Document:

exhibit10_1.htm

     

    
      	
              Exhibit
                10.1

            

    

    
 

    STOCK
      PURCHASE AGREEMENT

     

    THIS
      STOCK PURCHASE AGREEMENT, dated as of September 11, 2007, by and
      between Republic Airways Holdings Inc., a Delaware corporation (the
“Purchaser”), and WexAir RJET LLC (f/k/a WexAir LLC), a Delaware limited
      liability company (the “Stockholder”).

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      the Stockholder is a stockholder of the Purchaser;

     

    WHEREAS,
      the Purchaser desires to purchase from the Stockholder, and the Stockholder
      desires to sell to the Purchaser, One Million (1,000,000) shares of the Common
      Stock, par value $.001 per share, of the Purchaser (the “Shares”) at a
      price of $20.20 per share.

     

    NOW
      THEREFORE, in consideration of the mutual promises contained herein,
      the parties hereto agree as follows:

     

    1.  Purchase
      and Sale of the Shares and Purchase Price.  On September
      11, 2007, the Stockholder hereby agrees to sell, assign, transfer and deliver
      to
      Purchaser, and Purchaser hereby agrees to purchase from the Stockholder, the
      Shares, at a price of $20.20 per share (the
“Transaction”).  The Stockholder represents and warrants that
      the Stockholder is the sole beneficial owner of the Shares, and agrees that
      the
      Shares shall be transferred to the Purchaser free and clear of all mortgages,
      pledges, security interests, claims, liens, charges or other encumbrances of
      any
      kind.

     

    2.  Settlement.  Settlement
      of the Transaction shall occur on or before September 14, 2007, at which time
      (x) the Purchaser shall pay by wire transfer to such account as is specified
      by
      the Stockholder the amount of Twenty Million Two Hundred Thousand Dollars
      ($20,200,000) and (y) the Stockholder shall deliver to the Purchaser the share
      certificates representing the Shares, appropriately endorsed for
      transfer.

     

    3.  Applicable
      Law.  This Agreement shall be governed by and interpreted
      in accordance with the laws of the State of New York, other than the conflicts
      of laws principles thereof.

     

    4.  Counterparts.  This
      Agreement may be executed in several counterparts, each of which shall be deemed
      an original, but all of which, taken together, shall constitute one
      agreement.

     

    
      	
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    IN
      WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
      Agreement on the day and year first written above.

     

     

    
      	
               

            	
               

            

    

     

    
      	 	
              REPUBLIC
                AIRWAYS HOLDINGS INC.

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Bryan
              K. Bedford	 
	 	 	Name:
              Bryan K. Bedford 	 
	 	 	Title: President
              and Chief Executive Officer 	 
	 	 	 	 

    

     

     

    
      	 	
              WEXAIR
                RJET LLC

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Robert
              Holtz	 
	 	 	Name:
              Robert Holtz 	 
	 	 	Title:
              Vice PresidentJ. C. Penney Company, Inc. Supplemental Term Life Insurance Plan

    Exhibit
      10.1

    

     

     

     

     

     

     

     

    
 

    

    J.
      C. PENNEY CORPORATION, INC.

    SUPPLEMENTAL
      TERM LIFE INSURANCE PLAN

    FOR
      MANAGEMENT PROFIT-SHARING ASSOCIATES

    AS
      AMENDED AND RESTATED 

    JULY
      1, 2007

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

        
        

      

    

    J.
      C.
      PENNEY CORPORATION, INC.

    SUPPLEMENTAL
      TERM LIFE INSURANCE PLAN

    FOR
      MANAGEMENT PROFIT-SHARING ASSOCIATES

    

    

    TABLE
      OF CONTENTS

     

    
      
        	 	 	 	 Page
	 Article	 1	 Introduction	
                 1

                 

              
	 Article	 2	 Definitions	
                 2

                 

              
	 Article	 3	 Participation	
                 5

                 

              
	 Article	 4	 Life
                Insurance Benefits	
                 6

                 

              
	 Article	 5	 Funding
                of Benefits	
                 8

                 

              
	Article	 6	 Administration
                of the Plan	
                 9

                 

              
	Article	 7	 Adoption
                By Participating Employers	
                 17

                 

              
	Article	 8	 Amendment
                and Termination	
                 18

                 

              
	Article	 9	 Miscellaneous
                Provisions	
                 22

                 

              
	Appendix	 I	 Participating
                Subsidiaries	
                 25

                 

              

      

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

        
        

      

    

    

    ARTICLE
      1

    

    INTRODUCTION

    

    
 

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

    

    The
      Policies covered by this Plan are listed below and attached hereto:

    

    
      	·  	
              J.C.
                Penney Corporation, Inc. Active and Retired Management Profit Sharing
                Associates- Associate Term Life Coverage Basic
                Plan

            

    

    
 

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

    

    1.3     Suppression
      Of
      Prior Plan.
      This
      document is effective July 1, 2007 except as otherwise provided herein. All
      prior versions of the Plan document are hereby suppressed or superseded. The
      Plan was originally adopted effective January 1, 1978.

