<PAGE>
                                                               EXHIBIT 10(ii)(x)

                           J. C. PENNEY COMPANY, INC.

                     SUPPLEMENTAL TERM LIFE INSURANCE PLAN

                    FOR MANAGEMENT PROFIT-SHARING ASSOCIATES

                        ADOPTED EFFECTIVE JANUARY 1, 2002

<PAGE>

                           J. C. PENNEY COMPANY, INC.
                      SUPPLEMENTAL TERM LIFE INSURANCE PLAN
                    FOR MANAGEMENT PROFIT-SHARING ASSOCIATES

                                TABLE OF CONTENTS
                                -----------------

                                                                  Page
                                                                  ----
Article    1     Introduction                                       1
Article    2     Definitions                                        2
Article    3     Participation                                      4
Article    4     Life Insurance Benefits                            5
Article    5     Funding of Benefits                                7
Article    6     Administration of the Plan                         8
Article    7     Adoption By Participating Employers               12
Article    8     Amendment and Termination                         13
Article    9     Conversion Rights                                 14
Article   10     Miscellaneous Provisions                          15

Appendix I - Participating Subsidiaries                            17

<PAGE>

                                    ARTICLE 1

                                  INTRODUCTION
                                  ------------

     1.1 Purpose Of Plan. The J. C. Penney Company, Inc. Supplemental Term Life
         ---------------
Insurance Plan For Management Profit-Sharing Associates (the "Plan") is an
"employee welfare benefit plan" pursuant to ERISA. The purpose of the Plan is to
permit eligible retired management Associates of J.C. Penney Company, Inc. and
certain designated subsidiaries who elect to participate to purchase group term
life insurance benefits directly from the Insurer (as hereinafter defined). This
document, together with the Policies (as hereinafter defined) will be construed
as a single group term life insurance plan. Capitalized terms used throughout
the Plan have the meanings set forth in Article 2 unless the context clearly
requires otherwise or another definition is expressly assigned to the term in a
particular usage.

     1.2 Plan Status. The Plan is intended to satisfy the requirements of an
         -----------
after-tax option pursuant to the cafeteria plan requirements under Section
125(d) of the Code.

     1.3 Suppression Of Prior Plan. This document is effective January 1, 2002
         -------------------------
except as otherwise provided herein. All prior versions of the Plan document are
hereby suppressed or superseded. The Plan was originally adopted effective
January 1, 1978.

                                       1

<PAGE>

                                    ARTICLE 2

                                   DEFINITIONS
                                   -----------

     2.1 "Administrator" means the Benefits Administration Committee of the
          -------------
Company or such other person or committee as may be appointed from time to time
by the Human Resources Committee of the Management Committee of the Company or
any successor thereto ("HR Committee").

     2.2 "Annual Earnings for Benefits" means the greater of (i) the
          ----------------------------
Participant's "Annual Earnings for Benefits" for purposes of the Company-Paid
Plan on the Participant's retirement date or (ii) for a retired Participant who
is reemployed by a Participating Employer and who becomes eligible for the
Company-Paid Plan and later loses eligibility under the Company-Paid Plan, such
retired Participant's Annual Earnings for Benefits at such time as the
Participant lost eligibility under the Company-Paid Plan.

     2.3 "Associate" means a person who is employed by a Participating Employer
          ---------
and paid through a participating employer's payroll system. The term "Associate"
does not include a person who is classified as an independent contractor by the
Participating Employer for purposes of federal income tax reporting and
withholding. The designation of an "Associate" by the Company shall be final and
not subject to any redetermination of employment classification by any taxing
authority such as the Internal Revenue Service or any other governmental
authority or agency. The term "Associate" does not include any person who
performs services for a Participating Employer as a "leased employee" within the
meaning of Code Section 414 (n), or who performs services through an agreement
with a leasing organization.

     2.4 "Associate-Paid Plan" means the J.C. Penney Company, Inc. Group Term
          -------------------
Life Insurance Plan, as amended from time to time, and/or the J.C. Penney
Company, Inc. Associate-Paid Group Term Life Insurance Plan, as amended from
time to time.

     2.5 "Code" means the Internal Revenue Code of 1986, as amended and the
          ----
regulations promulgated thereunder. Reference to any section or subsection of
the Code includes reference to any comparable or succeeding provisions of any
legislation, that amends, supplements or replaces such section or subsection.

