EXHIBIT 10(ii)(w)

AMENDMENT NO. 2
J. C. PENNEY COMPANY, INC.
1999 SEPARATION ALLOWANCE PROGRAM
FOR
PROFIT-SHARING MANAGEMENT ASSOCIATES

WHEREAS, the Board of Directors authorized an Agreement and Plan of Merger (the "Merger Agreement") between J. C. Penney Company, Inc. ("Company"), J. C. Penney Holdings, Inc., a Delaware corporation ("Holdings"), and JCP Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Holdings ("Merger Sub");

WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and into Company, with Company surviving as a wholly-owned subsidiary of Holdings (the "Merger");

WHEREAS, pursuant to the Merger, Holdings will amend and restate its certificate of incorporation to inter alia change its name to "J. C. Penney Company, Inc.";

WHEREAS, pursuant to the Merger, Company will amend and restate its certificate of incorporation to inter alia, change its name to "J. C. Penney Corporation, Inc.";

NOW, THEREFORE, as authorized by the Board, the J. C. Penney Company, Inc. 1999 Separation Allowance Program for Profit-Sharing Management Associates ("SAP"), as amended on September 9, 1999, be, and it hereby is, further amended, effective as of the effective time of the Merger as set forth in the Merger Agreement (expected to be January 27, 2002), as follows:

1. The name of the program shall be the "J. C. Penney Corporation, Inc. 1999 Separation Allowance Program".

In all other respects the SAP, as amended, remains unchanged and in full force and effect.

DATED this 25th day of January 2002.

J. C. Penney Company, Inc.

/s/Charles R. Lotter
------------------------------
Charles R. Lotter
Executive Vice President,
Secretary and General Counsel

EXHIBIT 10(ii)(x)

J. C. PENNEY COMPANY, INC.

SUPPLEMENTAL TERM LIFE INSURANCE PLAN

FOR MANAGEMENT PROFIT-SHARING ASSOCIATES

ADOPTED EFFECTIVE JANUARY 1, 2002

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

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

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

Appendix I - Participating Subsidiaries                            17

ARTICLE 1

ARTICLE 2

ARTICLE 3

ARTICLE 4

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

ARTICLE 5

ARTICLE 6

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.

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

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

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

ARTICLE 7

ARTICLE 8

ARTICLE 9

ARTICLE 10

APPENDIX I

J.C. Penney Company, Inc.

JCP Publications Corp.
(Previously JCP Media Corporation)

(from and after April 3, 1996)

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

JCPenney Puerto Rico, Inc.

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

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

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

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

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

EXHIBIT 10(ii)(y)

J. C. PENNEY CORPORATION, INC.

BENEFIT RESTORATION PLAN

ADOPTED EFFECTIVE AUGUST 1, 1995

AS AMENDED THROUGH JANUARY 27, 2002

  April 10, 1996                Board of Directors
  April 10, 1996                Benefit Plan Review Committee
 *June 28, 1996                 Personnel Committee

  July 9, 1997                  Benefit Plan Review Committee
  December 30, 1997             Director of Personnel

  December 11, 1998             Human Resources Committee

  January 13, 1999              Board of Directors
  May 21, 1999                  Benefit Plans Review Committee
  July 14, 1999                 Board of Directors

  March 23, 2001                Human Resources and
                                Compensation Committee

**January 27, 2002              Chief Human Resources and
                                Administration Officer

*resolutions only
**Pursuant to authority
granted by the Board
of Directors on
December 5, 2001

J. C. PENNEY CORPORATION, INC.
BENEFIT RESTORATION PLAN

Adopted Effective August 1, 1995
As Amended Through January 27, 2002

                                TABLE OF CONTENTS

Article                                                                   Page
-------                                                                   ----

ARTICLE I.  INTRODUCTION.....................................................1

ARTICLE II.  DEFINITIONS.....................................................2

ARTICLE III.   PARTICIPATION.................................................5
        (1)  Pension Plan Benefit............................................5

ARTICLE IV.  BENEFITS........................................................6
        (1)      Pension Plan Participant Benefit............................6
        (2)      Death Benefit...............................................6
        (3)      Vesting.....................................................6
        (4)      Effect of Certain Payments Made in December 1992............6

ARTICLE V.  FORM AND COMMENCEMENT OF BENEFIT PAYMENTS........................8
        (1)      Optional Forms and Commencement of Benefit Payments.........8
        (2)      Small Annuities.............................................8

ARTICLE VI.  ADMINISTRATION..................................................9

ARTICLE VII.  TYPE OF PLAN..................................................10

ARTICLE VIII.  MISCELLANEOUS................................................11
        (1)  Amendment and Termination......................................11
        (2)  Rights of Associates...........................................11
        (3)  Mistaken Information...........................................11
        (4)  Liability......................................................12
        (5)  Reemployed Participants........................................12
        (6)  Construction...................................................12
        (7)  Non-assignability of Benefits..................................12
        (8)  Governing Law..................................................12
        (9)  Change of Control..............................................12

ARTICLE IX.  CLAIMS PROCEDURES..............................................16

APPENDIX I.  Participating Employers........................................18

J. C. PENNEY CORPORATION, INC.
BENEFIT RESTORATION PLAN

Adopted Effective August 1, 1995
As Amended Through January 27, 2002

ARTICLE I. INTRODUCTION

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

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

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

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

ARTICLE II. DEFINITIONS

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

ARTICLE III. PARTICIPATION

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

ARTICLE IV. BENEFITS

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

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

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

ARTICLE V. FORM AND COMMENCEMENT OF BENEFIT PAYMENTS

ARTICLE VI. ADMINISTRATION

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

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

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

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

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

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

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

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

ARTICLE VII. TYPE OF PLAN

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

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

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

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

ARTICLE VIII. MISCELLANEOUS

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

Each amendment to the Plan by the Human Resources and Compensation Committee or the Board of Directors will be made only pursuant to unanimous written consent or by majority vote at a meeting. Upon such action by the Human Resources and Compensation Committee or the Board of Directors, the Plan will be deemed amended as of the date specified as the effective date by such action or in the instrument of amendment. The effective date of any amendment may be before, on, or after the date of such action of the Human Resources and Compensation Committee or the Board of Directors.

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

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

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

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

(c) there is consummated a merger or consolidation of the Parent Company or any direct or indirect subsidiary of the Parent Company with any other corporation or entity, other than (i) a merger or consolidation which would result in the voting securities of the Parent Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any Parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Parent Company or any subsidiary of the Parent Company, at least 50% of the combined voting power of the securities of the Parent

Company, such surviving entity or any Parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected solely to implement a recapitalization of the Parent Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Parent Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Parent Company or its Affiliates) representing 50% or more of the combined voting power of the Parent Company's then outstanding securities; or

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

(e) the execution of a binding agreement that if consummated would result in a Change of Control of a type specified in subparagraphs (a) or (c) above (an "Acquisition Agreement") or of a binding agreement for the sale or disposition of assets that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (an "Asset Sale Agreement") or the adoption by the Board of Directors of the Parent Company of a plan of complete liquidation or dissolution of the Parent Company that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (a "Plan of Liquidation"), provided, however, that a Change of Control of the type specified in this subparagraph (e) shall not be deemed to exist or have occurred as a result of the execution of such Acquisition Agreement or Asset Sale Agreement, or the adoption of such a Plan of Liquidation, from and after the Abandonment Date. As used in this subparagraph (e), the term "Abandonment Date" shall mean the date on which (i) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is terminated (pursuant to its terms or otherwise) without having been consummated, (ii) the parties to an Acquisition Agreement or Asset Sale Agreement abandon the transactions contemplated thereby, (iii) the Parent Company abandons a Plan of Liquidation, or (iv) a court or regulatory body having competent jurisdiction enjoins or issues a cease and desist or stop order with respect to or otherwise prevents the consummation of, or a regulatory body notifies the Parent Company that it will not approve an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the transactions contemplated thereby and such injunction, order or notice has become final and not subject to appeal; or

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

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

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

ARTICLE IX. CLAIMS PROCEDURES

If an Associate does not receive the benefits which he believes he is entitled to receive under the Plan, he may file a claim for benefits with the Benefits Administration Committee or its delegate. All claims will be made in writing and will be signed by the claimant. If the claimant does not furnish sufficient information to determine the validity of the claim, the Benefits Administration Committee or its delegate will indicate to the claimant any additional information which is required.

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

A claimant may appeal a denial of his claim by requesting a review of the decision by the Benefits Administration Committee or a person designated by the Committee, which person will be a named fiduciary under Section 402(a)(2) of ERISA for purposes of this Article IX. An appeal must be submitted in writing within 60 days after the denial and must (i) request a review of the claim for benefits under the Plan, (ii) set forth all of the grounds upon which claimant's request for review is based and any facts in support thereof, and (iii) set forth any issues or comments which the claimant deems pertinent to the appeal. The Benefits Administration Committee or the named fiduciary designated by the Benefits Administration Committee will make a full and fair review of each appeal and any written materials submitted in connection with the appeal. The Benefits Administration Committee or the named fiduciary designated by the Benefits Administration Committee will act upon each appeal within 60 days after receipt thereof unless special circumstances require an extension of the time for processing, in which case a decision will be rendered as soon as possible but not later than 120 days after the appeal is received. The claimant will be given the opportunity to review pertinent documents or materials upon submission of a written request to the Benefits Administration Committee or named fiduciary, provided the Benefits Administration Committee or named fiduciary finds the requested documents or materials are pertinent to the appeal.

On the basis of its review, the Benefits Administration Committee or named fiduciary will make an independent determination of the claimant's eligibility for benefits under the Plan. The decision of the Benefits Administration Committee or named fiduciary on any claim for benefits will be final and conclusive upon all parties thereto. In the event the Benefits Administration Committee or named fiduciary denies an appeal in whole or in part, it will give written notice of the decision to the claimant, which notice will set forth in a manner calculated to be understood by the claimant the specific reasons for such denial and which will make specific reference to the pertinent Plan provisions on which the decision was based.

APPENDIX I

J. C. Penney Corporation, Inc.

JCPenney Business Services, Inc.
(until January 24, 1996)

J. C. Penney Casualty Insurance Company
(until June 18, 2001)

J. C. Penney Funding Corporation

J. C. Penney Life Insurance Company
(until June 18, 2001)

J. C. Penney National Bank
(until December 17, 1997)

J. C. Penney Overseas Services, Inc.
(from and after July 1, 1996)

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

J. C. Penney Receivables, Inc.

JCPenney Card Bank, National Association
(from and after December 17, 1997, and
until September 30, 2000)

JCPenney Puerto Rico, Inc.

JCP ECommerce L.P.
(from and after December 24, 2000)

JCP Internet Commerce Solutions, Inc.
(from and after February 1, 1999)

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

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

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

JCP Publications Corp.
(formerly JCP Media Corporation)

(from and after April 3, 1996)

Eckerd Corporation
(from and after January 1, 1999)

EDC Drug Stores, Inc.
(formerly Kerr Drug Stores, Inc.)

(from and after January 1, 1999)

Fay's Incorporated
(from and after January 1, 1999)

Genovese Drug Stores, Inc.
(from and after January 1, 2000)

Insurance Consultants, Inc.
(from and after April 1, 1999,
and until June 18, 2001)

Quest Membership Services, Inc.
(from and after January 1, 1999,
and until June 18, 2001)

StepInside, Inc.
(from and after January 1, 2000)

TDI Managed Care Services, Inc.
(from and after January 1, 1999)

Thrift Drug, Inc.
(from and after January 1, 1999)

Thrift Drug Services, Inc.
(from and after January 1, 1999)

EXHIBIT 10(ii)(z)

SUPPLEMENTAL RETIREMENT PROGRAM FOR

MANAGEMENT PROFIT-SHARING ASSOCIATES OF

J. C. PENNEY COMPANY, INC.

ADOPTED EFFECTIVE JANUARY 1, 1978

AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1995

AS AMENDED THROUGH June 18, 2001

This document is the amended and restated Plan adopted by the Benefit Plans Review Committee (BPRC) on July 11, 1995 with an effective date of August 1, 1995, as amended on the following dates:

April 1, 1996 by Director of Personnel; April 10, 1996 by Board of Directors; April 10, 1996 by Benefit Plans Review Committee; June 28, 1996 by Personnel Committee;

July 9, 1997 by Benefit Plans Review Committee; December 30, 1997 by Director of Personnel;

March 18, 1998 by Director of Personnel;

January 13, 1999 by Board of Directors;

July 14, 1999 by Board of Directors;

March 7, 2000 by Benefit Plans Review Committee;

February 6, 2001 by Human Resources Committee; March 22, 2001 by Human Resources and Compensation Committee; and June 18, 2001 by Director of Business Planning and Support

SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATES OF
J. C. PENNEY COMPANY, INC.