    

    
      
        1

      

      
        
        

        
        

      

      
        
        

        
        

      

    

    

    ARTICLE
      2

    

    DEFINITIONS

    

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

    

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

    

    2.3     “Associate”
       means
      a
      person who is employed by a Participating Employer and paid through a
      participating employer’s payroll system. The term “Associate” does not include a
      person who is classified as an independent contractor by the Participating
      Employer for purposes of federal income tax reporting and withholding. The
      designation of an “Associate” by the Company shall be final and not subject to
      any redetermination of employment classification by any taxing authority such
      as
      the Internal Revenue Service or any other governmental authority or agency.
      The
      term “Associate” does not include any person who performs services for a
      Participating Employer as a “leased employee” within the meaning of Code Section
      414 (n), or who performs services through an agreement with a leasing
      organization. The term “Associate” does not include a person covered by a
      collective bargaining agreement that does not expressly provide for
      participation in the Plan, provided that the representative of the person with
      whom the collective bargaining agreement is executed has had an opportunity
      to
      bargain in good faith concerning Plan benefits. 

    

    2.4     "Associate-Paid
      Plan”
means
      the J.C. Penney Corporation, Inc. Associate-Paid Group Term Life Insurance
      Plan,
      as amended from time to time.

    

    2.5     “Claims
      Administrator” means
      the entity or entities, individuals or committees appointed from time to time
      pursuant to Article 6 or for fully insured option benefits, the Insurer.

    

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

     

        
      2.7    "Company"
      means
      J. C. Penney Corporation, Inc., a Delaware corporation, or any successor
      corporation.

    

    
      
        2

      

      
        
        

        
        

      

      
        
        

      

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

       

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

    

       

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

     

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

        

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        3

      

      
        
        

        
        

      

      
        
        

      

    

        2.18   “Supplemental
      Retirement Program”
means
      the Supplemental Retirement Program for Management Profit-Sharing Associates
      of
      J. C. Penney Corporation, Inc., as amended from time to time.

     

    
      
        4

      

      
        
        

        
        

      

      
        
        

      

    

    ARTICLE
      3

    

    PARTICIPATION

    

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

    

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

    

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

    

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

    

    
      
        
          5

        

        
        

      

      
        
        

      

       

    

    ARTICLE
      4

    

    LIFE
      INSURANCE BENEFITS

    

    4.1     Amount
      of Life Insurance.
      An
      MSRP Retiree may purchase life insurance coverage under the Policies in an
      amount equal to 100% of the MSRP Retiree's Annual Earnings for Benefits from
      $1,000 up to $2,000,000. Coverage will be rounded to the next higher $1,000
      if
      it is not already an even multiple of $1,000.

    

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

    

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

    

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

    

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

    

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

    

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

     

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

    

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

    

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

    

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

    

    4.11     Qualified
      Domestic Relations Orders.
      To
      the extent required by Section 609 of ERISA with respect to life insurance
      plans, benefits available under the Plan will be provided in accordance with
      the
      applicable requirements of any Qualified Domestic Relations Order (as defined
      in
      Section 609 of ERISA). The Administrator will establish procedures,
      consistent with this Section, to determine whether an order is a Qualified
      Domestic Relations Order and to administer the provision of Plan benefits under
      such a qualified order.

    

    
      
        
          7

        

        
        

      

       

       

    

    ARTICLE
      5

    

    FUNDING
      OF BENEFITS

    

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

    

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

    

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

    

    
      
        
          8

        

        
        

      

      
        
        

      

       

    

    ARTICLE
      6

    

    ADMINISTRATION
      OF THE PLAN

    

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

    

    6.2     Specific
      Powers and Duties of the Administrator.
      The
      Administrator will administer the Plan and have the full authority and
      discretion necessary to accomplish that purpose, including without limitation
      the authority and discretion to: (i) resolve all questions relating to the
      eligibility of Associates to become or continue as Participants, (ii) determine
      the amount of benefits, if any, payable to Participants under the Plan and
      determine the time and manner in which such benefits are to be paid, except
      where payment of claims has been allocated to a Claims Administrator or Insurer,
      (iii) engage any administrative, legal, medical, accounting, clerical, or
      other services it deems appropriate in administering the Plan,
      (iv) construe and interpret the Plan, supply omissions from, correct
      deficiencies in and resolve inconsistencies or ambiguities in the language
      of
      the Plan, resolve inconsistencies or ambiguities between the provisions of
      this
      document and the provisions of any agreement with a Claims Administrator or
      any
      Policy, and adopt rules for the administration of the Plan which are not
      inconsistent with the terms of the Plan document or Policy, (v) compile and
      maintain all records it determines to be necessary, appropriate or convenient
      in
      connection with the administration of the Plan, (vi) review the performance
      of
      any Insurer or Claims Administrator with respect to the Insurer’s or Claims
      Administrator’s administrative duties, privacy practices, responsibilities and
      obligations under the Plan, (vii) resolve all questions of fact relating to
      any matter for which it has administrative responsibility and (viii) operate
      the
      Plan in compliance with effective new laws or regulations until the Plan is
      amended. The
      Administrator shall perform all of the duties and may exercise all of the powers
      and discretion that the Administrator deems necessary or appropriate for the
      proper administration of the Plan, and shall do so in a uniform,
      nondiscriminatory manner. Any failure by the Administrator to apply any
      provisions of this Plan to any particular situation shall not represent a waiver
      of the Administrator’s authority to apply such provisions thereafter. Every
      interpretation, choice, determination or other exercise of any power or
      discretion given either expressly or by implication to the Administrator shall
      be conclusive and binding upon all parties having or claiming to have an
      interest under the Plan or otherwise directly or indirectly affected by such
      action, without restriction, however, on the right of the Administrator to
      reconsider and redetermine such action. Any decision rendered by the
      Administrator and any review of such decision shall be limited to determining
      whether the decision was so arbitrary and capricious as to be an abuse of