     2.6 "Company" means J. C. Penney Company, Inc., a Delaware corporation, or
          -------
any successor corporation.

     2.7 "Company-Paid Plan" means the J. C. Penney Company, Inc. Group Term
          -----------------
Life Insurance Plan, as amended from time to time.

                                       2

<PAGE>

     2.8 "Date of Disability", "Disabled", and "Disability" have the meanings
          ------------------------------------------------
set forth in the Company-Paid Plan.

     2.9 "ERISA" means the Employee Retirement Income Security Act of 1974, as
          -----
amended, and the regulations promulgated thereunder. Reference to any section or
subsection of ERISA includes reference to any comparable or succeeding
provisions of any legislation, that amends, supplements or replaces such section
or subsection.

     2.10 "Insurer" means the insurance company or companies issuing the Policy
           -------
or Policies.

     2.11 "MSRP Retiree" means a former Associate who retired from a
           ------------
Participating Employer and who is eligible to receive Company-paid life
insurance coverage under the terms of the Supplemental Retirement Program for
Management Profit-Sharing Associates of J.C. Penney Company, Inc., as amended
from time to time. The term "MSRP Retiree" also includes any additional former
Associate so designated from time to time in the discretion of the Board of
Directors of the Participating Employer or the Benefits Administration Committee
or the HR Committee of the Company in accordance with the provisions of the
Supplemental Retirement Program.

     2.12 "Participant" means an MSRP Retiree who has satisfied the eligibility
           -----------
requirements of Article 3, has purchased life insurance coverage under the terms
of the Plan, and whose coverage under the Plan has not terminated.

     2.13 "Participating Employer" means the Company and any subsidiary or
           ----------------------
affiliate of the Company which is designated as a Participating Employer under
the Plan by the HR Committee, excluding, however, any division of the Company or
of a subsidiary or affiliate that is designated by the HR Committee as
ineligible to participate in the Plan. Appendix I contains a list of the
Participating Employers currently participating in the Plan that have adopted
the Plan pursuant to Article 7.

     2.14 "Plan" means the J.C. Penney Company, Inc. Supplemental Group Term
           ----
Life Insurance Plan for Management Profit-Sharing Associates, as set forth
herein and as may be amended from time to time.

     2.15 "Policy" or "Policies" means the life insurance policies through which
           ------
Plan benefits are provided, which are incorporated by reference into the Plan.

     2.16 "Plan Year" means the period with respect to which the records of the
           ---------
Plan are maintained, which will be the 12-month period beginning on January 1
and ending on December 31.

     2.17 "Supplemental Retirement Program" means the Supplemental Retirement
           -------------------------------
Program for Management Profit-Sharing Associates of J. C. Penney Company, Inc.,
as amended from time to time.

                                       3

<PAGE>

                                    ARTICLE 3

                                  PARTICIPATION
                                  -------------

     3.1 Eligibility For Coverage. An Associate who qualifies as an MSRP Retiree
         ------------------------
will be eligible to purchase coverage under the Plan, effective upon retirement,
provided the MSRP Retiree was a participant in the Associate-Paid Plan
immediately prior to retirement, but only if the MSRP Retiree properly completes
the enrollment procedures required by the Administrator within 31 days after
retirement. If the MSRP Retiree has assigned his term life insurance provided by
the Associate-Paid Plan, the assignee may elect the coverage provided by this
Section 3.1. No late enrollment procedures are available for MSRP Retirees.
Notwithstanding the foregoing, an MSRP Retiree who was receiving coverage under
the Associate-Paid or the Company-Paid Plan on account of Disability on the MSRP
Retiree's retirement date will not become eligible to purchase coverage under
this Plan.

     3.2 Termination of Coverage. A Participant's coverage under the Plan will
         -----------------------
terminate automatically on the earliest to occur of the following: (i) the last
day of the month in which the Participant attains age 65; (ii) subject to
Article 8, the date on which the Plan is terminated, or amended to terminate
coverage with respect to any group or class of MSRP Retirees that includes the
Participant; (iii) the date on which the Policy under which the Participant's
benefits are provided is cancelled or terminated and not replaced; (iv) the last
day of the month in which the Participant fails to make any required premium
payment; (v) the last day of the month in which the Participant becomes eligible
for coverage under the Company-Paid Plan as an active Associate; or (vi) the
date of the Participant's death. A Participant whose coverage is terminated
pursuant to subsection (v) above, shall again become eligible to participate in
the Plan on the first day of the month on or after the date he or she ceases to
be an active Associate eligible for coverage under the Company-Paid Plan.

