Document:

J. C. Penney Company, Inc. Deferred Compensation Plan for Directors

    Exhibit
      10.4

    J.
      C.
      Penney Company, Inc.

    Deferred
      Compensation Plan for Directors

    As
      amended and restated effective December 31, 2007 

    

    
      	1.
                	
              Purpose
                of Plan

            

    

    

    The
      purpose of the J. C. Penney Company, Inc. Deferred Compensation Plan for
      Directors ("Plan") is to provide a procedure whereby a member of the Board
      of
      Directors of J. C. Penney Company, Inc. ("Company") who is not an associate
      of
      the Company or any of its subsidiaries ("Director") may defer the payment of
      all
      or a specified portion of the compensation payable to the Director for services
      as a Director, including the annual retainer, meeting fees, and fees payable
      to
      a Director for services above and beyond those services in connection with
      his
      or her Board and committee responsibilities ("Fees"). Deferred Fees will be
      subject to Social Security Self-Employment tax in the year the Fees are paid
      irrespective of when such Fees are earned. A
      Director who elects to defer the payment of Fees will be eligible to make a
      deductible Keogh Plan contribution with respect to such Fees in the year such
      Fees are actually paid to the Director.

    

    
      	2.
                	
              Administration

            

    

    

    The
      Plan
      shall be administered by a committee ("Committee") consisting of one or more
      persons appointed from time to time by the Board of Directors out of those
      members of the Board of Directors who have never been participants under the
      Plan. The Committee shall have plenary authority in its discretion, but subject
      to the express provisions of the Plan, to interpret the Plan, to prescribe,
      amend, and rescind rules and regulations relating to it, and to make all other
      determinations deemed necessary or advisable for the administration of the
      Plan.
      The determinations of the Committee on the foregoing matters shall be conclusive
      and binding on all interested parties.

    

    
      	3.
                	
              Election
                to Defer

            

    

    

     

    3.1     A
      Director
      may elect annually to defer payment of all or a specified portion of any
      unearned Fees. This election to defer must be made by December 31 of the
      calendar year prior to the calendar year that the election becomes effective
      for
      the Fees earned in such calendar year, and the election shall become irrevocable
      on December 31 of the year in which the election is made. Such election shall
      be
      effective January 1 of the calendar year following the calendar year of
      election. For purposes of Section 3.1 and 3.2, Fees will be treated as earned
      in
      the period during which the services giving rise to such Fees are
      performed.

     

    3.2     A
      newly
      eligible Director may make an election to defer payment of all or a specified
      portion of any unearned Fees for the current year of appointment if the election
      is made within 30 days of the effective date of election to the Board. A
      Director will not be treated as newly eligible if the Director is otherwise
      eligible to participate in an agreement, method, 

     

    
      
        
        

      

      
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          Board of Directors Compensation and Benefit Programs

      

      
        
        

      

    

    program,
      or other arrangement that would be aggregated with this Plan under section
      409A
      of the Internal Revenue Code of 1986, as amended (”Code”) or Treasury Regulation
      section 1.409A-1(c)(2), or its successor. A Director who has terminated board
      service and is subsequently re-elected to the Board will be deemed to be newly
      eligible to the extent permitted under Code section 409A or Treasury Regulation
      section 1.409A-2(a)(7), or its successor. If the election to defer is not made
      within 30 days, or the Director is not otherwise newly eligible, the Director
      will be allowed to make an election for the deferral of unearned Fees for the
      following year in accordance with Section 3.1 above. 

     

    3.3     A
      Director’s
      election to defer will remain in effect from year to year until he or she files
      a new election in accordance with Section 3.1 or gives notice to terminate
      such
      election. In order for a termination of an election to become effective for
      a
      calendar year, the notice to terminate the election must be received prior
      to
      the election becoming irrevocable on the preceding December 31. An election
      to
      defer cannot be terminated once the election becomes effective for the calendar
      year, except due to an unforeseeable emergency as defined in Section
      6.2.

     

    
      	4.
                	
              Directors'
                Accounts

            

    

    

    4.1    There
      shall
      be established for each Director participating in the Plan an account on the
      books of the Company, to be designated as such Director's deferred compensation
      account ("Account"). Unless and until a Change of Control (as defined
      hereinafter) shall be deemed to have occurred, all amounts deferred pursuant
      to
      the Plan, together with any further amounts accrued thereon, as hereinafter
      provided, shall be held in the general funds of the Company and shall be
      credited to the Director's Account. The Company shall furnish quarterly or
      upon
      request to each participating Director a statement of such Director's Account.
      

    

    4.2     Change
      in
      Control. 

    

    (a) In
      the event a Change in Control (as defined in Section 4.2(c) below) shall be
      deemed to have occurred, the Company's liability for benefits under the Plan
      shall be funded under an irrevocable trust, to the extent permitted under Code
      section 409A, and as described in Section 4.2(b) below, which shall be subject
      to the claims of the Company's general creditors so that Eligible Directors
      will
      not be currently taxed upon the funding of such benefits.

    

    (b) Grantor
      Trust. To the extent permitted by Code section 409A and the regulations
      thereunder, the Board of Directors will have the authority to transfer assets
      of
      the Company, or its affiliates or subsidiaries in an amount sufficient to pay
      benefits that have accrued under the Plan up to the date of a Change in Control,
      as described in Section 4.2(c), to a grantor trust to be established by the
      Company for the purpose of paying benefits hereunder; and the Director’s Account
      shall thereafter be paid to the Director from such trust in accordance with
      the
      terms of the Plan. On each anniversary date of the date of the Change of
      Control, to the extent permitted by Code section 409A and the regulations
      thereunder, the Company shall transfer to the grantor trust an amount necessary
      to pay all benefits accrued under the Plan during the preceding twelve
      months.

     

    (c) Change
      in Control Event. For the purpose of determining whether a
      Change in Control has occurred with respect to the Plan, a Change in Control
      means a Change in Control within the meaning of Code section 409A and Treasury
      Regulation section 1.409A-3(i)(5), or its successor, including a change in
      the
      ownership of the corporation, a change in the effective control of the
      corporation, or a change in the ownership of a substantial portion of the assets
      of the corporation as such terms are defined in Treasury Regulation sections
      1.409A-3(i)(5)(v), (vi) 

    
      
        
        

      

      
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          Board of Directors Compensation and Benefit Programs

      

      
        
        

      

    

    and
      (vii). For this purpose, “corporation” has the meaning given in Treasury
      Regulation section 1.409A-3(i)(5)(ii), or its successor.

      

      4.3     If
        a Director
        should make the one-time election under the J. C. Penney Company, Inc.
        Retirement Plan for Non-Associate Directors to cease participation in that
        plan
        and to transfer his or her accrued benefit under that plan to this Plan,
        the
        amount so transferred, together with any further amounts accrued thereon
        (“Retirement Transfer”), shall be a part of the Director’s Account.
        Notwithstanding the foregoing, no Retirement Transfers to this Plan shall
        be
        made after 1997. 

       
4.4     Effective
      with
      respect to calendar quarters ending after December 31, 1988, a Director may
      elect that all but not a part of the balance in his or her Account be determined
      by reference to one of the following factors ("Factors"):

    

    (a)
       the addition of interest, to be accrued during each such quarter and to be
      credited to such Account on the first business day following the end of such
      quarter on the basis of the average balance in such Account during such quarter,
      at a rate equal, also at such Director's election, to either; 

    

    (1)
 the
      average annual rate
      payable for one-year United States Treasury Notes issued during such quarter,
      or

    

    (2) the
      annual rate in effect for
      such quarter under the Interest income Account of the J. C. Penney Corporation,
      Inc. Savings, Profit-Sharing, and Stock Ownership Plan; or

     

    (b)
 a
      number of units ("Units"),
      to be determined and valued in accordance with the fair market value of shares
      of the Company's Common Stock of 50¢ par value ("Common Stock"), the method of
      such determination and valuation being set forth in Attachment A to the
      Plan.

    

    4.5    The
      Director's election as to the Factor to be referenced to determine the balance
      in his or her Account and any change in such election, shall be effective on
      the
      first day of the calendar quarter following receipt by the Secretary of the
      Company, or his or her designee, of written notice thereof; provided, however,
      that in the absence of any such election, the Factor for a Director's Account
      shall be deemed to be the Savings Plan Interest Income Account described in
      Section 4.4(a)(2). 

    

    5.    
      Payment from Directors' Accounts

    

    5.1     For
      amounts
      commencing distribution on or after January 1, 2008, a Director may receive
      payment from his or her Director’s Account due to separation from service on the
      Board, death, unforeseeable emergency, or disability. The Director’s Account
      will be paid in a single lump sum on the first day of the month following the
      earlier of: (a) a separation from service within the meaning of Code section
      409A and Treasury Regulation section 1.409A-1(h), or its successor, from the
      Board; or (b) death; or (c); unforeseeable emergency within the meaning of
      Code
      section 409A and Treasury Regulation section 1.409A-3(i)(3), or its successor,
      or (d) disability within the meaning of Code section 409A and Treasury
      Regulation section 1.409A-3(i)4), or its successor. Notwithstanding the
      foregoing, in the event the Account of a Director who should become a specified
      employee (as defined below) becomes payable due to the Director’s separation
      from service (as defined above) for reasons other than 

     

    
      
        
        

      

      
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          Board of Directors Compensation and Benefit Programs

      

      
        
        

      

    

    due
      to
      the Director’s death or disability (as defined above), payment of the Director’s
      Account shall be made the first day of the 7th month following the
      month in which
      occurs the Director’s separation from service. A specified employee shall have
      the meaning within Code section 409A and as determined in accordance with the
      rules of the Board of Directors in resolutions dated December 12,
      2007.

     

    5.2     Notwithstanding
      the
      foregoing, if an election to defer is made on or after September 25, 1984 and
      on
      or before December 31, 2004, and the distribution of the balance of these
      accounts began before January 1, 2008 and will not be completely distributed
      as
      of January 1, 2008, payment of the balance in a Director's Account shall be
      made
      in 10 annual installments. Any installment payments owed to a Director, as
      of
      January 1, 2008, shall be paid on the first business day of 2008 (or as soon
      as
      practicable thereafter, but no later than the time required for payment under
      Treasury Regulation section 1.409A-3(d), or its successor) and of each
      succeeding calendar
      year until the entire remaining balance in a Director's Account shall have
      been
      paid. During any period in which a balance remains in a Director's Account,
      such
      remaining balance shall continue to be determined by the Factor which is then
      in
      effect for such Director until further changed by such Director. When a Director
      is to receive the balance of his or her Account in annual installments, each
      such annual installment shall be a fraction of the balance in such Account
      on
      the date such annual installment is to be paid, the numerator of which is one
      and the denominator of which is the total number of installments then remaining
      to be paid as of January 1, 2008.

     

    5.3     A
      director
      shall not have the right to elect a subsequent deferral of payment to a date
      beyond the payment event. Any payments from a Director's Account shall be made
      in cash, and in no event shall shares of Company Stock be issued to a Director,
      even if such Director shall have elected to have the value of his or her Account
      determined by reference to the Unit Factor.

    

    5.4     Except
      as
      provided in Code section 409A, Treasury Regulation section 1.409A-3(j)(4) or
      its
      successor, this Section, and Section 5.5, neither the Director nor the Company
      can accelerate the time or schedule of any payment or amount scheduled to be
      paid pursuant to the terms of the Plan. The Committee will have the discretion
      to accelerate payments in accordance with the provisions of Code section 409A
      and Treasury Regulation section 1.409A-3(j)(4), or its successor (provided
      that
      only the Board of Directors of the Company will have the discretion to
      accelerate payments in accordance with the provisions of Treasury Regulation
      section 1.409A-3(j)(4)(ix) or its successor). 

    

    5.5     If
      a
      Director’s Account when combined with the Director’s interest in any other
      agreements, methods, programs, or other arrangements with respect to which
      deferrals of compensation are treated as having been deferred under a single
      nonqualified deferred compensation plan under Code section 409A and Treasury
      Regulation section 1.409A-1(c)(2), or its successor, is equal to or less than
      the applicable dollar amount under Code section 402(g)(1)(B), in effect for
      the
      year of distribution, the Committee will distribute the benefit in the form
      of
      an immediate lump sum payment, provided that the payment results in the
      termination and liquidation of the entirety of the Director’s interest under
      this Plan and all other agreements, methods, programs, or other arrangements
      aggregated with this Plan and is in accordance with Treasury Regulation section
      1.409A-3(j)(4)(v), or its successor. 

    

    
      
        
        

      

      
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    6.      
      Payment in Event of Death, Unforeseeable Emergency, or
      Disability

    

    6.1     If
      a Director
      should die before the balance in his or her Account shall have been paid in
      full, the balance of the Director’s Account then remaining shall be paid in a
      single lump sum to his or her designated beneficiary or beneficiaries following
      the Director’s date of death, or, if later, as soon as administratively feasible
      after satisfactory proof of death is received by the Secretary of the Company,
      but in all event within the time required by Code section 409A. A Director
      may
      designate one or more beneficiaries (which may be an entity other than a natural
      person) to receive any payments to be made upon the Director's death. At any
      time, and from time to time, any such designation may be changed or canceled
      by
      the Director without notice to or the consent of any beneficiary. Any such
      designation, change, or cancellation shall be effective upon receipt by the
      Secretary of the Company of written notice thereof. If a Director designates
      more than one beneficiary, any payments to such beneficiaries shall be made
      in
      equal shares unless the Director has designated otherwise. If no beneficiary
      has
      been named by the Director, or if the designated beneficiary or beneficiaries
      shall have predeceased him or her, or shall no longer exist, the balance shall
      be paid to the Director's estate.