Adopted Effective January 1, 1978

Amended and Restated Effective August 1, 1995

As Amended Through June 18, 2001

TABLE OF CONTENTS

Article                                                                                               Page
-------                                                                                               -----
ARTICLE I.  INTRODUCTION ..........................................................................      4

ARTICLE II.  DEFINITIONS ..........................................................................      5

ARTICLE III.  PARTICIPATION .......................................................................     14

ARTICLE IV.  BENEFITS .............................................................................     15

  (1)    At Early, Traditional, or Delayed Retirement Date.........................................     15
  (2)    Minimum Benefit...........................................................................     17
  (3)    Social Security Make-up...................................................................     19
  (4)    Death Benefit.............................................................................     19
  (5)    Life Insurance Coverage...................................................................     19
  (6)    Effect of Certain Payments made in December 1992..........................................     20
  (7)    Special Rules for VERP Plan Participants..................................................     20
  (8)    Nonduplication of Benefits................................................................     23
  (9)    Benefits for Certain Former Financial Services Plan Participants..........................     23

ARTICLE V.  FORM AND COMMENCEMENT OF BENEFIT PAYMENTS  ............................................     25

  (1)    Delayed Commencement of Benefits..........................................................     25
  (2)    Optional Forms of Benefit Payment.........................................................     25
  (3)    Small Annuities...........................................................................     25

ARTICLE VI.  ADMINISTRATION  ......................................................................     26

ARTICLE VII.  TYPE OF PLAN  .......................................................................     27

ARTICLE VIII.  MISCELLANEOUS.......................................................................     28

  (1)    Additional Credited Service and Other Adjustments.........................................     28
  (2)    Amendment and Termination.................................................................     29
  (3)    Rights of Associates......................................................................     31
  (4)    Mistaken Information......................................................................     31

  (5)    Liability.................................................................................     31
  (6)    Benefits for Reemployed Eligible Management Associates....................................     31
  (7)    Construction..............................................................................     32
  (8)    Non-assignability of Benefits.............................................................     32
  (9)    Governing Law.............................................................................     32
  (10)   Transferred Eligible Management Associates................................................     32
  (11)   Change of Control.........................................................................     33
  (12)   Separation Allowance Program..............................................................     35

ARTICLE IX.  CLAIMS PROCEDURES  ...................................................................     37

APPENDIX I ........................................................................................     39

APPENDIX II .......................................................................................     40

APPENDIX III ......................................................................................     41

SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATES OF
J. C. PENNEY COMPANY, INC.

Adopted Effective January 1, 1978

Amended and Restated Effective August 1, 1995

As Amended Through June 18, 2001

ARTICLE I. INTRODUCTION

The Supplemental Retirement Program for Management Profit-Sharing Associates of J. C. Penney Company, Inc. is a plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated associates. This document amends and restates the Plan, originally adopted effective January 1, 1978, effective August 1, 1995.

With respect to any Eligible Management Associate who terminated employment prior to August 1, 1995, benefits payable to such Eligible Management Associates are determined pursuant to the terms and conditions of the Supplemental Retirement Program for Management Profit-Sharing Associates of J. C. Penney Company, Inc. in effect as of July 31, 1995.

ARTICLE II. DEFINITIONS

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

(i) the 9 full calendar years of Final Service immediately preceding the calendar year in which occurs the Eligible Management Associate's Early Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, as the case may be; or

(ii) if such Eligible Management Associate has less than 9 full calendar years of Final Service, the entire number of full calendar years of such Final Service immediately preceding the calendar year in which occurs the Eligible Management Associate's Early Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, as the case may be.

If such Eligible Management Associate has less than three full calendar years of Final Service prior to the calendar year in which occurs his Early Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, Average Final Compensation shall mean the aggregate Compensation earned with respect to the Eligible Management Associate's Final Service immediately preceding the calendar year in which occurs his Early Retirement Date, Traditional Retirement Date or Delayed Retirement Date, divided by the total number of full months of such Final Service, multiplied by 12.

(a) all expatriate and foreign service allowances, including without limitation cost-of-living adjustments;

(b) tax gross-up payments;

(c) noncash prizes;

(d) income attributable to employer-provided group term life insurance;

(e) income recognized with respect to stock options and stock awards;

(f) tax equalizations payments;

(g) taxable and nontaxable relocation payments;

(h) payments of deferred amounts under the EVA Performance Plan or any other nonqualified plan of deferred compensation;

(i) special payments made to an Associate under the Performance Unit Plan or the EVA Performance Plan in the year of retirement or disability;

(j) severance pay, outplacement pay, and/or critical pay;

(k) third-party disability payments (State of New York);

(l) home sale bonus payments;

(m) mortgage interest assistance payments;

(n) senior management perquisites, tax preparation fees, and allowances for travel from Alaska and Hawaii;

(o) legal settlements constituting back pay or other wage payments;

(p) non-associate travel reimbursements;

(q) clothing allowance payments; and

(r) payments made pursuant to a non-compete agreement.

In addition, Compensation includes any contributions made by a Participating Employer or other Controlled Group Member on behalf of an Associate pursuant to a deferral election under any employee benefit plan containing a cash or deferred arrangement under Code Section 401(k), and any amounts that would have been received as cash but for an election to receive benefits under a cafeteria plan meeting the requirements of Code Section 125, and amounts deferred by an Associate under the Deferred Compensation Plan and the Mirror Savings Plans.

Each annual payment to an Associate (i) from the Performance Unit Plan,
(ii) from the EVA Performance Plan, and (iii) of Profit Incentive Compensation shall be deemed to have been made in the calendar year immediately preceding the year in which payment was actually made.

For all purposes under the Plan, the Benefits Administration Committee, in its discretion, may exclude additional items from "Compensation" under the Plan.

An Associate who is in the service of the Armed Forces of the United States during any period in which his reemployment rights are guaranteed by law will be considered to have received the same rate of Compensation during his absence he was receiving immediately prior to his absence, provided he returns to employment with a Controlled Group Member within the time such rights are guaranteed.

(i) All compensation earned (a) prior to the later of 1951 or the year the Eligible Management Associate attains age 22 or (b) in the year in which the Eligible Management Associate Separates from Service if such separation occurs prior to the last day of the calendar year will be disregarded;

(ii) Earnings for the years prior to the Eligible Management Associate's employment with the Participating Employer are in the same proportion to the Taxable Wage Base in effect for the prior years as that which the first full year of earnings bore to the Taxable Wage Base in existence at that time;

(iii) Earnings are averaged over a number of full calendar years as determined by the following:

Year of Birth                           Number of Full
-------------                           --------------
                                        Calendar Years
                                        --------------
   1925                                       31
   1926                                       32
   1927                                       33
   1928                                       34
   After 1928                                 35

If the Eligible Management Associate's total calendar years of earnings determined under clauses (i) and (ii) above exceed the number of full years of earnings that are to be averaged based on the year of such Eligible Management Associate's birth, one or more of the Eligible Management Associate's lowest years of earnings will be disregarded until his total years of earnings equals the number of full years of earnings that are to be averaged based on the year of such Eligible Management Associate's birth.

(iv) Social Security indexing factors used are those actually used by the Social Security Administration in determining the Eligible Management Associate's Social Security benefit, and if those factors are not available, the latest published factors will be used.

(2) For Eligible Management Associates who reach Traditional Retirement Age on or prior to August 1, 2000, for purposes of clause (iii) of Subparagraph
(b) of Paragraph (1) of Article IV the lesser of the benefit determined under (A) or (B) below:

(A) The product of (a) multiplied by (b) with (a) being the monthly benefit the Eligible Management Associate would receive under the Social Security Act at age 62, or if retirement is later than age 62, the benefit payable at actual retirement, based on the following assumptions:

(i) The benefit is based solely on the compensation earned during the Eligible Management Associate's calendar years of service and disregarding the Eligible Management Associate's last calendar year of service if less than a full year and disregarding completely all other years;

(ii) Earnings are averaged over the number of years of actual credited service, as defined in the Pension Plan;

(iii) Social Security indexing factors used are those actually used by the Social Security Administration in determining the Eligible Management Associate's social security benefit, and if those factors are not available, the latest published factors will be used;

and (b) being a fraction, not exceeding one, the numerator of which is the Eligible Management Associate's years of credited service, as defined by the Pension Plan and the denominator of which is 30.

(B) The monthly benefit the Eligible Management Associate would receive under the Social Security Act at age 62, or if retirement is later than age 62, the benefit payable at actual retirement, based on the following assumptions:

(i) All compensation earned (a) prior to the later of 1951 or the year the Eligible Management Associate attains age 22 or (b) in the year in which the Eligible Management Associate Separates from Service if such separation occurs prior to the last day of the calendar year will be disregarded;

(ii) The Eligible Management Associate earned no compensation for calendar years before the Eligible Management Associate was employed by the Participating Employer, which years will be included in the calculation as years of zero earnings;

(iii) Earnings are averaged over a number of full calendar years as determined by the following:

Year of Birth                         Number of Full
-------------                         --------------
                                      Calendar Years
                                      --------------
   1925                                     31
   1926                                     32
   1927                                     33
   1928                                     34
   After 1928                               35

If the Eligible Management Associate's total calendar years of earnings determined under clauses (i) and (ii) above exceed the number of full years of earnings that are to be averaged based on year of such Eligible Management Associate's birth, one or more of the Eligible Management Associate's lowest years of earnings will be disregarded until his total years of earnings equals the number of full years of earnings that are to be averaged based on the year of such Eligible Management Associate's birth.

(iv) Social Security indexing factors used are those actually used by the Social Security Administration in determining the Eligible Management Associate's Social Security benefit, and, if those factors are not available, the latest published factors will be used.

For Eligible Management Associates who reach Traditional Retirement Age after August 1, 2000, for purposes of clause (iii) of Subparagraph (b) of Paragraph (1) of Article IV, Estimated Social Security Benefit shall be determined under (B) above.

ARTICLE III. PARTICIPATION

Each Eligible Management Associate shall participate in the Plan as of such Eligible Management Associate's Early Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, as the case may be; provided, however, that such Eligible Management Associate who has a Separation from Service in the month of December shall commence participation in the Plan as of the last day of that December. Notwithstanding the preceding sentence, and except as otherwise provided in Paragraph (9) of Article IV, effective on and after January 1, 1996, any Associate who, on December 31, 1995, was not classified as management or who was not in a Profit Incentive Compensation program shall not be considered an Eligible Management Associate and shall not participate in the Plan. In addition, effective as of the Closing (as such term is defined in Paragraph (9) of Article IV), the Eligible Management Associates whose names are set forth on Appendix II to the Plan shall cease to participate in the Plan and shall not be entitled to a benefit under any provision of the Plan. In the event an Eligible Management Associate whose name is set forth on Appendix II is employed after the Closing by the Company or any Controlled Group Member, such person will not thereafter be an Eligible Management Associate and will not participate in the Plan on or after the date of such employment.

