not to withhold consent unreasonably to any amendment requested by the
Corporation for the purpose of either complying with or being exempt from Code
section 409A); provided, that, any such amendment shall maintain the original
intent and benefit to the Corporation and the Executive of the applicable
provision of this Agreement, to the maximum extent possible without violating
Code section 409A. To the extent that any right or reimbursement of expenses or
payment of any benefit in-kind under this Agreement or otherwise constitutes
nonqualified deferred compensation (within the meaning of Code section 409A),
(i) any such expense reimbursement shall be made by the Corporation no later
than the last day of the taxable year following the taxable year in which such
expense was incurred by the Executive, (ii) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another
benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind
benefits to be provided in any other taxable year; provided, that the foregoing
clause shall not be violated with regard to expenses reimbursed under any
arrangement covered by Code section 105(b) solely because such expenses are
subject to a limit related to the period the arrangement is in effect.

1.5
Forfeiture. Notwithstanding the foregoing provisions of this Section 1, in
addition to any remedies to which the Corporation is entitled, any right of the
Executive to receive termination payments and benefits under Section 1 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 3.

1.6
Non-Eligibility For Other Company Separation Pay Benefits. The benefits provided
for herein are intended to be in lieu of, and not in addition to, other
separation pay benefits to which the Executive might be entitled, including
those under the Corporation’s Separation Pay Plan, or any successor plan or
program offered by the Corporation, which the Executive hereby waives. If the
Executive receives benefits under the Corporation’s Change in Control Plan (the
“CIC Plan”), in the event of Employment Termination (as defined in the CIC
Plan), the covenants set forth in Section 3 hereof shall automatically terminate
and, if the Executive shall receive all benefits to which the Executive is
entitled under the CIC Plan, the Executive waives all benefits hereunder.

1.7
Corporation’s Right of Offset. If the Executive is at any time indebted to the
Corporation, or otherwise obligated to pay money to the Corporation for any
reason, to the extent exempt from or otherwise permitted by Code section 409A
and the Treasury Regulations thereunder, including Treasury Regulation section
1.409A-3(j)(4)(xiii) or any successor thereto, the Corporation, at its election,
may offset amounts otherwise payable to the Executive under this Agreement,
including, but without limitation, Base Salary and incentive compensation
payments, against any such indebtedness or amounts due from the Executive to the
Corporation, to the extent permitted by law.

1.8
Mitigation. In the event of the Involuntary Separation from Service of the
Executive or the Executive’s voluntary Separation from Service for Good Reason,
the Executive 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 Executive after the
Executive’s Involuntary Separation from Service or voluntary Separation from
Service for 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.

--------------------------------------------------------------------------------

1.9
Resignations. Except to the extent requested by the Corporation, upon any
termination of the Executive’s employment with the Corporation, the Executive
shall immediately resign all positions and directorships with the Corporation
and each of its subsidiaries and affiliates.

2.
Certain Definitions.

As used in this Agreement, the following terms shall have the following
meanings:
2.1
“Agreement” shall mean this Executive Termination Pay Agreement.

2.2
“Base Salary” shall mean the Executive’s annual base salary as in effect at the
effective date of termination of the Executive’s employment with the Corporation
not taking into account any reductions of Base Salary which would constitute
Good Reason under this Agreement.

2.3
“Cause” shall mean (a) an intentional act of fraud, embezzlement, theft or any
other material violation of law that occurs during or in the course of
Executive’s employment with the Corporation; (b) willful and intentional damage
to the Corporation’s assets; (c) intentional disclosure of the Corporation’s
confidential information contrary to Corporation’s policies; (d) material breach
of Executive’s obligations under this Agreement; (e) intentional engagement in
any competitive activity which would constitute a breach of Executive’s duty of
loyalty or of Executive’s obligations under this Agreement; (f) the willful and
continued failure to substantially perform Executive’s duties for the
Corporation (other than as a result of incapacity due to physical or mental
illness); or (g) intentional breach of any of Corporation’s policies or willful
conduct by Executive that is in either case demonstrably and materially
injurious to Corporation, monetarily or otherwise; provided, however, that
termination for Cause based on clauses (d) or (f) shall not be effective unless
the Executive shall have written notice from the Board of Directors of J. C.
Penney Company, Inc. (the “Board”) (which notice shall include a description of
the reasons and circumstances giving rise to such notice) not less than 30 days
prior to the Executive’s termination and the Executive has failed after receipt
of such notice to satisfactorily discharge the Executive’s duties. For purposes
hereof, an act, or a failure to act, shall not be deemed “willful” or
“intentional” unless it is done, or omitted to be done, by the Executive in bad
faith or without a reasonable belief that the Executive’s action or omission was
in the best interest of Corporation. Failure to meet performance standards or
objectives, by itself, does not constitute “Cause.” Executive shall not be
terminated for “Cause” in the absence of a vote of a majority of the Board after
an opportunity to be heard before the Board with counsel, such opportunity to be
available to the Executive for a period of 24 hours following executive’s
receipt of the notice of the Board’s intent to vote on whether Executive should
be terminated for “Cause.”