    

    6.2     A
      Director
      may request a single-sum distribution to satisfy a severe financial hardship
      resulting from an unforeseeable event or emergency beyond his control. The
      distribution shall be limited to the amount necessary to satisfy the severe
      financial hardship (including any applicable federal, state or local taxes
      attributable to such distribution), and shall not exceed the current value
      of
      the Director’s Account. An unforeseeable event or emergency shall have the
      meaning as is defined within Treasury Regulation section 1.409A-3(i)(3), or
      its
      successor. The determination of the existence of a severe financial hardship
      and
      the approval of an unforeseeable emergency distribution shall be made by the
      Committee. Approval shall be given only if, taking into account all of the
      facts
      and circumstances, continued deferral of benefits or adherence to the Plan's
      payment schedule would result in a severe financial hardship to the Participant
      or Beneficiary. Approval shall not be granted if such hardship is or may be
      relieved through insurance, by liquidation of his or her assets (to the extent
      such liquidation would not itself cause severe financial hardship), or by
      terminating his or her election to defer. The amount of payment permitted
      hereunder shall in no event exceed the amount permitted under Treasury
      Regulation section 1.409A-3(i)(3)(ii), or its successor.

    

    6.3     Upon
      a
      Director’s disability, the Committee shall direct the Company to pay in a lump
      sum to a Director the balance of the Director’s Account. Disability shall have
      the meaning as that term is defined within Treasury Regulation section
      1.409A-3(i)(4), or its successor. The determination of the existence of a
      disability shall be made by the Committee. 

    

    7.     
      Termination of Election to Defer

    

    A
      Director may on an annual basis terminate his or her election to defer payment
      of Fees only if the election has not become irrevocable and effective (except
      in
      the event of an unforeseeable emergency). Such termination shall become
      effective on the following January 1 following any year after receipt of written
      notice of such election to terminate deferrals by the Secretary of the Company,
      or his or her designee; provided, however, that any balance

    
      
        
        

      

      
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          Board of Directors Compensation and Benefit Programs

      

      
        
        

      

    

     in
      the Account of a Director prior to the effective date of
      termination of an election to defer shall not be affected thereby and shall
      be
      paid only in accordance with Sections 5 and 6. A Director who has filed a
      termination of election to defer or whose election to defer has been terminated
      in accordance with Section 6 may thereafter again file an election to defer
      in
      accordance with Section 3.

     

    8.     
      Nonassignability

    During
      a
      Director's lifetime, the right to the balance in his or her Account shall not
      be
      transferable or assignable. Nothing contained in the Plan shall create, or
      be
      deemed to create, a trust, actual or constructive, for the benefit of a Director
      or his or her beneficiary, or shall give, or be deemed to give, to any Director
      or his or her beneficiary any interest in any specific assets of the Company.
      

    

    9.    
      Amendment

    

    The
      Board
      of Directors of the Company may, at any time, without the consent of the
      participants, amend, suspend, or terminate the Plan. Subject to the terms of
      this Plan, including Section 5.4, and any applicable laws and regulations,
      no
      amendment, suspension, or termination of the Plan shall operate to annul an
      election already in effect for the then current calendar year or for any
      preceding calendar year and Fees shall continue to be deferred until the end
      of
      such current calendar year in accordance with a Director's then current
      election; and the balance in the Director's Account shall continue to be payable
      in accordance with a Director's then current election and, until paid, to be
      measured by a factor to be determined from time to time by the
      Committee.

    

    10.     
      Governing Law

    

    The
      Plan
      shall be construed and enforced according to the laws of the State of New York,
      and all the provisions thereof shall be administered according to the laws
      of
      said State.

    

    11.     
      Severability of Provisions

    

    If
      any of
      the provisions of the Plan or the application thereof to any Director shall
      be
      held invalid, neither the remainder of the Plan nor its application to any
      other
      Director shall be affected thereby.

    

    12.      Effective
      Date

    

    The
      amended and restated Plan shall become effective at 11:59 p.m. on December
      31,
      2007. This Plan was originally adopted on August 28, 1979; and was amended
      on
      September 25, 1984; June 28, 1988; February 28, 1989; July 8, 1992; and April
      9,
      1997.

    
      
        
        

      

      
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    Attachment
      A

    

    General

    Units
      shall be measured by reference to the fair market value of a share of Company
      Stock.

    

    Fair
      Market Value

    For
      purposes of the Plan, the fair market value ("Fair Market Value") of a share
      of
      Company Stock shall be the closing market price for that date as reported in
      the
      composite transaction table covering transactions of New York Stock Exchange
      listed-securities or such other amount as the Plan Committee shall ascertain
      reasonably to represent such Fair Market Value.

    

    Calculation
      of Units

    The
      number of Units, to be calculated to the nearest thousandth of a Unit, shall
      be
      determined (1) on the effective date of the election of the Unit Factor, by
      dividing (a) the balance, if any, then in a Director's account by (b) the Fair
      Market Value of a Share of Company Stock on the last trading day prior to the
      date of election of such Factor and (2) as to Fees deferred thereafter, by
      dividing (a) the amount of such deferred Fees on any date on which such Fees
      would otherwise have been paid by (b) the Fair Market Value of a share of
      Company Stock on the last trading day prior to the date such deferred Fees
      would
      otherwise have been paid.

    

    Cash
      Dividends

    Whenever
      a cash dividend is paid on a share of Company Stock, the number of Units in
      a
      Director's Account shall be increased by a number determined by dividing (1)
      the
      product of (a) the number of such Units times (b) an amount equal to the amount
      of the cash dividend paid on a share of Company Stock by (2) the Fair Market
      Value of a share of Company Stock on the last trading date prior to the
      appropriate dividend payment date.

    

    Adjustments

    In
      the
      event of any change in the outstanding Company Stock by reason of a stock
      dividend, stock split, recapitalization, merger, consolidation, combination
      or
      exchange of shares, spin-off, distribution to holders of Company Stock (other
      than cash dividends), or the like, the Plan Committee shall adjust appropriately
      the number of Units credited to a Director's Account.

    

    Valuation
      of Account Balance Referenced to Units

    If
      a
      Director has elected to have his or her Account balance determined by reference
      to the Unit Factor, then the value at any time of the balance in such Account
      shall be determined by multiplying (1) the number of Units in such Account
      by
      (2) the Fair Market Value of a share of Company Stock on the last trading day
      prior to the date such value is determined.

    
 

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     JCPenney
      Board of Directors Compensation and Benefit ProgramsExhibit
      10.5

    

    

    

    

     

    

    

    

    

    

    

    

    J.
      C. PENNEY CORPORATION, INC.

    BENEFIT
      RESTORATION PLAN

    AS
      AMENDED AND RESTATED 

    EFFECTIVE
      December 31, 2007

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

    

    
      	 Article	 	 	 	 	 	 	
               Page

            
	Article 1	 	 	Introduction	 	 	 	
              1

            
	Article
              2 	 	 	Definitions	 	 	 	
              2

            
	Article 3	 	 	Participation	 	 	 	
              8

            
	Article 4	 	 	Benefits	 	 	 	
              9

            
	Article 5	 	 	Form and
              Commencement of Benefit Payments 	 	 	 	
              12

            
	Article 6	 	 	Administration 	 	 	 	
              15

            
	Article 7	 	 	Type of
              Plan	 	 	 	
              16

            
	Article 8	 	 	Change in
              Control 	 	 	 	
              17

            
	Article 9	 	 	Miscellaneous	 	 	 	
              18

            
	Article 10
              	 	 	Claims
              Procedures 	 	 	 	
              21

            
	Appendix
              I.	 	 	Participating
              Employers	 	 	 	
              23

            
	Appendix
              II.	 	 	Pre-2008
              Plan	 	 	 	
              24

            

    

    

     

     

    
      
        
           

        

        
        

      

      
        
        

        
        

      

      
        
        

        
        

      

    

    J.
      C. PENNEY CORPORATION, INC.

    BENEFIT
      RESTORATION PLAN

    

    

    

    ARTICLE
      1

    INTRODUCTION

    

    J.
      C. Penney Corporation, Inc., a Delaware corporation (formerly, J. C. Penney
      Company, Inc.), amends and completely restates the J. C. Penney Corporation,
      Inc. Benefit Restoration Plan (formerly the J. C. Penney Company, Inc. Benefit
      Restoration Plan) effective as of 11:59 P.M. on December 31, 2007. The Plan
      is
      maintained by the Company primarily for the purpose of providing benefits for
      eligible Associates in excess of the limit on benefits and contributions imposed
      by Code section 415 and the compensation limit under Code section 401(a)(17).
      

    

    This
      document amends and completely restates the portion of the Supplemental
      Retirement Program for Management Profit-Sharing Associates of J. C. Penney
      Corporation, Inc. that provided benefits that would have been payable under
      the
      J. C. Penney Corporation, Inc. Pension Plan and the J. C. Penney Corporation,
      Inc. Savings, Profit-Sharing and Stock Ownership Plan but for the limits on
      benefits, contributions, and compensation imposed on retirement plans qualified
      under the Code. With respect to Associates who terminated employment prior
      to
      August 1, 1995, benefits payable to such Associates are determined pursuant
      to
      the terms and conditions of the Supplemental Retirement Program for Management
      Profit-Sharing Associates of J. C. Penney Corporation, Inc. in effect as of
      July
      31, 1995.

    

    The
      provisions of the Plan as amended and restated herein will apply to the entire
      benefit of each Participant who is an Associate on or after the Effective Date
      and each Participant who had a Separation from Service prior to the Effective
      Date and had not commenced receiving benefit payments under the Plan as of
      the
      Effective Date. For all other Participants who have commenced receiving benefits
      under the Plan as of the Effective Date, the provisions of the Plan as in effect
      at the time each such Participant commenced receiving benefits will continue
      to
      be applicable. Set
      forth in Appendix II for reference only is a copy of the Plan as in effect
      on
      October 3, 2004, and amendments to that Plan adopted after that date. Unless
      otherwise indicated, no provision of the Plan as amended and restated shall
      amend any provision of the Plan in Appendix II. 

    

    Words
      and phrases with initial capital letters used throughout the Plan are defined
      in
      Article 2.

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      2

    DEFINITIONS

    

     

    2.1
       Actuarial
      Equivalent or Actuarially Equivalent means
      a form of benefit payment under which the aggregate payments expected to be
      received are equal in value to the aggregate payments expected to be received
      under a different form of benefit payment using the interest rate and other
      factors set forth in this Section.

    

    (a)
      This paragraph applies to determine the present value of a Plan Benefit payable
      to a Participant or a Spouse in the form of five annual installments or an
      immediate lump sum payment. “Actuarial Equivalent” or “Actuarially Equivalent”
means an amount equal to the greater of (i) the present value of the monthly
      Plan Benefit payable on the applicable Payment Commencement Date to the
      Participant in the form of a Single Life Annuity, or to the Spouse in the form
      of a “qualified preretirement survivor annuity” as defined in Section 4.2,
      calculated by using the Applicable Interest Rate, the Applicable Mortality
      Table, and the applicable Early Retirement Factors or Early Reduction Factors
      or
      (ii) the present value of the Plan Benefit payable as a Single Life Annuity
      to
      the Participant or as a qualified preretirement survivor annuity to the Spouse
      on the Participant’s Normal Retirement Date (or the present value of the late
      Plan Benefit, if applicable, payable to a Participant on the first day of the
      month immediately following the Participant’s Separation from Service during any
      month after the month in which he attains Normal Retirement Age) calculated
      by
      using the Applicable Interest Rate and the Applicable Mortality Table.

    

    (b) This
      paragraph applies to determine the present value of a Plan Benefit payable to an
      alternate payee pursuant to a domestic relations order. "Actuarial Equivalent"
      or "Actuarially Equivalent" means an amount calculated applying the methodology
      in Section 2.1(a) using the alternate payee’s applicable commencement date, the
      Applicable Interest Rate, the Applicable Mortality Table, and the applicable
      Early Retirement Factors or Early Reduction Factors. 

     

    (c) For
      purposes of Section 2.14, “Actuarial Equivalent” or “Actuarially Equivalent”
will be determined using the Applicable Interest Rate under Section 2.2 and
      the
      Applicable Mortality Table under Section 2.3.

    

    2.2 
      Applicable
      Interest Rate
      means, for a Participant who has a Separation from Service after the Effective
      Date, the adjusted first, second, and third segment rates under Code section
      417(e)(3)(C) and (D), determined with regard to the 2008 through 2011 phase-in
      provisions of Code section 417(e)(3)(D)(iii), for the month of August preceding
      a Payment Commencement Date occurring during the next following January 1
      through June 30 period and for the month of February preceding a
      Payment

    
      
        2

      

      
        
        

        
        

      

      
        
        

      

    

    Commencement
      Date occurring during the next following July 1 through December 31 period.
      Notwithstanding the foregoing, for purposes of calculating the phase-in of
      the
      Applicable Interest Rate, 1% will be added to the annual rate of interest on
      30-year Treasury securities for the above-determined month. If a Participant
      has
      a Separation from Service prior to the Effective Date, the Applicable Interest
      Rate is the annual rate of interest on 30-year Treasury securities for the
      month
      of August, 2006, plus 1%. 