ARTICLE IV. BENEFITS

(a) the sum of

(i) 3% of the Eligible Management Associate's Average Final Compensation multiplied by such Eligible Management Associate's Credited Service not in excess of 10 years; plus
(ii) 1% of the Eligible Management Associate's Average Final Compensation multiplied by such Eligible Management Associate's Credited Service in excess of 10 years but not in excess of 30 years; plus
(iii) 1/2 of 1% of the Eligible Management Associate's Average Final Compensation multiplied by such Eligible Management Associate's Credited Service in excess of 30 years but not in excess of 40 years; less
(iv) 1/3 of 1% for each month by which the Eligible Management Associate's Early Retirement Date shall precede such Eligible Management Associate's Traditional Retirement Date multiplied by the Eligible Management Associate's Average Final Compensation;

less

(b) the sum of

(i) the single-life, no-death-benefit annuity equivalent of (a) the annual amount of pension payable pursuant to the Pension Plan (disregarding Disability Service) assuming that the Eligible Management Associate's Benefit Commencement Date is the first day of the month immediately following the date of such Eligible Management Associate's Separation from Service, (b) the annual amount payable pursuant to the terms of a domestic relations order qualified under Code Section 414(p), (A) from the Pension Plan and (B) from benefits accrued pursuant to Paragraph (1) of Article IV of the Benefit Restoration Plan and (c) the accrued benefit payable pursuant to Paragraph (1) of Article IV of the Benefit Restoration Plan; plus
(ii) the single-life, no-death-benefit annuity equivalent, as of the Valuation Date which is the next trading date of the New York Stock Exchange following the Eligible Management Associate's Separation from Service, of

(a) the value of all assets allocated to the Eligible Management Associate in the Company Account(s) under the Savings, Profit-Sharing and Stock Ownership Plan, including such assets allocated to him under

the Savings and Profit-Sharing Retirement Plan prior to January 1, 1999; and

(b) the value of any additional assets which would have been allocated to the Eligible Management Associate's Company Account(s) under the Savings and Profit-Sharing Retirement Plan, the Savings, Profit-Sharing and Stock Ownership Plan, and the Mirror Savings Plans, had such Eligible Management Associate made all further permissible Matched Deposits up to 6% of his compensation (as such term is defined in each said plan) under each said plan and had he not made any withdrawals of taxed Matched Deposits from the plans prior to January 1, 1989; and

(c) the value of dividends attributable to units in his Company Account (within the meaning of the Savings, Profit-Sharing and Stock Ownership Plan) and distributed to the Eligible Management Associate pursuant to Section 9.04 of the Savings, Profit-Sharing and Stock Ownership Plan; and

(d) the value of any amounts payable pursuant to the terms of a domestic relations order qualified under Code Section 414(p) out of such Eligible Management Associate's Company Account(s) from the Savings and Profit-Sharing Retirement Plan and the Savings, Profit-Sharing and Stock Ownership Plan; and

(e) the value of benefits payable to the Eligible Management Associate (or another person on behalf of the Eligible Management Associate from (A) his annual benefit limit make-up account pursuant to paragraph (2) of Article IV of the Benefit Restoration Plan prior to January 1, 1999, and (B) his Company Accounts under the Mirror Savings Plans; plus

(iii) 50% (less 1/4 of 1% for each month by which the Eligible Management Associate's Early Retirement Date shall precede such Eligible Management Associate's Traditional Retirement Date) of the Eligible Management Associate's Estimated Social Security Benefit; plus

(iv) in the case of an Eligible Management Associate whose Credited Service is increased pursuant to Paragraph (1) of Article VIII, the amount of annual retirement benefit (or any commutations thereof or substitutions therefor) payable to an Eligible Management Associate from any other employer, but only to the extent determined by the Benefits Administration Committee, expressed in the form of a single-life, no-death-benefit annuity equivalent (as determined by the Benefits Administration Committee), commencing on such Eligible Management Associate's Separation from Service.

In determining the amount referred to in clause (ii) of subparagraph (b) of this Paragraph (1) of this Article IV, it shall be deemed that:

(i) an Eligible Management Associate who has not, at all times when he was eligible to participate in the Savings and Profit-Sharing Retirement Plan and the Savings, Profit-Sharing and Stock Ownership Plan and the Mirror Savings Plans, contributed an amount sufficient to share, to the maximum extent, in the Company contribution to such Plan or such predecessor plan has so contributed and that an Eligible Management Associate who did not share, to the maximum extent, in Company contributions for which he was eligible under the Savings and Profit-Sharing Retirement Plan due to any withdrawal of taxed Matched Deposits, be deemed not to have any such withdrawal;

(ii) the share of any such Company contribution deemed to have been credited to an Eligible Management Associate pursuant to this Paragraph for plan years ending before January 1, 1989 shall be deemed to have experienced the same rate of dividends, earnings, and change in value as the actual rate of dividends, earnings, and change in value experienced by the Penney Stock (Company) Account under the Savings and Profit-Sharing Retirement Plan from the time such share of a Company contribution is deemed to have been credited for said plan years and that the value of this said amount as of December 31, 1988 under the Savings and Profit-Sharing Retirement Plan, plus the share of any such Company contribution deemed to have been credited to an Eligible Management Associate pursuant to this Paragraph for plan years beginning after December 31, 1988 shall be deemed to have experienced the same rate of earnings and change in value experienced by the Interest Income Account under the Savings, Profit-Sharing and Stock Ownership Plan from the time such share of a Company contribution is deemed to have been credited for said plan years;

(iii) the value of the amount of the Company Account(s) and annual limit make-up account paid out pursuant to a domestic relations order qualified under Section 414(p) of the Code deemed to have been credited to an Eligible Management Associate pursuant to this Paragraph shall be deemed to have experienced the same rate of earnings and change in value experienced by the Interest Income Account under the Savings, Profit-Sharing and Stock Ownership Plan from the time such amount is deemed to have been credited; and

(iv) the rates used to determine the single-life, no-death-benefit annuity equivalent shall be the rates that the Benefits Administration Committee, in its discretion, shall determine.

(A) the amount of pension payable pursuant to the early retirement pension benefit provision of the Pension Plan (determined without regard to any

compensation or benefit limits imposed by the Code) that would be applicable if the Eligible Management Associate elected to receive benefits pursuant to that provision prior to such Eligible Management Associate's normal retirement date, as defined in the Pension Plan (disregarding Disability Service, if any, and including as Credited Service any increase granted under Article VIII hereof) assuming the Eligible Management Associate's Benefit Commencement Date is the first day of the month immediately following the day of such Eligible Management Associate's Separation from Service under this Plan, and

(B) the amount of pension payable pursuant to the early retirement pension benefit provision of the Pension Plan (determined without regard to any compensation or benefit limits imposed by the Code) that would be applicable if the Eligible Management Associate did not elect to receive benefits pursuant to that provision prior to the Eligible Management Associate's normal retirement date, as defined in the Pension Plan (disregarding Disability Service, if any, and including as Credited Service any increase granted under Article VIII hereof).

In no event will the amount payable under Paragraph (1) of this Article IV to an Eligible Management Associate who:

(a) Separates from Service on his Early Retirement Date within one year prior to his Traditional Retirement Date and who is granted additional Credited Service pursuant to Paragraph (1) of Article VIII at his Early Retirement Date, or

(b) Separates from Service because of a reduction in force and is designated as an individual termination by the Director of Personnel in accordance with Paragraph (1) of Article VIII and who is granted deemed additional months of Credited Service thereunder be less than the difference between

(A) the amount of pension that would be payable (determined without regard to any compensation or benefit limits imposed by the Code) at such Eligible Management Associate's normal retirement date, as defined by the Pension Plan (disregarding Disability Service, if any, and including as Credited Service, as defined by the Pension Plan, any increase granted under Article VIII hereof), and

(B) the amount of pension payable pursuant to the early retirement pension benefit provision of the Pension Plan (determined without regard to any compensation or benefit limits imposed by the Code) that would be applicable if the Eligible Management Associate elected to receive benefits pursuant to that provision prior to such Eligible Management Associate's normal retirement date, as defined by the Pension Plan (disregarding Disability Service, if any, and excluding as Credited Service any increase granted under Article VIII hereof) assuming the Eligible Management Associate's Benefit Commencement Date is the first day of the month

following such associate's Separation from Service, but in no event prior to the date such associate reaches age 59.

An Eligible Management Associate, who, on his Separation from Service, is entitled to disability benefits under the United States Social Security laws, shall not be eligible for any Social Security make-up benefits provided for in this paragraph.

If an Eligible Management Associate is married at the time such Eligible Management Associate Separates from Service by reason of death after attaining Early Retirement Age, or if an Eligible Management Associate who has Separated from Service after attaining Early Retirement Age and who is married at the time of his death, dies before payment has begun under the Plan, such Eligible Management Associate's Spouse will receive the benefit that would have been payable if the Eligible Management Associate had a Separation from Service immediately prior to such Eligible Management Associate's death (if he was an active Associate on the date of his death), and had begun to receive benefits immediately prior to his death in the form of a 100% (75% if death occurs prior to January 1, 1996) joint and survivor annuity without payment certain with the Spouse as the beneficiary.

The amount of coverage to be provided into retirement shall be equal, at such Eligible Management Associate's Traditional Retirement Date, to 100% of the amount of coverage being provided to him at Company expense immediately prior to the

attainment of his Traditional Retirement Age reduced to 90%, 80%, 70%, 60%, 50%, 40%, 30%, 20%, and 10% of such amount of coverage on the first day of the month following his attainment of age 61, 62, 63, 64, 65, 66, 67, 68, and 69, respectively.

The amount of coverage to be provided at a Delayed Retirement Date shall be the applicable percentage based upon the Eligible Management Associate's age on such Delayed Retirement Date multiplied by the amount of coverage being provided to him at Company expense immediately prior to his Delayed Retirement Date and decreasing thereafter as provided in the preceding sentence.

If, on the Eligible Management Associate's Traditional Retirement Date or Delayed Retirement Date, as the case may be, such Eligible Management Associate is already covered by term life insurance under the Company's term life insurance plan on account of the Eligible Management Associate's total disability, such Eligible Management Associate shall not be eligible for any term life insurance coverage provided for in this paragraph. Benefits payable under this Plan will be paid to the beneficiary designated by the Eligible Management Associate as soon as practicable after receipt of a properly submitted claim.

A Participant whose group term life insurance coverage under the Plan terminates because of his attainment of age 70 will have the right to convert his group term life insurance coverage to an individual policy to the extent, and only to the extent, permitted under the group policy applicable to the Participant. Any election to convert to individual coverage must be made within 31 days after the Participant's coverage under the Plan terminates and must be made in accordance with all requirements specified in such policy. The amount of coverage that may be converted shall be the amount in effect immediately before the Participant attained age 70.

(a) If the Eligible Management Associate has attained at least age 55 but not age 60 as of April 30, 1998 and has compensation as determined under Section 4.17(d) the Pension Plan for the 1997 calendar year in excess of $80,000 but not more than $87,000, he shall be entitled to receive a benefit in lieu of the Minimum Benefit described in Paragraph (2) of Article IV equal to (i) minus (ii) below:

(i) The annual enhanced normal retirement benefit that would have been payable to the Eligible Management Associate from the Pension Plan pursuant to Section 4.17(b) of the Pension Plan but for the restrictions and limitations of said Section 4.17(b), calculated as follows:

(A) For purposes of determining the Eligible Management Associate's normal retirement benefit and supplemental retirement benefit that would have been payable under the Pension Plan pursuant to Sections 4.1(b) and 4.1(e), 4.2(b) and 4.2(e), 4.3(b) and 4.3(e), or Section 4.3A(b) and 4.3A(e), three additional years of Credited Service, up to a maximum of 35 such years, will be added to his Credited Service determined as if he had Separated from Service on December 31, 1997; and such retirement benefit will be unreduced for early commencement of benefits. In no event will more than 10 years of Credited Service be taken into account for purposes of determining his enhanced supplemental retirement benefit.

(B) The Eligible Management Associate's minimum and protected retirement benefits determined under the Pension Plan pursuant to Sections 4.1(c), 4.2(c), 4.3(c), 4.3A(c), and 4.4; his supplemental retirement benefit calculated under Sections 4.1(e), 4.2(e), 4.3(e) or 4.3A(e), which is to be added to his minimum benefit; and his Recalculated Pension Benefit (as defined in the Pension Plan) under
Section 4.15 will be calculated without regard to the provisions of this subparagraph (i), and the applicable early retirement factors set forth in Section 4.5 of the Pension Plan will be applied.

(C) The Participant's enhanced retirement benefit will be the greater of the benefit calculated under clause (A) or the benefit under clause (B).

(ii) The annual enhanced normal retirement benefit actually payable to the Eligible Management Associate pursuant to Section 4.17(c) of the Pension Plan subject to the applicable early retirement factors set forth in Section 4.5 of the Pension Plan, calculated as follows:

(A) For purposes of determining the Eligible Management Associate's normal retirement benefit and supplemental retirement benefit under the Pension Plan pursuant to Sections 4.1(b) and 4.1(e), 4.2(b) and 4.2(e), 4.3(b) and 4.3(e), or Section 4.3A(b) and 4.3A(e), three additional years of Credited Service, up to a maximum of 35 such years, will be added to his Credited Service determined as if the Participant had Separated from Service on December 31, 1997; five years will be added to his age as of April 30, 1998; and the applicable early retirement factors set forth in Section 4.5 of the Pension Plan will be applied based on his enhanced age.

In no event will more than 10 years of Credited Service be taken into account for purposes of determining his enhanced supplemental retirement benefit.

(B) The Eligible Management Associate's minimum and protected retirement benefits determined under the Pension Plan pursuant to Sections 4.1(c), 4.2(c), 4.3(c), 4.3A(c), and 4.4; his supplemental retirement benefit calculated under Sections 4.1(e), 4.2(e), 4.3(e) or 4.3A(e), which is to be added to his minimum benefit; and his Recalculated Pension Benefit (as defined in the Pension Plan) under
Section 4.15 will be calculated without regard to the provisions of this subparagraph (ii), and the applicable early retirement factors set forth in Section 4.5 of the Pension Plan will be applied.