     

    
      
        9

      

      
        
        

        
        

      

      
        
        

      

    

     

    discretion.
      The Administrator may adopt such rules and procedures for the administration
      of
      the Plan as are consistent with the terms hereof.

     

    6.3     Appointment
      and Authority of Claims Administrator.
      The
      Administrator may appoint one or more Claims Administrators with respect to
      the
      Plan. With respect to the portion of the Plan for which the Claims Administrator
      has been appointed, the Claims Administrator will be responsible for the review,
      payment, and/or denial of claims for benefits, for making determinations with
      respect to appeals as provided in Section 10, and for carrying out any
      obligations established by agreement with the Administrator. In carrying out
      its
      responsibilities under the Plan, the Claims Administrator will have the
      authority and discretion to (i) determine the amount of benefits, if any,
      payable to Participants under the Plan and determine the time and manner in
      which such benefits are to be paid, (ii) construe and interpret the Plan,
      supply omissions from, correct deficiencies in and resolve inconsistencies
      or
      ambiguities in the language of the Plan, and adopt rules for the administration
      of claims which are not inconsistent with the terms of the Plan, and
      (iii) compile and maintain all records it determines to be necessary,
      appropriate or convenient in connection with the Plan or Policies. The
      Claims Administrator shall perform all of the duties and may exercise all of
      the
      powers and discretion that the Claims Administrator deems necessary or
      appropriate for the proper administration of the Plan, and shall do so in a
      uniform, nondiscriminatory manner. Any failure by the Claims Administrator
      to
      apply any provisions of this Plan to any particular situation shall not
      represent a waiver of the Claims Administrator’s authority to apply such
      provisions thereafter. Every interpretation, choice, determination or other
      exercise of any power or discretion given either expressly or by implication
      to
      the Claims Administrator shall be conclusive and binding upon all parties having
      or claiming to have an interest under the Plan or otherwise directly or
      indirectly affected by such action, without restriction, however, on the right
      of the Claims Administrator to reconsider and redetermine such action. The
      Claims Administrator may adopt such rules and procedures for the administration
      of the Plan as are consistent with the terms hereof. 

     

    6.4     Authority
      of Insurer.
      The
      Insurer will be responsible for the review, payment, and/or denial of claims
      and
      appeals for benefits under the Policy. In carrying out its responsibilities
      under the Policy, the Insurer will have the authority and discretion to (1)
      determining eligibility for benefits and the amount and form of payment of
      any
      benefits payable under their respective component benefit Policy;
      (2) construe and interpret the Policy, and (3) compile and maintain
      all records it determines to be necessary, appropriate or convenient in
      connection with the Policy and (4) prescribing claims procedures to be followed
      and the claims forms to be used by employees pursuant to the their respective
      component benefit plans.

    

    The
      Insurer, not the Company, is responsible for paying claims with respect to
      this
      Plan. The Company shares responsibility only with the Insurer for administering
      eligibility for Policy benefits.

    

    The
      Insurer shall perform all of the duties and may exercise all of the powers
      and
      discretion that the Insurer deem necessary or appropriate for the proper
      administration of 

     

    
      
        10

      

      
        
        

        
        

      

      
        
        

      

    

     

    the
      Plan, and shall do so in a uniform, nondiscriminatory manner. Any failure by
      the
      Insurer to apply any provisions of this Plan to any particular situation shall
      not represent a waiver of the Insurer’s authority to apply such provisions
      thereafter. Every interpretation, choice, determination or other exercise of
      any
      power or discretion given either expressly or by implication to the Insurer
      shall be conclusive and binding upon all parties having or claiming to have
      an
      interest under the Plan or otherwise directly or indirectly affected by such
      action, without restriction, however, on the right of the Insurer to reconsider
      and redetermine such action. Any decision rendered by the Insurer and any review
      of such decision shall be limited to determining whether the decision was so
      arbitrary and capricious as to be an abuse of discretion. The Insurer may adopt
      such rules and procedures for the administration of the Plan as are consistent
      with the terms hereof. If the validity of the Administrator’s decision or
      finding is challenged in court or any other forum, it shall not be given de
      novo
      review, rather it shall be upheld unless clearly arbitrary or
      capricious.

