Document:

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                                                                  Exhibit 10(a)

                          J. C. PENNEY COMPANY, INC.

                        2000 NEW ASSOCIATE EQUITY PLAN
                        ------------------------------

     1.   Purposes of Plan.  The general purposes of this 2000 New Associate
          ----------------
Equity Plan ("Plan") are to issue equity compensation to persons not previously
employed by J. C. Penney Company, Inc. ("Company") as a material inducement to
such persons entering into an employment contract with the Company, and to
motivate such persons thereafter in connection with their efforts on the
Company's behalf to sustain its progress, growth, and profitability.

     2.   Shares Subject to Plan.  The maximum number of shares of the Company's
          ----------------------
Common Stock, par value $.50 per share ("Common Stock") upon which options to
purchase shares of Common Stock ("Stock Options") or awards of Common Stock or
share units ("Stock Awards") (together, "Awards") may be issued under the Plan
is 5,500,000.  In no event may more than 50% of the shares reserved for issuance
under the Plan be issued as Stock Awards over the term of the Plan.

     Common Stock issuable under the Plan may be, in whole or in part, as
determined by the Company's Board of Directors ("Board of Directors" or
"Board"), authorized but unissued shares, reacquired or treasury shares, or
shares available from prior plans.  Upon the settlement of an option exercise
under the Plan using the "stock-swap" or similar payment method, the number of
shares of Common Stock tendered as a result of the exercise will again be
available
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for use under the Plan. If any Stock Option granted under the Plan expires or
terminates for any reason without having been exercised in full, or if any Stock
Award is not earned in full, the unpurchased or unearned shares will also again
be available for use under the Plan. "Common Stock" includes any security issued
in substitution, exchange, or in lieu thereof. Any Awards under the Plan may be
granted independent of, or in tandem with, each other or with other awards
granted outside of the Plan.

     3.   Eligibility and Bases of Participation.  Awards under the Plan may be
          --------------------------------------
made to a person or persons ("Participant" or "Participants") not previously
employed by the Company, as a material inducement to such person's entering into
an employment contract with the Company.

     4.   Administration of Plan.  The Plan will be administered by, or under
          ----------------------
the direction of, a committee ("Committee") of the Board of Directors
constituted in such a manner as to comply at all times with Rule 16b-3 or any
successor rule ("Rule 16b-3") promulgated by the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as in effect from
time to time ("Exchange Act"). The Committee shall administer the Plan so as to
comply at all times with the Exchange Act and the Internal Revenue Code of 1986,
and any regulations promulgated thereunder, or any similar successor statute or
regulation, as in effect from time to time ("Code"), and shall otherwise have
plenary authority to interpret the Plan and to make all determinations specified
in or permitted by the Plan or deemed necessary or desirable for its
administration or for the conduct of the Committee's business. All

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interpretations and determinations of the Committee may be made on an individual
or group basis, and shall be final, conclusive, and binding on all interested
parties. The Committee may delegate, to the fullest extent permitted by law, its
responsibilities under the Plan, other than the making of grants and awards
under the Plan, to persons other than its members, subject to such terms and
conditions as it may determine. Notwithstanding the foregoing, however, no stock
appreciation or tax benefit rights may be granted under the Plan. Transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3. To the extent any provision of the Plan or any action by the Committee or
its delegatee fails to so comply, such provision or action will, without further
action by any person, be deemed to be automatically amended to the extent
necessary to effect compliance with Rule 16b-3, provided that if such provision
or action cannot be amended to effect such compliance, such provision or action
will be deemed null and void, to the extent permitted by law and deemed
advisable by the relevant authority. Each Award to a Participant under this Plan
will be deemed issued subject to the foregoing qualification.

     5.   Stock Option Grants.  The Committee may grant Stock Options (including
          -------------------
any associated dividend equivalent rights) to Participants on such terms and
conditions as the Committee may determine. These Stock Options will be non-
qualified stock options within the meaning of the Code. The date of grant of
each Stock Option will be the date specified by the Committee; provided,
however, that such date of grant may not be prior to the date of such action by
the Committee. The option price per share of Common

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Stock purchasable under a Stock Option will be determined by the Committee at
the time of grant, and shall be 100% of the fair market value of the shares of
Common Stock covered by the grant on such date, or such other price per share as
the Committee, at the time of grant, determines to be reasonable and
appropriate. The option price (and, as provided in Section 13 of the Plan, any
applicable taxes thereon) of the shares as to which a Stock Option is exercised
will be paid in such manner as the Committee may determine in accordance with
the Plan's purposes, including: (i) in cash; (ii) in shares of Common Stock;
(iii) in services rendered; or (iv) in any combination of (i), (ii), and (iii)
above. Each Stock Option will have such terms and conditions for its exercise,
including the manner and effective date of such exercise, as the Committee may
determine, except as otherwise specifically provided herein.