(C) The Participant's enhanced retirement benefit will be the greater of the benefit calculated under clause (A) or the benefit under clause (B).

(b) If the Eligible Management Associate has attained at least age 60 but not age 65 as of April 30, 1998 and has compensation as determined under the Pension Plan for the 1997 calendar year of $87,000 or less, to avoid duplication of benefits otherwise payable from the Plan and the Pension Plan,

(i) the Minimum Benefit described in Paragraph (2) of Article IV shall be offset by the enhanced retirement benefit paid to such Eligible Management Associate pursuant to Section 4.17(b) of the Pension Plan calculated as described in paragraph (7)(a)(i)(A), (B) and (C) above, and

(ii) if the monthly Social Security Make-up benefit described in Paragraph
(3) of Article IV is payable to such Eligible Management Associate, the benefit shall be paid by the Plan only in the amount that exceeds the $1,000 per month social security supplement paid to such Eligible Management Associate pursuant to Section 4.17(f) of the Pension Plan.

(c) An Eligible Management Associate who as of his Separation from Service has attained at least age 60 but has not attained age 62 shall not receive the Social Security Make-up benefit described in paragraph (3) of Article IV of the Plan if he elected to receive the lump sum payment described in subparagraph (b) of Section 3.02 of the VERP Plan.

(d) Benefits payable from the Plan pursuant to this paragraph (7) shall be subject to the provisions of paragraph (2) of Article V regarding optional forms of benefit payments based on the ages of the Eligible Management Associate and his Spouse on December 1, 1997.

(e) An Eligible Management Associate shall be entitled to life insurance coverage under paragraph (5) of Article IV effective on the first day of the month following his Separation from Service by reason of retirement. The amount of such coverage shall be equal to 100% of the amount being provided to him at Company expense immediately prior to his Separation from Service by reason of retirement. Said amount shall be

reduced in accordance with paragraph (5) of Article IV starting with the first day of the month following his attainment of age 61.

(f) In the event an Eligible Management Associate is reemployed by the Company or a Participating Employer and again participates in the Plan, benefits payable under the formula described in Paragraph (1) of Article IV, if any, shall be reduced by the benefits to which the Eligible Management Associate is entitled under the VERP Plan. Benefits payable under the Minimum Benefit described in Paragraph (2) of Article IV or the benefit described in subparagraph (a) above, whichever is applicable, if any, based on the Credited Service attributable to his reemployment, shall be based on his actual age as of his retirement date subsequent to his reemployment date.

(g) [Deleted]

(h) Notwithstanding any other provision of the Plan, an Eligible Management Associate (excluding Officers of the Company) who is entitled to receive a benefit under the Plan pursuant to the formula described in Paragraph (1) of Article IV and who retires as part of the Voluntary Early Retirement Program announced in 1997 shall receive the greater of:

(i) The amount payable under the Plan pursuant to Paragraph (1) of Article IV as of his Early Retirement Date, Traditional Retirement Date, or Delayed Retirement Date, as the case may be (the "Plan Benefit"), or

(ii) The amount derived by subtracting the aggregate benefit payable to the Associate from the Pension Plan and, if applicable, the Benefit Restoration Plan from the benefit communicated to the Associate in the personalized VERP communication materials as the aggregate benefit earned as of January 1, 1998, from the Plan, the Pension Plan and, if applicable, the Benefit Restoration Plan.

The Plan hereby assumes the accrued retirement income benefit obligation under the Supplemental Retirement Program for Eligible Management Associates of JCPenney Financial Services (the "Financial Services Plan") for each former Associate

who (i) retired or separated from service prior to the Closing with a right to a retirement income benefit under the Financial Services Plan and who had not begun to receive retirement income benefits from the Financial Services Plan as of the Closing and (ii) whose name is not set forth on Appendix I to the Financial Services Plan, which Appendix is reproduced and attached as Appendix III to the Plan. Each such former Associate will be entitled to a retirement income benefit under this Plan in the amount of such former Associate's Financial Services Plan accrued retirement income benefit and payable in the same form and at the same time as such Financial Services Plan accrued retirement income benefit would have been paid. In addition, the Plan hereby assumes the obligation of the Financial Services Plan to make continued monthly retirement income benefit payments to each former Associate who retired prior to the Closing and had begun to receive retirement income benefits from the Financial Services Plan as of the Closing in the same amount, the same form and at the same time as such former Associate's Financial Services Plan retirement income benefit was being paid.

ARTICLE V. FORM AND COMMENCEMENT OF BENEFIT PAYMENTS

ARTICLE VI. ADMINISTRATION

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

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

(ii) resolve all questions relating to the eligibility of Associates to become Eligible Management Associates and the eligibility of Eligible Management Associates to participate in the Plan;

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

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

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

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

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

ARTICLE VII. TYPE OF PLAN

The Plan is a plan which is unfunded. The Plan is maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The Plan shall be construed according to the provisions of ERISA applicable to such plans. Benefits under the Plan (other than the life insurance benefits referred to in Paragraph (5) of Article IV which may be insured) are paid from the general assets of the Company.

In the event that it should subsequently be determined by statute or by regulation or ruling that the Plan is not "a plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA and section 2520.104-24 of Chapter 29 of the Code of Federal Regulations, participation in the Plan shall be restricted by the Benefits Administration Committee to the extent necessary to assure that it will be such a plan within the meaning of such sections.

ARTICLE VIII. MISCELLANEOUS

(a) in the case of an Eligible Management Associate other than members of the Company's executive or senior management committee (or a successor committee then in place) described in Subparagraphs (b) and (c) of this Paragraph (1), the Chairman of the Board or the Chief Human Resources Officer;

(b) in the case of an Eligible Management Associate who is a member of the Company's executive or senior management committee but who is not a director of the Company, the Human Resources and Compensation Committee; and

(c) in the case of the Chairman of the Board and an Eligible Management Associate who is a member of the Company's executive or senior management committee and who is also a director of the Company, the Board of Directors.

For all purposes of the Plan, the Benefits Administration Committee in its discretion, may make adjustments in Compensation and Credited Service with respect to payments of severance pay, including, but not limited to, outplacement pay and critical pay.

An Eligible Management Associate who terminates employment due to a reduction in force, as defined below, and who does not satisfy the requirements for Traditional Retirement Age on the date of termination shall receive deemed additional months of age and/or Service, based on the following:

Years of Service      Deemed Additional Months of Age and/or Service
----------------      ----------------------------------------------
     0 - 9                               0
     10-14                               12
     15-19                               18
     20 or more                          24

A reduction in force shall mean the termination of employment of an Eligible Management Associate because of:

(a) A partial unit closing or complete unit closing ("unit closing") as determined by the Director of Personnel of the Company in his sole discretion, or

(b) Other business reasons of the Company ("individual termination") as determined by the Director of Personnel of the Company in his sole discretion. With the approval of the Benefits Administration Committee of the Company, the Director of

Human Resources may increase such award by up to 24 deemed additional months of age and/or Service for an individual termination.

For the purposes of determining the benefit payable under Paragraph (1) of Article IV, such Eligible Management Associate is deemed to have attained Traditional Retirement Age. The deemed additional months of age and/or Service shall be added, but only to the extent necessary, to the Eligible Management Associate's age and/or Service, in such amounts necessary to satisfy the minimum requirements for Traditional Retirement Age or, with the approval of the Benefits Administration Committee, an Early Retirement Age on or after age 59.

The deemed additional months of Service shall count as Credited Service for the purpose of entitlement to benefits under this Plan only in the event of an individual termination as described in (b) of the preceding subparagraph, and shall not count as Credited Service in the event of a unit closing described in
(a) of the preceding subparagraph.

For the purpose of determining life insurance coverage under paragraph (5) of Article IV, an Eligible Management Associate deemed to have attained Traditional Retirement Age in the event of a unit closing described in (a) of the preceding subparagraph shall be entitled to coverage effective on the first day of the month following his Separation from Service. The amount of such coverage shall be equal to 100% of the amount being provided to him at Company expense immediately prior to his Separation from Service. Said amount shall be reduced in accordance with paragraph (5) of Article IV starting with the first day of the month following his attainment of age 61.

Notwithstanding any other provision of the Plan, an Eligible Management Associate (excluding Officers of the Company) who is entitled to a benefit pursuant to the formula described in paragraph (1) of Article IV as of the Associate's Early Retirement Date, Traditional Retirement Date or Delayed Retirement Date, as the case may be ("formula benefit"), (i) who received from the Company as part of the Company's offer in 1997 to participate in the Voluntary Early Retirement Program, a personalized statement showing the aggregate benefits earned as of January 1, 1998, from the Plan, the Pension Plan and, if applicable, the Benefit Restoration Plan, ("earned benefit") and (ii) who retires from the Company prior to January 1, 1999, shall receive the greater of: (a) the formula benefit, or (b) an amount derived by subtracting the aggregate benefit payable to the Associate from the Pension Plan and, if applicable, the Benefit Restoration Plan from the earned benefit.

Management Associate for whom benefit payments have already begun in accordance with the Plan as in effect prior to the effective date of the amendment, modification, suspension, discontinuance, or termination unless otherwise required to comply with applicable law.

If the Plan is terminated, any Eligible Management Associate who, as of the effective date of Plan termination, has reached Traditional Retirement Age but who has not reached age 65 shall be entitled to receive, at his actual Separation from Service, the benefits, if any, to which he would have been entitled under Paragraph (1) or (2) of Article IV had he Separated from Service on the day before the effective date of Plan termination, reduced by the percentage derived by dividing the number of months of Credited Service, if any, from the Plan termination effective date to the date of actual Separation from Service by the number of months of Credited Service from the Plan termination effective date to the date the Eligible Management Associate will have reached age 65. Any such Eligible Management Associate shall also be entitled to receive at his actual Separation from Service (other than by reason of death) a benefit, if any, to which he would have been entitled under Paragraph (3) of Article IV had the Plan not been terminated. If, after Plan termination, such Eligible Management Associate Separates from Service by reason of death, Paragraph (4) of Article IV shall apply, if appropriate.

If the Plan is terminated, any Eligible Management Associate who, as of the effective date of Plan termination, has reached his Early Retirement Date (assuming a Separation from Service on such date) shall be entitled to receive, at his actual Separation from Service, the benefits, if any, to which he would have been entitled under Paragraph (1) or (2) of Article IV calculated as if he had reached his Traditional Retirement Age and Separated from Service on the day before the effective date of Plan termination and disregarding the percentage reduction on account of early retirement referred to in clause (iv) of Subparagraph (a) of Paragraph (1) of Article IV, reduced by the percentage derived by dividing the number of months of Credited Service, if any, after his Traditional Retirement Date by 60. Any such Eligible Management Associate shall also be entitled to receive at his actual Separation from Service (other than by reason of death) a benefit, if any, to which he would have been entitled under Paragraph (3) of Article IV had the Plan not been terminated. If after Plan termination, such Eligible Management Associate Separates from Service by reason of death, Paragraph (4) of Article IV shall apply, if appropriate.

If the Plan is terminated, any Eligible management Associate who, as of the effective date of Plan termination (a) has reached age 50, (b) has 10 or more years of credited service, as defined by the Pension Plan, as an Eligible Management Associate, and (c) is not otherwise eligible for benefits under this Paragraph (2) of this Article VIII, shall be entitled to receive, at his actual Separation from Service but no earlier than his Traditional Retirement Date, a benefit equal to the difference between the amount of pension which would be payable pursuant to the early retirement pension benefit provision of the Pension Plan that would be applicable if the Eligible Management Associate elected to receive benefits pursuant to that provision prior to his normal retirement date, as defined in the Pension Plan (disregarding Disability Service, if any) and the amount of pension payable pursuant to the early retirement pension benefit provision of the Pension Plan that would be applicable if the Eligible Management

Associate did not elect to receive benefits pursuant to that provision prior to his normal retirement date, as defined in the Pension Plan (disregarding Disability Service, if any) reduced by the percentage derived by dividing the number of months of Credited Service, if any, after Traditional Retirement Date (assuming a separation from Service) by 60.

In no event will any future amendment or modification of the Plan adversely affect the right to Plan benefits which vest on Plan termination as set forth in this Paragraph (2) without the consent of at least 75 percent of the affected Eligible Management Associates unless such amendment or modification is specifically required to comply with applicable law.

Each amendment to the Plan by the Human Resources and Compensation Committee or the Board of Directors will be made only pursuant to unanimous written consent or by majority vote at a meeting. Upon such action by the Human Resources and Compensation Committee or the Board of Directors, the Plan will be deemed amended as of the date specified as the effective date by such action or in the instrument of amendment. The effective date of any amendment may be before, on, or after the date of such action of the Human Resources and Compensation Committee or the Board of Directors.