     3.3 Enrollment Procedures. The Administrator may from time to time
         ---------------------
prescribe enrollment procedures and forms that are consistent with the terms of
the Plan.

     3.4 Coverage Not Extended by Payment. The duration of a Participant's
         --------------------------------
coverage is determined solely by the terms of the Plan, and coverage which has
otherwise terminated will not be extended even if premium payments for the
terminated coverage continue to be made and/or processed on behalf of the
Participant.

                                       4

<PAGE>

                                    ARTICLE 4

                             LIFE INSURANCE BENEFITS
                             -----------------------

     4.1 Amount of Life Insurance. An MSRP Retiree may purchase life insurance
         ------------------------
coverage under the Policies in an amount equal to 100% of the MSRP Retiree's
Annual Earnings for Benefits. Coverage will be rounded to the next higher $1,000
if it is not already an even multiple of $1,000.

     4.2 Evidence of Good Health. To the extent required by the Plan, applicable
         -----------------------
Policies, the Insurer or the Administrator, Participants will be required to
provide evidence of good health satisfactory to the Insurer or Administrator as
a condition to coverage.

     4.3 Payment of Benefits. Except as provided in 4.7, the Insurer will pay
         -------------------
benefits payable under the Plan to the beneficiary or beneficiaries as soon as
practicable after receipt by the Insurer of properly submitted claims. Benefits
will be paid in a single lump sum payment unless the Participant (or the
beneficiary, if applicable) elects a different method of payment offered by the
Insurer.

     4.4 Designation of Beneficiary. Except as provided in 4.7, a Participant
         --------------------------
may designate one or more beneficiaries to receive the life insurance benefits
under the Plan with respect to coverage on the Participant's life, or may change
a prior beneficiary designation, by completing and delivering a written
beneficiary designation form in accordance with procedures specified by the
Administrator from time to time. If no beneficiary has been designated under a
Policy (or the beneficiary is not alive on the date of the Participant's death),
benefits will be paid to the Participant's estate.

     4.5 Benefit Limitation. Benefits under the Plan are subject to the terms of
         ------------------
the Policies and to applicable state law.

     4.6 Recovery of Overpayment. Any amounts paid to any person in excess of
         -----------------------
the amount to which he is entitled under the Plan will be repaid by that person
to the Insurer promptly following receipt by the person of a notice of such
excess payments. In the event such repayment is not made, such repayment may be
made, at the discretion of the Insurer, by reducing or suspending any future
payments due under the Plan to the person and by taking such other or additional
action as may be permitted by applicable law.

     4.7 Accelerated Payment Option. A Participant who is terminally ill (as
         --------------------------
hereinafter defined) may elect to receive a prepayment, as an accelerated
payment option, up to the lesser of $250,000 or 50% of the applicable life
insurance benefit under the Plan. The balance of the life insurance benefit
under the Plan will be paid to the Participant's beneficiary upon the
Participant's death, subject to the terms of the Plan. The accelerated payment
option will be paid to the Participant in a lump sum, or

                                       5

<PAGE>

in twelve monthly installments if the Participant so elects. If the Participant
dies before receiving the full amount of the accelerated payment option under
this Section, the remainder will be paid to the beneficiary or beneficiaries as
part of the balance of the life insurance benefit, subject to the terms of the
Plan. For purposes of this Plan, a Participant will be considered to be
"terminally ill" if the Participant furnishes to the Insurer satisfactory proof
that the Participant's life expectancy is twelve months or less.

     4.8 Payment Satisfied Claim. Any payment for the benefit of a Participant,
         -----------------------
the Participant's estate or the Participant's beneficiary that is made in
accordance with the foregoing provisions of this Article or that is made as a
settlement to any claim or lawsuit, will, to the extent of the payment, be in
full satisfaction of all claims under the Plan against the Participating
Employers, the Insurer and the Administrator, any of whom may require such
payee, as a condition precedent to such payment, to execute a release
acknowledging receipt of such payment. No interest will be paid on any
underpayment of benefits or on any benefit payments that have been delayed for
any reason, unless required by law.