    

    6.5     Allocation
      of Fiduciary Responsibility.
      The
      Administrator from time to time may delegate to any other persons or
      organizations any of its rights, powers, duties, and responsibilities with
      respect to the operation and administration of the Plan that are permitted
      to be
      delegated under ERISA. Any such allocation or delegation will be reviewed
      periodically by the Administrator, and will be terminable upon such notice
      as
      the Administrator in its discretion deems reasonable and proper under the
      circumstances. Whenever the Administrator delegates discretionary authority
      respecting the administration of the Plan to another person or organization,
      the
      Administrator's responsibility with respect to such delegation is limited to
      the
      selection of the person to whom authority is delegated and the periodic review
      of such person's performance and compliance with applicable law and regulations.
      Any breach of fiduciary responsibility by the person to whom authority has
      been
      delegated which is not proximately caused by the Administrator's failure to
      properly select or supervise, and in which breach the Administrator does not
      otherwise participate, will not be considered a breach by the Administrator.
      

    

    When
      benefits are provided under a fully insured option, the Insurer will be the
      named Fiduciary for benefit claims and appeals and the provisions of all
      benefits, without any action on the part of the Administrator. 

    

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

    

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

    

    
      
        11

      

      
        
        

        
        

      

      
        
        

      

    

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

    

    6.9     Claims
      Procedure.
      A
      Participant, or an authorized representative of a Participant may file a claim
      for benefits or eligibility to participate with the Administrator or a person
      designated by the Administrator, which person will be a named fiduciary under
      ERISA section 402(a)(2) for purposes of this Section. All claims must be
      made in writing and 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 Administrator, the Insurer or other
      named fiduciary will advise the claimant in writing of any additional
      information that is required to make a determination. 

     

    (a)
      Eligibility.
      Each
      claim for eligibility (unless the eligibility claim arises in the context of
      a
      denial of a claim for benefits, in which case the time frames in subpart 6.8(b)
      apply) will be approved or disapproved by the Administrator, the Insurer or
      other named fiduciary 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. 

    

    (b)
      Benefits.
      Each
      claim for benefits will be approved or disapproved by the Administrator, the
      Insurer or other named fiduciary within the time frame and pursuant to the
      procedures established in the applicable component program or
      Policy.

    

    For
      purposes of determination of the amount of, and entitlement to, benefits under
      the Policy, the Insurer is the named fiduciary under the Plan, with the full
      power to interpret and apply the terms of the Plan as they relate to the
      benefits provided under the applicable insurance contract.

    

    To
      obtain benefits from the Insurer, the Participant must follow the claims
      procedures under the applicable insurance contract, which may require the
      Participant to complete, sign and submit a written claim on the Insurer's
      form.

    

    The
      Insurer will decide a Participant's claim in accordance with its reasonable
      claims procedures, as required by ERISA. The Insurer has the right to secure
      independent medical advice and to require such other evidence as it deems
      necessary in order to decide a claim. If the Insurer denies a claim in whole
      or
      in part, then the Participant will receive a written notification setting forth
      the reason(s) for the denial.

    

    If
      a
      claim is denied, the Participant may appeal to the Insurer for a review of
      the
      denied claim. The Insurer will decide the appeal in accordance with its
      reasonable claims procedures, as required by ERISA. 

    

    
      
        12

      

      
        
        

        
        

      

      
        
        

      

    

    If
      the
      participant does not appeal on time, then he or she will lose his or her right
      to file suit in a state or federal court, as he or she will not have exhausted
      his or her internal administrative appeal rights (which generally is a
      prerequisite to bringing a suit in state or federal court).

    

    The
      applicable attached insurance contract (including the certificate of insurance
      booklet) provides more information about how to file a claim and details
      regarding the Insurer's claims procedures.

    

    (c)
      General.
      In
      the event a claim for benefits or eligibility to participate is denied in whole
      or in part, the Administrator, the Insurer or other named fiduciary will notify
      the claimant in writing of the denial of the claim. Such notice by the
      Administrator, the Insurer or other named fiduciary will also set forth, in
      a
      manner calculated to be understood by the claimant, the specific reason for
      such
      denial, the specific Plan provisions on which the denial is based, information
      related to any medical professional whose judgment was relied upon in making
      the
      determination, information related to standards used in making the
      determination, 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 appeals procedure as set forth
      in
      Section 6.9. 

    

    6.10     Appeals
      Procedure.
      A
      claimant may appeal a denial of his claim under the Plan by requesting a review
      of the decision by the Administrator or a person designated by the Administrator
      or the Insurer, which person will be a named fiduciary under ERISA section
      402(a)(2) for purposes of this Section and will have the same authority and
      discretion as the Administrator with respect to the appeal. 

    

    (a)
      Eligibility.
      An
      appeal must be submitted to the Administrator in writing within 60 days (unless
      the denial arises from a denied claim for benefits, in which case the time
      frames in 6.9(b) apply) after the notice of denial of the claim for eligibility
      is received and must include all information that would assist in reviewing
      the
      denial. The Administrator, the Insurer or other named fiduciary will make a
      full
      and fair review of each appeal and any written materials submitted in connection
      with the appeal. The Administrator or other named fiduciary will act upon each
      appeal within 60 days after receipt thereof unless special circumstances require
      an extension of the time for processing, in which case a decision will be
      rendered as soon as possible but not later than 120 days after the appeal was
      first received. The extension request 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.