Employer, the payment of benefits hereunder shall continue. Any life insurance coverage in effect pursuant to Paragraph (5) of Article IV shall cease effective on the date a rehired (whether or not participating in a Profit Incentive Compensation program) Associate becomes eligible for coverage under the Company's term life insurance plan. Upon such Associate's Separation from Service he shall be entitled to receive applicable benefits, if any, under Article IV pursuant to uniform rules approved by the Benefits Administration Committee.

In the event of the transfer of an Eligible Management Associate on or after March 8, 1995 but on or before December 31, 1995 to a non-participating employer, said Eligible Management Associate will continue to be eligible to participate in this Plan in accordance with Article III provided that on December 31, 1995 the Eligible Management Associate (a) is in the employ of the non- participating employer and (b) is not eligible to participate in the Supplemental Retirement Program for Eligible Management Associates of JCPenney Financial Services, or Supplemental Retirement Program for Management Profit-Sharing Associates of Thrift Drug, Inc.

The Service and Compensation of the Eligible Management Associate with the non-participating employer shall be recognized as attributable to a Participating Employer to the extent permitted by the Plan in determining benefits under the Plan. A non-participating employer shall mean a participating employer in the (a) Supplemental Retirement Program for Eligible Management Associates of JCPenney Financial Services, or (b) Supplemental Retirement Program for Management Profit-Sharing Associates of Thrift Drug, Inc.

Notwithstanding the foregoing provisions of this Paragraph (10), an entity that ceases to be a member of the Controlled Group immediately after the Closing (as such term is defined in Paragraph (9) of Article IV) will not be a "non-participating employer" for any purpose of this Plan.

Upon a Change of Control, assets of the Company in an amount sufficient to pay benefits that have accrued under the Plan up to that date shall immediately be transferred to a grantor trust to be established by the Company for the purpose of paying benefits hereunder. Each Eligible Management Associate's vested benefits shall thereafter be paid to him from such trust in accordance with the terms of the Plan; provided that at the time of such Change of Control, the Eligible Management Associate may make an irrevocable election to have his Plan benefits paid in a single-sum immediately upon the later of (i) the date of the Change of Control, or (ii) the Eligible Management Associate's retirement date; in which event his benefits shall be reduced by 10% as a penalty for early payment. The amount transferred to the grantor trust shall include the amount necessary to pay benefits for Eligible Management Associates who have not yet retired, determined as if they retired on the date of the Change of Control. On each anniversary date of the date of a Change of Control, the Company shall transfer to the grantor trust an amount necessary to pay all benefits that have accrued under the plan during the preceding twelve months.

For purposes of this paragraph (11), a Change of Control shall be deemed to have occurred if the event set forth in any one of the following subparagraphs shall have occurred:

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

(b) during any period of two consecutive calendar years, the following individuals cease for any reason to constitute a majority of the number of directors then serving as directors of the Company: individuals, who on July 14, 1999 constitute the Board of Directors of the Company and any new director (other than a director whose initial assumption of office is in connection with the settlement of an actual or threatened

election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors of the Company or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on July 14, 1999 or whose appointment, election or nomination for election was previously so approved or recommended; or

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

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

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

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

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

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

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

(a) shall receive credit for an additional five years of Credited Service
(provided that total Credited Service under the Plan does not exceed 40 years) and

(b) shall, if age 55 or less, be deemed to be five years older than his actual age, or if age 56 to 59 be deemed to be age 60, and

(c) shall have his Severance Pay counted as Compensation under this Plan as if paid in monthly installments commencing with his Employment Termination (within the meaning of the SAP),

provided that, for purposes of clause (ii) of Subparagraph (b) of Paragraph (1) of Article IV of this Plan, the single life, no-death-benefit annuity equivalent shall not exceed the equivalent determined by ascribing to the Common Stock of the Company, as of the Valuation Date, a value equal to the average of the mean of the high and low sales prices (as reported in the composite transaction table covering transactions of New York Stock Exchange-listed securities) for each trading day in the two calendar quarters immediately preceding the calendar quarter in which a Change of Control (as defined in Paragraph (11) above) occurs, and the amount payable under this Plan at age 60 assuming such Eligible Management Associate remained in employment up to such age at a Compensation level equal to that of the calendar year immediately preceding his Employment Termination (within the meaning of the SAP).

ARTICLE IX. CLAIMS PROCEDURES

If an Associate does not receive the benefits which he believes he is entitled to receive under the Plan, he may file a claim for benefits with the Benefits Director. All claims will be made in writing and will be signed by the claimant. If the claimant does not furnish sufficient information to determine the validity of the claim, the Benefits Director will indicate to the claimant any additional information which is required.

Each claim will be approved or disapproved by the Benefits Director within 90 days following the receipt of the information necessary to process the claim. In the event the Benefits Director denies a claim for benefits in whole or in part, the Benefits Director will notify the claimant in writing of the denial of the claim. Such notice by the Benefits Director will also set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, the specific Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim with an explanation of the Plan's claim review procedure as set forth below. If no action is taken by the Benefits Director on a claim within 90 days, the claim will be deemed to be denied for purposes of the review procedure.

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

The Benefits Administration Committee or the named fiduciary designated by the Benefits Administration Committee will make a full and fair review of each appeal and any written materials submitted in connection with the appeal. The Benefits Administration Committee or the named fiduciary designated by the Benefits Administration Committee will act upon each appeal within 60 days after receipt thereof unless special circumstances require an extension of the time for processing, in which case a decision will be rendered as soon as possible but not later than 120 days after the appeal is received. The claimant will be given the opportunity to review pertinent documents or materials upon submission of a written request to the Benefits Administration Committee or named fiduciary, provided the Benefits Administration Committee or named fiduciary finds the requested documents or materials are pertinent to the appeal. On the basis of its review, the Benefits Administration Committee or named fiduciary will make an independent determination of the claimant's eligibility for benefits under the Plan.

The decision of the Benefits Administration Committee or named fiduciary on any claim for benefits will be final and conclusive upon all parties thereto. In the event the Benefits Administration Committee or named fiduciary denies an appeal in whole or in part, it will give written notice of the decision to the claimant, which notice will set forth in a manner calculated to be understood by the claimant the specific reasons for such

denial and which will make specific reference to the pertinent Plan provisions on which the decision was based.

APPENDIX I

J. C. Penney Company, Inc.

JCPenney National Bank
(from and after August 1, 1994 until December 17, 1997)

JCP Internet Commerce Solutions, Inc.
(from and after February 1, 1999)

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

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

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

JCP Portfolio, Inc.
(dissolved July 18, 1995)

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

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

JCP Publications Corp.
(formerly JCP Media Corporation)

(from and after April 3, 1996)

JCPenney Puerto Rico, Inc.

JCP Receivables, Inc.

StepInside, Inc.
(from and after January 1, 2000)

APPENDIX II

FORMER ELIGIBLE MANAGEMENT ASSOCIATES
WHOSE BENEFITS HAVE BEEN ASSUMED BY
THE SUPPLEMENTAL RETIREMENT PROGRAM FOR
ELIGIBLE MANAGEMENT ASSOCIATES OF
JCPENNEY FINANCIAL SERVICES

John Camillo

Yumin Chen

Donald S. Creveling

Stephen Duran

David Foster

Jerry R. Geyer

Paul A. Heleski

Robert Iorio

Judy Johnston

Deborah Litwak

Karen A. Nelson

Larry J. Tracey

Robert Valliere

APPENDIX III

ELIGIBLE MANAGEMENT ASSOCIATES
WHOSE NAMES ARE SET FORTH ON
APPENDIX I TO THE
SUPPLEMENTAL RETIREMENT PROGRAM FOR
ELIGIBLE MANAGEMENT ASSOCIATES OF
JCPENNEY FINANCIAL SERVICES

John Camillo

Yumin Chen

Donald S. Creveling

John DiJoseph

Stephen Duran

David Foster

Walter Gatewood

Jerry R. Geyer

Paul A. Heleski

Robert Iorio

Judy Johnston

Deborah Litwak

Thomas McGahey

Deborah Megee

Lynn Morris

Karen A. Nelson

Karen Newton

Leslie Pierce

Alvin Prudhomme

Regina V. Rohner

Joseph Sartoris

Sue E. Stewart

George Suiter

Mark Thornton

Larry J. Tracey

Robert Valliere

R. Michael Williams

Pursuant to authority granted to me by the Board of Directors of J.C. Penney Company, Inc. at its meeting held on December 5, 2001, I hereby approve the amendments to the J.C. Penney Company, Inc. Pension Plan, the J.C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan, the J.C. Penney Company, Inc. Benefit Restoration Plan, the Supplemental Retirement Program for Management Profit-Sharing Associates of J.C. Penney Company, Inc., the J.C. Penney Company, Inc. Voluntary Early Retirement Plan, the J.C. Penney Company, Inc. Mirror Savings Plans I, II, and III, the J.C. Penney Company, Inc. Separation Pay Plan, and the JCP Telecom Systems, Inc. Early Retirement Plan in the forms annexed hereto as Exhibit A.

Dated as of January 27, 2002.

 /s/ Gary L. Davis
--------------------------------
Gary L. Davis
Executive Vice President,
Chief Human Resources and
Administration Officer

Approval of Counsel:

 /s/ T.P. Blaylock
-------------------------------------
T.P. Blaylock


 /s/ M.E. White
-------------------------------------
M.E. White

WHEREAS, the Board of Directors of J.C. Penney Company, Inc. authorized an Agreement and Plan of Merger (the "Merger Agreement") between J.C. Penney Company, Inc. ("Company"), J.C. Penney Holdings, Inc., a Delaware corporation ("Holdings"), and JCP Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings ("Merger Sub");

WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with Company surviving as a wholly-owned subsidiary of Holdings (the "Merger");

WHEREAS, pursuant to the Merger, Holdings will amend and restate its certificate of incorporation to inter alia, change its name to "J.C. Penney Company, Inc.";

WHEREAS, pursuant to the Merger, the Company will amend and restate its certificate of incorporation to inter alia, change its name to "J.C. Penney Corporation, Inc.";

NOW, THEREFORE, as authorized by the Board of Directors on December 5, 2001, the J.C. Penney Company, Inc. Pension Plan (As Amended and Restated Effective January 1, 2001); the J.C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan; the J.C. Penney Company, Inc. Benefit Restoration Plan, the Supplemental Retirement Program for Management Profit-Sharing Associates of J.C. Penney Company, Inc.; the J.C. Penney Company, Inc. Voluntary Early Retirement Plan; the J.C. Penney Company, Inc. Mirror Savings Plans I, II, and III, the J.C. Penney Company, Inc. Separation Pay Plan, and the JCP Telecom Systems, Inc. Early Retirement Plan be, and they hereby are, amended, effective as of January 27, 2002, as set forth in Exhibits 1, 2, 3, 4, 5, 6, 7, and 8, respectively.

AMENDMENT TO
SUPPLEMENTAL RETIREMENT PROGRAM FOR
MANAGEMENT PROFIT-SHARING ASSOCIATE OF
J. C. PENNEY COMPANY, INC.

1. The name of the Plan is changed effective January 27, 2002 to Supplemental Retirement Program for Management Profit-Sharing Associates of J. C. Penney Corporation, Inc. in each place it appears.

as amended from time to time, and on and after January 27, 2002, the Supplemental Retirement Program for Management Profit-Sharing Associates of J. C. Penney Corporation, Inc. as amended from time to time.

3. Paragraph (7) of Article IV is amended effective January 27, 2002 to add the following sentence after sentence one:

Effective January 27, 2002, the name of the VERP Plan was changed to the J. C. Penney Corporation, Inc. Voluntary Early Retirement Plan.

4. Paragraph (11) of Article VIII is amended effective January 27, 2002 to delete the word "Company" and to substitute therefor the words "Parent Company" in each place in which it appears.

5. Paragraph (12) of Article VIII is amended effective January 27, 2002 to delete in sentence one the words "J. C. Penney Company, Inc. 1999 Separation Allowance Program for Profit-Sharing Management Associates ("SAP")" and to substitute therefor the words "J. C. Penney Corporation, Inc. 1999 Separation Allowance Program for Profit-Sharing Management Associates ("SAP")".

December 11, 1998           Human Resources Committee

July 14, 1999               Board of Directors
December 10, 1999           Human Resources Committee

December 11, 2000           Human Resources Committee

March 22, 2001              Human Resources and Compensation Committee

June 1, 2001                Director of Human Resources

October 10, 2001            Human Resources Committee
--------------------------------------------------------------------------------

J. C. PENNEY COMPANY, INC.

MIRROR SAVINGS PLANS I and II

Adopted effective January 1, 1999

Amended through October 10, 2001

The J. C. Penney Company, Inc. Mirror Savings Plans I and II ("Plans") were adopted effective January 1, 1999 as part of a program to redesign the Company's qualified and non-qualified savings plans to optimize the retirement savings opportunities for Associates.