     4.9 No Double Payment. Under no condition will the Plan pay more than one
         -----------------
benefit on account of a Participant's death. If a Participant has coverage under
the Plan at the time of his or her death under more than one of the Plan's
provisions, the Plan will pay only under the one applicable provision with the
highest amount of coverage.

     4.10 Alienation and Assignment. The interests of the Participants and their
          -------------------------
beneficiaries under the Plan are not in any way subject to their debts or other
obligations, and may be transferred or assigned only to the extent permitted by
the applicable Policy or a Qualified Domestic Relations Order.

                                       6

<PAGE>

                                    ARTICLE 5

                               FUNDING OF BENEFITS
                               -------------------

     5.1 Associate-Paid Premiums. The Participants will pay all or a portion of
         -----------------------
the cost of premiums with respect to benefits under the Policies as determined
by the Administrator in its discretion from time to time. The Administrator will
have full and exclusive power to determine the cost of coverage to be paid by
each Participant, and to adjust the required cost from time to time. In
establishing the amount of required Participant cost, the Administrator may rely
on tables, appraisals, valuations, projections, opinions, and reports furnished
by agents employed or engaged by the Administrator or the Company, and may take
into account the projected or anticipated costs and expenses relating to the
Plan, including without limitation administrative costs and insurance premiums.
Premiums required of Participants will be treated as fixed premium payments, and
neither the Participants nor any beneficiary will be entitled to any dividend,
credit, refund, or rebate under any Policy on account of actual claims
experience, investment performance, or similar factors, but all such dividends,
credits, refunds, and rebates shall be the sole property of the Company, except
to the extent that the aggregate amount of such dividends, credits, refunds, or
rebates exceeds the aggregate payments made by the Participating Employers for
the employer portion of the cost of premiums under the Policies. The amount of
any such excess shall be applied by the Administrator in its discretion from
time to time for the benefit of Participants or their beneficiaries.

     5.2 Participating Employer Obligations. The Participating Employers will
         ----------------------------------
pay the portion, if any, of the cost of premiums with respect to benefits under
the Policies as determined by the Administrator in its discretion from time to
time. The Participating Employers' obligations under the Plan are limited to the
payment of such portion of applicable premiums due under any Policies in force,
and no Participant or beneficiary will have any claim or cause of action against
any Participating Employer on account of the failure of an Insurer to pay
benefits due under the Policies.

     5.3 Source of Benefits. Benefits under the Plan will be paid solely from
         ------------------
the Policies and only to the extent provided under such Policies. Any payment
for the benefit of a Participant that is made in accordance with the terms of
the Policies will, to the extent of the payment, be in full satisfaction of all
claims under the Plan against the Participating Employers, the Administrator,
and the Insurer, any of whom may require such payee, as a condition precedent to
such payment, to execute a release acknowledging receipt of such payment.

                                       7

<PAGE>

                                    ARTICLE 6

                           ADMINISTRATION OF THE PLAN
                           --------------------------

     6.1 General Powers and Duties of the Administrator. The Administrator will
         ----------------------------------------------
have the full power, responsibility, and discretion to administer the Plan and
to construe and apply Plan provisions, and will be the named fiduciary with
respect to the operation and administration of the Plan, except with respect to
the specific responsibilities performed by the Insurer pursuant to the Policies
or delegated to the Insurer or another fiduciary pursuant to Section 6.3 or 6.4.
The Administrator, and all other persons with discretionary control respecting
the operation, administration, control, and/or management of the Plan will
perform their duties under the Plan solely in the interests of Participants and
their beneficiaries.

     6.2 Specific Powers and Duties of the Administrator. The Administrator will
         -----------------------------------------------
administer the Plan and have the full authority and discretion necessary to
accomplish that purpose, including without limitation the authority and
discretion to: (i) resolve all questions relating to the eligibility of
Associates to become or continue as Participants, (ii) engage any
administrative, legal, medical, accounting, clerical, or other services it deems
appropriate in administering the Plan, (iii) construe and interpret the Plan,
supply omissions from, correct deficiencies in and resolve inconsistencies or
ambiguities in the language of the Plan, resolve inconsistencies or ambiguities
between the provisions of this Plan and the provisions of any Policy, and adopt
rules for the administration of the Plan which are not inconsistent with the
terms of the Plan document, (iv) compile and maintain all records it determines
to be necessary, appropriate, or convenient in connection with the
administration of the Plan, and (v) resolve all questions of fact relating to
any matter for which it has administrative responsibility.