    

    (b)
      Benefits.
      An
      appeal must be submitted to the Administrator, Insurer or other named fiduciary
      in writing within 180 days after the denial and must (i) request a review
      of the denied claim for benefits or eligibility under the Plan, (ii) set
      forth all of the grounds upon which the claimant's request for review is based
      and any facts, documents, records or other information in support thereof,
      and
      (iii) set forth any issues 

     

    
      
        13

      

      
        
        

        
        

      

      
        
        

      

    

     

    or
      comments which the claimant deems pertinent to the appeal. The Administrator,
      the Insurer or other named fiduciary will make a full and fair review of each
      appeal and any written materials submitted in connection with the appeal without
      regard to whether such information was submitted or considered in the initial
      benefit determination. The review on appeal will be conducted by the
      Administrator, the Insurer or another named fiduciary who is neither the
      individual who made the adverse benefit determination that is the subject of
      the
      appeal, nor the subordinate of such individual. The Administrator, the Insurer
      or other named fiduciary will act upon each appeal within the time frame
      required by law as set forth in the Insurer’s procedures. 

    

    (c)
      General.
      The
      claimant, upon written request to the Administrator, the Insurer or other named
      fiduciary and during normal business hours, will be given the opportunity to
      review pertinent documents or materials, provided the Administrator, the Insurer
      or other named fiduciary finds the requested documents or materials are
      pertinent to the appeal. On the basis of its review, the Administrator, the
      Insurer or other named fiduciary will make an independent determination on
      the
      claimant's denied claim for eligibility or benefits under the Plan. The decision
      of the Administrator, the Insurer or other named fiduciary on any claim for
      benefits will be final and conclusive upon all parties thereto.

    

    In
      the
      event the Administrator, the Insurer or other 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, make specific reference to the pertinent Plan
      provisions on which the decision was based, and provide any other additional
      information, as applicable, required by 29 Code of Federal Regulations §
2560.503-1 applicable to a disability plan.

    

    6.11     Time
      Limit for Legal Action.
      Every
      ERISA right of action by any Participant, former Participant, a Participant’s
      Representative, beneficiary, or the Participant’s estate against the Plan, or
      any Plan fiduciary, must be brought no later than three years from the date
      Associate’s employment ended, or from receipt of notice of an Adverse Benefit
      Determination, if earlier, except as otherwise required by ERISA. All levels
      of
      claims and appeal outlined in this Article 6 must be completed before the
      claimant can bring a legal action.

    

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

    

    6.13     Reliance
      on Tables, etc.
      The
      Administrator is entitled to rely upon all tables, valuations, certificates,
      and
      reports furnished by any duly appointed actuary, upon all certificates and
      reports made by any duly appointed independent qualified public accountant
      and
      upon all opinions given by legal counsel. The Administrator will be fully
      protected in respect of any action taken or suffered by the Administrator in
      good

     

    
      
        14

      

      
        
        

        
        

      

      
        
        

      

    

    faith
      reliance upon all such tables, valuations, certificates, reports, opinions,
      or
      other advice. The Administrator is also entitled to rely upon any data or
      information furnished by a Participating Employer or by an Associate, MSRP
      Retiree, or beneficiary as to the age or Annual Earnings for Benefits of any
      person, or as to any other information pertinent to any calculation or
      determination to be made under the provisions of the Plan, and, as a condition
      to payment of any benefit under the Plan, may request an Associate, MSRP
      Retiree, or beneficiary to furnish such information as the Administrator deems
      necessary or desirable in administering the Plan. If an Associate, MSRP Retiree,
      or beneficiary does not provide accurate information in connection with
      enrollment or coverage under the Plan, the Administrator may, in its discretion,
      delay or deny the affected coverage. If any relevant facts regarding an
      Associate, MSRP Retiree, or beneficiary are inaccurate or misstated, the
      Administrator may make an equitable adjustment of contributions, and the true
      facts will be used by the Administrator to determine whether, and in what
      amount, coverage is in effect or benefits will be paid.

    

    6.14     Nondiscrimination
      Testing.
      If,
      in the judgment of the Administrator, any component benefit program offered
      under the Plan or any portion of it may fail to meet any applicable requirement
      of the Code related to discrimination testing whether under Code § 125, 105(h),
      79 or 129, or any regulations promulgated thereunder, the Administrator may
      take
      such action as it deems appropriate to assure compliance with such requirements,
      and such action may be taken with or without the consent of any Participant.
      The
      Administrator may, at any time, cap a salary reduction or require any
      Participant or class of Participants to amend the amount of their salary
      reductions for a Plan Year if the Administrator determines that such action
      is
      necessary or advisable in order to (a) satisfy any of the Code’s
      nondiscrimination requirements applicable to this Plan; (b) prevent any
      Participants who are Highly Compensated Employees or class of Employees from
      having to recognize more income for federal income tax purposes from the receipt
      of benefits hereunder than would otherwise be recognized; (c) maintain the
      qualified status of benefits received under this Plan; or (d) satisfy Code
      nondiscrimination requirements or other limitations applicable to the Company’s
      qualified plans. In the event that contributions need to be reduced for a class
      of Participants, the Administrator will reduce the salary reduction amount.
      In
      the event that contributions need to be reduced for a class of Participants,
      the
      Administrator will reduce the salary reduction amounts for each affected
      Participant, beginning with the Participant in the class who had elected the
      highest salary reduction amount and continuing with the Participant in the
      class
      who had elected the next highest salary reduction amount, and so forth, until
      the defect is corrected. The Administrator may treat the Plan as two or more
      separate plans solely for purposes of compliance with the Code, if authorized
      under the applicable Code section, provided that the Administrator designates
      the features that are to be considered as separate plans and the applicable
      provisions of each separate plan. A separate plan may be designated on the
      basis
      of eligible Associates, Participants, benefits provided, coverage options,
      Participant contributions required, or any other factors or combination of
      factors. The Administrator may also combine this Plan, or any feature treated
      under this Section as a separate plan, with any other plan or plans maintained
      by the Association or the Company solely 

