Executive Termination Pay Agreement


    Exhibit
      10.1

    
 

    As
      Amended and Restated 

    Effective
      September 21, 2007

    


    FORM
      OF

    


    EXECUTIVE
      TERMINATION PAY AGREEMENT 

    


    This
      Executive Termination Pay Agreement (the “Agreement”), dated as of
      _____________, 2007 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 continue] 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 (or any successor plan) 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.

            


    

     

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

     

    
      	1.2  	
              Involuntary
                Separation from Service for Cause; Voluntary Separation from Service
                by
                the Executive. 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, 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.

            


    

     

    
      	(a)  	
              Form
                and Amount.
                In the event of the Involuntary Separation from Service of the Executive
                without Cause, 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 thereafter. 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
                occurs. The lump sum severance pay will be equal to (i) the Prorated
                Bonus, except as provided below, (ii) the Executive’s monthly 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), (iv) Special
                Bonus
                Hours to the extent provided under Section 1.3(c), and (v) $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 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. In addition to the lump sum payments
                provided for herein, following an Involuntary Separation from Service,
                the
                Corporation shall also provide to the Executive Accelerated Vesting
                as
                provided in Section 1.3(d).

            


    

     

     

    
      
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      	(b)  	
              Health
                Care and Life Insurance.
                Following an Involuntary Separation from Service, 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, in an amount based on
                the entire Severance Period. Such amount shall be grossed-up for
                applicable federal income 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 shall have
                occurred.

            


    

     

    
      	(c)  	
              Special
                Bonus Hours.
                Following an Involuntary Separation from Service, the Corporation
                shall
                pay the Executive a lump sum payment for Special Bonus Hours, if
                the
                Executive is a participant in the Corporation’s Paid Time Off Policy (“PTO
                Policy”). Such payment shall be determined in accordance with the
                provisions of the PTO Policy applicable to an involuntary termination
                resulting from a reduction in
                force.

            


    

     

    
      	 	
              (d)

            	
              Accelerated
                Vesting.
                Effective on the Involuntary Separation from Service date, all Long
                Term
                Incentive stock awards and stock options in the Executive’s name shall be
                immediately vested. To the extent applicable, if the Executive has
                elected
                to make a deferral under the Corporation’s equity compensation plan (or
                any successor plan), then such deferral will be paid in accordance
                with
                the terms of the Corporation’s equity compensation
                plan.

            


    

    


    
      	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).


            


    

     

    
      	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 breach of any covenant set forth
                in
                Section 3. 

            


    

     

     

    
      
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      	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,
                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, 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 termination of employment
                with the Corporation.

            


    

     

    
      
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      	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) 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 clause (d) shall not be effective unless the Executive shall
                have written notice from the Chief Executive Officer of the Corporation
                (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.” “Cause” also includes
                any of the above grounds for dismissal regardless of whether the
                Corporation learns of it before or after terminating Executive’s
                employment. 

            


    

     

    
      	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  	
              “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 

            


    

     

    
      
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              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. 

            


    

     

    
      	2.11  	
              “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.

            


    

     

    
      	2.12  	
              “Proprietary
                Information”
                shall have the meaning ascribed thereto in Section
                3.

            


    

     

    
      	2.13
               	
              “Prorated
                Bonus” shall
                have the meaning ascribed thereto in Section
                1.1.

            


    

     

    
      	2.14  	
              “PTO
                Policy”
                shall have the meaning ascribed thereto in Section
                1.3.

            


    

     

    
      	2.15  	
              “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).
                

            


    

     

    
      	 	
              2.16

            	
              “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,
                

            


    

     

    
      
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              within
                the meaning of Code section 409A and Treasury Regulation section
                1.409A-1(h)(3) or any successor
                thereto.

            




    
      	 	
              2.17

            	
              “Severance
                Period”
                shall mean the following period, based on the Executive’s title at the
                time of termination of the Executive’s employment with the
                Corporation:

            


    

     

    Title                          Severance
      Period

    


    Executive
      Vice Presidents and above               18
      months

    Senior
      Vice President                            12
      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

            


    

     

     

    
      
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              contractual,
                ethical, or legal responsibility to maintain its
                confidentiality.

            


    

     

    
      	(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 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 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 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.

            


    

     

    
      	3.3  	
              Noninterference
                with Business Relations. The
                Executive hereby covenants and agrees that during the Executive’s
                employment with the Corporation and 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, 

            


    

     

    
      
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              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.

            


    

     

    
      	(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 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.

            


    

     

     

    
      
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      	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


            


    

     

     

    
      
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    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.

            


    

     

    
      
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      	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


            


    

     

     

    
      
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    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

     

                                                   

     

     

     

     

     

     

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