    

    2.3 
      Applicable
      Mortality Table
      means, for a Participant who has a Separation from Service after the Effective
      Date, the mortality table as prescribed by the Secretary of the Treasury under
      Code section 417(e)(3)for the Plan Year containing the Payment Commencement
      Date. If a Participant has a Separation from Service prior to the Effective
      Date, the Applicable Mortality Table is the mortality table as prescribed by
      the
      Secretary of the Treasury under Code section 417(e)(3) as in effect for August,
      2006. 

    

    2.4
      Associate
      means any person who is employed by a Controlled Group Member if the
      relationship between a Controlled Group Member and such person would constitute
      the legal relationship of employer and employee, including an officer who may
      or
      may not be a director, but excluding a director serving only in that capacity,
      and excluding any employee of a Controlled Group Member substantially all the
      operations of which are outside the United States unless United States Social
      Security contributions are made on behalf of such employee.

    

    2.5 
      Beneficiary means
      one or more persons or entities, including contingent Beneficiaries, entitled
      to
      receive a distribution of a Participant’s interest in the Plan in the event of
      his death.

    

    2.6 
      Benefits Administration Committee
      means the committee appointed by the Human Resources Committee and authorized
      by
      Article 6 to administer the Plan.

    

    2.7 
      Board
      of Directors
      means the Board of Directors of the Parent Company.

    

    2.8 
      Change
      in Control Plan means
      the J. C. Penney Corporation, Inc. Change in Control Plan, as amended from
      time
      to time. 

    

    2.9 
      Code
      means the Internal Revenue Code of 1986, as amended from time to time.
      References to "regulations" are to regulations published by the Secretary of
      the
      Treasury under applicable provisions of the Code, unless otherwise expressly
      indicated.

    

    2.10
      Company
      means the J. C. Penney Corporation, Inc., a Delaware corporation. The term
      "Company" will also include any

    
      
        3

      

      
        
        

        
        

      

      
        
        

      

    

    successor
      employer, if the successor employer expressly agrees in writing as of the
      effective date of succession to continue the Plan.

    

    2.11 
      Controlled
      Group
      means the Company and all other corporations, trades, and businesses, the
      employees of which, together with employees of the Company, are required by
      the
      first sentence of subsection (b), by subsection (c), by subsection (m), or
      by
      subsection (o) of Code section 414 to be treated as if they were employed by
      a
      single employer. For purposes of determining if a Separation from Service has
      occurred, the Controlled Group will be determined under Code sections 414(b)
      and
      414(c) and Treasury Regulation section 1.414(c) - 2 by using the language “at
      least 50 percent” instead of “at least 80 percent” each place it appears in Code
      section 1563(a)(1),(2), and (3).

    

    2.12 
      Controlled
      Group Member
      means each corporation or unincorporated trade or business that is or was a
      member of a Controlled Group, but only during such period as it is or was such
      a
      member.

    

    2.13 
      Early
      Retirement Age
      means the date on which a Participant (i) has attained age 55 and has completed
      at least 15 years of service (as determined under the Pension Plan) or (ii)
      if
      the Participant first participated in the Pension Plan prior to January 1,
      1989,
      has attained age 60 without regard to his years of service.

    

    2.14 
      Early
      Reduction Factors
      mean the factors set forth in this Section for use under Section 2.1 for a
      Participant (or Spouse or alternate payee) whose Payment Event is before the
      Participant’s Early Retirement Age. If a Payment Event is before the
      Participant’s Early Retirement Age, the factors used in the present value
      calculations under Sections 2.1(a)(i) and 2.1(b) for each month that a Payment
      Commencement Date is earlier than the date the Participant would have attained
      Normal Retirement Age will be equal to 0.5833% for each month between the ages
      of 65 and 60, 0.4167% for each month between the ages of 60 and 55, and for
      each
      month before age 55, such factors that will result in a Plan Benefit (or, if
      applicable, a qualified preretirement survivor annuity) that is Actuarially
      Equivalent to a Plan Benefit (or, if applicable a qualified preretirement
      survivor annuity) commencing at age 55. For these purposes, a “qualified
      preretirement survivor annuity” shall be an annuity as defined in Section 4.2.

    

    2.15 
      Early
      Retirement Factors
      mean the factors set forth in this Section for use under Section 2.1 for a
      Participant (or Spouse or alternate payee) whose Payment Event occurs on or
      after the Participant’s Early Retirement Age. If a Payment Event is on or after
      the Participant’s Early Retirement Age, the factors used in the present value
      calculation under Sections 2.1(a)(i) and 2.1(b) will be equal to 0.3333% for
      each month between the ages of 65 and 60, and by 0.4167% for each month between
      the ages of 60

    
      
        4

      

      
        
        

        
        

      

      
        
        

      

    

    and
      55 that the Payment Commencement Date is earlier than the date the Participant
      would have attained Normal Retirement Age.

    

    2.16 
      Effective
      Date
      means December 31, 2007, at 11:59 P.M.

    

    2.17 
      ERISA
      means the Employee Retirement Income Security Act of 1974, as amended from
      time
      to time.

    

    2.18 
      Human
      Resources Committee
      means the Human Resources Committee of the Company.

    

    2.19 
      Human
      Resources and Compensation Committee
      means the Human Resources and Compensation Committee of the Board of
      Directors.

    

    2.20 
      Normal
      Retirement Age
      means age 65.

    

    2.21 
      Normal
      Retirement Benefit
      means the retirement benefit payable to a Participant on the Normal Retirement
      Date, determined in accordance with the applicable provisions of Article 4
      of
      the Pension Plan.

    

    2.22
      Normal
      Retirement Date
      means the first day of the month immediately following a Participant's
      attainment of age 65.

    

    2.23
      Parent
      Company
      means the J. C. Penney Company, Inc., a Delaware corporation, and any successor
      corporation.

    

    2.24
      Participant
      means an eligible Associate or former Associate of a Participating Employer
      who
      has satisfied the conditions for participating in the Plan as set forth in
      Article 3 and who has not received a complete distribution of
      benefits.

    

    2.25
      Participating
      Employer
      means the Company and any other Controlled Group Member or organizational unit
      of the Company or of a Controlled Group Member which is designated as a
      Participating Employer under the Plan by the Human Resources Committee or the
      board of directors of the Company; provided, however, that if any such
      designation would substantially increase the cost of the Plan to the Company,
      such designation shall be subject to the sole discretion of the Board of
      Directors.

    

    2.26
      Payment Commencement Date
      means the date upon which payment of a Plan Benefit is scheduled to begin as
      determined under Section 5.3.

    

    2.27
      Payment
      Event means
      the event set forth in Section 5.2 upon which an amount of deferred compensation
      under this Plan may be paid.

    

    2.28
      Pension
      Benefit
      means the amount of a Participant's Normal Retirement Benefit payable to a
      Participant pursuant to the provisions of the Pension Plan on his Normal
      Retirement Date (or if the Participant has attained age 65, the late
      retirement

    
      
        5

      

       

       

    

    benefit
      payable under Section 4.6, or its successor, of the Pension Plan as of the
      first
      day of the month immediately following his Separation from Service) which the
      Participant has earned as of the first day of the month immediately following
      his Separation from Service. 

    

    2.29
      Pension
      Plan
      means the J. C. Penney Corporation, Inc. Pension Plan (formerly, the J. C.
      Penney Company, Inc. Pension Plan) adopted effective February 1, 1966, as
      amended from time to time.

    

    2.30
      Pension
      Plan Participant
      means an Associate or former Associate who is treated as a participant under
      the
      Pension Plan.

    

    2.31
      Plan
      means the J. C. Penney Corporation, Inc. Benefit Restoration Plan(formerly,
      the
      J. C. Penney Company, Inc. Benefit Restoration Plan) adopted effective August
      1,
      1995, as amended from time to time.

    

    2.32
      Plan
      Benefit
      means the benefit payable to a Participant on his Normal Retirement Date,
      determined in accordance with the provisions of Article 4 of this Plan or,
      where
      applicable, the qualified preretirement survivor annuity, as defined in Section
      4.2, payable to a Spouse on the Participant’s Normal Retirement Date, as the
      case may be. 

    

    2.33 Plan
      Year means
      the twelve-month
      period beginning on January 1 and ending on December 31 of each calendar
      year.

    

    2.34
      Prior
      Plan
      means the Supplemental Retirement Program for Management Profit-Sharing
      Associates of J. C. Penney Corporation, Inc. (formerly the Supplemental
      Retirement Program for Management Profit-Sharing Associates of J. C. Penney
      Company, Inc.)as in effect on July 31, 1995.

    

    2.35
      Separation
      from Service
      means the date an Associate dies, retires, or otherwise has a termination of
      employment from the Controlled Group within the meaning of Code section 409A
      and
      Treasury Regulation section 1.409A-1(h), or its successor, taking into account
      the definition of Controlled Group for such purpose in Section 2.11.

    

    2.36
      Single
      Life Annuity
      means an annuity with no ancillary benefits, consisting of equal monthly
      payments beginning as of a designated commencement date and ending with the
      monthly payment due immediately prior to his death.

    

    2.37
      Specified
      Employee
      means a “specified employee” within the meaning of Code section 409A and
      Treasury Regulation section 1.409A-1(i), or its successor, as determined in
      accordance with the rules specified by the Board of Directors in resolutions
      dated December 12, 2007. 

    
      
        6

      

      
        
        

        
        

      

      
        
        

      

    

    2.38 
      Spouse
      means the individual to whom an Associate is legally married under the laws
      of
      the State (within the meaning of section 3(10) of ERISA) in which the Associate
      is domiciled, or if domiciled outside the United States, under the laws of
      the
      State of Texas, subject to federal legal requirements.

    

    2.39
      Unrestricted
      Benefit
      means the Pension Benefit determined without applying the provisions of the
      Pension Plan relating to the limitation on compensation under Code section
      401(a)(17) or the limitation on benefits under Code section 415.

    

    

    
      
        7

      

      
        
        

        
        

      

      
        
        

      

    

    

    ARTICLE
      3

    PARTICIPATION

    

    

    

    

    For
      purposes of Section 4.1, any Associate of a Participating Employer who is a
      Pension Plan Participant on or after August 1, 1995, and whose retirement
      pension benefit payable pursuant to the terms of the Pension Plan is limited
      by
      operation of the annual benefit limits under Code section 415 or the
      compensation limits under Code section 401(a)(17) shall be a Participant in
      the
      Plan. In addition, an active or former Associate for whom a benefit was accrued
      under Paragraph (2) of Article III of the Prior Plan and whose benefit under
      Paragraph (2) of Article III under the Prior Plan had not been completely
      distributed to such Associate at July 31, 1995, will also be a Participant
      in
      the Plan.

    

    

    

    
      
        8

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      4

    BENEFITS

    

    

    4.1 
      Pension
      Plan Participant Benefit. A
      Participant shall be entitled to a Plan Benefit equal in amount to his
      Unrestricted Benefit less his Pension Benefit.

    

    Additionally,
      a benefit shall be accrued for each Participant for whom a benefit was accrued
      under Paragraph (2) of Article III of the Prior Plan at July 31, 1995, and
      whose
      accrued benefit had not been completely distributed from the Prior Plan. The
      value of the Participant's Prior Plan benefit under Paragraph (2) of Article
      III
      determined as of July 31, 1995, will become an accrued benefit under this Plan
      and will be distributed to the Participant pursuant to the terms of this Plan.
      The distribution to a Participant from this Plan of such Prior Plan accrued
      benefit will completely discharge the Company and each other Participating
      Employer from any further liability for such benefit.

    

    4.2 
      Death
      Benefit.
      If
      a Participant who has a vested interest in his benefit is married at the time
      such Participant has a Separation from Service by reason of death, the
      Participant's Spouse will receive a benefit in the form of five equal annual
      installments commencing as of the first day of the month after the Participant's
      death. The amount of such death benefit will be calculated under Section 2.1(a)
      by reference to the Single Life Annuity that would be payable to the Spouse
      as a
“qualified preretirement survivor annuity” based on the Participant’s Plan
      Benefit, and such amount then will be adjusted to reflect payment over five
      years in the manner described in Section 5.1. For these purposes, a “qualified
      preretirement survivor annuity” means a monthly annuity for the life of the
      Spouse of a deceased Participant equal to the monthly annuity that the Spouse
      would have received under a qualified joint and survivor annuity, with the
      survivor annuity being equal to 100% of the amount of the monthly annuity
      payable during the joint lives of the Participant and his Spouse if the
      Participant dies on or after the day he attains Early Retirement Age or Normal
      Retirement Age and 50% if the Participant dies prior to the day he attains
      Early
      Retirement Age. The calculation of the qualified joint and survivor annuity
      shall be determined by reference to the factors used under Exhibits E and G
      to
      Appendix I to the Pension Plan, or their successors, to convert an immediate
      single life annuity to a joint and 50% or 100% survivor annuity, as appropriate.
      No benefit under this Plan will be payable to a single Participant who has
      a
      Separation from Service due to death.

    

    If
      a Participant who has a Separation from Service (other than by death) and who
      is
      either married or single at the time of his subsequent death dies before payment
      of his vested

    
      
        9

      

      
        
        

        
        

      

      
        
        

      

    

    benefit
      has begun under the Plan, the Participant's Beneficiary will receive the benefit
      in the form of five equal annual installments equal to the amount that would
      have been payable to a Participant under Section 5.1 and at the same time.
      If no
      Beneficiary has been designated by such a Participant, the Beneficiary will
      be
      deemed to be the Spouse for a married Participant and the estate for a single
      Participant. 