     Fair market value of the Common Stock on any date will be the mean of the
high and low sales prices on such date as reported in the composite transaction
table covering transactions of New York Stock Exchange listed securities, or if
such Exchange is closed, or if the Common Stock does not trade on such date, by
averaging the mean of the high and low sales prices on the trading dates
immediately before and immediately after such date, or such other amount as the
Committee may ascertain reasonably to represent such fair market value. The
value of the services rendered as payment for all or a portion of the option
price of a Stock Option being exercised will be the amount determined by the
Board of Directors or the Committee.

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     6.   Exercise of Stock Options.  Each Stock Option will become exercisable
          -------------------------
upon such date as the Committee may determine, or as provided in Sections 8 and
9 of the Plan, and may be exercised thereafter at any time during its term, as
to any or all full shares which have become purchasable under the provisions of
the Stock Option. The term of each Stock Option may not exceed ten years,
measured from the date of its grant. Except as provided in Section 9 or 12 of
the Plan, a Stock Option may be exercised only by the Participant, and only if
the Participant is then an associate of the Company, a subsidiary, or affiliate.

     7.   Stock Awards.  The Committee may grant a Stock Award (including any
          ------------
associated dividend equivalent rights or share units equal in value to such
Stock Award) to Participants on such terms and conditions as the Committee may
determine.  The Committee may determine the types of Stock Awards made, the
number of shares, share units, or dividend equivalent rights covered by such
awards, and any other terms and conditions relating to the Stock Awards as it
deems appropriate, including any vesting conditions necessary to comply with the
laws of the State of Delaware.

     8.   Change of Control.   Upon a Change of Control, each Participant will
          -----------------
have the right to exercise any or all Stock Options held by the Participant, and
all Stock Awards will immediately vest and be deemed to be earned, on such terms
and conditions as may be determined by the Committee at the time of grant or
award. For these purposes, a "Change of Control" will be deemed to have occurred
if (i) at any time during any 24-month period, at least a majority of the Board
of Directors will not

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consist of "Continuing Directors" (meaning directors of the Company at the
beginning of such 24-month period and directors who subsequently became such,
and whose election, or nomination for election, by the Company's stockholders,
was approved by a majority of the then Continuing Directors); or (ii) at any
time during any 12-month period, the Company directors in office at the
beginning of such period cease to constitute at least a majority of the Board of
Directors (disregarding any vacancy occurring during such period by reason of
death or disability, but deeming any individual whose election, or nomination
for election, by the Company's stockholders, to fill such vacancy was approved
by a majority of the directors in office immediately prior to such vacancy, to
have been in office at the beginning of such 12-month period); or (iii) any
person or "group" (as determined for purposes of SEC Regulation 13D-G or
successor regulation), except any majority-owned subsidiary or any Company
employee benefit plan or any trust or investment manager thereunder, will have
acquired "beneficial ownership" (as determined for purposes of SEC Regulation
13D-G or successor regulation) of shares of Company Common Stock having 20% or
more of the voting power of all outstanding shares of Company capital stock,
unless such acquisition is approved in advance by a majority of the Board of
Directors in office immediately preceding such acquisition; or (iv) a merger or
consolidation occurs to which the Company is a party, whether or not the Company
is the surviving corporation, in which outstanding shares of Company Common
Stock are converted into shares of stock or

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securities of another company, partnership, or other entity (other than a
conversion into shares of voting common stock of the successor corporation or a
holding company or entity thereof) or other securities (of either the Company or
another company) or cash or other property (excluding payments made solely for
fractional shares); or (v) the sale of all, or substantially all, of the
Company's assets occurs.

     9.   Changes in Employment Status, Death.  In the event of a Participant's
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termination of employment, transfer or change of duties or position, absence,
layoff, incapacity, or death (regardless of whether the deceased was employed at
death), the Committee may determine the terms and conditions applicable to any
Stock Option or Stock Award previously granted to the Participant and not then
exercised or earned in full, as the case may be, including, without limitation,
(i) the duration of any exercise period following such event (which may not
exceed the original exercise period for the Stock Option), (ii) any necessary or
appropriate authorization to the Participant's legatee, distributee, guardian,
legal representative, or other third party, as the Committee may determine, or
(iii) the circumstances under which all or part of such Stock Options may be
terminated and any unearned Stock Awards forfeited.  All determinations by the
Committee with respect to the foregoing shall be final, conclusive, and binding
on all interested parties.

     10.  Right to Continued Employment.  Nothing in the Plan shall confer on a
          -----------------------------
Participant any right to continue in the employ of the Company or any of its
subsidiaries or affiliates or affect

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in any way the right of the Company or any of its subsidiaries or affiliates to
terminate such Participant's employment without prior notice at any time for any
reason or for no reason.

     11.  Deferred Payments.  The Committee may permit a Participant to elect to
          -----------------
defer receipt of all or part of any cash or stock payment under the Plan, or the
Committee may determine to defer receipt, by all or some Participants, of all or
part of any such payment.  Any deferral will be for such period and in
accordance with such terms and conditions as the Committee may determine.