The Plans are maintained by the Company on an unfunded basis primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees.

Merged into Plan II effective January 1, 1999 were the J. C. Penney Company, Inc. 1995 Deferred Compensation Plan and the Annual Benefit Limit Make-Up Accounts as of December 31, 1998 under the J. C. Penney Company, Inc. Benefit Restoration Plan and the Thrift Drug, Inc. Benefit Restoration Plan. On and after January 1, 1999 the J. C. Penney Company, Inc. 1995 Deferred Compensation Plan is no longer in existence.

(Plan II)

J. C. PENNEY COMPANY, INC.
MIRROR SAVINGS PLANS I and II

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

Article                                                                Page
-------                                                                ----

ARTICLE ONE      DEFINITIONS.............................................1

ARTICLE TWO      ELIGIBILITY AND PARTICIPATION...........................4

   2.01      Eligibility Determined for Each Plan Year...................4
   2.02      Eligible Associate..........................................4
   2.03      Participation...............................................4
   2.04      Election to Defer...........................................5
   2.05      Deferral Amounts............................................5
   2.06      Investment Elections........................................6

ARTICLE THREE    BENEFITS................................................7

   3.01      Establishment of Accounts...................................7
   3.02      Personal Accounts...........................................7
   3.03      Company Accounts............................................7
   3.04      Mirror Company Matching Contribution........................8
   3.05      Partial-Year Mirror Company Matching Contribution...........9
   3.06      Transferred Participants...................................10

ARTICLE FOUR     TRANSFERS..............................................11

   4.01      Personal Accounts..........................................11
   4.02      Company Accounts...........................................11

ARTICLE FIVE     VESTING................................................12

   5.01      Personal Accounts..........................................12
   5.02      Company Accounts...........................................12
   5.03      Forfeitures................................................12

ARTICLE SIX      TYPE OF PLAN...........................................13

   6.01      Top Hat Plan...............................................13
   6.02      No Funding.................................................13

ARTICLE SEVEN    DISTRIBUTIONS..........................................14

   7.01      Normal Form of Payment.....................................14
   7.02      Separation from Service....................................14
   7.03      Death......................................................14
   7.04      Alternate Form of Payment..................................15
   7.05      Hardship Distribution......................................15
   7.06      Fund-Specific Installments or Hardship Distributions.......16
   7.07      Form of Payments...........................................16
   7.08      Change of Control..........................................16
   7.09      Reemployed Particpants.....................................19

ARTICLE EIGHT    AMENDMENT AND TERMINATION..............................20

   8.01      Plan Amendment.............................................20
   8.02      Plan Termination...........................................20
   8.03      Automatic Plan Termination.................................20

ARTICLE NINE     MISCELLANEOUS..........................................21

   9.01      Plan Administration........................................21
   9.02      Plan Expenses..............................................21
   9.03      Effect on Other Benefits...................................21
   9.04      No Guarantee of Employment.................................22
   9.05      Disclaimer of Liability....................................22
   9.06      Severability...............................................22
   9.07      Successors.................................................22
   9.08      Governing Law..............................................22
   9.09      Construction...............................................22
   9.10      Taxes......................................................23
   9.11      Non-Assignability..........................................23
   9.12      Claims Procedure...........................................23

ARTICLE ONE

DEFINITIONS

As used herein, the following words and phrases have the following respective meanings unless the context clearly indicates otherwise.

In addition, Compensation includes any contributions made by the Associate's Employer on behalf of the Associate pursuant to a deferral election under any employee benefit plan containing a cash or deferred arrangement under
Section 401(k) of the Code, and any amounts that would have been received as cash but for an election to receive benefits under a cafeteria plan meeting the requirements of Section 125 of the Code.

Compensation also includes eligible cash incentive payments in the year paid to the Associate, and amounts deferred by the Active Participant pursuant to Section 2.05 of the Plan.

Compensation for a Plan Year shall be determined without regard to the limitations on annual compensation under Section 401(a)(17) of the Code.

An Associate who is in the service of the armed forces of the United States during any period in which his reemployment rights are guaranteed by law will be considered to have received the same rate of Compensation during his absence that he was receiving immediately prior to his absence, provided he returns to employment with an Employer within the time such rights are guaranteed.

With respect to transactions or distributions initiated by a Participant or Beneficiary, (a) the date of receipt by the Plan Administrator of the request if it is received prior to the close of the New York Stock Exchange, or (b) the next trading day if the request is received after the close of the New York Stock Exchange.

With respect to distributions not initiated by a Participant, the date the distribution is processed.

ARTICLE TWO

ELIGIBILITY AND PARTICIPATION

The eligibility of each Associate to participate in the Plan as an Active Participant is determined for each Plan Year based on the preceding Plan Year in accordance with Section 2.02 below. Eligibility for, or participation in, the Plan for a Plan Year does not give an Associate the right to defer part of his Compensation under the Plan for any other Plan Year.

An Associate shall be eligible to participate in the Plan as an Active Participant for a Plan Year if the Associate for the preceding Plan Year had:

(1) Satisfied the eligibility requirements of the Savings Plan; and

(2) Earnings in excess of $80,000 (as adjusted in accordance with Section 414(q)(1) of the Code) and less than $100,000 based on his actual Compensation through October 31 of such year plus his projected earnings from November 1 through December 31 of such year determined by using his Base Salary (as defined below) in effect on October 31 of such year.
(Plan 1)

(3) Earnings of at least $100,000 based on his actual Compensation through October 31 of such year plus his projected earnings from November 1 through December 31 of such year determined by using his Base Salary (as defined below) in effect on October 31 of such year.
(Plan II)

Base Salary shall mean the aggregate amount of regular wages due and payable to an Eligible Associate in that Plan Year or calendar year designated by his Employer as the Eligible Associate's monthly pay as reflected on the Employer's personnel records, including any such amounts otherwise due and payable with respect to which his Election to Defer applies hereunder.

An Eligible Associate for a Plan Year shall participate in the Plan for that Plan Year as an Active Participant by making a timely Election to Defer in accordance with Section 2.04 below. An Eligible Associate who fails to satisfy the requirements of Section 2.04 below shall not be allowed to make an Election to Defer and shall not be an Active Participant for that Plan Year.

A Participant who is not an Active Participant for a Plan Year shall continue to participate in the Plan in all respects except that such Participant shall not have the right to defer part of his Compensation under the Plan for that Plan Year, and shall not be

entitled to a Mirror Company Matching Contribution (as determined under Section 3.04) for that Plan Year.

An Eligible Associate for a Plan Year may elect to defer a percentage (as described in Section 2.05 below) of his Compensation for such Plan Year.

The Election to Defer for a Plan Year must be made in a manner approved by the Plan Administrator and must be received by the Plan Administrator by December 31 of the preceding Plan Year (or, in the case of the first Plan Year, received by December 31, 1998). An Eligible Associate may change his Election to Defer by filing a new Election to Defer with the Plan Administrator by the applicable deadline.

An Active Participant cannot change his Election to Defer during a Plan Year for that Plan Year. An Active Participant may terminate his Election to Defer during a Plan Year for that Plan Year but shall not be permitted to make another Election to Defer for that Plan Year. Such termination shall be effective as of the next available payroll period following receipt of the termination by the Plan Administrator.

An Election to Defer also shall terminate if:

(1) the Eligible Associate or Participant has a Separation from Service with an Employer, or

(2) the Plan is terminated, or

(3) upon a Change of Control that occurs before the date that payment of Compensation would have been made if not deferred.

An Active Participant for a Plan Year may defer up to 14% of his Compensation for that Plan Year. All deferral amounts shall be in whole percentages and made by payroll deduction.

(Plan I)

An Active Participant for a Plan Year may defer (a) up to 14% of his Compensation in that Plan Year up to the Earnings Dollar Limit (as defined below), and (b) up to 75% of his Compensation in that Plan Year that exceeds the Earnings Dollar Limit. All deferral amounts shall be in whole percentages and made by payroll deduction.

(Plan II)

The Earnings Dollar Limit of an Active Participant for a Plan Year shall be $160,000, as adjusted for cost-of-living increases in accordance with Section 401(a)(17) of the Code.

(Plan II)

A Participant shall complete an election, in the manner determined by the Plan Administrator, requesting that all of his future deferral amounts (in whole percentages) be applied to the purchase for him, as of the earliest practicable Valuation Date after such amounts are deferred, of units in his Personal Accounts within any one or more of the Mirror Investment Funds in each case at a price equal to the value of such units as of such Valuation Date.

Such election initially must be made prior to the commencement of his participation in the Plan and may be changed at any time during the Plan Year. Each such election or change in election shall be effective as soon as administratively feasible following receipt by the Plan Administrator or its delegate of the Participant's election.

In the event that no timely investment election by the Participant is on file with the Plan Administrator, such Participant shall be deemed to have elected that all deferral amounts shall be applied to the purchase for him of units in the Personal Account within the Mirror Investment Fund that is the Interest Income Fund.

ARTICLE THREE

BENEFITS

A Personal Account and a Company Account within each Mirror Investment Fund shall be established for each Participant in the Plan as if assets were invested in a trust. All amounts credited to the Personal Accounts and Company Accounts of a Participant shall at all times be held in the Company's general funds as part of the Company's general assets, unless a trust is established pursuant to
Section 7.08.

The value, including gains and losses, of such accounts and funds shall be determined by the Plan Administrator in the same manner that the value is determined under the Savings Plan. As of each Valuation Date, the net asset value of a unit shall equal the net asset value of a unit as determined under the Savings Plan.

No funds shall be allocated by the Company to any Personal Account, Company Account, Mirror Investment Fund, Mirror Company Matching Contribution, or Partial-Year Mirror Company Matching Contribution under the Plan.

All amounts deferred by an Active Participant pursuant to Article Two shall be credited to his Personal Accounts within his Mirror Investment Funds specified in his investment election.

All phantom amounts credited to a Participant in his account as of December 31, 1998 under the J. C. Penney Company, Inc. 1995 Deferred Compensation Plan shall be transferred and credited as of January 1, 1999 to his Personal Account within the Mirror Investment Fund that is the Interest Income Fund. (Plan II)

An amount deemed to be a Mirror Company Matching Contribution for a full year (as determined under Section 3.04 below) shall be credited to the Company Account of each Active Participant for a Plan Year as of the date a Company matching contribution is allocated to the accounts of participants under the Savings Plan or the Eckerd Savings Plan for that Plan Year.

An Active Participant must be in the active employ of an Employer on December 31 of the Plan Year to receive credit for a Mirror Company Matching Contribution for that Plan Year; provided, however, that an Active Participant who had a Separation from Service before December 31 of said year shall receive credit for a Partial-Year Mirror Company Matching Contribution (as determined under Section 3.05 below) if he qualified for a partial-year Company matching contribution under the Savings Plan or the Eckerd Savings Plan for such year.

A Mirror Company Matching Contribution for a full year shall be deemed to be invested in his Company Account within the Mirror Investment Fund that is the Penney Common Stock Fund. A Partial-Year Mirror Company Matching Contribution shall be deemed to be invested in his Company Accounts within his Mirror Investment Funds in accordance with the Participant's investment election for his Personal Accounts under this Plan.

All phantom amounts credited to a Participant in his Annual Benefit Limit Make-Up Account as of December 31, 1998 under the J. C. Penney Company, Inc. Benefit Restoration Plan or the Thrift Drug, Inc. Benefit Restoration Plan shall be transferred and credited as of January 1, 1999 to his Company Account within the Mirror Investment Fund that is the Interest Income Fund.

(Plan II)

Any amount of Company contributions credited to the Participant's Company account under the Savings Plan and subsequently cancelled so that said plan could satisfy the average contribution percentage test (as described in the Savings Plan) shall be credited to his Company Account within the Mirror Investment Fund that is the Penney Common Stock Fund in the year paid.

All amounts credited to the Company Accounts of a Participant shall be subject to the vesting provisions of Article Five.

A. Savings Plan Participants

The Mirror Company Matching Contribution for an Active Participant is an amount determined by subtracting (b) from (a) below where:

(a) Is the lesser of (c) or (d) below multiplied by the Company matching contribution rate as determined under the Savings Plan for such year;

(b) Is the amount of the matching contribution for a full year actually allocated to the Active Participant's account under the Savings Plan for such year;

(c) Is 6% multiplied by the Active Participant's Compensation for such year determined without regard to the limitations (i) on annual additions under Section 415(c)(1) of the Code, and (ii) on annual compensation under Section 401(a)(17) of the Code; and

(d) Is the amount of the Active Participant's deposits under the Savings Plan for the Plan Year plus the amounts deferred by the Active Participant pursuant to Article Two for such year.