    

    In
      the event of the death of a Participant after his benefit has commenced and
      before all installments have been paid, the remaining unpaid installments shall
      be paid to his Beneficiary in accordance with the payment schedule of the
      Participant. 

    

    

    4.3 
      Vested
      Benefit.
      

    

      
      (a) Vesting
      Schedule.
      For purposes of the benefit provided by Section 4.1, the interest of each
      Participant in his benefit will become vested and nonforfeitable in accordance
      with the following schedule:

    

    
      	
               Years
                of
                Service

            	
              Percentage
                Vested and
                Nonforfeitable

            
	 Less than
              5	
              0

            
	 5 or
              more	
              100

            

    

     

    For
      purposes of this Section 4.3, a Participant will have the same number of years
      of service under this Plan as the Participant has under the Pension Plan.
      Notwithstanding anything in the Plan to the contrary, a Participant will only
      be
      entitled to payment of a benefit under the Plan if the Participant’s interest in
      his benefit is vested at the time payment is scheduled to commence.

    

     (b) Accelerated
      Vesting.
      A Participant’s interest in his benefit will become 100% vested and
      nonforfeitable without regard to his years of service on his attainment of
      Normal Retirement Age while he is an Associate. Notwithstanding the foregoing,
      a
      Participant who attains age 60 while an Associate will become fully vested
      in
      his benefit without regard to his years of service if he became a participant
      in
      the Pension Plan before January 1, 1989, or if he was a participant in the
      JCPenney Financial Services Pension Plan.

    

    (c) Change
      in Control Plan.
      If the Board of Directors exercises its discretion under Section 8.1 to
      terminate the Plan because of a Change in Control (as defined in Section 8.3)and
      a Participant is a participant in the Change in Control Plan, the Participant’s
      interest in his Plan Benefit will become 100% vested and nonforfeitable without
      regard to his years of service or age. If a Participant who is also a
      participant in the Change in Control Plan has an “employment termination”
following a “change

    
      
        10

      

      
        
        

        
        

      

      
        
        

      

    

    in
      control” as those terms are defined in the Change in Control Plan, his interest
      in his Plan Benefit will become 100% vested and nonforfeitable without regard
      to
      his years of service or age.

    

    4.4 
      Qualified
      Unit Closings.
      A Participant who has an involuntary Separation from Service as a result of
      a
      Qualified Unit Closing (as hereinafter defined) will receive credit for
      additional months of service and additional months of age, based on the
      Participant's years of service (before applying the provisions of this Section)
      in accordance with the schedule set forth below, solely for purposes of
      determining whether the Participant has attained Early Retirement Age or Normal
      Retirement Age at his Separation from Service, and not for purposes of
      determining the amount of the Participant's Plan Benefit or for any other
      purpose.

     

    
 

    
      	
               Years
                of Service
                at

              Separation
                from
                Service

            	
               Months
                of
                Additional

              Age
                and
                Service

            
	Less than
              10 	
              0 

            
	At least 10
              but
              less than 15 	
              12 

            
	At least 15
              but
              less than 20 	
              18 

            
	20 or
              more	
              24

            

    

      

    For
      purposes of this Section, a Qualified Unit Closing means the complete or partial
      discontinuance of business at a store or other business unit of a Participating
      Employer, provided the Associates employed at the store or other business unit
      are eligible for separation pay.

    
      
        11

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      5

    FORM
      AND COMMENCEMENT OF BENEFIT PAYMENTS

    

    

    

    

    5.1 
      Form
      of Benefit Payments.
      Except as otherwise provided in this Plan, benefits will be paid in the form
      of
      five equal annual installments. The present value of such installments will
      be
      equal to the amount determined under Section 2.1. For a Participant who has
      a
      Separation from Service after the Effective Date, the amount of such annual
      installments will be calculated by using only the adjusted first segment rate
      of
      the Applicable Interest Rate, determined with regard to the 2008 through 2011
      phase-in provisions of Code section 417(e)(3)(D)(iii). For a Participant who
      has
      a Separation from Service prior to the Effective Date, the amount of such annual
      installments will be calculated by using the Applicable Interest Rate under
      Section 2.2 that applies to such Participant. The lookback and stability periods
      set forth in Section 2.2 will apply in determining the adjustment.

    

    5.2 
      Payment
      Events.
      The Payment Event for a Participant will be the later of (i) Separation from
      Service or (ii) January 1, 2008; provided, however, that if a Specified
      Employee’s Separation from Service (other than by reason of death) occurs prior
      to January 1, 2008, and the date of such Separation from Service plus six months
      is after January 1, 2008, Separation from Service will be the deemed Payment
      Event for such a Specified Employee.

    

      5.3 
      Payment
      Commencement Date.
      The Payment Commencement Date for a Participant (including a Specified Employee)
      whose Payment Event under Section 5.2 is Separation from Service will be the
      first day of the month following the date of his Separation from Service;
      provided, however, that the actual time of the first payment to a Specified
      Employee will be determined in accordance with the provisions of Section 5.4.
      For all other Participants, the Payment Commencement Date for benefits under
      Section 4.1 will be January 1, 2008, or as soon as practicable thereafter,
      but
      no later than the time required for payment under Treasury Regulation section
      1.409A-3(d), or its successor. Subsequent installments for all Participants,
      including Specified Employees, will be paid on the first through fourth
      anniversaries of the Payment Commencement Date. 

    

    The
      Payment Commencement Date in the case of a death benefit will be determined
      under Section 4.2. For an alternate payee, the Payment Commencement Date will
      be
      the applicable commencement date as provided in a domestic relations order
      that
      conforms with the requirements of Code section 409A and Treasury Regulation
      section 1.409A-3(j)(4)(ii), or its successor.

    
      
        12

      

      
        
        

        
        

      

      
        
        

      

    

    5.4 
      Delay
      for Specified Employees.
      If a Participant is a Specified Employee as of the date of his Separation from
      Service and his Payment Event is Separation from Service (other than by reason
      of death), payment will not be made before the date that is six months after
      the
      date of Separation from Service. The first payment to such a Specified Employee
      will be paid on the first day of the seventh month following the date of
      Separation from Service. The initial installment payment to a Specified Employee
      whose Separation from Service occurs after December 31, 2007, will include
      an
      interest adjustment. Such adjustment will be calculated by using only the
      adjusted first segment rate of the Applicable Interest Rate, determined with
      regard to the 2008 through 2011 phase-in provisions of Code section
      417(e)(3)(D)(iii). The lookback and stability periods set forth in Section
      2.2
      will apply in determining the adjustment. Notwithstanding the foregoing, no
      interest will be paid to a Specified Employee whose Separation from Service
      occurs before January 1, 2008. If a Specified Employee dies after a Separation
      from Service but prior to the expiration of the six-month delay, benefit
      payments under Section 4.2 will commence to the Beneficiary in accordance with
      the provisions of Section 4.2

     

    5.5 
      Subsequent
      Changes in Time and Form of Payment.
      No Participant can make a subsequent election to delay a payment or change
      the
      form of payment. 

     

    5.6 
      Prohibition
      on Acceleration of Payment.
      Except as provided in Code section 409A, Treasury regulation section
      1.409A-3(j)(4) or its successor, this Section, Section 5.7, and Article 8,
      neither the Participant nor the Company can accelerate the time or schedule
      of
      any payment or amount scheduled to be paid pursuant to the terms of the Plan.
      The Benefits Administration Committee will have the discretion to accelerate
      payments in accordance with the provisions of Code section 409A and Treasury
      Regulation section 1.409A-3(j)(4), or its successor (provided that only the
      Board of Directors will have the discretion to accelerate payment in accordance
      with the provisions of Treasury Regulation section 1.409A-3(j)(4)(ix), or its
      successor). 

    

    5.7 
      Limited
      Cashouts.
      If the present value, as determined herein, of a Participant’s or Beneficiary's
      benefit under Sections 4.1 or 4.2, when combined with the present value of
      a
      Participant’s or Beneficiary's interest in any other agreements, methods,
      programs, or other arrangements with respect to which deferrals of compensation
      are treated as having been deferred under a single nonqualified deferred
      compensation plan under Code section 409A and Treasury Regulation section
      1.409A-1(c)(2), or its successor, is equal to or less than the applicable dollar
      amount under Code section 402(g)(1)(B), in effect for the year of distribution,
      the Benefits Administration Committee will distribute the benefit in the form
      of
      an immediate lump sum payment that is the Actuarial Equivalent of such vested
      Plan Benefit on the Payment Commencement Date, provided that the Participant
      is
      not also a Participant in the J. C. Penney

    
      
        13

      

      
        
        

        
        

      

      
        
        

      

    

    Corporation,
      Inc. Mirror Savings Plan, or its successor, and the payment results in the
      termination and liquidation of the entirety of the Participant’s interest under
      this Plan and all other agreements, methods, programs, or other arrangements
      aggregated with this Plan and is in accordance with Treasury regulation section
      1.409A-3(j)(4)(v), or its successor. In the case of a Specified Employee, the
      benefit will be paid at the time specified in Section 5.4, with the comparable
      adjustment for interest as described in Section 5.4.

    
      
        14

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      6

    ADMINISTRATION

    

     

    The
      Benefits Administration Committee will administer the Plan and will have the
      full authority and discretion to accomplish that purpose, including without
      limitation, the authority and discretion to 

    

    
      	(i)  	
              interpret
                the Plan in a manner consistent with the requirements of Code section
                409A
                (and the regulations thereunder) and correct any defect, supply any
                omission or reconcile any inconsistency or ambiguity in the Plan
                in the
                manner and to the extent that the Benefits Administration Committee
                deems
                desirable to carry on the purpose of the Plan consistent with Code
                section
                409A and the regulations
                thereunder;

            

    

    

    
      	(ii)  	
              resolve
                all questions relating to the eligibility of Associates to become
                or
                continue as Participants; 

            

    

    

    
      	(iii)  	
              determine
                the amount of benefits payable to Participants and authorize and
                direct
                the Company with respect to the payment of benefits under the Plan;
                

            

    

    

    
      	(iv)  	
              make
                all other determinations and resolve all questions of fact necessary
                or
                advisable for the administration of the Plan;
                and

            

    

    

    
      	(v)  	
              make,
                amend, and rescind such rules as it deems necessary for the proper
                administration of the Plan. 

            

    

    

    The
      Benefits Administration Committee will keep a written record of its actions
      and
      proceedings regarding the Plan and all dates, records, and documents relating
      to
      its administration of the Plan.

    

    Any
      action taken or determination made by the Benefits Administration Committee
      will
      be conclusive on all parties. No member of the Benefits Administration Committee
      will vote on any matter relating specifically to such member. In the event
      that
      a majority of the members of the Benefits Administration Committee will be
      specifically affected by any action proposed to be taken (as opposed to being
      affected in the same manner as each other Participant in the Plan), such action
      will be taken by the Human Resources Committee.

    

    
      
        15

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      7

    TYPE
      OF PLAN

    

     

    The
      Plan is a plan which is unfunded. Benefits under the Plan are paid from the
      general assets of the Company. 

    

    The
      portion of this Plan in Section 4.1 which comprises the benefit determined
      due
      to the limit on annual benefits under the Pension Plan imposed by Code section
      415 constitutes a separable part of this Plan which is maintained by the Company
      solely for the purpose of providing benefits for certain Associates in excess
      of
      the limitations on benefits imposed by Code section 415. This separable portion
      of the Plan shall be construed according to the provisions of ERISA applicable
      to such plans. 

    

    The
      remaining portion of the Plan is maintained by the Company primarily for the
      purpose of providing deferred compensation for a select group of management
      or
      highly compensated employees. The Plan shall be construed according to the
      provisions of ERISA applicable to such plans. 

    

    In
      the event that it should subsequently be determined by statute or by regulation
      or ruling that the Plan is not "a plan which is unfunded and is maintained
      primarily for the purpose of providing deferred compensation for a select group
      of management or highly compensated employees" within the meaning of sections
      201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA, participation in the
      Plan
      shall be restricted by the Benefits Administration Committee to the extent
      necessary to assure that it will be such a plan within the meaning of such
      sections. 

    

    
      
        16

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      8

    CHANGE
      IN
      CONTROL

    
 

    8.1 
      Authority
      of the Board of Directors.
      Upon a Change in Control as defined in Section 8.3, the Board of Directors
      will
      have the discretion and the authority to (i) terminate and liquidate the Plan
      pursuant to its irrevocable action taken within the 30 days preceding or the
      12
      months following a Change in Control and in accordance with Code section 409A
      and Treasury Regulation section 1.409A-3(j)(4)(ix)(B), or its successor (in
      which event the benefit of each Participant who is also a participant in the
      Change in Control Plan will automatically vest as provided in Section 4.3(c));
      (ii) fund a grantor trust in accordance with the provisions of Section 8.2;
      or
      (iii) provide that each Participant’s benefit in the Plan will become 100%
      vested and nonforfeitable as of the date of the Change in Control without regard
      to his years of service under the Pension Plan.