     12.  Transferability.  No unearned Stock Award or any portion thereof or
          ---------------
Stock Option granted under the Plan may be assigned or transferred other than by
will or the laws of descent and distribution or by such other means as the
Committee, in its discretion, may approve from time to time and any attempt to
do so will be void. No Stock Option will be exercisable during the Participant's
lifetime except by the Participant or the Participant's guardian or legal
representative, or other third party, as the Committee may determine.

     13.  Taxes.  The Company has the right to deduct from any cash payment made
          -----
under the Plan, or otherwise, to any Participant, including a Participant
subject to Section 16 of the Exchange Act, any federal, state, or local taxes of
any kind required by law to be withheld by it ("Withholding Obligation") with
respect to such payment.  The Company's obligation to deliver shares of Common
Stock pursuant to any Stock Award or Stock Option exercise under the Plan is
conditioned on the payment by the Participant to the

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Company of any Withholding Obligation arising therefrom. The Company may
withhold, in satisfaction of all or a portion of such Withholding Obligation
referred to in the preceding sentence, that number of shares of Common Stock
having an aggregate fair market value sufficient to satisfy the amount of such
obligation.

     The Committee may also permit any Participant, in accordance with any
applicable rules established by the Committee, to elect to satisfy all or a
portion of any tax liability (including the Withholding Obligation) incurred by
such Participant as a result of the Stock Award or Stock Option exercise ("Total
Tax Obligation"), by having the Company withhold, or by the Participant making
payment to the Company in, shares of Common Stock having an aggregate fair
market value sufficient to satisfy the Total Tax Obligation.

     The Company will refund to the Participant any amount in excess of the
Withholding Obligation or Total Tax Obligation, as the case may be.

     14.  Changes in Capitalization and Similar Changes.  In the event of any
          ---------------------------------------------
change in the number of shares of Common Stock outstanding, or the assumption
and conversion of outstanding Stock Options or Stock Awards, by reason of a
stock dividend, stock split, acquisition, recapitalization, reclassification,
merger, consolidation, combination or exchange of shares, spin-off, or
distribution to holders of Common Stock (other than normal cash dividends), the
Committee shall adjust to the extent appropriate (i) the option price under each
unexercised Stock Option and (ii) the number and class of shares which may be
issued on exercise of

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Stock Options granted and for Stock Awards earned, and may make any other
related adjustments deemed appropriate and equitable by the Committee. Any
adjustment of the number and class of shares which may be issued on exercise of
Stock Options granted and for Stock Awards earned must also be approved by the
Board of Directors.

     15.  Stockholder Rights.  A Participant (including for purposes of this
          ------------------
Section, a Participant's legatee, distributee, guardian, legal representative,
or other third party, as the Committee may determine) will have no stockholder
rights with respect to any shares subject to a Stock Option or a Stock Award
until such shares are issued to such Participant.  Shares will be deemed issued
on the date on which they are registered in the Participant's (as this term is
defined in the preceding sentence) name on the Company stock records.

     16.  Effective Date.  The Plan will become effective on September 12, 2000.
          --------------

     17.  Termination and Amendment.  No Award may be made under the Plan after
          -------------------------
September 11, 2003, unless, prior to such Effective Date, the Board shall
determine to extend the duration of the Plan for an additional term, the length
of such term to be determined and approved by the Board at the time the Board
extends the duration of the Plan.  The Board of Directors may terminate the Plan
or make such amendments as it deems advisable, including, but not limited to,
any amendments to conform to or reflect any change in any law, regulation, or
ruling applicable to an Award, or the Plan including, without limitation, any
change in any applicable tax law, regulation, or ruling.  Except as otherwise
provided in or

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permitted by the Plan or by the terms, if any, of an Award under the Plan, no
termination or amendment of the Plan or change in the terms of an outstanding
Award may adversely affect the rights of the holder of any Award without the
consent of the holder.

     18.  Severability of Provisions.  If any provision of this Plan becomes or
          --------------------------
is deemed invalid, illegal, or unenforceable in any jurisdiction, or if any such
provision would, in the sole determination of the Committee, disqualify the Plan
or any Award under any law deemed applicable by the Committee, such provision
will be construed or deemed amended to conform to applicable law or if, in the
sole determination of the Committee, such provision cannot be so construed or so
deemed amended without materially altering the intent of the Plan, such
provision will be stricken and the remainder of the Plan will remain in full
force and effect.

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                                                                 Exhibit 10(b)

                             EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT (the "Agreement"), made in the City of Plano
and the State of Texas, dated as of September 25, 2000, between J. C. Penney
                                    ------------
Company Inc., a Delaware corporation (hereinafter called the "Employer"), and J.
Wayne Harris (hereinafter called the "Employee").

1.   Employment, Position and Duties.
     -------------------------------
     1.1  The Employer agrees to employ Employee and the Employee hereby agrees
          to undertake employment upon the terms and conditions herein set
          forth.