2.4
“Code” shall mean the Internal Revenue Code of 1986, as amended, including
proposed, temporary or final regulations or any other guidance issued by the
Secretary of the Treasury or the Internal Revenue Service with respect thereto.

2.5
“CIC Plan” shall have the meaning ascribed thereto in Section 1.6.

2.6
“Compensation Payments” shall have the meaning ascribed thereto in Section 1.1.

2.7
“Competing Business” shall have the meaning ascribed thereto in Section 3.4.

--------------------------------------------------------------------------------

2.8
“Corporation” shall mean J.C. Penney Corporation, Inc.

2.9
“Executive” shall mean the undersigned member of the Corporation’s Executive
Board.

2.10
“Good Reason” shall mean

(a)
the Corporation’s failure to make the Executive Chief Executive Officer
effective August 1, 2015, or

(b)
a decrease in the Executive’s Base Salary or incentive compensation opportunity
(i.e., the amount of incentive compensation paid at target as a percentage of
Base Salary under the Management Incentive Compensation Program), or

(c)
any demotion of Executive or any reduction in Executive’s authority or
responsibility, except in each case in connection with the Executive’s
Involuntary Separation from Service for Cause or Permanent Disability or as a
result of Executive’s death, or temporarily as a result of Executive’s illness
or other Corporation approved absence, or

(d)
the Corporation’s requiring the Executive to change the principal location at
which the Executive must perform services to a location that is more than 50
miles from 6501 Legacy Drive, Plano, Texas 75024 after the Executive’s date of
hire, or

(e)
the Corporation’s failure to nominate Executive for election to the Board,
except in connection with the Executive’s Involuntary Separation from Service
for Cause or Permanent Disability or as a result of Executive’s death, or
temporarily as a result of Executive’s illness or other Corporation approved
absence, or

(f)
prior to August 1, 2015, the Corporation’s material breach of the Executive’s
offer letter of employment, or

(g)
failure to make any material payments to the Executive when due, other than as
required by applicable law or regulation or due to a mistake that is corrected
as soon as practicable, but in any event within 30 days after discovery of the
failure to make the material payment to the Executive.

                          
In order to constitute “Good Reason” the Executive must provide notice to the
Corporation of the existence of the condition described above within 30 days of
the initial existence of the condition, where upon the Corporation will have 30
days, following the notice of the condition by the Executive, during which it
may remedy the condition and not be required to pay any amount owed under this
Agreement. Any Separation from Service as a result of a Good Reason condition
must occur within 180 days of the initial existence of the condition that
constitutes “Good Reason” in order for benefits to be due under this Agreement.
2.11
“Inducement Award” shall mean an equity award granted to Executive in
consideration of Executive’s (i) employment with the Corporation and (ii)
forfeiture of equity awards granted by a former employer.

2.12
“Involuntary Separation from Service” shall mean Separation from Service due to
the independent exercise of the unilateral authority of the Service Recipient to
terminate the

--------------------------------------------------------------------------------

Executive's services, other than due to the Executive’s implicit or explicit
request, where the Executive was willing and able to continue performing
services, within the meaning of Code section 409A and Treasury Regulation
section 1.409A-1(n)(1) or any successor thereto.
2.13
“Management Incentive Compensation Program” shall mean the Management Incentive
Compensation Program approved by shareholders on May 18, 2012, as such may be
amended from time to time, or any successor plan or program that replaces the
Management Incentive Compensation Program.