     6.3 Authority of Insurer. The Insurer will be responsible for the initial
         --------------------
review, payment, and/or denial of claims for benefits under the Policies. In
carrying out its responsibilities under the Policies, the Insurer will have the
authority and discretion to (i) determine the amount of benefits, if any,
payable to Participants and beneficiaries under the Policies and determine the
time and manner in which such benefits are to be paid, (ii) construe and
interpret the Policies, and (iii) compile and maintain all records it determines
to be necessary, appropriate, or convenient in connection with the Policies.

     6.4 Allocation of Fiduciary Responsibility. The Administrator from time to
         --------------------------------------
time may delegate to any other persons or organizations any of its rights,
powers, duties, and responsibilities with respect to the operation and
administration of the Plan that are permitted to be delegated under ERISA. Any
such allocation or delegation will be reviewed periodically by the
Administrator, and will be terminable upon such notice as the Administrator in
its discretion deems reasonable and proper under the circumstances. Whenever the
Administrator delegates discretionary authority respecting the administration of
the Plan to another person or organization, the

                                       8

<PAGE>

Administrator's responsibility with respect to such delegation is limited to the
selection of the person to whom authority is delegated and the periodic review
of such person's performance and compliance with applicable law and regulations.
Any breach of fiduciary responsibility by the person to whom authority has been
delegated which is not proximately caused by the Administrator's failure to
properly select or supervise, and in which breach the Administrator does not
otherwise participate, will not be considered a breach by the Administrator.

     6.5 Information to be Submitted to the Administrator. To enable the
         ------------------------------------------------
Administrator to perform its functions, each Participating Employer will supply
full and timely information to the Administrator on all matters relating to
Associates as the Administrator may require and will maintain such other records
required by the Administrator to determine the benefits due under the Plan.

     6.6 Expenses and Compensation. The expenses of administering the Plan,
         -------------------------
including without limitation the expenses of the Administrator properly incurred
in the performance of its duties under the Plan, will be paid by the Company.
The Administrator will not be compensated by the Plan for services as
Administrator.

     6.7 Reporting and Disclosure. The Company will be the "administrator" of
         ------------------------
the Plan as defined in ERISA section 3(16)(A) for purposes of the reporting and
disclosure requirements imposed by ERISA and the Code. The Administrator will
assist the Company, as requested, in complying with such reporting and
disclosure requirements.

     6.8 Claims Procedure. Participants and beneficiaries must apply for Plan
         ----------------
benefits in writing on a form provided by the Administrator and must supply any
supplemental information required by the Administrator or the Insurer. Following
completion of the claim form, the form may be returned to the Administrator for
submission to the Insurer, or may be submitted directly to the Insurer if so
specified by the Administrator.

     All claims will be made in writing and will be signed by the claimant. If
the claimant does not furnish sufficient information to determine the validity
of the claim, the Administrator will indicate to the claimant any additional
information which is required. Each claim will be approved or disapproved by the
Insurer within 90 days following the receipt of the information necessary to
process the claim. In the event the Insurer denies a claim for benefits in whole
or in part, the Insurer will notify the claimant in writing of the denial of the
claim. Such notice by the Insurer will also set forth, in a manner calculated to
be understood by the claimant, the specific reason for such denial, the specific
Plan provisions on which the denial is based, a description of any additional
material or information necessary to perfect the claim with an explanation of
why such material or information is necessary, and an explanation of the Plan's
claim review procedure as set forth below. If no action is taken by the Insurer
on a claim within 90 days, the claim will be deemed to be denied for purposes of
the review procedure.