     1.2  During the Term (as hereafter defined), the Employee will serve as
          Chairman and Chief Executive Officer of Eckerd Corporation, or such
          other position as may be assigned by the Employer's Chairman and Chief
          Executive Officer, and shall perform such duties consistent with such
          position as are determined and directed by the Employer's Chairman and
          Chief Executive Officer. The Employee shall devote his full working
          time, attention and ability to the business of the Employer,
          including, if applicable, its subsidiaries and/or affiliates to which
          the Employee may have been assigned responsibilities; provided,
          however, that it shall not be a violation of this Agreement for the
          Employee to (i) devote reasonable periods of time to charitable and
          community activities and, with the approval of the Employer, industry
          or professional activities, and (ii) manage personal business
          interests and investments, so long as such activities do not
          materially interfere with the performance of the Employee's
          responsibilities under this Agreement.

     1.3  Unless otherwise agreed by the Employee and the Employer, throughout
          the term of this Agreement, the Employee's principal offices shall be
          located in Largo, Florida.

2.   Term of Employment.  Employee's term of employment under this Agreement
     ------------------
     ("Term") will commence on October 1, 2000 (the "Start Date") and, subject
     to the provisions of this Agreement, will terminate on the earlier of (i)
     the fourth anniversary of the Start Date or (ii) termination of Employee's
     employment pursuant to Section 7 of this Agreement (the "Termination
     Date"). Notwithstanding the Termination Date provided in the previous
     sentence, the term of this Agreement may be extended by mutual agreement of
     the parties.
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3.   Compensation.

     3.1  Salary. In consideration of his services during the Term, the Employer
          shall pay the Employee cash compensation at an annual rate of $700,000
          ("Base Salary") (less applicable withholding for federal taxes) in
          accordance with the Employer's usual payroll policies. Employee's Base
          Salary shall be subject to such adjustments as may be approved by the
          appropriate committee of the Employer's Board of Directors or its
          delegate (the "Committee").

     3.2  Annual Incentive Compensation. Employee shall be eligible to
          participate in an annual incentive plan (the "Bonus Plan"), as set out
          in ANNEX I hereto.

     3.3  Grand Total Earnings. The Employee's "Grand Total Earnings" shall mean
          an amount equal to his Base Salary plus target annual incentive under
          the Bonus Plan at $1.00 per unit.

     3.4  Supplemental Cash Payment. Employee shall be entitled to receive a
          supplemental cash payment of $600,000. This supplemental cash payment
          shall be payable in four installments as specified below, provided
          that Employee remains employed on each date of payment subject to
          Section 7. The supplemental cash payment shall be payable as follows:
          $150,000 on the Start Date, and $150,000 on the first, second, and
          third anniversaries of the Start Date.

4.   Expenses.  During the Term the Employee shall be allowed reimbursement of
     --------
     reasonable expenses necessary for the performance of his duties in
     accordance with the policies of the Employer.

5.   Stock Options.
     -------------

     5.1  The Employer will grant to Employee, on the Start Date, an option to
          purchase 75,000 shares of Employer's Common Stock ("Common Stock") of
          50 cents par value. The option will have a ten-year term and an
          exercise price equal to the fair market value on the Start Date as
          defined in the Employer's 1997 Equity Compensation Plan or other
          equity compensation plan of the Employer then in force or effect (mean
          of the high and low sales prices on Start Date). The option will
          become exercisable and otherwise be on such terms as are set forth in
          Exhibit A attached hereto.

     5.2  The grants of Options will be made pursuant to and subject to the
          terms, conditions, and restrictions in the Employer's 1997 Equity
          Compensation Plan or other equity compensation plan of the Employer
          then in force or effect.

6.   Employee Benefits.
     -----------------

     6.1  During the Term, Employee shall be entitled to the benefits generally
          provided or made available to employees of the Employer, including
          group medical insurance benefits (subject in each case, however, to
          (i) eligibility and (ii) modification or elimination in accordance
          with the Employer's standard policies as in effect from

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          time to time). The Employee is entitled to five weeks of vacation each
          calendar year.

     6.2  For the period from the Start Date until the Employee becomes eligible
          for the Employer's Medical Plan, the Employer will reimburse the
          Employee for the full cost of the COBRA premium charged by his former
          employer.

     6.3  The Employer will grant to Employee 10 years of service under the
          Employer's 1999 Separation Allowance Program for Profit-Sharing
          Management Associates.

     6.4  The Employer will grant to the Employee 10 years of credited service
          under the Employer's Defined Benefit Pension Plan.

     6.5  The Employer will provide a car allowance to the Employee consistent
          with the policy for Eckerd executives.

7.   Termination of Employment.
     -------------------------

     The termination of the Employee's employment will be governed by the
     following provisions:

     7.1  Death. In the event of the Employee's death during the Term, the
          Employer will pay to the Employee's beneficiaries or estate, as
          appropriate, as soon as practicable after the Employee's death,
          (i) unpaid Base Salary to which the Employee is entitled and any
          unpaid vacation, (the "Compensation Payments"), (ii) the target bonus
          (at $1.00 per unit) for the Bonus Plan for the fiscal year, prorated
          for the actual period of service for that fiscal year, (the "Prorated
          Bonus"), (iii) any other death benefits payable under any employee
          benefit or compensation plan that is maintained by the Employer for
          the Employee's benefit, and (iv) any unpaid portion of the
          Supplemental Cash Payment.