    

      8.2 
      Grantor
      Trust.
      To the extent permitted by Code section 409A and the regulations thereunder,
      the
      Board of Directors will have the discretion and the authority to transfer assets
      of the Parent Company, in an amount sufficient to pay benefits that have accrued
      under the Plan up to the date of the Change in Control, to a grantor trust
      to be
      established by the Parent Company for the purpose of paying benefits hereunder;
      and the Participant's vested benefits shall thereafter be paid to the
      Participant from such trust in accordance with the terms of the Plan. On each
      anniversary date of the date of the Change in Control, the Parent Company shall
      transfer , to the extent permitted by Code section 409A and the regulations
      thereunder, to the grantor trust an amount necessary to pay all benefits accrued
      under the Plan during the preceding twelve months.

    

    8.3 
      Change
      in Control Event.
      For the purpose of determining whether a Change in Control has occurred with
      respect to a Participant, a Change in Control means a change in control event
      within the meaning of Code section 409A and Treasury Regulation section
      1.409A-3(i)(5), or its successor, including a change in the ownership of the
      corporation, a change in the effective control of the corporation, or a change
      in the ownership of a substantial portion of the assets of the corporation
      as
      such events are defined in Treasury Regulation sections
      1.409A-3(i)(5)(v),(vi),and (vii). For this purpose, “corporation” has the
      meaning given in Treasury Regulation section 1.409A-3(i)(5)(ii), or its
      successor.

    

      

    

    

    
      
        17

      

      
        
        

        
        

      

      
        
        

      

    

    

    ARTICLE
      9 

    MISCELLANEOUS

    

    

    

      9.1 
      Amendment
      and Termination.
      The Human Resources and Compensation Committee may amend or modify the Plan
      at
      any time, without prior notice; provided, however, that any such amendment
      or
      modification which would substantially increase the cost of the Plan to the
      Company shall require approval of the Board of Directors. 

    

       The
      Board of Directors may suspend, discontinue, or terminate the Plan at any time
      without prior notice or approval. Any termination and liquidation of the Plan,
      including any termination and liquidation of the Plan upon a Change in Control,
      must comply with the provisions of Code section 409A and Treasury Regulation
      section 1.409A-3(j)(4)(ix), or its successor.

    

       Subject
      to the foregoing, in no event will any amendment, modification, suspension,
      discontinuance, or termination adversely affect the Plan Benefit payable
      pursuant to Section 4.1 
      for any Participant for whom benefit payments have already begun in accordance
      with the Plan as in effect prior to the effective date of the amendment,
      modification, suspension, discontinuance, or termination unless otherwise
      required to comply with applicable law. 

    

    Each
      amendment to the Plan by the Human Resources and Compensation Committee or
      the
      Board of Directors will be made only pursuant to unanimous written consent
      or by
      majority vote at a meeting. Upon such action by the Human Resources and
      Compensation Committee or the Board of Directors, 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 Human Resources and Compensation
      Committee or the Board of Directors.

    

     9.2 
      Rights
      of Associates.
      Neither the establishment of the Plan nor any action thereafter taken by the
      Company, the Parent Company, or any Controlled Group Member or by the Benefits
      Administration Committee shall be construed as giving to any Associate any
      vested right to a benefit from the Plan or a right to be retained in employment
      or any specific position or level of employment with the Company or any
      Controlled Group Member. Moreover, no Associate shall have any right or claim
      to
      any benefits under this Plan if the Associate has an involuntary Separation
      from
      Service due to a summary dismissal as defined in the Company’s policies and
      procedures, including resignation in lieu thereof, unless the Benefits
      Administration Committee, in its

    
      
        18

      

      
        
        

        
        

      

      
        
        

      

    

    discretion,
      determines that such Associate shall be eligible for such benefits
      notwithstanding such summary dismissal.

     

      9.3 
      Mistaken
      Information.
      If any information upon which a Participant's benefit under the Plan is
      calculated has been misstated by the Participant or is otherwise mistaken,
      such
      benefit shall not be invalidated (unless upon the basis of the correct
      information the Participant would not have been entitled to a benefit), but
      the
      amount of the benefit shall be adjusted to the proper amount determined on
      the
      basis of the correct information and, to the extent permitted by Code section
      409A, any overpayments shall be charged against future payments to the
      Participant or his Beneficiary or otherwise required to be repaid by the
      recipient.

     

    9.4 
      Liability.
      Neither the Board of Directors (including any committees thereof) of the Parent
      Company, the Company, or of any Participating Employer, nor any member of the
      Benefits Administration Committee or the Human Resources Committee nor any
      person to whom any of them may delegate any duty or power in connection with
      administering the Plan shall be personally liable for any action or failure
      to
      act with respect to the Plan.

     

    9.5 
      Reemployed
      Participant.
      If a retired Participant again becomes an Associate of a Participating Employer,
      the payment of benefits hereunder shall continue. Upon such Associate's
      subsequent Separation from Service, he shall be entitled to receive any
      applicable benefits, if any, under Article 4 pursuant to the provisions of
      this
      Plan.

     

      9.6 
      Construction.
      In determining the meaning of any provision of the Plan, words imparting the
      masculine gender shall include the feminine and the singular shall include
      the
      plural, unless the context requires otherwise. Headings of Articles, Sections
      and Subsections in the Plan are for convenience and reference only and are
      not
      intended to modify or affect the meaning of the substantive provisions of the
      Plan.

    

    9.7 
      Non-assignability
      of Benefits.
      The
      benefits payable hereunder or the right to receive future benefits under the
      Plan may not be anticipated, alienated, pledged, encumbered, or subjected to
      any
      charge or legal process, and if any attempt is made to do so, or a person
      eligible for any benefits becomes bankrupt, the interest under the Plan of
      the
      person affected may be terminated by the Benefits Administration Committee
      which, in its sole discretion, may cause the same to be held or applied for
      the
      benefit of one or more of the dependents of such person or make any other
      disposition of such benefits that it deems appropriate, in all events subject
      to
      the requirements of Code section 409A.

    

    9.8 
      Governing
      Law.
      Except to the extent that the Plan may be subject to the provisions of ERISA,
      the Plan will be construed

    
      
        19

      

      
        
        

        
        

      

      
        
        

      

    

    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 shall be barred after the expiration of three years from
      the
      date of Separation from Service of the Participant or the date of receipt of
      the
      notice of denial of a claim for benefits, if earlier. In the event ERISA's
      limitations on legal actions do not apply, the laws of the State of Texas with
      respect to limitations of legal actions shall apply and the cause of action
      must
      be brought no later than four years after the date the action
      accrues.

    
      
        20

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      10

    CLAIMS
      PROCEDURES

    

    
 

    If
      an Associate, or an authorized representative of an Associate, does not receive
      the benefits which he believes he is entitled to receive under the Plan, he
      may
      file a claim for benefits with the Benefits Administration Committee or its
      delegate. All claims will be made in writing no later than the time prescribed
      by Treasury Regulation section 1.409A-3(g), or its successor, and will be signed
      by the claimant or the claimant’s authorized representative. If the claimant
      does not furnish sufficient information to determine the validity of the claim,
      the Benefits Administration Committee or its delegate will advise the claimant
      in writing of any additional information that is required.

    

    Each
      claim will be approved or disapproved by the Benefits Administration
Committee
      or its delegate
      within 60 days following the receipt of the information necessary to process
      the
      claim, unless special circumstances require an extension of time for processing,
      in which case a decision will be rendered as soon as possible but not later
      than
      120 days after receipt of the information necessary to process the claim. Notice
      of the extension must be provided to the claimant or the claimant’s authorized
      representative before the expiration of the original 60-day period and indicate
      the special circumstances requiring the extension of time and the date by which
      the Plan expects to make a determination. 

    

    In
      the event the Benefits Administration Committee
      or its delegate
      denies a claim for benefits in whole or in part, the Benefits Administration
      Committee
      or its delegate
      will notify the claimant in writing of the denial of the claim. Such notice
      by
      the Benefits Administration Committee
      or its delegate
      will also set forth, in a manner calculated to be understood by the claimant,
      the specific reasons for such denial, the specific Plan provisions on which
      the
      denial is based, and 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. 

    

    A
      claimant may appeal a denial of his claim by requesting a review of the decision
      by the Benefits Administration Committee or a person designated by the Benefits
      Administration Committee, which person will be a named fiduciary under Section
      402(a)(2) of ERISA for purposes of this Article. An appeal must be submitted
      in
      writing within 60 days after the denial and must (i) request a review of the
      claim for benefits under the Plan, (ii) set forth all of the grounds upon which
      claimant's request for review is based and any facts, documents, records, or
      other information in

    
      
        21

      

      
        
        

        
        

      

      
        
        

      

    

    support
      thereof, and (iii) set forth any issues or comments which the claimant deems
      pertinent to the appeal. The Benefits Administration Committee or the named
      fiduciary designated by the Benefits Administration Committee will make a full
      and fair review of each appeal and any written materials submitted in connection
      with the appeal, without regard to whether the information was submitted under
      the initial claim determination. The Benefits Administration Committee or the
      named fiduciary designated by the Benefits Administration Committee 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. Notice of the extension must be provided to the claimant
      or the claimant’s authorized representative before the expiration of the
      original 60-day period and indicate the special circumstances requiring the
      extension of time and the date by which the Plan expects to make a
      determination. The claimant will be given the opportunity to review pertinent
      documents or materials upon submission of a written request to the Benefits
      Administration Committee or named fiduciary, provided the Benefits
      Administration Committee or named fiduciary finds the requested documents or
      materials are pertinent to the appeal. 

    

    On
      the basis of its review, the Benefits Administration Committee or named
      fiduciary will make an independent determination of the claimant's eligibility
      for benefits under the Plan. The decision of the Benefits Administration
      Committee or named fiduciary on any claim for benefits will be final and
      conclusive upon all parties thereto. In the event the Benefits Administration
      Committee or named fiduciary denies an appeal in whole or in part, it will
      give
      written or electronic notice of the decision to the claimant or the claimant’s
      authorized representative, 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 and provide other additional information, as applicable,
      required by 29 Code of Federal Regulations section 2560.503-1, or its
      successor.

    

    If
      the claimant’s claim or appeal is approved, any resulting payment of benefits
      will be made no later than the time prescribed for payment of benefits by
      Treasury Regulation section 1.409A-3(g), or its successor.

    

    

    

    

    

    

    

    
      
        22

      

      
        
        

        
        

      

      
        
        

      

    

    APPENDIX
      I

    

    Participating
      Employers

    

    

    

    J.
      C. Penney Corporation, Inc.

    

    J.C.
      Penney Funding Corporation

    

    J.
      C. Penney Private Brands, Inc.

    

    JCP
      Receivables, Inc.

    

    JCPenney
      Puerto Rico, Inc.

    

    JCP
      Logistics L.P.

    

    JCP
      Media L.P.

    

    JCP
      Overseas Services, Inc.

    

    JCP
      Procurement L.P.

    

    JCP
      Publications Corp.

    (formerly
      JCP Media Corporation)

    

    The
      Original Arizona Jean Company

    
      
        23

      

      
        
        

        
        

      

      
        
        

      

    

    APPENDIX
      II

    

    Pre-2008
      Plan 

    

    

    
      	1.  	
              Plan
                Document in Effect on October 3,
                2004

            

    

    

    
      	2.  	
              Plan
                Amendment Effective January 1, 2005

            

    

    

    
      	3.  	
              Plan
                Amendment Effective December 31,
                2006

            

    

    

    
      	4.  	
              Plan
                Amendments Effective January 1,
                2006

            

    

    

    

    
      
        24

      

      
        
        

        
        

      

      
        
        

        
        

      

    

    APPENDIX
      II

    

    

    J.
      C. PENNEY CORPORATION, INC.

    BENEFIT
      RESTORATION PLAN

    ADOPTED
      EFFECTIVE AUGUST 1, 1995

    AS
      AMENDED THROUGH FEBRUARY 16, 2004

    

    

    
      	
               DOCUMENT
                HISTORY

            
	 This
              document is the Plan adopted by the
              Benefit Plans Review Committee on July 11, 1995 with an effective date
              of
              August 1, 1995, as amended on the following dates:
	 	 
	
              April
                10,
                1996

            	Board of
              Directors
	
              April
                10,
                1996

            	Benefit Plan
              Review
              Committee
	
              June
                28,
                1996

            	Personnel
              Committee
	
              July
                9,
                1997

            	Benefit Plan
              Review
              Committee
	
              December
                30,
                1997

            	Director of
              Personnel
	
              December
                11,
                1998

            	Human Resources
              Committee
	
              January
                13,
                1999

            	Board of
              Directors
	
              May
                21,
                1999

            	Benefit Plans
              Review Committee
	
              July
                14,
                1999

            	Board of
              Directors
	
              March
                23,
                2001 

            	Human
              Resources and Compensation
              Committee
	
              January
                27,
                2002

            	Chief Human
              Resources and Administration
              Officer 
	
              June
                1,
                2002

            	Director of
              Human
              Resources and
              Administration
	
              December
                10,
                2003

            	Board of
              Directors 
	
              February
                16,
                2004

            	Human Resources
              Committee

    

    

     

     

    
      
        II-1

      

      
        
        

        
        

      

      
        
        

      

    

    J.
      C. PENNEY CORPORATION, INC.

    BENEFIT
      RESTORATION PLAN

    

    Adopted
      Effective August 1, 1995

    As
      Amended Through February 16, 2004

    

    TABLE
      OF CONTENTS

     

    
      	Article	 	Page
	Article
              I.	Introduction	1
	Article
              II.	Definitions	2
	Article
              III.	Participation	5
	
               (1)

            	Pension Plan
              Benefit	5
	Article
              IV.	Benefits	6
	
               (1)

            	Pension Plan
              Participant Benefit	
              6

            
	
               (2)

            	Death
              Benefit	
              6

            
	
               (3)

            	Vesting	6
	
               (4)

            	Effect of Certain
              Payments Made in December 1992	
              6

            
	
              Article
                V.