2.14
“Permanent Disability” means the Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, within the meaning of
Code section 409A and Treasury Regulation section 1.409A-3(i)(4)(i)(A) or any
successor thereto. A determination of Permanent Disability, for purposes of
payment under this Agreement, will be made by the Corporation’s disability
insurance plan administrator or insurer.

2.15
“Proprietary Information” shall have the meaning ascribed thereto in Section 3.

2.16
“Prorated Bonus” shall have the meaning ascribed thereto in Section 1.1.

2.17
“PTO Policy” shall have the meaning ascribed thereto in Section 1.3.

2.18
“Separation from Service” within the meaning of Code section 409A and Treasury
Regulation section 1.409A-1(h) or any successor thereto, shall mean the date an
Executive retires, dies or otherwise has a termination of employment with the
Service Recipient. In accordance with Treasury Regulation section 1.409A-1(h) or
any successor thereto, if an Executive is on a period of leave that exceeds six
months and the Executive does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship is deemed to
terminate on the first date immediately following such six-month period, and
also, an Executive is presumed to have separated from service where the level of
bona fide services performed (whether as an employee or an independent
contractor) decreases to a level equal to 20 percent or less of the average
level of services performed (whether as an employee or an independent
contractor) by the Executive during the immediately preceding 36-month period
(or the full period of service to the Service Recipient if the employee has been
providing services for less than the 36-month period).

2.19
“Service Recipient” shall mean the person, within the meaning of Treasury
Regulation section 1.409A-1(g) or any successor thereto, for whom the services
are performed and with respect to whom the legally binding right to compensation
arises, and all persons with whom such person would be considered a single
employer under Code section 414(b) (employees of controlled group of
corporations), and all persons with whom such person would be considered a
single employer under Code section 414(c) (employees of partnerships,
proprietorships, etc., under common control), using the “at least 50 percent”
ownership standard, within the meaning of Code section 409A and Treasury
Regulation section 1.409A-1(h)(3) or any successor thereto.

--------------------------------------------------------------------------------

2.20
“Severance Bonus” shall mean

(a)
from the effective date of the Executive’s date of hire until January 30, 2016,
Executive’s target annual incentive (at $1.00 per unit) under the Corporation’s
Management Incentive Compensation Program, or

(b)
after January 30, 2016 but before the Executive has been employed by the
Corporation for three or more fiscal years, the average of the actual payments
made to the Executive under the Corporation’s Management Incentive Compensation
Program for the fiscal years, or portion thereof, that the Executive has been
employed by the Corporation, excluding the 2014 fiscal year ending on January
31, 2015 , or

(c)
if the executive has been employed by the Corporation for three or more fiscal
years, after excluding the 2014 fiscal year ending on January 31, 2015, the
average of the actual payments made to the Executive under the Corporation’s
Management Incentive Compensation Program for each of the three fiscal years
immediately preceding the fiscal year in which the Executive experiences an
Involuntary Separation from Service other than for Cause or a voluntary
Separation from Service for Good Reason.

2.21
“Severance Period” shall mean 24 months.

3.
Covenants and Representations of the Executive. The Executive hereby
acknowledges that the Executive’s duties to the Corporation require access to
and creation of the Corporation’s confidential or proprietary information and
trade secrets (collectively, the “Proprietary Information”). The Proprietary
Information has been and will continue to be developed by the Corporation and
its subsidiaries and affiliates at substantial cost and constitutes valuable and
unique property of the Corporation. The Executive further acknowledges that due
to the nature of the Executive’s position, the Executive will have access to
Proprietary Information affecting plans and operations in every location in
which the Corporation (and its subsidiaries and affiliates) does business or
plans to do business throughout the world, and the Executive’s decisions and
recommendations on behalf of the Corporation may affect its operations
throughout the world. Accordingly, the Executive acknowledges that the foregoing
makes it reasonably necessary for the protection of the Corporation’s business
interests that the Executive agree to the following covenants:

3.1
Confidentiality. The Executive hereby covenants and agrees that the Executive
shall not, without the prior written consent of the Corporation, during the
Executive’s employment with the Corporation or at any time thereafter disclose
to any person not employed by the Corporation, or use in connection with
engaging in competition with the Corporation, any Proprietary Information of the
Corporation.

(a)
It is expressly understood and agreed that the Corporation’s Proprietary
Information is all nonpublic information relating to the Corporation’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 Corporation. 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.
Notwithstanding the foregoing, the Executive shall be permitted to disclose
Proprietary Information to the extent required by a subpoena, court order, or
other summons, by the apparent authority of a governmental or regulatory body or
as reasonably appropriate in connection with any legal dispute.