     7.2  Permanent Disability. If the Employee becomes totally and permanently
          disabled (as defined in the Employer's Long-Term Disability Plan)
          during the Term, the Employer or Employee may terminate the Employee's
          employment on written notice thereof in accordance with Section 12.5,
          and the Employer will provide to the Employee as soon as practicable:
          (i) amounts payable pursuant to the terms of any applicable disability
          plan or program, (ii) the Prorated Bonus, (iii) the Compensation
          Payments, (iv) such payments under applicable plans and programs, to
          which the Employee is entitled pursuant to the terms of such plans or
          programs, and (v) any unpaid portion of the Supplemental Cash Payment.

     7.3  Voluntary Termination by Employee; Discharge for Cause.

          (i)  In the event that during the Term the Employee's employment is
               terminated by the Employer for Cause (as defined below) or by the
               Employee unless for Good Reason (as defined in Section 7.4) or
               unless as a result of the Employee's death or disability, the
               Company will pay the

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               Compensation Payments as soon as practicable to the Employee and
               the Employee will be entitled to no other compensation, except as
               otherwise due him under applicable law or the terms of any
               applicable plan or program. Employee will not be entitled to the
               payment of any bonus in respect of all or any portion of the
               fiscal year in which such termination occurs.

          (ii) For purposes of this Agreement, the Employer will have "Cause" to
               terminate the Employee's employment upon a finding that (a) the
               Employee has been convicted by a court of competent jurisdiction
               of the commission of a felony, (b) the Employee has committed a
               serious breach of the Employer's Statement of Business Ethics,
               (c) the Employee materially breached any of the express covenants
               set forth in Section 9.1 or 9.3, or (d) the Employee has
               materially breached his duties and obligations under this
               Agreement; provided, however, that termination for Cause based on
               this subparagraph (d) shall not be effective unless the Employee
               shall have received written notice from the Chairman and Chief
               Executive Officer or such officer(s) or successor in title or
               responsibility (which notice shall include a description of the
               reasons and circumstances giving rise to such notice) fifteen
               (15) days prior to his termination and the Employee has failed
               after receipt of such notice to satisfactorily discharge his
               duties.

     7.4  Involuntary Termination

          (i)  In any case of involuntary termination under this section,
               Employee will be entitled to payment as described in Section 7.5.

          (ii) During the Term, the Employee's employment may be terminated by
               the Employer for any reason other than for Cause by delivery to
               the Employee of a notice of termination in accordance with
               Section 11.5. The Employee will be treated for the purposes of
               this Agreement as having been involuntarily terminated other than
               for Cause if, during the Term the Employee terminates his
               employment with the Employer prior to termination for Cause for
               any of the following reasons (each, a "Good Reason"): without the
               Employee's written consent, (a) the Employer has breached any
               material provision of this Agreement and within 30 days after
               notice thereof from the Employee, the Employer fails to cure such
               breach; or (b) a successor or assign (whether direct or indirect,
               by purchase, merger, consolidation or otherwise) to all or
               substantially all of the business and/or assets of the Employer
               fails to assume liability under the Agreement.

     7.5  Termination Payments and Benefits

          (i)  Form and Amount. Upon the Employee's involuntary termination
               other than for Cause, the Employer will pay the Compensation
               Payments to the

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                 Employee, and will provide such payments under applicable plans
                 or programs to which the Employee is entitled pursuant to the
                 terms of such plans and programs. In addition, conditioned upon
                 receipt of Employee's written release of claims in such form as
                 may be required by the Employer, the Employer will pay or
                 provide to the Employee as soon as practicable (a) the Prorated
                 Bonus, (b) a payment equal to two times Grand Total Earnings,
                 (c) outplacement services by a firm selected by the Employee at
                 the expense of the Employer, in an amount up to $30,000 and (d)
                 for 24 months (the "Continuation Period") the continuation of
                 group medical insurance benefits except as offset by benefits
                 paid or provided by other sources as set forth in Section 8, or
                 as prohibited by law. For purposes of determining the period of
                 continuation coverage to which the Employee or any of his
                 dependents is entitled under section 4980B of the Internal
                 Revenue Code of 1986, as amended, (or any successor provision
                 thereto), the Employee will be deemed to have remained employed
                 until the end of the Continuation Period.

          (ii)   Maintenance of Benefits. During the Continuation Period, the
                 Employer will use its best efforts to maintain its group
                 medical insurance benefits in full force and effect for the
                 continued benefit of the Employee or will arrange to make
                 available to the Employee group medical benefits substantially
                 similar to those that the Employee would otherwise have been
                 entitled to receive if his employment had not been terminated.
                 Such benefits will be provided on the same terms and conditions
                 (including employee contributions toward the premium payments)
                 under which the Employee was entitled to participate
                 immediately prior to his termination.