     

    
      
        15

      

      
        
        

        
        

      

      
        
        

      

    

     

    for
      purposes of compliance with the applicable Code section’s discrimination testing
      requirements.

    

    6.15     Records
      and Reports.
      The
      Administrator and Claims Administrator(s) will maintain adequate records of
      all
      of their proceedings and acts and all such books of account, records, and other
      data as may be necessary for administration of the Plan. The Administrator
      and
      Claims Administrator(s) will make available to each Participant upon his request
      such of the Plan's records as pertain to him for examination at reasonable
      times
      during normal business hours in accordance with the Claims Administrator's
      confidentiality procedures.

    

    6.16     Availability
      of Plan Information and Documents.
      Any
      Participant having a question concerning the administration of the Plan or
      the
      Participant's eligibility for participation in the Plan or for the payment
      of
      benefits under the Plan may contact the Administrator and request a copy of
      the
      Plan document. Each Participating Employer will keep copies of this Plan
      document, exhibits and amendments hereto, and any related documents on file
      in
      its administrative offices, and such documents will be available for review
      by a
      Participant or a designated representative of the Participant at any reasonable
      time during regular business hours. Reasonable copying charges for such
      documents will be paid by the requesting party.

    

    
      
        
          16

        

        
        

      

      
        
        

      

       

    

    ARTICLE
      7

    

    ADOPTION
      BY PARTICIPATING EMPLOYERS

    

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

    

    
      
        
           17

        

        
        

      

      
        
        

      

       

    

    ARTICLE
      8

    

    AMENDMENT
      AND TERMINATION

    

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

    

    8.2      
      Right to Amend.
      Except as provided in the Change in Control section of this Article, the right
      to amend the Plan at any time in any respect is reserved to the Company acting
      through the HR Committee or the Administrator as provided herein, without prior
      notice to or approval by Participants, beneficiaries or any Participating
      Employer. The HR Committee may amend the Plan at any time and from time to
      time
      to the extent it may deem advisable or appropriate. In addition, the
      Administrator may amend the Plan at any time and from time to time to the extent
      the Administrator deems it advisable or appropriate, provided that such
      amendment would not significantly increase the cost of the Plan to the
      Participating Employers. The right to amend includes: (a) the right to change,
      limit or eliminate coverage or benefits, and (b) the right to limit
      Participating Employer contributions made to the Plan on behalf of Participants
      and to require Participants to pay the balance of any Plan costs.

    

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

    

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

    

    8.5     Change
      in
      Control.
      The
      Plan may be amended at any time; provided, however, that any amendment or
      termination within one year before or two years after a Change in Control may
      not be made if it would have an adverse effect on the 

     

    
      
        18

      

      
        
        

        
        

      

      
        
        

      

    

     

    Participant’s
      eligibility, Plan benefits and/or rights under the Plan, except as may be
      otherwise required to comply with changes in applicable laws or regulations.
      

    

    For
      the
      purposes of this section the following definitions apply. 

    

    Board
      means
      the Board of Directors of J.C. Penney Company, Inc.

     

    Change
      in Control
      means
      the occurrence of any of the following events:

     

    
      	(i)  	
              any
                individual, entity or group (within the meaning of Section 13(d)(3)
                or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner
                (within the meaning of Rule 13d-3 promulgated under the Exchange
                Act) of
                20% or more of the combined voting power of the then-outstanding
                Voting
                Stock of the Company or Corporation; provided,
                however,
                that:

            

    

     

    
      	(1)  	
              for
                purposes of this Section (i)(1), the following acquisitions shall not
                constitute a Change in Control: (A) any acquisition of Voting Stock
                of the Company or Corporation directly from the Company or Corporation
                that is approved by a majority of the Incumbent Directors, (B) any
                acquisition of Voting Stock of the Company or Corporation by the
                Company
                or any Subsidiary, (C) any acquisition of Voting Stock of the Company
                or Corporation by the trustee or other fiduciary holding securities
                under
                any employee benefit plan (or related trust) sponsored or maintained
                by
                the Company or any Subsidiary, and (D) any acquisition of Voting
                Stock of
                the Company or Corporation by any Person pursuant to a Business
                Transaction that complies with clauses (A), (B) and (C) of
                Section (iii) below;

            

    

     