            	Form and
              Commencement of Benefit Payments	8
	
               (1)

            	Optional Forms
              and
              Commencement of Benefit Payments	8
	
               (2)

            	Small
              Annuities	8
	
               (3)

            	Installments	8
	Article
              VI.	Administration	10
	Article
              VII.	Type of
              Plan	11
	Article
              VIII.	Miscellaneous	12
	
               (1)

            	Amendment and
              Termination	12
	
               (2)

            	
              Rights
                of Associates

            	12
	
               (3)

            	Mistaken
              Information	12
	
               (4)

            	Liability	13
	
               (5)

            	Reemployed
              Participants	13
	
               (6)

            	Construction	13
	
               (7)

            	Non-Assignability
              of Benefits	13
	
               (8)

            	Governing
              Law	13
	
               (9)

            	Change of
              Control	13
	Article
              IX.	Claims
              Procedures	17
	Appendix
              I.	Participating
              Employers	19
	 	 	 

    

        

    
      
        II-2

      

       

    

    J.
      C. PENNEY CORPORATION, INC.

    BENEFIT
      RESTORATION PLAN

    

    Adopted
      Effective August 1, 1995

    As
      Amended Through February 16, 2004

    

    

    ARTICLE
      I. INTRODUCTION

    

    The
      J. C. Penney Corporation, Inc. Benefit Restoration Plan is a plan maintained
      by
      the Company primarily for the purpose of providing benefits for eligible
      Associates in excess of the limit on benefits and contributions imposed by
      Internal Revenue Code Section 415 and the compensation limit under section
      401(a)(17) of the Internal Revenue Code. 

    

    This
      document amends and completely restates the portion of the Supplemental
      Retirement Program for Management Profit-Sharing Associates of J. C. Penney
      Corporation, Inc. that provided benefits that would have been payable under
      the
      J. C. Penney Corporation, Inc. Pension Plan and the J. C. Penney Corporation,
      Inc. Savings, Profit-Sharing and Stock Ownership Plan but for the limits on
      benefits, contributions, and compensation imposed on retirement plans qualified
      under the Internal Revenue Code. With respect to Associates who terminated
      employment prior to August 1, 1995, benefits payable to such Associates are
      determined pursuant to the terms and conditions of the Supplemental Retirement
      Program for Management Profit-Sharing Associates of J. C. Penney Corporation,
      Inc. in effect as of July 31, 1995.

    

    Effective
      January 1, 1999, amounts credited to the Annual Benefit Limit Make-Up Account
      as
      of December 31, 1998 of each Participant were transferred into the J. C. Penney
      Corporation, Inc. Mirror Savings Plan II and therefore were no longer payable
      under the J. C. Penney Corporation, Inc. Benefit Restoration Plan after December
      31, 1998.

    

    Effective
      January 1, 1999, the Thrift Drug, Inc. Benefit Restoration Plan was merged
      into
      the J. C. Penney Corporation, Inc. Benefit Restoration Plan.

    

    

    
      
        II-3

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      II. DEFINITIONS

    

    For
      the purpose of this Plan the following terms shall have the following
      meanings:

    

    Associate:
      Any person who is employed by a Controlled Group Member if the relationship
      between a Controlled Group Member and such person would constitute the legal
      relationship of employer and employee, including an officer who may or may
      not
      be a director, but excluding a director serving only in that capacity, and
      excluding any employee of a Controlled Group Member substantially all the
      operations of which are outside the United States unless United States Social
      Security contributions are made on behalf of such employee.

    

    Benefits
      Administration Committee:
      The committee appointed by the Human Resources Committee and authorized by
      Article VI to administer the Plan.

    

    Board
      of Directors:
      Board of Directors of the Parent Company.

    

    Code:
      The Internal Revenue Code of 1986, as amended from time to time. References
      to
      "regulations" are to regulations published by the Secretary of the Treasury
      under applicable provisions of the Code, unless otherwise expressly
      indicated.

    

    Company:
      J. C. Penney Corporation, Inc., a Delaware corporation. The term "Company"
      will
      also include any successor employer, if the successor employer expressly agrees
      in writing as of the effective date of succession to continue the
      Plan.

    

    Controlled
      Group:
      The Company and all other corporations, trades, and businesses, the employees
      of
      which, together with employees of the Company, are required by the first
      sentence of subsection (b), by subsection (c), by subsection (m), or by
      subsection (o) of Code section 414 to be treated as if they were employed by
      a
      single employer.

    

    Controlled
      Group Member:
      Each corporation or unincorporated trade or business that is or was a member
      of
      a Controlled Group, but only during such period as it is or was such a
      member.

    

    Effective
      Date:
      August 1, 1995.

    

    ERISA:
      Employee Retirement Income Security Act of 1974, as amended from time to
      time.

    

    Human
      Resources and Compensation Committee:
      The Human Resources and Compensation Committee of the Board of Directors of
      the
      Parent Company.

    

    Human
      Resources Committee:
      The Human Resources Committee of the Management Committee of the
      Company.

    
      
        II-4

      

      
        
        

        
        

      

      
        
        

      

    

    

    Parent
      Company: 
      J. C. Penney Company, Inc., a Delaware corporation, and any successor
      corporation.

    

    Participant:
      An eligible Associate of a Participating Employer who has satisfied the
      conditions for participating in the Plan as set forth in Article III and who
      has
      not received a complete distribution of benefits.

    

    Participating
      Employer:
      The Company and any other Controlled Group Member or organizational unit of
      the
      Company or of a Controlled Group Member which is designated as a Participating
      Employer under the Plan by the Human Resources Committee or the Board of
      Directors of the Company; provided, however, that if any such designation would
      substantially increase the cost of the Plan to the Company, such designation
      shall be subject to the sole discretion of the Board of Directors of the Parent
      Company.

    

    Pension
      Benefit:
      The monthly benefit that is payable to a Participant pursuant to the provisions
      of the Pension Plan in the form of a single-life, no-death-benefit annuity,
      assuming the Participant's benefit commencement date under the Pension Plan
      is
      the first day of the month immediately following the date of the Participant's
      Separation from Service.

    

    Pension
      Plan:
      J. C. Penney Corporation, Inc. Pension Plan, as amended from time to
      time.

    

    Pension
      Plan Participant:
      An Associate or former Associate who is treated as a participant under the
      Pension Plan.

    

    Plan:
      J. C. Penney Corporation, Inc. Benefit Restoration Plan, as amended from time
      to
      time.

    

    Plan
      Year:
      The twelve-month period beginning on January 1 and ending on December 31 of
      each
      calendar year.

    

    Prior
      Plan:
      The
      Supplemental Retirement Program for Management Profit-Sharing Associates of
      J.
      C. Penney Corporation, Inc. as in effect on July 31, 1995.

    

    Separation
      from Service or Separates from Service:
      Termination of service by reason of disability, discharge, retirement (including
      resignation), or death. Termination of service due to a disability is deemed
      to
      occur upon the later of termination of sick pay or the end of any leave of
      absence granted the Participant.

    

    Spouse:
      The individual to whom an Associate is legally married under the laws of the
      State (within the meaning of section 3(10) of ERISA) in which the Associate
      is
      domiciled, or if domiciled outside the United States, under the laws of the
      State of Texas.

    
      
        II-5

      

      
        
        

        
        

      

      
        
        

      

    

    

    Supplemental
      Retirement Program:
      The Supplemental Retirement Program for Management Profit-Sharing Associates
      of
      J. C. Penney Corporation, Inc., as amended and restated August 1, 1995, and
      as
      further amended from time to time.

    

    Unrestricted
      Benefit:
      The monthly benefit that would be payable to a Participant pursuant to the
      provisions of the Pension Plan in the form of a single-life, no-death-benefit
      annuity, assuming the Participant's benefit commencement date under the Pension
      Plan is the first day of the month immediately following the date of the
      Participant's Separation from Service, if the Participant's benefit under the
      Pension Plan were determined without applying the provisions of the Pension
      Plan
      relating to the limitation on compensation under Section 401(a)(17) of the
      Code
      or the limitation on benefits under Section 415 of the Code. 

    

    
      
        II-6

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      III. PARTICIPATION

    

    (1)
      Pension
      Plan Benefit:
      For purposes of Paragraph (1) of Article IV, any Associate of a Participating
      Employer who is a Pension Plan Participant on or after the Effective Date and
      whose retirement pension benefit payable pursuant to the terms of the Pension
      Plan is limited by operation of the annual benefit limits under Section 415
      of
      the Code or the compensation limits under Section 401(a)(17) of the Code shall
      be a Participant in the Plan. In addition an active or former Associate for
      whom
      a benefit was accrued under Paragraph (2) of Article III of the Prior Plan
      and
      whose benefit under Paragraph (2) of Article III under the Prior Plan had not
      been completely distributed to such Associate at July 31, 1995, will also be
      a
      Participant in the Plan.

    

    

    

    
      
        II-7

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      IV. BENEFITS

    

    (1) Pension
      Plan Participant Benefit:
      A
      Participant shall be entitled to a monthly benefit equal in amount to his
      Unrestricted Benefit less his Pension Benefit.

    

    Additionally,
      a benefit shall be accrued for each Participant for whom a benefit was accrued
      under Paragraph (2) of Article III of the Prior Plan at July 31, 1995, and
      whose
      accrued benefit had not been completely distributed from the Prior Plan. The
      value of the Participant's Prior Plan benefit under Paragraph (2) of Article
      III
      determined as of July 31, 1995, will become an accrued benefit under this Plan
      and will be distributed to the Participant pursuant to the terms of this Plan.
      The distribution to a Participant from this Plan of such Prior Plan accrued
      benefit will completely discharge the Company and each other Participating
      Employer from any further liability for such benefit

    

    (2)  Death
      Benefit:
      For
      purposes of the benefit provided by Paragraph (1) of this Article IV, if a
      Participant is married at the time such Participant Separates from Service
      by
      reason of death, or if a Participant who has Separated from Service and who
      is
      married at the time of his death, dies before payment has begun under the Plan,
      the Participant's Spouse will receive the benefit, at the time the Participant
      would have attained age 55, that would have been payable if the Participant
      had
      a Separation from Service immediately prior to such Participant's death (if
      he
      was an active Participant on the date of death), had survived to age 55, and
      had
      begun to receive benefits immediately prior to his death in the form of a 50%
      joint and survivor annuity without payment certain with the Spouse as the
      beneficiary.

    

    Notwithstanding
      the preceding sentence, if the Participant at the time of his death (a) was
      55
      years of age or more, (b) had 15 years or more of service, as defined by the
      Pension Plan, and (c) Separates from Service by reason of death, the joint
      and
      survivor annuity payable to the Spouse will be in the form of a 100% (75% if
      death occurs prior to January 1, 1996) joint and survivor annuity without
      payment certain.

    

    (3)
      Vesting:
      For purposes of the benefit provided by Paragraph (1) of this Article IV, a
      Participant will have the same degree of vested and nonforfeitable interest
      in
      his benefit under this Plan as the Participant has in his Pension Benefit under
      the Pension Plan.

    

    (4) Effect
      of Certain Payments Made in December 1992:
      In the event the Company made payments to a current or former Participant on
      or
      before December 31, 1992 under the Company's Profit Incentive Compensation
      program and under the Performance Unit Plan and such payments were attributable
      to the Company's fiscal year ending on January 30, 1993, this Paragraph
      shall

    
      
        II-8

      

      
        
        

        
        

      

      
        
        

      

    

    apply.
      The effect of such payments on the benefits payable to such individual under
      the
      Savings, Profit-Sharing and Stock Ownership Plan and under the Pension Plan
      shall be determined with respect to whether an increase or decrease in benefits
      resulted. Benefits payable under this Plan to such current or former
      Participants shall be adjusted (a) to offset any such increase in benefits
      and/or (b) to restore any such decrease in benefits so that no advantage or
      detriment, as the case may be, shall be experienced by any such current or
      former Participant with respect to total retirement benefits under the Pension
      Plan and Savings, Profit-Sharing and Stock Ownership Plan and this Plan.

    
      
        II-9

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      V. FORM AND COMMENCEMENT OF BENEFIT PAYMENTS

    

    (1)  Optional
      Forms and Commencement of Benefit Payments:
      Except as otherwise provided in this Plan and subject to such rules and
      regulations as the Benefits Administration Committee may establish from time
      to
      time with respect to time and manner of payment, benefits provided by this
      Plan
      shall be payable as follows. For purposes of the benefit provided by Paragraph
      (1) of Article IV, the Participant shall receive the annual benefit payable
      under Paragraph (1) of Article IV in such a form and at such time and
      actuarially adjusted in such a manner as the benefit payable under the Pension
      Plan. Payment of such benefit may be deferred to a date no later than the
      Participant’s attainment of age 65 only if the Participant has elected to defer
      receipt of benefits under the Pension Plan.

    

      (2) Small
      Annuities:
      If the total benefit payable with respect to a Participant under Paragraph
      (1)
      of Article IV plus the benefits payable from the Pension Plan would not provide
      monthly payments exceeding $100, the benefit shall be converted into an
      actuarially equivalent lump sum payment (applying the actuarial factors utilized
      in the Pension Plan).