          (iii)  Forfeiture. Notwithstanding the foregoing provisions of Section
                 7.5, any right of the Employee to receive termination payments
                 and benefits under Section 7.5 will be forfeited to the extent
                 of any amounts payable or benefits to be provided after a
                 material breach of any covenant set forth in Section 9.1, 9.2,
                 or 9.3.

     7.6  Nonduplication of Benefits. To the extent, and only to the extent, a
          payment or benefit that is paid or provided under this Section 7 would
          also be paid or provided under the terms of any applicable plan,
          program, or arrangement, including, without limitation, any severance
          program, such applicable plan, program, agreement or arrangement will
          be deemed to have been satisfied by the payment made or benefit
          provided under this Agreement.

     7.7  Employer's Right of Offset. Should Employee at any time be indebted to
          the Employer, or otherwise obligated to pay money to the Employer for
          any reason, the Employer, at its election, may offset amounts
          otherwise payable to Employee under this Agreement, including, but
          without limitation, salary payments, against any such indebtedness or
          amounts due from Employee to the Employer.

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<PAGE>

8.   Mitigation. The Employee is under no obligation to mitigate damages or the
     ----------
     amount of any payment or benefit provided for hereunder by seeking other
     employment or otherwise. No amounts earned by the Employee after his
     termination date, whether from self-employment, as a common law employee,
     or otherwise, will reduce the amount of any payment or benefit under any
     provision of this Agreement; provided however, the Employee's coverage
     under the Employer's group medical insurance as provided in Section 7.5(i)
     will terminate as soon as the Employee becomes covered under any group
     medical plan made available by another employer. The Employee will report
     to the Employer any such coverage actually received by him.

9.   Covenants and Representations of Employee.

     9.1  Confidentiality. During the Term, the Employer agrees that it will
          disclose to Employee its confidential or proprietary information to
          the extent necessary for Employee to carry out his obligations under
          this Agreement. The Employee hereby covenants and agrees that he will
          not, without the prior written consent of the Employer, during the
          Term or thereafter disclose to any person not employed by the
          Employer, or use in connection with engaging in competition with the
          Employer, any confidential or proprietary information of the Employer.

     9.2  Nonsolicitation. The Employee hereby covenants and agrees that during
          the Term and for two years thereafter, he will not, without the prior
          written consent of the Employer, on his own behalf or on the behalf of
          any person, firm or company, directly or indirectly, attempt to
          influence, persuade or induce, or assist any other person in so
          persuading or inducing, any employee of Employer or its affiliates to
          give up, or to not commence, employment or a business relationship
          with the Employer.

     9.3  Noncompetition. It is recognized by the Employee and Employer that the
          Employee's duties hereunder will entail the receipt of trade secrets
          and confidential information, which include not only information
          concerning the Employer's current operations, procedures, suppliers,
          and other contacts, but also its short-range and long-range plans, and
          that such trade secrets and confidential information have been
          developed by the Employer and its affiliates at substantial cost and
          constitute valuable and unique property of the Employer. Accordingly,
          the Employee acknowledges that the foregoing makes it reasonably
          necessary for the protection of the Employer's business interests that
          the Employee not compete with the Employer or any of its affiliates
          during the Term and for a reasonable and limited period thereafter.
          Therefore, during the Term and for a period of one year thereafter,
          the Employee shall not acquire a direct investment of $100,000 or more
          in a Competing Business (as hereinafter defined) and shall not render
          personal services to any such Competing Business in any manner,
          including, without limitation, as owner, partner, director, trustee,
          officer, employee, consultant, or advisor thereof.

          If the Employee shall breach the covenants contained in this Section
          9, the Employer shall have no further obligation to make any payment
          to the Employee

                                       6
<PAGE>

          pursuant to this Agreement and may recover from the Employee all such
          damages as it may be entitled to at law or in equity. In addition, the
          Employee acknowledges that any such breach is likely to result in
          immediate and irreparable harm to the Employer for which money damages
          are likely to be inadequate. Accordingly, the Employee consents to
          injunctive and other appropriate equitable relief upon the institution
          of proceedings therefor by the Employer in order to protect Employer's
          rights hereunder.

          As used in this Agreement, the term "Competing Business" shall mean
          any business that, at the time of the determination -

          (i)    operates (a) any retail department store, specialty store,
                 general merchandise store, or drug store; (b) any retail
                 catalog, telemarketing, or direct mail business; (c) any
                 Internet-based or other electronic retailing business; (d) any
                 other retail business that sells goods, merchandise, or
                 services of the types sold by Employer, including its
                 divisions, affiliates, and licensees; or (e) any business that
                 provides buying office or sourcing services to any business of
                 the types referred to in this subparagraph;

          (ii)   conducts any business of the types referred to in subparagraph
                 (i) in the United States or another country in which Employer,
                 including its divisions, affiliates, and licensees, conducts a
                 similar business; and

          (iii)  from any business(es) of the types referred to in subparagraph
                 (i), had aggregate net sales or revenues of $500,000,000 in the
                 fiscal year preceding the determination or is reasonably
                 expected to have aggregate net sales or revenues of
                 $500,000,000 in either the current fiscal year or the next
                 following fiscal year.