                                       9

<PAGE>

     6.9 Appeals Procedure. A claimant may appeal a denial of his claim with
         -----------------
respect to "Procedural Issues" (as hereinafter defined) by requesting a review
of the decision by the Administrator or a person designated by the
Administrator, which person will be a named fiduciary under ERISA section
402(a)(2) for purposes of this Section. A claimant may appeal a denial of his
claim with respect to "Coverage Issues" (as hereinafter defined) by requesting a
review of the decision by the Insurer, which will be a named fiduciary under
ERISA section 402(a)(2) for purposes of this Section. An appeal must be
submitted in writing within one year after the notice of denial is received (or
within 60 days if the notice of denial is received after December 31, 1995) and
must (i) request a review of the claim for benefits under the Plan, (ii) set
forth all of the grounds upon which the claimant's request for review is based
and any facts in support thereof, and (iii) set forth any issues or comments
which the claimant deems pertinent to the appeal. The Administrator, Insurer, or
other applicable named fiduciary will make a full and fair review of each appeal
and any written materials submitted in connection with the appeal. The
Administrator, Insurer, or other applicable named fiduciary will act upon each
appeal within 60 days after receipt thereof unless special circumstances require
an extension of the time for processing, in which case a decision will be
rendered as soon as possible but not later than 120 days after the appeal is
received. The claimant will be given the opportunity to review pertinent
documents or materials upon submission of a written request to the
Administrator, Insurer, or other named fiduciary, provided the Administrator,
Insurer, or other named fiduciary finds the requested documents or materials are
pertinent to the appeal. On the basis of its review, the Administrator, Insurer,
or other named fiduciary will make an independent determination of the
claimant's eligibility for benefits under the Plan. The decision of the
Administrator, Insurer, or other named fiduciary on any claim for benefits will
be final and conclusive upon all parties thereto. In the event the
Administrator, Insurer, or other named fiduciary denies an appeal in whole or in
part, it will give written notice of the decision to the claimant, which notice
will set forth in a manner calculated to be understood by the claimant the
specific reasons for such denial and which will make specific reference to the
pertinent Plan provisions on which the decision was based.

     For purposes of this Section, the term "Procedural Issues" means issues
concerning (i) an Associate's eligibility to become or continue as a
Participant, (ii) an Associate's employment status at the time of the claim or
when the claim arose, (iii) a determination of a Participant's Annual Earnings
for Benefits, and (iv) other procedural issues that do not require
interpretation of the Policies.

     For purposes of this Section, the term "Coverage Issues" means issues
concerning (i) whether death is covered under the Policy, (ii) the documentation
required by the Insurer, (iii) conversion rights under Article 9, (iv) the
validity of beneficiary designations, (v) determinations regarding Disability,
and (vi) other questions concerning the extent of Plan coverage under the terms
of the Policies.

                                       10

<PAGE>

     6.10 Uniform Application of Rules and Policies. The Administrator in
          -----------------------------------------
exercising its discretion granted under any of the provisions of the Plan will
do so only in accordance with rules and policies that it establishes, which
rules and policies will be uniformly applicable to all Associates, MSRP Retirees
and their beneficiaries.

     6.11 Reliance on Tables, etc. The Administrator is entitled to rely upon
          -----------------------
all tables, valuations, certificates, and reports furnished by any duly
appointed actuary, upon all certificates and reports made by any duly appointed
independent qualified public accountant and upon all opinions given by legal
counsel. The Administrator will be fully protected in respect of any action
taken or suffered by the Administrator in good faith reliance upon all such
tables, valuations, certificates, reports, opinions, or other advice. The
Administrator is also entitled to rely upon any data or information furnished by
a Participating Employer or by an Associate, MSRP Retiree, or beneficiary as to
the age or Annual Earnings for Benefits of any person, or as to any other
information pertinent to any calculation or determination to be made under the
provisions of the Plan, and, as a condition to payment of any benefit under the
Plan, may request an Associate, MSRP Retiree, or beneficiary to furnish such
information as the Administrator deems necessary or desirable in administering
the Plan. If an Associate, MSRP Retiree, or beneficiary does not provide
accurate information in connection with enrollment or coverage under the Plan,
the Administrator may, in its discretion, delay or deny the affected coverage.
If any relevant facts regarding an Associate, MSRP Retiree, or beneficiary are
inaccurate or misstated, the Administrator may make an equitable adjustment of
contributions, and the true facts will be used by the Administrator to determine
whether, and in what amount, coverage is in effect.