    

      (3) Installments:
      Notwithstanding
      any other provisions of the Plan to the contrary, a retired Participant who
      on a
      date to be determined by the Benefits Administration Committee is receiving
      benefits from the Plan, or is eligible to receive benefits from the Plan, may
      make a one-time irrevocable election that his remaining unpaid benefits from
      the
      Plan be paid as 5 equal annual installments. The election must be made during
      an
      election period and in a manner authorized by the Benefits Administration
      Committee or its delegate. The total of such payments shall be actuarially
      equivalent to his remaining unpaid benefits under Paragraph (1) of Article
      IV,
      determined by applying the actuarial factors utilized in the Pension Plan for
      lump sum payments except that the interest rate shall be determined by the
      Human
      Resources and Compensation Committee. Payment dates shall be determined by
      the
      Benefits Administration Committee or its delegate.

    

    Notwithstanding
      any other provisions of the Plan to the contrary (except for small annuities
      payable under Paragraph (2) of Article V), a Participant who on a date to be
      determined by the Benefits Administration Committee has not had a Separation
      from Service may make an irrevocable election that his benefits from the Plan
      be
      paid as 5 equal annual installments. The election, which shall be made in a
      manner authorized by the Benefits Administration Committee or its delegate,
      must
      be made prior to his Separation from Service. If a Participant makes an
      installment election, the first annual installment will be made as of the first
      day of the month immediately following the latest to occur of (i) the
      Participant’s Separation from Service, (ii) six full months following the date
      of the Participant’s election,

    
      
        II-10

      

      
        
        

        
        

      

      
        
        

      

    

    if
      the election is made in a calendar year prior to the calendar year of his
      Separation from Service, or (iii) 12 full months following the date of his
      election, if the election is made in the calendar year of his Separation from
      Service. The total of such payments shall be actuarially equivalent to his
      benefits under Paragraph (1) of Article IV, determined by applying the actuarial
      factors utilized in the Pension Plan for lump sum payments except that the
      interest rate shall be determined by the Human Resources and Compensation
      Committee. Payment dates shall be determined by the Benefits Administration
      Committee or its delegate.

    

    In
      the event of the death of the retired or active Participant after his election
      is made and before all installments have been paid, the remaining unpaid
      installments shall be paid to his beneficiary in accordance with the payment
      schedule of the Participant except that the first remaining installment shall
      be
      paid as soon as administratively feasible after satisfactory proof of death
      is
      received by the Benefits Administration Committee or its delegate, if
      later.

    
      
        II-11

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      VI. ADMINISTRATION

    

    The
      Benefits Administration Committee will administer the Plan and will have the
      full authority and discretion to accomplish that purpose, including without
      limitation, the authority and discretion to 

    

    
      	(vi)  	
              interpret
                the Plan and correct any defect, supply any omission or reconcile
                any
                inconsistency or ambiguity in the Plan in the manner and to the extent
                that the Benefits Administration Committee deems desirable to carry
                on the
                purpose of the Plan,

            

    

    

    
      	(vii)  	
              resolve
                all questions relating to the eligibility of Associates to become
                or
                continue as Participants, 

            

    

    

    
      	(viii)  	
              determine
                the amount of benefits payable to Participants and authorize and
                direct
                the Company with respect to the payment of benefits under the Plan,
                

            

    

    

    
      	(ix)  	
              make
                all other determinations and resolve all questions of fact necessary
                or
                advisable for the administration of the Plan,
                and

            

    

    

    
      	(x)  	
              make,
                amend, and rescind such rules as it deems necessary for the proper
                administration of the Plan. 

            

    

    

    The
      Benefits Administration Committee will keep a written record of its actions
      and
      proceedings regarding the Plan and all dates, records, and documents relating
      to
      its administration of the Plan.

    

    Any
      action taken or determination made by the Benefits Administration Committee
      will
      be conclusive on all parties. No member of the Benefits Administration Committee
      will vote on any matter relating specifically to such member. In the event
      that
      a majority of the members of the Benefits Administration Committee will be
      specifically affected by any action proposed to be taken (as opposed to being
      affected in the same manner as each other Participant in the Plan), such action
      will be taken by the Human Resources Committee.

    

    
      
        II-12

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      VII. TYPE OF PLAN

    

    The
      Plan is a plan which is unfunded. Benefits under the Plan are paid from the
      general assets of the Company. 

    

    The
      portion of this Plan in Paragraph (1) of Article IV which comprises the benefit
      determined due to the limit on annual benefits under the Pension Plan imposed
      by
      Code Section 415 constitutes a separable part of this Plan which is maintained
      by the Company solely for the purpose of providing benefits for certain
      Associates in excess of the limitations on benefits imposed by Section 415
      of
      the Code. This separable portion of the Plan shall be construed according to
      the
      provisions of ERISA applicable to such Plans. 

    

    The
      remaining portion of the Plan is maintained by the Company primarily for the
      purpose of providing deferred compensation for a select group of management
      or
      highly compensated employees. The Plan shall be construed according to the
      provisions of ERISA applicable to such plans. 

    

    In
      the event that it should subsequently be determined by statute or by regulation
      or ruling that the Plan is not "a plan which is unfunded and is maintained
      primarily for the purpose of providing deferred compensation for a select group
      of management or highly compensated employees" within the meaning of sections
      201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA, participation in the
      Plan
      shall be restricted by the Benefits Administration Committee to the extent
      necessary to assure that it will be such a plan within the meaning of such
      sections. 

    

    
      
        II-13

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      VIII. MISCELLANEOUS

     

    (1) Amendment
      and Termination:
      The Human Resources and Compensation Committee or the Board of Directors of
      the
      Company may amend or modify the Plan at any time, without prior notice;
      provided, however, that any such amendment or modification which would
      substantially increase the cost of the Plan to the Company shall require
      approval of the Board of Directors of the Parent Company. The Board of Directors
      of the Parent Company or the Company may suspend, discontinue, or terminate
      the
      Plan at any time without prior notice or approval.

    

    In
      no event will any amendment, modification, suspension, discontinuance, or
      termination adversely affect the Plan benefit payable pursuant to Paragraph
      (1)
      of Article IV for any Participant for whom benefit payments have already begun
      in accordance with the Plan as in effect prior to the effective date of the
      amendment, modification, suspension, discontinuance, or termination unless
      otherwise required to comply with applicable law. 

    

    Each
      amendment to the Plan by the Human Resources and Compensation Committee or
      the
      Board of Directors of the Parent Company or the Company will be made only
      pursuant to unanimous written consent or by majority vote at a meeting. Upon
      such action by the Human Resources and Compensation Committee or the Board
      of
      Directors of the Parent Company or the Company, 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 Human Resources and Compensation
      Committee or the Board of Directors of the Parent Company or the
      Company.

    

    (2) Rights
      of Associates:
      Neither the establishment of the Plan nor any action thereafter taken by the
      Company, the Parent Company, or any Controlled Group Member or by the Benefits
      Administration Committee shall be construed as giving to any Associate any
      vested right to a benefit from the Plan or a right to be retained in employment
      or any specific position or level of employment with the Company or any
      Controlled Group Member. Moreover, no Associate shall have any right or claim
      to
      any benefits under this Plan if the Associate is summarily discharged, as
      defined by the Company (including resignation in lieu thereof) unless the
      Benefits Administration Committee, in its discretion, determines that such
      Associate shall be eligible for such benefits notwithstanding such summary
      discharge.

     

    (3) Mistaken
      Information:
      If any information upon which a Participant's benefit under the Plan is
      calculated has been misstated by the Participant or is otherwise mistaken,
      such
      benefit shall not be invalidated (unless upon the basis of the correct
      information the Participant would not have been entitled

    
      
        II-14

      

      
        
        

        
        

      

      
        
        

      

    

    to
      a benefit), but the amount of the benefit shall be adjusted to the proper amount
      determined on the basis of the correct information and any overpayments shall
      be
      charged against future payments to the Participant or his
      beneficiary.

     

    (4) Liability:
      Neither the Board of Directors (including any committees thereof) of the Parent
      Company, the Company, or of any Participating Employer nor any member of the
      Benefits Administration Committee or the Human Resources Committee nor any
      person to whom any of them may delegate any duty or power in connection with
      administering the Plan shall be personally liable for any action or failure
      to
      act with respect to the Plan.

     

    (5) Reemployed
      Participants:
      If a retired Participant again
      becomes an Associate of a Participating Employer, the payment of benefits
      hereunder shall continue. Upon such Associate's Separation from Service he
      shall
      be entitled to receive applicable benefits, if any, under Article IV pursuant
      to
      uniform rules approved by the Benefits Administration Committee.

     

      (6) Construction:
      In determining the meaning of any provision of the Plan, words imparting the
      masculine gender shall include the feminine and the singular shall include
      the
      plural, unless the context requires otherwise. Headings of paragraphs and
      Articles in the Plan are for convenience only and are not intended to modify
      or
      affect the meaning of the substantive provisions of the Plan.

    (7)
      Non-assignability
      of Benefits:
      The
      benefits payable hereunder or the right to receive future benefits under the
      Plan may not be anticipated, alienated, pledged, encumbered, or subjected to
      any
      charge or legal process, and if any attempt is made to do so, or a person
      eligible for any benefits becomes bankrupt, the interest under the Plan of
      the
      person affected may be terminated by the Benefits Administration Committee
      which, in its sole discretion, may cause the same to be held or applied for
      the
      benefit of one or more of the dependents of such person or make any other
      disposition of such benefits that it deems appropriate.

    

    (8)  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 shall be barred after
      the
      expiration of three years from the date of Separation from Service of the
      Participant or the date of receipt of the notice of denial of a claim for
      benefits, if earlier. In the event ERISA's limitations on legal actions do
      not
      apply, the laws of the State of Texas with respect to limitations of legal
      actions shall apply and the cause of action must be

     

     

    
      
        II-15

      

      
        
        

        
        

      

      
        
        

      

    

    brought
      no later than four years after the date the action accrues.

    

    (9) Change
      of Control:
      Upon a Change of Control (as hereinafter defined), assets of the Parent Company
      in an amount sufficient to pay benefits that have accrued under the Plan up
      to
      that date shall immediately be transferred to a grantor trust to be established
      by the Parent Company for the purpose of paying benefits hereunder, and the
      Participant's vested benefits shall thereafter be paid to the Participant from
      such trust in accordance with the terms of the Plan; provided that at the time
      of such Change of Control, the Participant may make an irrevocable election
      to
      have his Plan benefits paid in a single-sum immediately upon the later of (i)
      the date of the Change of Control, or (ii) the Participant's retirement date,
      in
      which event his benefits shall be reduced by 10% as a penalty for early payment.
      On each anniversary date of the date of a Change of Control, the Parent Company
      shall transfer to the grantor trust an amount necessary to pay all benefits
      accrued under the Plan during the preceding twelve months.

    

    For
      purposes of this paragraph (9), a Change of Control shall be deemed to have
      occurred if the event set forth in any one of the following subparagraphs shall
      have occurred:

    

    (a) any
      Person is or becomes the Beneficial Owner, directly or indirectly, of securities
      of the Parent Company (not including in the securities beneficially owned by
      such Person any securities acquired directly from the Parent Company or its
      Affiliates) representing 50% or more of the combined voting power of the Parent
      Company's then outstanding securities; or

    

    (b) during
      any period of two consecutive calendar years, the following individuals cease
      for any reason to constitute a majority of the number of directors then serving
      as directors of the Parent Company: individuals, who on July 14, 1999 constitute
      the Board of Directors of the Company and any new director (other than a
      director whose initial assumption of office is in connection with the settlement
      of an actual or threatened election contest, including but not limited to a
      consent solicitation, relating to the election of directors of the Parent
      Company) whose appointment or election by the Board of Directors of the Parent
      Company or nomination for election by the Parent Company's stockholders was
      approved or recommended by a vote of at least two-thirds of the directors then
      still in office who either were directors on July 14, 1999 or whose appointment,
      election or nomination for election was previously so approved or recommended;
      or

    

    (c) there
      is consummated a merger or consolidation of the Parent Company or any direct
      or
      indirect subsidiary of the Parent Company with any other corporation or entity,
      other than (i) a merger or consolidation which would result in the
      voting

    
      
        II-16

      

      
        
        

        
        

      

      
        
        

      

    

    securities
      of the Parent Company outstanding immediately prior to such merger or
      consolidation continuing to represent (either by remaining outstanding or by
      being converted into voting securities of the surviving entity or any Parent
      thereof), in combination with the ownership of any trustee or other fiduciary
      holding securities under an employee benefit plan of the Parent Company or
      any
      subsidiary of the Parent Company, at least 50% of the combined voting power
      of
      the securities of the Parent Company, such surviving entity or any Parent
      thereof outstanding immediately after such merger or consolidation, or (ii)
      a
      merger or consolidation effected solely to implement a recapitalization of
      the
      Parent Company (or similar transaction) in which no Person is or becomes the
      Beneficial Owner, directly or indirectly, of securities of the Parent Company
      (not including in the securities beneficially owned by such Person any
      securities acquired directly from the Parent Company or its Affiliates)
      representing 50% or more of the combined voting power of the Parent Company's
      then outstanding securities; or

    

    (d) the
      stockholders of the Parent Company approve a plan of complete liquidation or
      dissolution of the Parent Company, or there is consummated a sale or disposition
      by the Parent Company or any of its subsidiaries of any assets which
      individually or as part of a series of related transactions constitute all
      or
      substantially all of the Parent Company's consolidated assets, other than any
      such sale or disposition to an entity at least 50% of the combined voting power
      of the voting securities of which are owned by stockholders of the Parent
      Company in substantially the same proportions as their ownership of the voting
      securities of the Parent Company immediately prior to such sale or disposition;
      or 