    
      	(2)  	
              if
                any Person becomes the beneficial owner of 20% or more of combined
                voting
                power of the then-outstanding Voting Stock of the Company or Corporation
                as a result of a transaction described in clause (A) of
                Section (i)(1) above and such Person thereafter becomes the
                beneficial owner of any additional shares of Voting Stock of the
                Company
                or Corporation representing 1% or more of the then-outstanding Voting
                Stock of the Company or Corporation, other than in an acquisition
                directly
                from the Company or Corporation that is approved by a majority of
                the
                Incumbent Directors or other than as a result of a stock dividend,
                stock
                split or similar transaction effected by the Company or Corporation
                in
                which all holders of Voting Stock are treated equally, such subsequent
                acquisition shall be treated as a Change in
                Control;

            

    

     

    
      	(3)  	
              a
                Change in Control will not be deemed to have occurred if a Person
                becomes
                the beneficial owner of 20% or more of the Voting Stock of the Company
                or
                Corporation as a result of a reduction in the number of shares of
                Voting
                Stock of the Company or Corporation outstanding pursuant to a transaction
                or series of 

               

               

            

    

     

    
      
        19

      

      
        
        

        
        

      

      
        
        

      

    

    
      	 	
              transactions
                that is approved by a majority of the Incumbent Directors unless
                and until
                such Person thereafter becomes the beneficial owner of any additional
                shares of Voting Stock of the Company or Corporation representing
                1% or
                more of the then-outstanding Voting Stock of the Company or Corporation,
                other than as a result of a stock dividend, stock split or similar
                transaction effected by the Company or Corporation in which all holders
                of
                Voting Stock are treated equally; and 

               

            

    

    
      	(4)  	
              if
                at least a majority of the Incumbent Directors determine in good
                faith
                that a Person has acquired beneficial ownership of 20% or more of
                the
                Voting Stock of the Company or Corporation inadvertently, and such
                Person
                divests as promptly as practicable but no later than the date, if
                any, set
                by the Incumbent Directors a sufficient number of shares so that
                such
                Person beneficially owns less than 20% of the Voting Stock of the
                Company
                or Corporation, then no Change in Control shall have occurred as
                a result
                of such Person’s acquisition; or

            

    

     

    
      	(ii)  	
              a
                majority of the board of the Company or of the Corporation ceases
                to be
                comprised of Incumbent Directors;
                or

            

    

     

    
      	(iii)  	
              the
                consummation of a reorganization, merger or consolidation, or sale
                or
                other disposition of all or substantially all of the assets of the
                Company
                or the Corporation, or the acquisition of the stock or assets of
                another
                corporation, or other transaction (each, a “Business Transaction”),
                unless, in each case, immediately following such Business Transaction
                (A) the Voting Stock of the Company outstanding immediately prior to
                such Business Transaction continues to represent (either by remaining
                outstanding or by being converted into Voting Stock of the surviving
                entity or any parent thereof), more than 50% of the combined voting
                power
                of the then outstanding shares of Voting Stock of the entity resulting
                from such Business Transaction (including, without limitation, an
                entity
                which as a result of such transaction owns the Company, Corporation
                or all
                or substantially all of the Company’s or Corporation’s assets either
                directly or through one or more subsidiaries), (B) no Person (other
                than the Company, such entity resulting from such Business Transaction,
                or
                any employee benefit plan (or related trust) sponsored or maintained
                by
                the Company or any Subsidiary or such entity resulting from such
                Business
                Transaction) beneficially owns, directly or indirectly, 20% or more
                of the
                combined voting power of the then outstanding shares of Voting Stock
                of
                the entity resulting from such Business Transaction, and (C) at least
                a majority of the members of the Board of Directors of the entity
                resulting from such Business Transaction were Incumbent Directors
                at the
                time of the execution of the initial agreement or of the action of
                the
                Board providing for such Business Transaction;
                or

            

    

     

    
      
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      	(iv)  	
              approval
                by the stockholders of the Company of a complete liquidation or
                dissolution of the Company, except pursuant to a Business Transaction
                that
                complies with clauses (A), (B) and (C) of
                Section (iii).

            

    

     

    Company
      shall
      mean J. C. Penney Company, Inc., a Delaware corporation, or any successor
      company.

    

    Corporation
      shall
      mean J. C. Penney Corporation, Inc., a Delaware corporation, or any successor
      company.

    

    Exchange
      Act
      means
      the Securities Exchange Act of 1934, as amended, and the regulations promulgated
      thereunder. Reference to any section or subsection of the Exchange Act includes
      reference to any comparable or succeeding provisions of any legislation that
      amends, supplements or replaces such section or subsection.

    

    Incumbent
      Directors
      means
      the individuals who, as of the Effective Date hereof, are Directors of the
      Company or the Corporation, as the context requires, and any individual becoming
      a Director subsequent to the date hereof whose election, nomination for election
      by the Company’s or Corporation’s stockholders, or appointment, was approved by
      a vote of at least two-thirds of the then Incumbent Directors (either by a
      specific vote or by approval of the proxy statement of the Company in which
      such
      person is named as a nominee for director, without objection to such
      nomination); provided,
      however,
      that
      an individual shall not be an Incumbent Director if such individual’s election
      or appointment to the Board occurs as a result of an actual or threatened
      election contest (as described in Rule 14a-12(c) of the Exchange Act) with
      respect to the election or removal of Directors or other actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the
      Board.