     9.4  Representations of Employee. The Employee represents and warrants to
          the Employer that:

          (i)  There are no restrictions, agreements or understandings
               whatsoever to which the Employee is a party that would prevent or
               make unlawful the Employee's execution of this Agreement or the
               Employee's employment under this Agreement, or which is or would
               be inconsistent, or in conflict with this Agreement or the
               Employee's employment under this Agreement, or would prevent,
               limit or impair in any way the performance by the Employee of the
               obligations under this Agreement; and

          (ii) The Employee has disclosed to Employer all restraints,
               confidentiality commitments or other employment restrictions that
               Employee has with any other employer, person or entity.

                                       7
<PAGE>

          (iii)  Upon and after the Employee's termination or cessation of
                 employment with Employer and until such time as no obligations
                 of the Employee to Employer hereunder exist, the Employee: (a)
                 shall provide a complete copy of this Agreement to any
                 prospective employer or other person, entity or association in
                 a Competing Business with whom or which the Employee proposes
                 to be employed, affiliated, engaged, associated or to establish
                 any business or remunerative relationship prior to the
                 commencement thereof; and (b) shall notify Employer of the name
                 and address of any such person, entity or association prior to
                 the Employee's employment, affiliation, engagement, association
                 or the establishment of any business or remunerative
                 relationship.

                                       8
<PAGE>

10.  Survival.  The expiration or termination of the Term will not impair the
     ---------
     rights or obligations of any party hereto that accrue hereunder prior to
     such expiration or termination, except to the extent specifically stated
     herein. In addition to the foregoing, the Employee's covenants contained in
     Section 9 and 11.1 and the Employer's obligations under Section 7 and 11.1
     will survive the expiration or termination of Employee's employment.

11.  Miscellaneous Provisions.
     ------------------------

     Dispute Resolution. Any dispute between the parties under this Agreement
     will be resolved (except as provided below) through informal arbitration by
     an arbitrator selected under the rules of the American Arbitration
     Association for arbitration of employment disputes (located in the city in
     which the Employer's principal executive offices are based) and the
     arbitration will be conducted in that location under the rules of said
     Association. Each party will be entitled to present evidence and argument
     to the arbitrator. The arbitrator will have the right only to interpret and
     apply the provisions of this Agreement and may not change any of its
     provisions. The arbitrator will permit reasonable pre-hearing discovery of
     facts, to the extent necessary to establish a claim or a defense to a
     claim, subject to supervision by the arbitrator. The determination of the
     arbitrator will be conclusive and binding upon the parties and judgment
     upon the same may be entered in any court having jurisdiction thereof. The
     arbitrator will give written notice to the parties stating his or their
     determination, and will furnish to each party a signed copy of such
     determination. The expenses of arbitration will be borne equally by the
     Employer and Employee or as the arbitrator otherwise equitably determines.
     Any arbitration or action pursuant to this Section 11.1 will be governed by
     and construed in accordance with the substantive laws of the State of
     Texas, without giving effect to the principles of conflict of laws of such
     State. The mandatory arbitration provisions of this Section 11.1 shall
     supersede in their entirety the J. C. Penney Alternative, a dispute
     resolution program generally applicable to employment terminations.

     Notwithstanding the foregoing, the Employer will not be required to seek or
     participate in arbitration regarding any breach of the Employee's covenants
     in Section 9, but may pursue its remedies for such breach in a court of
     competent jurisdiction in the city in which the Employer's principal
     executive offices are based.

     11.1 Binding on Successors; Assignment. This Agreement will be binding upon
          and inure to the benefit of the Employer, Employee and each of their
          respective successors, assigns, personal and legal representatives,
          executors, administrators, heirs, distributees, devisees, and
          legatees, as applicable; provided however, that neither this Agreement
          nor any rights or obligations hereunder will be assignable or
          otherwise subject to hypothecation by Employee (except by will or by
          operation of the laws of intestate succession) or by the Employer,
          except that the Employer may assign this Agreement to any successor
          (whether by merger, purchase or otherwise) to all or substantially all
          of the stock, assets or businesses of the Employer, if such successor
          expressly agrees to assume the obligations of the Employer hereunder.

                                       9
<PAGE>

     11.2  Governing Law. This Agreement will be governed, construed,
           interpreted, and enforced in accordance with the substantive law of
           the State of Texas, without regard to conflicts of law principles.

     11.3  Severability. Any provision of this Agreement that is deemed invalid,
           illegal or unenforceable in any jurisdiction will, as to that
           jurisdiction, be ineffective, to the extent of such invalidity,
           illegality or unenforceability, without affecting in any way the
           remaining provisions hereof in such jurisdiction or rendering that or
           any other provisions of this Agreement invalid, illegal or
           unenforceable in any other jurisdiction. If any covenant should be
           deemed invalid, illegal or unenforceable because its scope is
           considered excessive, such covenant will be modified so that the
           scope of the covenant is reduced only to the minimum extent necessary
           to render the modified covenant valid, legal and enforceable.