    

    (e) the
      execution of a binding agreement that if consummated would result in a Change
      of
      Control of a type specified in subparagraphs (a) or (c) above (an "Acquisition
      Agreement") or of a binding agreement for the sale or disposition of assets
      that, if consummated, would result in a Change of Control of a type specified
      in
      subparagraph (d) above (an "Asset Sale Agreement") or the adoption by the Board
      of Directors of the Parent Company of a plan of complete liquidation or
      dissolution of the Parent Company that, if consummated, would result in a Change
      of Control of a type specified in subparagraph (d) above (a "Plan of
      Liquidation"), provided, however, that a Change of Control of the type specified
      in this subparagraph (e) shall not be deemed to exist or have occurred as a
      result of the execution of such Acquisition Agreement or Asset Sale Agreement,
      or the adoption of such a Plan of Liquidation, from and after the Abandonment
      Date. As used in this subparagraph (e), the term "Abandonment Date" shall mean
      the date on which (i) an Acquisition Agreement, Asset Sale Agreement or Plan
      of
      Liquidation is terminated (pursuant to its terms or otherwise) without having
      been consummated, (ii) the parties to an Acquisition Agreement or Asset Sale
      Agreement abandon the transactions contemplated thereby, (iii) the Parent
      Company

    
      
        II-17

      

      
        
        

        
        

      

      
        
        

      

    

    abandons
      a Plan of Liquidation, or (iv) a court or regulatory body having competent
      jurisdiction enjoins or issues a cease and desist or stop order with respect
      to
      or otherwise prevents the consummation of, or a regulatory body notifies the
      Parent Company that it will not approve an Acquisition Agreement, Asset Sale
      Agreement or Plan of Liquidation or the transactions contemplated thereby and
      such injunction, order or notice has become final and not subject to appeal;
      or

    

    (f) the
      Board of Directors of the Parent Company adopts a resolution to the effect
      that,
      for purposes of this Plan, a Change of Control has occurred.

    

    Notwithstanding
      the foregoing, a Change of Control shall not be deemed to have occurred by
      virtue of the consummation of any transaction or series of integrated
      transactions immediately following which the record holders of the common stock
      of the Parent Company immediately prior to such transaction or series of
      transactions continue to have substantially the same proportionate ownership
      in
      an entity (i) which owns all or substantially all of the assets of the Parent
      Company immediately following such transaction or series of transactions, (ii)
      which is intended to reflect or track the value or performance of a particular
      division, business segment or subsidiary of the Parent Company, or (iii) which
      is an affiliated company, subsidiary, or spin-off entity owned by the
      stockholders of the Parent Company in substantially the same proportions as
      their ownership of stock of the Parent Company on the date of such
      spin-off.

    

    As
      used in connection with the foregoing definition of Change of Control,
      "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under
      Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning set
      forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
      Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
      mean any entity that becomes the Beneficial Owner of at least 50% of the voting
      power of the outstanding voting securities of the Parent Company or of an entity
      that survives any merger or consolidation of the Parent Company or any direct
      or
      indirect subsidiary of the Parent Company; and "Person" shall have the meaning
      given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
      13(d) and 14(d) thereof, except that such term shall not include (i) the Parent
      Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
      securities under an employee benefit plan of the Parent Company or any of its
      Affiliates, (iii) an underwriter temporarily holding securities pursuant to
      an
      offering of such securities, or (iv) a corporation or entity owned, directly
      or
      indirectly, by the stockholders of the Parent Company in substantially the
      same
      proportions as their ownership of stock of the Parent Company.

    
      
        II-18

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      IX. CLAIMS PROCEDURES

    

    If
      an Associate does not receive the benefits which he believes he is entitled
      to
      receive under the Plan, he may file a claim for benefits with the Benefits
      Administration Committee or its delegate. 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 Benefits Administration
      Committee or its delegate will indicate to the claimant any additional
      information which is required.

    

    Each
      claim will be approved or disapproved by the Benefits Administration
Committee
      or its delegate
      within 90 days following the receipt of the information necessary to process
      the
      claim. In the event the Benefits Administration Committee
      or its delegate
      denies a claim for benefits in whole or in part, the Benefits Administration
      Committee
      or its delegate
      will notify the claimant in writing of the denial of the claim. Such notice
      by
      the Benefits Administration Committee
      or its delegate
      will also set forth, in a manner calculated to be understood by the claimant,
      the specific reasons 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 the Plan's claim review
      procedure as set forth below. If no action is taken by the Benefits
      Administration Committee
      or its delegate
      on a claim within 90 days, the claim will be deemed to be denied for purposes
      of
      the review procedure.

    

    A
      claimant may appeal a denial of his claim by requesting a review of the decision
      by the Benefits Administration Committee or a person designated by the
      Committee, which person will be a named fiduciary under Section 402(a)(2) of
      ERISA for purposes of this Article IX. An appeal must be submitted in writing
      within 60 days after the denial and must (i) request a review of the claim
      for
      benefits under the Plan, (ii) set forth all of the grounds upon which 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 Benefits Administration Committee or the named fiduciary designated by
      the
      Benefits Administration Committee will make a full and fair review of each
      appeal and any written materials submitted in connection with the appeal. The
      Benefits Administration Committee or the named fiduciary designated by the
      Benefits Administration Committee 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 Benefits Administration Committee or named
      fiduciary, provided the Benefits Administration Committee or named fiduciary
      finds the requested documents or materials are pertinent to the appeal.

    

    
      
        II-19

      

      
        
        

        
        

      

      
        
        

      

    

    On
      the basis of its review, the Benefits Administration Committee or named
      fiduciary will make an independent determination of the claimant's eligibility
      for benefits under the Plan. The decision of the Benefits Administration
      Committee or named fiduciary on any claim for benefits will be final and
      conclusive upon all parties thereto. In the event the Benefits Administration
      Committee or 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.

    
      
        II-20

      

      
        
        

        
        

      

      
        
        

      

    

     

    APPENDIX
      I

    

    Participating
      Employers

    

    J.
      C. Penney Corporation, Inc.

    

    JCPenney
      Business Services, Inc.

    (until
      January 24, 1996)

    

    J.
      C. Penney Casualty Insurance Company

    (until
      June 18, 2001)

    

    J.
      C. Penney Funding Corporation

    

    J.
      C. Penney Life Insurance Company

    (until
      June 18, 2001)

    

    J.
      C. Penney National Bank

    (until
      December 17, 1997)

    

    J.
      C. Penney Overseas Services, Inc.

    (from
      and after July 1, 1996)

    

    J.
      C. Penney Private Brands, Inc.

    (from
      and after January 1, 2000)

    

    J.
      C. Penney Receivables, Inc.

    

    JCPenney
      Card Bank, National Association

    (from
      and after December 17, 1997, and

    until
      September 30, 2000)

    

    JCPenney
      Puerto Rico, Inc.

    

    JCP
      ECommerce L.P.

    (from
      and after December 24, 2000)

    

    JCP
      Internet Commerce Solutions, Inc.

    (from
      and after February 1, 1999)

    

    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)

     

     

    
      
        II-21

      

      
        
        

      

       

    

    JCP
      Publications Corp.

    (formerly
      JCP Media Corporation)

    (from
      and after April 3, 1996)

    

    Eckerd
      Corporation

    (from
      and after January 1, 1999)

    

    EDC
      Drug Stores, Inc.

    (formerly
      Kerr Drug Stores, Inc.)

    (from
      and after January 1, 1999)

    

    Fay’s
      Incorporated

    (from
      and after January 1, 1999)

    

    Genovese
      Drug Stores, Inc.

    (from
      and after January 1, 2000)

    

    Insurance
      Consultants, Inc.

    (from
      and after April 1, 1999,

    and
      until June 18, 2001)

    

    Quest
      Membership Services, Inc.

    (from
      and after January 1, 1999,

    and
      until June 18, 2001)

    

    StepInside,
      Inc.

    (from
      and after January 1, 2000)

    

    TDI
      Managed Care Services, Inc.

    (from
      and after January 1, 1999)

    

    Thrift
      Drug, Inc.

    (from
      and after January 1, 1999)

    

    Thrift
      Drug Services, Inc.

    (from
      and after January 1, 1999)

    

    
      
        II-22

      

      
        
        

        
        

      

      
        
        

      

    

    APPENDIX
      II

    

    

    PLAN
      AMENDMENTS

    

    The
      following amendment adding Article X to the Plan was adopted on December 6,
      2005, effective as of January 1, 2005:

    

    Article
      X. Section 409A Transition Relief

    

    (1)  Priority
      over Other Provisions:
      The provisions set forth in this Article will supersede any conflicting
      provisions of the Plan.

    

    (2)  Termination
      of Participation:
      Any amount subject to Code section 409A paid to a Participant during 2005 that
      would otherwise violate the requirements of Code section 409A(a)(2), (3), or
      (4)
      will be treated as a distribution in termination of the Participant’s
      participation in the Plan within the meaning of IRS Notice 2005-1, Q&A-20.
      The amounts subject to termination will be includible in the Participant’s
      income in calendar year 2005. This paragraph applies to (i) payments in 2005
      to
      a specified employee, as that term is defined in Code section 409A(a)(2)(B)(i),
      within six months after the date of the Participant’s separation from service,
      as that term is defined by the Secretary; (ii) payments in 2005 pursuant to
      the
      election of the installment option under paragraph (3) of Article V; and (iii)
      any other payments in 2005 otherwise in violation of Code section 409A(a)(2),
      (3), or (4). 

    

    (3)  Change
      in Payment Elections or Conditions on or Before December 31,
      2006:
      With respect to amounts subject to Code section 409A, a Participant may make
      a
      new payment election on or before December 31, 2006, as permitted by the
      preamble to the Proposed Regulations; and the election will not be treated
      as a
      change in the timing and form of payment under Code section 409A(a)(4) or an
      acceleration of a payment under Code section 409A(a)(3); provided, however,
      that
      a participant cannot in 2006 change payment elections with respect to payments
      that the Participant would otherwise receive in 2006, or cause payments to
      be
      made in 2006. Any election made by a Participant on or before December 31,
      2006
      (including an election made before January 1, 2005) that applies to an amount
      accrued under the Plan subject to Code section 409A will be treated as a new
      election under this paragraph unless an election in 2006 would apply to amounts
      that otherwise would be payable in 2006.

    

    
      
        II-23

      

      
        
        

        
        

      

      
        
        

      

    

    APPENDIX
      II

    

    

    PLAN
      AMENDMENT

    

    The
      following amendment to paragraph (3) of Article X of the Plan was adopted on
      December 12, 2006, effective as of December 31, 2006:

    

    

    (3) Change
      in Payment Elections or Conditions on or Before December 31,
      2007:
      With respect to amounts subject to Code section 409A, a Participant may make
      a
      new payment election on or before December 31, 2007, as permitted by IRS Notice
      2006-79; and the election will not be treated as a change in the timing and
      form
      of payment under Code section 409A(a)(4) or an acceleration of a payment under
      Code section 409A(a)(3); provided, however, that a Participant cannot in 2006
      or
      2007 change payment elections with respect to payments that the Participant
      would otherwise receive in 2006 or 2007, respectively, or cause payments to
      be
      made in 2006 or 2007, respectively. Any election made by a Participant on or
      before December 31, 2007 (including an election made before January 1, 2005)
      that applies to an amount accrued under the Plan subject to Code section 409A
      will be treated as a new election under this paragraph unless an election in
      2006 or 2007 would apply to amounts that otherwise would be payable in 2006
      or
      2007, respectively.

    
      
        II-24

      

      
        
        

        
        

      

      
        
        

      

    

    APPENDIX
      II

    

    

    PLAN
      AMENDMENTS

    

    The
      following amendments to Article I of the Plan were adopted on December 12,
      2006,
      effective for distributions commencing after December 31, 2006:

    

    Pension
      Benefit:
      The monthly benefit that is payable to a Participant pursuant to the provisions
      of the Pension Plan in the form of a single-life, no-death-benefit annuity,
      assuming the Participant's benefit commencement date under the Pension Plan
      is
      the first day of the month immediately following the date of the Participant's
      Separation from Service; provided, however, that the applicable terms of the
      Pension Plan as in effect on  October
      3, 2004, are to be applied in calculating the monthly benefit earned and vested
      under the Pension Plan as of December 31, 2004, and to which the Participant
      had
      a legally binding right.

    

    
      	 	
              Unrestricted
                Benefit:
                The monthly benefit that would be payable to a Participant pursuant
                to the
                provisions of the Pension Plan in the form of a single-life,
                no-death-benefit annuity, assuming the Participant's benefit commencement
                date under the Pension Plan is the first day of the month immediately
                following the date of the Participant's Separation from Service,
                if the
                Participant's benefit under the Pension Plan were determined without
                applying the provisions of the Pension Plan relating to the limitation
                on
                compensation under Section 401(a) (17) of the Code or the limitation
                on
                benefits under Section 415 of the Code; provided, however, that the
                applicable terms of the Pension Plan as in effect on October 3, 2004,
                are
                to be applied in calculating the monthly benefit earned and vested
                under
                the Pension Plan as of December 31, 2004, and to which the Participant
                had
                a legally binding right.

            

    

    
 

     

     

     

     

     

    II-25

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