     

    Subsidiary
      shall
      mean any entity in which the Company, directly or indirectly, beneficially
      owns
      50% or more of the Voting Stock.

    

    Voting
      Stock
      means
      securities entitled to vote generally in the election of directors.

     

    
      
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    ARTICLE
      9

    

    MISCELLANEOUS
      PROVISIONS

    

    

    9.1     Alienation
      and Assignment.
      The
      interests of the Participants under the Plan will not be subject to
      anticipation, alienation, sale, assignment, pledge, encumbrance or charge,
      and
      any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge
      such right or benefit will be void unless approved in advance by Insurer or
      Administrator; provided that a Participant may authorize the Plan to make
      payment for benefits due under the Plan to the provider furnishing services
      for
      which the benefits are payable. The interests of the Participants under the
      Plan
      are not in any way subject to their debts or other obligations.

    

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

    

    9.3   
Gender
      and
      Number.
      Whenever used in this Plan, unless the context indicates otherwise, words in
      the
      masculine gender will include the feminine gender, and words in the plural
      will
      include the singular, and the singular will include the plural.

    

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

    

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

    

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

    

    9.7     Consent
      To Terms Of Plan.
      By
      enrolling for coverage or accepting benefits under the Plan, a Participant
      agrees that the terms and conditions of the Plan will be binding on the
      Participant or anyone claiming through a Participant. In the event that the
      terms or provisions of any summary description of this Plan are interpreted
      as
      being in conflict with the provisions of this Plan as set forth in this document
      the provisions of the Plan shall be controlling. 

     

     

    
      
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    9.8      Inability
      To Locate Payee.
      If
      the Administrator is unable to make payment to any Participant or other person
      to whom a payment is due under the Plan because it cannot ascertain the identity
      or whereabouts of such Participant or other person after reasonable efforts
      have
      been made to identify or locate such person, then such payment and all
      subsequent payments otherwise due to such Participant or other person shall
      be
      forfeited following six months after the Plan Year end after the date any such
      payment first became due.

    

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

    

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

    

    9.11   Conversion
      of Insured
      Benefits.
      A
      Participant who is covered under an insured arrangement offered through the
      Plan
      will have the right to convert his or her coverage to an individual policy
      to
      the extent, and only to the extent, permitted under the insurance policy
      applicable to the Participant. 

    

    9.12      No
      Guarantee of Tax Consequences.
      Neither the Administrator nor the Company makes any commitment or guarantee
      that
      any amounts paid to or for the benefit of a Participant or beneficiary under
      this Plan will be excludable from the Participant's or beneficiary’s gross
      income for federal or state income tax purposes, or that any other federal
      or
      state tax treatment will apply to or be available to any Participant or
      beneficiary. It shall be the obligation of each Participant or beneficiary
      to
      determine whether each payment under the Plan is excludable from the
      Participant's or beneficiary’s gross income for federal and state income tax
      purposes, and to notify the Company if the Participant or beneficiary has reason
      to believe that any such payment is not so excludable.

    

    9.13
       Indemnification
      of Company by Participants.
      If any
      Participant receives one or more payments or reimbursements under this Plan
      that
      are not for before-tax benefits, such Participant shall indemnify and reimburse
      the Company for any liability it may incur for failure to withhold federal
      or
      state income tax or Social Security tax from such payments or reimbursements.
      However, such indemnification and reimbursement shall not exceed the amount
      of
      additional federal and state income tax that the Participating Employer would
      have been required to withhold under applicable federal 

     

    
      
        23

      

      
        
        

        
        

      

      
        
        

      

    

    and
      state tax law if the payments or reimbursements had been made to the Participant
      as regular cash compensation, plus the Participant's share of any Social
      Security tax that would have been paid on such compensation, less any such
      additional income and Social Security tax actually paid by the
      Participant.

    

    9.14     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 to the extent that state laws are preempted by ERISA, any
      insured arrangement under the Plan will be subject to applicable state insurance
      laws. 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 termination
      of
      employment or the date of receipt of the notice of denial of a claim for
      benefits or eligibility, if earlier. In the event ERISA's limitation on legal
      action does not apply, the laws of the State of Texas with respect to the
      limitations of legal actions shall apply and the cause of action must be brought
      no later than four years after the date the action
      accrues.

    

     

    J.
      C.
      PENNEY CORPORATION, INC.

    

    
      
        
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    APPENDIX
      I

    

    Participating
      Employers

    As
      of July 1, 2007

    

    J.C.
      Penney Corporation, Inc.

    

    JCP
      Publications Corp.

    

    JCP
      Overseas Services, Inc.

    

    JCPenney
      Puerto Rico, Inc.

    

    JCP
      Logistics L. P.

    

    JCP
      Media L.P.

    

    JCP
      Procurement L.P.

    

    J.C.
      Penney Private Brands, Inc.

    

    JCP
      Ecommerce L.P.

    

    The
      Original Arizona Jean Company

     

     

     

     

     

     

     

     

     

    25

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