B. Eckerd Savings Plan Participants

The Mirror Company Matching Contribution for an Active Participant is an amount determined by subtracting (b) from (a) below where:

(a) Is $1.50 for each $1.00 of the Active Participant's deposits under the Eckerd Savings Plan and amounts deferred pursuant to Article Two for such year to the extent the total of such deposits and deferrals do not exceed 2% of his Compensation for such year, and $1.00 for each $1.00 of his deposits under the Eckerd Savings Plan and amounts deferred pursuant to Article Two for such year to the extent the total of such deposits and deferrals exceed 2% but do not exceed 3% of his Compensation for such year; and

(b) Is the amount of the matching contribution actually allocated to the Active Participant's account under Section 3.03(b) of the Eckerd Savings Plan for such year.

Compensation for such year shall be determined without regard to the limitations (i) on annual additions under Section 415(c)(1) of the Code, and
(ii) on annual compensation under Section 401(a)(17) of the Code.

A. Savings Plan Participants

The Partial-Year Mirror Company Matching Contribution is an amount determined by subtracting (b) from (a) below where:

(a) Is the lessor of 50% of (c) below or 50% of (d) below;

(b) Is the amount of the matching contribution for a partial year actually allocated to the Active Participant's account under the Savings Plan for such year;

(c) Is 6% multiplied by the Active Participant's Compensation (as determined below) for such year determined without regard to the limitations on (i) annual additions under Section 415(c)(1) of the Code, and (ii) annual compensation under Section 401(a)(17) of the Code; and

(d) Is the amount of the Active Participant's deposits under the Savings Plan for the Plan year plus the amounts deferred by the Active Participant pursuant to Article Two for such year.

Compensation for the purpose of (c) above shall mean the Active Participant's actual Compensation (other than eligible cash incentive payments) received during the Plan Year plus 1/12 of such eligible cash incentive payments received during the Plan Year multiplied by the number of months (including partial months) during which the Active Participant was in the active employ of his Employer.

B. Eckerd Savings Plan Participants

The Partial-Year Mirror Company Matching Contribution is the amount determined under Section 3.04-B except that Compensation shall mean the Active Participant's actual Compensation (other than eligible cash incentive payments) received during the Plan Year plus 1/12 of such eligible cash incentive payments received during the Plan Year multiplied by the number of months (including partial months) during which the Active Participant was in the active employ of his Employer.

In the event an Active Participant transfers employment from one Employer to another Employer during the Plan Year without a break in service and is a participant in both the Savings Plan and the Eckerd Savings Plan during such Plan Year, he shall be entitled to a Mirror Company Matching Contribution determined under Sections 3.05-A and 3.05-B except that for the purposes of
Section 3.05-A, the matching contribution rate as determined under the Savings Plan for such year shall be applied and the 50% matching rate shall not be applied.

ARTICLE FOUR

TRANSFERS

A Participant may elect, once in each calendar day of the Plan Year, to transfer an amount (in whole percentages) equal to the value of all or part of his units in his Personal Accounts within any one or more of the Mirror Investment Funds to another one or more of his Personal Accounts within the Mirror Investment Funds. The value of such units shall be determined as of the Valuation Date. A transfer is effective only if made in the manner determined by the Plan Administrator.

A Participant may elect, once in each calendar day of the Plan Year, to transfer an amount (in whole percentages) equal to the value of all or part of his units in his Company Accounts within any one or more of the Mirror Investment Funds to another one or more of his Company Accounts within the Mirror Investment Funds. The value of such units shall be determined as of the Valuation Date. A transfer is effective only if made in the manner determined by the Plan Administrator.

Notwithstanding any other provision of the Plan, a Participant who wishes to make transfers from both his Personal Accounts and Company Accounts during the same day, must do so as part of the same transaction.

ARTICLE FIVE

VESTING

A Participant shall be 100% vested in the value of his Personal Accounts within his Mirror Investment Funds at all times without regard to whether he is a Participant in the Plan for any future Plan Year.

A. Savings Plan Participants

This Section 5.02A applies to Mirror Company Matching Contributions described in Section 3.04-A, and Partial-Year Mirror Company Matching Contributions described in Section 3.05-A. A Participant shall be vested in the value of his Company Accounts within his Mirror Investment Funds in the same vesting percentage attributable to the value of his Company accounts under the Savings Plan based on his full years of service (as defined in the Savings Plan) in accordance with the following table:

Full years of service                       Vested Percentage
---------------------                       -----------------

Less than 1                                         0%
1                                                  20%
2                                                  40%
3                                                  60%
4                                                  80%
5 or more                                         100%

B. Eckerd Savings Plan Participants

This Section 5.02-B applies to Mirror Company Matching Contributions described in Section 3.04-B, and Partial-Year Mirror Company Matching Contributions described in Section 3.05-B. A Participant shall be 100% vested in the value of his Company Accounts within his Mirror Investment Funds at all times.

A Participant who is less than 100% vested in the value of his Company Accounts as of his Separation from Service shall forfeit the non-vested value of his Company Accounts. In the event the Participant subsequently is re-employed by an Employer within 5 years, the amount forfeited (without earnings) hereunder shall be restored to his Company Accounts only if his amount forfeited under the Savings Plan is restored to his Savings Plan Company accounts. The restoration of forfeitures under the Plan shall be made in the same manner as the restoration of forfeitures under the Savings Plan.

ARTICLE SIX

TYPE OF PLAN

The Plan is intended to be a "pension plan" as defined in ERISA and is maintained by the Company on an unfunded basis primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees. As such, the Plan is intended to be construed so as not to provide income to any Participant or Beneficiary for purposes of the Internal Revenue Code prior to actual receipt of benefit payments under the Plan.

In the event that it should subsequently be determined by statute or by regulation or ruling that the Plan is not "a plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of sections 201(2), 301(a)(3), 401 (a)(1), and 4021(b)(6) of ERISA and section 2520.104-24 of Chapter 29 of the Code of Federal Regulations, participation in the Plan shall be restricted by the Plan Administrator to the extent necessary to assure that it will be such a plan within the meaning of such sections.

Notwithstanding any other provision of the Plan, if the benefits of a Participant become taxable prior to distribution from the Plan, such amounts shall be distributed as soon as practicable to the affected Participant.

Plan benefits shall be payable solely from the general assets of the Company. The Company shall not be required to, but may at its discretion, segregate or physically set aside any funds or assets attributable to Plan benefits. The Company shall retain title to and beneficial ownership of all assets of the Company, including any assets which may be used to pay Plan benefits. The cost of the Plan shall be expensed and a book reserve shall be maintained on the Company's financial statements.

No Participant or Beneficiary shall be deemed to have, pursuant to the Plan, any legal or equitable interest in any specific assets of the Company. To the extent that any Participant or Beneficiary acquires any right to receive Plan benefits, such right shall arise merely as a result of a contractual obligation and shall be no greater than, nor have any preference or priority over, the rights of any general unsecured creditor of the Company.

ARTICLE SEVEN

DISTRIBUTIONS

The normal form of payment of benefits under the Plan shall be 5 substantially equal annual installments payable in accordance with Section 7.02 below.

A Participant who has a Separation from Service for a reason other than death shall be entitled to receive the vested benefits in his Personal Accounts and Company Accounts in 5 substantially equal annual installments.

The first annual installment shall be paid in January following the year in which occurs his Separation from Service. Each annual installment thereafter shall be paid in January of each year. Payment dates shall be determined by the Plan Administrator.

Notwithstanding the foregoing, if the present value of the participant's vested benefits does not exceed $5,000, such benefits shall be distributed to the Participant in a single sum payment in January following the year in which occurs the later of (a) his Separation from Service or (b) the date of receipt by the Plan Administrator of the Participant's notice of employment termination. Such present value shall be determined as of the date of receipt by the Plan Administrator of the Participant's notice of employment termination; provided, however, that if the Participant had a Separation from Service before January 1, 2000, such present value shall be determined as of December 31, 1999. The payment date shall be determined by the Plan Administrator.

The Beneficiary of a Participant who (1) has a Separation from Service because of death, or (2) dies after his Separation from Service but before receiving all of his vested Plan benefits shall be entitled to receive the remaining annual installments to which the Participant was entitled as of the date of death. The first annual installment payable to the Beneficiary shall be paid in January following the Participant's date of death, or, if later, after satisfactory proof of death is received by the Plan Administrator. Each annual installment thereafter shall be paid in January of each year. Payment dates shall be determined by the Plan Administrator.

Notwithstanding the foregoing, if the present value of the participant's vested benefits does not exceed $5,000, such benefits shall be distributed to the Beneficiary of the Participant in a single sum payment in January following the Participant's date of death, or, if later, after satisfactory proof of death is received by the Plan Administrator. The payment date shall be determined by the Plan Administrator.

A single-sum distribution shall be paid to the estate of the Participant if as of the date of death (1) no valid beneficiary designation by the Participant is on file with the

Plan Administrator, (2) the Beneficiary has predeceased the Participant, or (3) the Beneficiary has died within 30 days after the Participant's date of death.

A single-sum distribution shall be paid to the estate of the Beneficiary if the Beneficiary dies before receiving all benefits to which he was entitled under the Plan.

A Participant entitled to receive benefits under Section 7.02 above may make an irrevocable election to receive (1) not more than 15 substantially equal annual installments, or (2) a single-sum distribution. The election must be made prior to the Participant's Separation from Service in a manner authorized by the Plan Administrator. If no election has been made by the Participant, benefits shall be paid in the normal form of payment in accordance with Section 7.02 above.

The first annual installment or single-sum distribution shall be paid in January following the year in which occurs his Separation from Service; provided, however, that the first annual installment or single-sum distribution shall not be paid until the January following the expiration of at least one calendar year after the year in which the Participant's election is made. Each annual installment thereafter shall be paid in January of each year.

A Participant also may make an irrevocable election to defer payment of the first installment or single-sum distribution to January of a later year provided the election is made prior to the Participant's Separation from Service in a manner authorized by the Plan Administrator. If no election has been made by the Participant, benefits shall commence in accordance with Section 7.02 or Section 7.04 above, whichever is applicable.

A Participant who elects both to change the normal form of payment and to defer payment must make the elections at the same time.

A Participant or Beneficiary entitled to vested benefits under the Plan may request a single-sum distribution to satisfy a severe financial hardship resulting from an unforseen event or emergency (as defined below) beyond his control. The distribution shall be limited to the amount necessary to satisfy the severe financial hardship (including any applicable federal, state or local taxes attributable to such distribution), and shall not exceed the current value of vested benefits payable to or on behalf of the Participant or Beneficiary.

An unforseen event or emergency may include, but is not limited to, a sudden and unexpected illness or accident of the Participant or Beneficiary or his dependent, loss of his property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as the result of events beyond his control, but shall not include the purchase of his home or the college expenses of his child.

The determination of the existence of a severe financial hardship and the approval of a hardship distribution shall be made by the Director of Personnel (or his successor by title or position) or his delegate except as provided below. Approval shall be given only if, taking into account all of the facts and circumstances, continued deferral of benefits or adherence to the Plan's payment schedule would result in a severe financial hardship to the Participant or Beneficiary. Approval shall not be granted if such hardship is or may be relieved through insurance, by liquidation of his assets (to the extent such liquidation would not itself cause severe financial hardship), or by terminating his Election to Defer.

With respect to a Participant who is a member of the Management Committee of the Company or a Participant who is subject to Section 16(b) of the Exchange Act, the determination of the existence of a severe financial hardship and the approval of the hardship distribution shall be made by the Human Resources and Compensation Committee.

In the case of a Participant or Beneficiary who receives a partial hardship distribution while receiving benefit payments, the regular payment schedule of the Participant or Beneficiary shall continue following such distribution.

The payment to a Participant or Beneficiary of installments or a hardship distribution shall reduce the value of his accounts in his Mirror Investment Fund(s) as designated by the Participant or Beneficiary. In the event the Participant or Beneficiary fails to designate the Mirror Investment Funds from which payment is to be made, the value of his Mirror Investment Funds shall be reduced on a pro-rata basis.

Payment of all benefits from the Plan shall be made only by check. No payments of Company stock shall be permitted.

At the time of commencement of participation in the Plan, a Participant may make an irrevocable election to have his Plan benefits paid in a single-sum immediately upon a Change of Control (as hereafter defined). If the Participant makes such an election as described above, his vested Plan benefits shall be paid in a single-sum upon a Change of Control.