                                       11

<PAGE>

                                    ARTICLE 7

                       ADOPTION BY PARTICIPATING EMPLOYERS
                       -----------------------------------

     7.1 Adoption Procedure. Any subsidiary or affiliate of the Company may
         ------------------
become a Participating Employer under the Plan provided that (i) the HR
Committee approves the adoption of the Plan by the subsidiary or affiliate and
designates the subsidiary or affiliate as a Participating Employer in the Plan,
and (ii) by appropriate resolutions of the board of directors or other governing
body of the subsidiary or affiliate, the subsidiary or affiliate agrees to
become a Participating Employer under the Plan and also agrees to be bound by
any other terms and conditions which may be required by the HR Committee or the
Administrator, provided that such terms and conditions are not inconsistent with
the purposes of the Plan. A Participating Employer may withdraw from
participation in the Plan by providing written notice to the Administrator that
the board of directors or other governing body of the Participating Employer has
approved withdrawal. The HR Committee may at any time remove a Participating
Employer from participation in the Plan by providing written notice to the
Participating Employer that the HR Committee has approved removal. The HR
Committee will act in accordance with this Article pursuant to unanimous written
consent or by majority vote at a meeting.

                                       12

<PAGE>

                                    ARTICLE 8

                            AMENDMENT AND TERMINATION
                            -------------------------

     8.1 Right to Suspend Premium Payments. It is the expectation of the
         ---------------------------------
Participating Employers that they will continue to pay any employer portion of
premium payments as determined under Article 5, but they do not assume an
individual or collective contractual obligation to do so, and the right is
reserved by the HR Committee at any time to reduce, suspend, or discontinue any
such premium payments.

     8.2 Right to Amend. The right to amend the Plan at any time in any respect
         --------------
is reserved to the Company acting through the HR Committee or the Administrator
as provided herein, without prior notice to or approval by Participants,
Participants' estates, their designated representatives, beneficiaries or any
Participating Employer, provided that no amendment will adversely affect
individuals who are Participants on the effective date of the amendment unless
otherwise required to comply with applicable law. The HR Committee may amend the
Plan at any time and from time to time to the extent it may deem advisable or
appropriate. In addition, the Administrator may amend the Plan at any time and
from time to time to the extent the Administrator deems it advisable or
appropriate, provided that such amendment would not significantly increase the
cost of the Plan to the Participating Employers. The right to amend includes:
(a) the right to change, limit or eliminate coverage or benefits and (b) the
right to limit Company contributions made to the Plan on behalf of Participants
and to require Participants to pay the balance of any Plan costs.

     8.3 Amendment Procedure. Each amendment to the Plan by the HR Committee or
         -------------------
the Administrator will be made only pursuant to unanimous written consent or by
majority vote at a meeting, and a copy of any amendment adopted by the HR
Committee will be delivered to the Administrator. Upon such action by the HR
Committee or the Administrator, the Plan will be deemed amended as of the date
specified as the effective date by such action or in the instrument of
amendment. The effective date of any amendment may be before, on, or after the
date of such action of the HR Committee or the Administrator.

     8.4 Termination of the Plan. The Participating Employers expect to continue
         -----------------------
the Plan indefinitely, but they do not assume an individual or collective
contractual obligation to do so, and the right is reserved to the Company,
acting through the HR Committee, to terminate the Plan or to completely
discontinue premium payments with respect to any Policy at any time, without
prior notice to or approval by Participants or beneficiaries. Notwithstanding
the foregoing, in no event will termination of the Plan adversely affect
individuals who are Participants on the effective date of the amendment unless
otherwise required to comply with applicable law. The authority of the HR
Committee will be exercised by unanimous written consent or by majority vote at
a meeting.

                                       13

<PAGE>

                                    ARTICLE 9

                                CONVERSION RIGHTS
                                -----------------

     9.1 Conversion to Individual Policy. A Participant whose coverage under the
         -------------------------------
Plan terminates under Section 3.2 will have the right to convert his or her
group term life insurance coverage to an individual policy to the extent, and
only to the extent, permitted under the group Policy applicable to the
Participant. Any election to convert to individual coverage must be made within
31 days after the Participant's coverage under the Plan terminates, and must be
made in accordance with all requirements specified in such Policy.

     9.2 Death During Conversion Period. If a Participant dies within 31 days
         ------------------------------
after coverage has terminated under the Plan and while the Participant is
entitled to convert his or her group coverage to an individual policy under the
terms of the applicable Policy, the Participant's beneficiary will be entitled
to a death benefit from the Policy in an amount equal to the amount of term life
insurance the Participant was entitled to convert immediately prior to death.
Any benefit payable during the conversion period will be paid solely from the
Policy and will not constitute a benefit under the Plan.