     11.4  Notices. For all purposes of this Agreement, all communications
           required or permitted to be given hereunder will be in writing and
           will be deemed to have been duly given when hand delivered or
           dispatched by electronic facsimile transmission (with receipt thereof
           confirmed), or five business days after having been mailed by United
           States registered or certified mail, return receipt requested,
           postage prepaid, or three business days after having been sent by a
           nationally recognized overnight courier service, addressed to the
           Employer at its principal executive office and to the Employee at his
           principal residence, or to such other address as any party may have
           furnished to the other in writing and in accordance herewith, except
           that notices of change of address will be effective only upon
           receipt.

     11.5  Entire Agreement. The terms of this Agreement are intended by the
           parties to be the final expression of their Agreement with respect to
           the Employee's employment and may not be contradicted by evidence of
           any prior or contemporaneous agreement. The parties further intend
           that this Agreement will constitute the complete and exclusive
           statement of its terms and that no extrinsic evidence whatsoever may
           be introduced in any judicial, administrative, or other legal
           proceedings to vary the terms of this Agreement.

     11.6  Amendments; Waivers. This Agreement may not be modified, amended, or
           terminated except by an instrument in writing, approved by the
           Employer and signed by the Employee and the Employer. Failure on the
           part of either party to complain of any action or omission, breach or
           default on the part of the other party, no matter how long the same
           may continue, will never be deemed to be a waiver of any rights or
           remedies hereunder, at law or in equity. The Employee or Employer may
           waive compliance by the other party with any provision of this
           Agreement that such other party was or is obligated to comply with or
           perform only through an executed writing; provided however, that such
           waiver will not operate as a waiver of, or estoppel with respect to,
           any other or subsequent failure.

                                       10
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                                     J. C. Penney Company, Inc.

                                     By: /s/ ALLEN I. QUESTROM
                                        ----------------------------------------
                                     Name: Allen I. Questrom
                                     Title: Chairman and Chief Executive Officer

                                        /s/ J. WAYNE HARRIS
                                     -------------------------------------------
                                     J. Wayne Harris

                                       11
<PAGE>

                                    ANNEX I
                                    -------

                                  Bonus Plan
                                  ----------

Employee's annual target incentive units shall be 88.25% of Base Salary unless
changed by the Personnel and Compensation Committee; provided however, that
Employee's annual incentive award for the 12 months commencing with the Start
Date shall not be less than 88.25% of Base Salary, which amount for 2000 shall
be prorated to reflect Employee's actual period of service during 2000 after the
Start Date.

The performance measures for the Bonus Plan shall be as follows:

Sales                                40% weighting
Profit (EBIT)                        40% weighting
Gross Margin Return on Investment    20% weighting

Performance against plan for these measures produces a unit value that is
multiplied by the target incentive units to produce an annual award. The minimum
unit value under this Plan shall be 0% and the maximum shall be 300%.

                                       12
<PAGE>

EXHIBIT A
---------

                          Special Stock Option Grant

The Employer will grant a special stock option grant for the purchase of 75,000
shares of Common Stock to Employee. The stock option grant will be effective on
the Start Date, pending approval of the Committee, with an exercise price per
share of the fair market value (mean of the high and the low sales prices as
reported in the composite transaction table covering transactions of NYSE listed
securities) of JCPenney stock on the effective date of the grant.

Form of Grant
-------------

Non-qualified Stock Options (NSOs).

Term of the Special Stock Option Grant:
---------------------------------------

The option term is 10 years with the normal expiration date of the option on
October 1, 2010.

Vesting Provisions
------------------

The stock option grant will vest 25% per year beginning on October 1, 2001. The
grant will be 100% vested on October 1, 2004.

Termination of Employment Provisions:
------------------------------------

If Employee terminates employment due to disability or retirement, any unvested
portion of the option will become immediately exercisable and the option will
expire five years from the date of termination or the normal expiration date of
the option, whichever is earlier. If Employee terminates employment due to
death, any unvested portion of the option will become immediately exercisable
and the option will expire two years from the date of death or the normal
expiration date of the option, whichever is earlier. If Employee terminates
employment before the normal expiration date of the option for any reason other
than death, disability or retirement, all outstanding vested and unvested
portions of the option will expire on the date of termination.

Change of Control:
------------------

The stock option grant becomes immediately exercisable (vested) without regard
to the vesting dates listed above upon a Change of Control of the JCPenney
Company (as defined in the Employer's 1997 Equity Compensation Plan), or if, as
a result of a sale, merger or other disposition, JCPenney Company, Inc. owns
less than 51% of the outstanding common stock of Eckerd Corporation, or if
JCPenney Company, Inc. sells all or substantially all of the assets of Eckerd
Corporation to a person or entity not affiliated with the Employer.

                                       13

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