(b)
In the event the Executive receives a subpoena, court order or other summons
that may require the Executive to disclose Proprietary Information, on pain of
civil or criminal penalty, the Executive will (to the extent legally
permissible) promptly give notice to the Corporation of the subpoena or summons
and provide the Corporation an opportunity to appear at the Corporation’s
expense and challenge the disclosure of its Proprietary Information, and the
Executive shall provide reasonable cooperation (at the Corporation’s expense) to
the Corporation for purposes of affording the Corporation the opportunity to
prevent the disclosure of the Corporation’s Proprietary Information.

3.2
Nonsolicitation of Employees. The Executive hereby covenants and agrees that
during the Executive’s employment with the Corporation, and, in the event the
Executive will receive or has received the severance benefits provided for in
Section 1.3, for a period equal to the Severance Period thereafter , the
Executive shall not, without the prior written consent of the Corporation, on
the Executive’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
Corporation (or any of its subsidiaries or affiliates) to give up his or her
employment with the Corporation (or any of its subsidiaries or affiliates), and
the Executive shall not directly or indirectly solicit or hire employees of the
Corporation (or any of its subsidiaries or affiliates) for employment with any
other employer. Executive shall not be in violation of this paragraph as a
result of employment solicitations through general advertisements not directed
specifically at employees of the Corporation (or any of its subsidiaries or
affiliates).

3.3
Noninterference with Business Relations. The Executive hereby covenants and
agrees that during the Executive’s employment with the Corporation, and, in the
event the Executive will receive or has received the severance benefits provided
for in Section 1.3, for a period equal to the Severance Period thereafter , the
Executive shall not, without the prior written consent of the Corporation, on
the Executive’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 Corporation (or any of its subsidiaries or affiliates).

3.4
Noncompetition.

(a)
The Executive covenants that during the Executive’s employment with the
Corporation and, in the event the Executive will receive or has received the
severance benefits provided for in Section 1.3, for a period equal to the
Severance Period thereafter, the Executive will not undertake work for a
Competing Business, as defined in Section 3.4(b). 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 Executive at any time during the 12-month period preceding the
Executive’s termination from the Corporation for any reason. Notwithstanding the
foregoing, the Executive may waive the benefits under Section 1.3 by providing a
written notice to the Corporation’s General Counsel and will then not be subject
to this Section 3.4. In addition, notwithstanding the foregoing the Executive
shall not violate this provision by (i) being a passive owner of less than 3% of
the equity interests of (x) any entity which is publicly traded or (y) through a
hedge fund or private equity fund (or similar investment vehicle), any
privately-held entity, or (ii) providing services to a subsidiary, division or
unit of any entity which maintains a Competing Business so long as the Executive
does not (a) provide services to the subsidiary, division, or unit of such
entity that is engaged in the Competing Business, or (b) have substantive
business communication with, influence over, or control of the subsidiary,
division, or unit of such entity that is engaged in the Competing Business.
 
(b)
As used in this Agreement, the term “Competing Business” shall mean any business
that, at the time of the determination:

(i)
operates (A) any retail department store, specialty store, or general
merchandise store; (B) any retail catalog, telemarketing, or direct mail
business; (C) any Internet-based or other electronic department store or general
merchandise retailing business; (D) any other retail business that sells goods,
merchandise, or services of the types sold by the Corporation, including its
divisions, affiliates, and licensees; or (E) any business that provides buying
office or sourcing services to any business of the types referred to in this
Section 3.4(b)(i); and

(ii)
conducts any business of the types referred to in Section 3.4(b)(i) in the
United States, Commonwealth of Puerto Rico, or another country in which the
Corporation, including its divisions, affiliates, and licensees, conducts a
similar business.

3.5
Injunctive Relief. If the Executive shall materially breach any of the covenants
contained in this Section 3, the Corporation shall have no further obligation to
make any payment to the Executive pursuant to this Agreement and may recover
from the Executive all such damages as it may be entitled to at law or in
equity. In addition, the Executive acknowledges that any such breach is likely
to result in immediate and irreparable harm to the Corporation for which money
damages are likely to be inadequate. Accordingly, the Executive consents to
injunctive and other appropriate equitable relief without the necessity of bond
in excess of $500.00 upon the institution of proceedings therefor by the
Corporation in order to protect the Corporation’s rights hereunder.

