Notice of Stock Option Grant


    Exhibit
      10.1

    JCPenney

    
      J.
        C. Penney Company,
        Inc.                                      Notice
        of Grant of
        Stock Option(s)

      
        	
                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] 

              


      

      2005
        Equity

      Compensation
        Plan

        

      

    

    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. 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 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. 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

    


    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 JCPenney Company Equity
      Compensation 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”) 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         .

    


    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
      an Involuntary Termination under, and as defined in the Executive Termination
      Pay Agreement, 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, disability, or reduction in force/unit closing as
      described below. 

    
      
        1

      

    

    
      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 Dates
      until
      the Expiration
      Date
      which
      is           ("Normal
      Expiration Date").
      

    


    This
      option can be exercised by:

     

    
      	
            	
              ·

            	
              Cash
                Payment Method (Exercise-and-Hold)

            


    

    
      	
            	
              ·

            	
              Stock
                Payment Method

            


    

    
      	 	
              ·

            	
              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 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)
      Reduction in Force or Unit Closing: If
      your
      employment terminates due to a reduction in force or unit closing 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 a 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 Termination
      under the Executive Termination Pay Agreement:
      If
      your employment terminates due to an Involuntary Termination 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 prior to the Involuntary Termination 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 Termination 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.

    
      
        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 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 35 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.


    


    
      
        
          3