Form of Notice of Restricted Stock Units


    Exhibit
      10.2


    NOTICE
      OF SPECIAL RESTRICTED STOCK UNIT AWARD

    


    Name:[Associate
      Name]

    ID:
      [EEID] 

    


    Restricted
      Stock Unit Grant

    A
      restricted stock unit award for [Grant Amount] units was granted to you on
      [Grant Date] (“Grant Date”). Each restricted stock unit shall at all times be
      deemed to have a value equal to the then-current fair market value of one share
      of J. C. Penney Company, Inc. Common Stock of 50¢ par value (“Common Stock”).
      This grant 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 JCPenney Board of Directors. In the event of a change in the
      capitalization of the Company or other similar event, the number of restricted
      stock units granted to you shall be adjusted as provided in the Plan.


    


    The
      restricted stock unit award shall vest [Vesting Schedule] provided you are
      still
      actively employed on the vesting date with no interruption of employment with
      the Company. The shares to be received upon vesting of your restricted stock
      units, including in connection with termination of your employment as described
      below, shall be delivered to you as soon as practicable but in no event later
      than two and one-half months following the close of the year in which vesting
      occurs.

    


    You
      shall be credited with a quarterly distribution of an amount equivalent to
      the
      dividend declared on Common Stock on the restricted stock units until such
      time
      as the units are converted to shares of Common Stock. Any such dividends shall
      be converted into a number of additional restricted stock units equal to the
      aggregate dividend which would have been paid with respect to the number of
      restricted stock units then credited to you under this grant divided by the
      closing price of the Common Stock on the New York Stock Exchange on the day
      on
      which such dividends are paid. Any such additional restricted stock units shall
      vest at the same time as the restricted stock units granted hereunder.


    


    Employment
      Termination

    If
      your
      employment terminates due to retirement, Disability, death or reduction in
      force/unit closing prior to the vesting date, you shall be entitled to a
      prorated number of restricted stock units. 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. Any remaining restricted stock units shall expire on such employment
      termination. The beneficiary listed on your JCPenney Company Equity Compensation
      beneficiary designation form shall receive the vested shares covered by the
      restricted stock unit award in the case of termination of employment due to
      death. 

    


    If
      your
      employment terminates due to an
      Involuntary Termination under, and as defined in the Executive Termination
      Pay
      Agreement, any outstanding restricted stock units shall immediately vest and
      be
      payable in shares of JCPenney Common Stock, 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 for any reason other than those specified above, any
      unvested restricted stock units shall be cancelled on the effective date of
      termination. 

    


    Taxes
      and Withholding

    At
      the
      time the restricted stock units vest, the fair market value of the shares on
      the
      vesting date (the closing price of the Common Stock on the NYSE, or if the
      Common Stock does not trade on such date, the closing price reported in the
      composite transaction table on the last trading date immediately preceding
      such
      date) multiplied by the number of vested shares shall be included as income
      on
      your W-2 form and the Company shall be required to withhold applicable taxes
      on
      such shares. The Company shall collect any withholding taxes due by retaining
      and canceling the number of vested shares equal to the value of the required
      minimum tax withholding.

     

    
      
         

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    Transferability

    The
      restricted stock unit granted hereunder is non-transferable.

    


    Effect
      on Other Benefits

    The
      value of the shares covered by the restricted stock unit award shall not be
      included as compensation or earnings for purposes of any other compensation,
      retirement, or benefit plan offered to Company associates.

    


    Change
      of Control

    The
      restricted stock unit award vests immediately without regard to the vesting
      dates listed above upon a Change of Control of the Company (as defined in
      Attachment A).

    


    Administration

    The
      Human Resources and Compensation Committee of the Company’s Board of Directors
      has full authority and discretion to decide all matters relating to the
      administration and interpretation of the Plan and this award and all such
      Committee determinations shall be final, conclusive, and
      binding.


    
      
         

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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. 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.


    


    
      
        
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