4.
Employment-at-Will. Notwithstanding any provision in this Agreement to the
contrary, the Executive hereby acknowledges and agrees that the Executive’s
employment with the Corporation is for an unspecified duration and constitutes
“at-will” employment, and the Executive further acknowledges and agrees that
this employment relationship may be terminated at any time, with or without
Cause or for any or no Cause, at the option either of the Corporation or the
Executive.

--------------------------------------------------------------------------------

5.
Miscellaneous Provisions.

5.1
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
Corporation’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 3.4 and only in the event the Corporation has not brought an
action in a court of competent jurisdiction to enforce the covenants in Section
3. 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 Corporation and the Executive or as
the arbitrator equitably determines consistent with the application of state or
federal law; provided, however, that the Executive’s share of such expenses
shall not exceed the maximum permitted by law. To the extent applicable, in
accordance with Code section 409A and Treasury Regulation section
1.409A-3(i)(1)(iv)(A) or any successor thereto, any payments or reimbursement of
arbitration expenses which the Corporation is required to make under the
foregoing provision shall meet the requirements below. The Corporation shall
reimburse the Executive for any such expenses, promptly upon delivery of
reasonable documentation, provided, however, all invoices for reimbursement of
expenses must be submitted to the Corporation and paid in a lump sum payment by
the end of the calendar year following the calendar year in which the expense
was incurred. All expenses must be incurred within a 20 year period following
the Separation from Service. The amount of expenses paid or eligible for
reimbursement in one year under this Section 5.1 shall not affect the expenses
paid or eligible for reimbursement in any other taxable year. The right to
payment or reimbursement under this Section 5.1 shall not be subject to
liquidation or exchange for another benefit.

Any arbitration or action pursuant to this Section 5.1 shall be governed by and
construed in accordance with the substantive laws of the State of Texas and,
where applicable, federal law, without giving effect to the principles of
conflict of laws of such State. The mandatory arbitration provisions of this
Section 5.1 shall supersede in their entirety the J.C. Penney Alternative, a
dispute resolution program generally applicable to employment terminations.
Notwithstanding the foregoing, the Corporation shall not be required to seek or
participate in arbitration regarding any actual or threatened breach of the
Executive’s covenants in Section 3, but may pursue its remedies, including
injunctive relief, for such breach in a court of competent jurisdiction in the
city in which the Corporation’s principal executive offices are based, or in the
sole discretion of the Corporation, in a court of competent jurisdiction where
the Executive has committed or is threatening to commit a breach of the
Executive’s covenants, and no arbitrator may make any ruling inconsistent with
the findings or rulings of such court.

--------------------------------------------------------------------------------

5.2
Binding on Successors; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Executive, the Corporation 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
Executive (except by will or by operation of the laws of intestate succession)
or by the Corporation except that the Corporation 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 Corporation, if such successor
expressly agrees to assume the obligations of the Corporation hereunder.

5.3
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 Corporation exercises its discretion under
Section 5.1 to bring an action to enforce the covenants contained in Section 3
in a court of competent jurisdiction where the Executive 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.

5.4
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 3 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.

5.5
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 Corporation at
its principal executive office, c/o the Corporation’s General Counsel, and to
the Executive at the Executive’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.

5.6
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.

5.7
Entire Agreement. The terms of this Agreement are intended by the parties to be
the final expression of their agreement with respect to the Executive’s
employment by the Corporation 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.

5.8
Amendments; Waivers. This Agreement may not be modified, amended, or terminated
except by an instrument in writing, approved by the Corporation and signed by
the Executive and the Corporation. 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 Executive
or the Corporation 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.

5.9
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.

5.10
Headings 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.

5.11
Beneficiaries. The Executive 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 Executive’s
death, and may change such election, in either case by giving the Corporation
written notice thereof in accordance with Section 5.5. In the event of the
Executive’s death or a judicial determination of the Executive’s incompetence,
reference in this Agreement to the “Executive” shall be deemed, where
appropriate, to be the Executive’s beneficiary, estate or other legal
representative.

5.12
Withholding. The Corporation 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:     _______________________________________
Name: _________________________________    
Title: _________________________________

Executive

____________________________________