                                       14

<PAGE>

                                   ARTICLE 10

                            MISCELLANEOUS PROVISIONS
                            ------------------------

     10.1 No Right of Employment. Participation in the Plan will not give any
          ----------------------
Associate or Participant the right to be retained in the employment of the
Company.

     10.2 Gender and Number. Whenever used in this Plan, unless the context
          -----------------
indicates otherwise, words in the masculine gender will include the feminine
gender, and words in the plural will include the singular, and the singular will
include the plural.

     10.3 Notices. Any notice or document required to be given to a Participant
          -------
or beneficiary will be properly given if (i) mailed, postage prepaid, to the
Participant or beneficiary at his last known address as set forth in the
Participating Employer's records, or (ii) in the case of a Participant who is an
Associate, distributed to the Associate at his or her place of employment, or
(iii) sent electronically to any Covered Associate or beneficiary in compliance
with 29 CFR Section 2520.104b-1(c). All notices required to be given or any
document required to be filed with the Administrator will be properly given or
filed if mailed postage prepaid, certified mail, to the Administrator or Insurer
at the addresses as set forth in the Summary Plan Descriptions of the Plan
furnished to Participants from time to time.

     10.4 Section Headings. The section headings or head notes are inserted only
          ----------------
as a matter of convenience and for reference and in no way define, limit, or
describe the scope or intent of the Plan.

     10.5 Officers. Any reference to a particular officer of the Company will
          --------
also refer to the functional equivalent of such officer in the event the title
or responsibilities of that office change.

     10.6 Consent to Terms of Plan. By enrolling for coverage under the Plan, a
          ------------------------
Participant agrees that the terms and conditions of the Plan will be binding on
the Participant and the Participant's beneficiaries.

     10.7 Severable Plan Provisions. If any provision of the Plan, including
          -------------------------
instruments incorporated in the Plan by reference, shall be held illegal,
invalid, or disqualifying for any reason, including, but not limited to, any
inconsistency in the text of the Plan with applicable law or regulation, said
illegality, invalidity, or inconsistency shall not affect the remaining
provisions of the Plan, such illegal, invalid, disqualifying, or inconsistent
provision shall be fully severed from the contents of the Plan, and the Plan
shall be construed and enforced as if such illegal, invalid, disqualifying, or
inconsistent provision had not been included in the Plan.

                                       15

<PAGE>

     10.8 Oral Representations. The Plan governs, controls, and supersedes any
          --------------------
and all representations, either oral or written, made by any employee or agent,
or other representative of the Company or any Participating Employer, and no
other agreements, statements, or assertion relating to the subject matter of
this Plan shall be valid or enforceable.

     10.9 Governing Law. Except to the extent that the Plan may be subject to
          -------------
the provisions of ERISA, the Plan will be construed and enforced according to
the laws of the State of Texas, without giving effect to the conflict of laws
principles thereof. Except as otherwise required by ERISA, every right of action
by a Participant, former Participant, or beneficiary with respect to the Plan
will be barred after the expiration of three years from the date of termination
of employment or the date of receipt of the notice of denial of a claim for
benefits, if earlier. In the event ERISA's limitation on legal action does not
apply, the laws of the State of Texas with respect to the limitations of legal
actions will apply and the cause of action must be brought no later than four
years after the date the action accrues.

                                       16

<PAGE>

                                   APPENDIX I

                             Participating Employers
                              As of January 1, 2002
                              ---------------------

                            J.C. Penney Company, Inc.

                             JCP Publications Corp.
                       (Previously JCP Media Corporation)
                         (from and after April 3, 1996)

                           JCP Overseas Services, Inc.
                          (from and after July 1, 1996)

                           JCPenney Puerto Rico, Inc.

                               JCP Logistics L. P.
                        (from and after February 1, 1999)

                                 JCP Media L.P.
                        (from and after February 1, 1999)

                              JCP Procurement L.P.
                        (from and after February 1, 1999)

                        J.C. Penney Private Brands, Inc.
                        (from and after January 1, 2000)

                               JCP Ecommerce L.P.
                        (from and after January 1, 2001)

                                       17