If the Participant does not make such an election, then, upon a Change of Control, assets of the Company in an amount sufficient to pay benefits then due under the Plan shall immediately be transferred to a grantor trust to be established by the Company for the purpose of paying benefits hereunder, and the Personal Account and Company Account shall thereafter be paid to the Participant from such trust in accordance with the terms of the Plan; provided that at the time of such Change of Control, the Participant may make an irrevocable election to have his Plan benefits paid

in a single-sum immediately, in which event the Participant's benefits shall be reduced by 10% as a penalty for early withdrawal, and the Participant shall receive a single-sum payment of only 90% of his benefits otherwise payable under the Plan. On each anniversary date of the date of a Change of Control, the Company shall transfer to the grantor trust an amount necessary to pay all benefits accrued under the plan during the preceding twelve months.

For purposes of this Section 7.08, a Change of Control shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

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

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

(c) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation of entity, other than

(i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any Parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 50% of the combined voting power of the securities of the Company, such surviving entity or any Parent thereof outstanding immediately after such merger or consolidation, or

(ii) a merger or consolidation effected solely to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such

Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company's then outstanding securities; or

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

(e) the execution of a binding agreement that if consummated would result in a Change of Control of a type specified in subparagraphs (a) or (c) above (an "Acquisition Agreement") or of a binding agreement for the sale of disposition of assets that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (an "Asset Sale Agreement") or the adoption by the Board of Directors if the Company of a plan of complete liquidation or dissolution of the Company that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (a "Plan of Liquidation"), provided, however, that a Change of Control of the type specified in this subparagraph (e) shall not be deemed to exist or have occurred as a result of the execution of such Acquisition Agreement or Asset Sale Agreement, or the adoption of such a Plan of Liquidation, from and after the Abandonment Date. As used in this subparagraph (e), the term "Abandonment Date" shall mean the date on which

(i) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is terminated (pursuant to its terms or otherwise) without having been consummated,

(ii) the parties to an Acquisition Agreement or Asset Sale Agreement abandon the transactions contemplated thereby,

(iii) the Company abandons a Plan of Liquidation, or

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

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

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

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

If the Participant is reemployed, his scheduled payments under Section 7.02 or Section 7.04 shall cease and his election, if any, under Section 7.04 shall be void. The Participant may make a new election under Section 7.04 prior to his subsequent Separation from Service that shall apply to any unpaid benefits and to any additional benefits payable to or on behalf of the Participant because of a subsequent Separation from Service.

If no new election is made by the Participant, benefits shall be paid in the normal form of payment in accordance with Section 7.02 above.

ARTICLE EIGHT

AMENDMENT AND TERMINATION

The Human Resources and Compensation Committee may amend the Plan at any time and from time to time, without prior notice to any Participant or Beneficiary; provided, however, that the Human Resources Committee also may make amendments that relate primarily to the administration of the Plan, are applied in a uniform and consistent manner to all Participants, and are reported to the Human Resources and Compensation Committee.

The Board of Directors of the Company may terminate or discontinue the Plan at any time. If the Plan is terminated, it shall be on such terms and conditions as the Board of Directors of the Company shall deem appropriate.

This Plan is expressly conditioned on the continued deferral of income tax on amounts deferred by a Participant under the Plan until such amounts are actually distributed to the Participant. If, as a result of an adverse determination by the Internal Revenue Service or a change in the tax laws or applicable income tax regulations, amounts deferred by Participants under the Plan become subject to income tax prior to the actual distribution of such amounts, the Plan and each Election to Defer hereunder shall automatically terminate as of the effective date of such change in the law without any formal action by the Board of Directors to terminate the Plan.

ARTICLE NINE

MISCELLANEOUS

The Plan shall be administered under the direction of the Human Resources and Compensation Committee. Except as otherwise provided below, the Benefits Administration Committee shall be considered the Plan Administrator for purposes of ERISA.

The Human Resources and Compensation Committee may delegate all or some of the responsibility for the administration of the Plan to the Human Resources Committee or the Benefits Administration Committee in which case such Committee shall assume such delegated power and authority in administering the Plan to that extent; provided, however, that in no event shall the Human Resources Committee or the Benefits Administration Committee have any power or authority with respect to matters involving a Participant who is a member of the Management Committee of the Company or a Participant who is subject to Section 16(b) of the Exchange Act.

The Plan Administrator has the authority and discretion to construe and interpret the Plan. As part of this authority, the Plan Administrator has the discretion to resolve inconsistencies or ambiguities in the language of the Plan, to supply omissions from or correct deficiencies in the language of the Plan, and to adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan. The Plan Administrator also has the authority and discretion to resolve all questions of fact relating to any claim for benefits as to any matter for which the Plan Administrator has responsibility. All determinations of the Plan Administrator are final and binding on all parties.

Each person considered to be a fiduciary with respect to the Plan shall have only those powers and responsibilities as are specifically given that person under this Plan. It is intended that each such person shall be responsible for the proper exercise of his or her own powers and responsibilities, and shall not be responsible for any act or failure to act of any other person considered to be a fiduciary or any act or failure to act of any person considered to be a non-fiduciary.

All Plan administration expenses incurred by the Company or the Plan Administrator shall be paid by the Company.

Participation in the Plan shall not reduce any welfare benefits or retirement benefits offered by the Company, except that the amounts deferred under the Plan and any Plan benefits shall not be considered "Compensation" for purposes of the Savings Plan.

Neither participation in the Plan nor any action taken under the Plan shall confer upon a Participant any right to continue in the employ of an Employer or affect the right of such Employer to terminate the Participant's employment at any time.

The Employer shall be solely responsible for the payment of Plan benefits hereunder. The members of the Human Resources and Compensation Committee and the Human Resources Committee, and the officers, directors, employees, or agents of the Company or any other Employer, shall not be liable for such benefits. Unless otherwise required by law, no such person shall be liable for any action or failure to act, except where such act or omission constitutes gross negligence or willful or intentional misconduct.

If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall apply only to that provision, and shall not affect or render invalid or unenforceable any other provision of the Plan. In such event, the Plan shall be administered and construed as if such invalid or unenforceable provision were not contained herein. If the application of any Plan provision to any Participant or Beneficiary shall be held invalid or unenforceable, the application of such provision to any other Participant or Beneficiary shall not in any manner be affected thereby.

The Plan and any Election to Defer shall be binding on (i) the Company and its successors and assigns, (ii) any Employer and its successors and assigns,
(iii) each Participant, (iv) each Beneficiary, and (v) the heirs, distributees, and legal representatives of each Participant and Beneficiary.

Except to the extent that the Plan may be subject to the provisions of ERISA, the Plan shall be construed and enforced according to the laws of the State of Texas without giving effect to the conflict of laws principles thereof. In the event limitations imposed by ERISA on legal actions do not apply, the laws of the State of Texas shall apply, and a cause of action under the Plan must be brought no later than four years after the date the action accrues.

As used herein, the masculine shall include the feminine, the singular shall include the plural, and vice versa, unless the context clearly indicates otherwise. Titles and headings herein are for convenience only and shall not be considered in construing the Plan. The words "hereof," "hereunder", and other similar compounds of the word

"here" shall mean and refer to the entire Plan and not to any particular provision or Section.

Any taxes imposed on Plan benefits shall be the sole responsibility of the Participant or Beneficiary. The Company shall deduct from Plan benefits any federal taxes, state taxes, local taxes, or other taxes required to be withheld. The Company shall, unless the Plan Administrator elects otherwise, withhold such taxes at the applicable flat rate percentage. The Company shall also deduct from any payment of Compensation, including any cash incentive payments, on the date such payment would have been made if not deferred under this Plan Social Security and Medicare taxes or other taxes required to be withheld on such date.

Unless otherwise required by law, and prior to distribution to a Participant or Beneficiary, Plan benefits shall not be subject to assignment, transfer, sale, pledge, encumbrance, alienation, or charge by such Participant or Beneficiary, and any attempt to do so shall be void. Plan benefits shall not be liable for or subject to garnishment, attachment, execution, or levy, or liable for or subject to the debts, contracts, or liabilities of the Participant or Beneficiary; provided, however, that the Company may offset from the payment of any Plan benefits to a Participant or Beneficiary amounts owed by the Participant to an Employer.

If a Participant or Beneficiary ("claimant") does not receive the benefits which the claimant believes he is entitled to receive under the Plan, the claimant may file a claim for benefits with the Director of Personnel (or his successor by title or position). All claims must be made in writing and must be signed by the claimant. If the claimant does not furnish sufficient information to determine the validity of the claim, the Director of Personnel will indicate to the claimant any additional information which is required.

Each claim will be approved or disapproved by the Director of Personnel within 90 days following receipt of the information necessary to process the claim. In the event the Director of Personnel denies a claim for benefits in whole or in part, the Director of Personnel will notify the claimant in writing of the denial of the claim. Such notice by the Director of Personnel will also set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, the specific Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim with an explanation of why such material or information necessary, and an explanation of the Plan's claim review procedure as set forth below. If no action is taken by the Director of Personnel on or a claim within 90 days, the claim will be deemed to be denied for purposes of the review procedure below.

A claimant may appeal a denial of his or her claim by requesting a review of the decision by the Plan Administrator. An appeal must be submitted in writing within six

months after the denial and must (i) request a review of the claim for benefits under the Plan, (ii) set forth all the grounds upon which the claimant's request for review is based and any facts in support thereof, and (iii) set forth any issues or comments which the claimant deems pertinent to the appeal.

The Plan Administrator will make a full and fair review of each appeal and any written materials submitted in connection with the appeal. The Plan Administrator will act upon each appeal within 60 days after receipt thereof, unless special circumstances require an extension of the time for processing, in which case a decision will be rendered as soon as possible but not later than 120 days after the appeal is received. The claimant will be given the opportunity to review pertinent documents or materials upon submission of a written request to the Plan Administrator, provided the Plan Administrator finds the requested documents or materials pertinent to the appeal. On the basis of its review, the Plan Administrator will make an independent determination of the claimant's eligibility for benefits under the Plan.

The decision of the Plan Administrator on any claim for benefits will be final and conclusive upon all parties thereto. In the event the Plan Administrator denies an appeal in whole or in part, the Plan Administrator will give written notice of the decision to the claimant, which notice will set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial and specific reference to the pertinent Plan provisions on which the decision was based.

J. C. PENNEY COMPANY, INC.

MIRROR SAVINGS PLAN III

Adopted effective August 1, 1999

As amended through October 10, 2001

               December 10, 1999     Human Resources Committee

               December 11, 2000     Human Resources Committee

               March 22, 2001        Human Resources and Compensation
                                     Committee

               June 1, 2001          Director of Human Resources

               October 10, 2001      Human Resources Committee

--------------------------------------------------------------------------------

J. C. PENNEY COMPANY, INC.

MIRROR SAVINGS PLAN III

Adopted effective August 1, 1999

As amended through October 10, 2001

The J. C. Penney Company, Inc. Mirror Savings Plan ("Plan") III was adopted effective August 1, 1999 as part of a program to redesign the Company's qualified and non-qualified savings plans to optimize the retirement savings opportunities for certain Associates prior to the date they became eligible to participate in the J. C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan.

The Plan is maintained by the Company on an unfunded basis primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees.

J. C. PENNEY COMPANY, INC.
MIRROR SAVINGS PLAN III

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

Article                                                                     Page
-------                                                                     ----

ARTICLE ONE     DEFINITIONS...................................................5

ARTICLE TWO     ELIGIBILITY AND PARTICIPATION.................................8

         2.01   Eligibility Determined for Each Plan Year.....................8
         2.02   Eligible Associate............................................8
         2.03   Participation.................................................8
         2.04   Election to Defer.............................................8
         2.05   Deferral Amounts..............................................9
         2.06   Investment Elections.........................................10

ARTICLE THREE   BENEFITS.....................................................11

         3.01   Establishment of Accounts....................................11
         3.02   Personal Accounts............................................11

ARTICLE FOUR    TRANSFERS....................................................12

         4.01   Personal Accounts............................................12

ARTICLE FIVE    VESTING......................................................13

         5.01   Personal Accounts............................................13

ARTICLE SIX     TYPE OF PLAN.................................................14

         6.01   Top Hat Plan.................................................14
         6.02   No Funding...................................................14

ARTICLE SEVEN   DISTRIBUTIONS................................................15

         7.01   Normal Form of Payment.......................................15
         7.02   Separation from Service......................................15
         7.03   Death........................................................15
         7.04   Alternate Form of Payment....................................16
         7.05   Hardship Distribution........................................16
         7.06   Fund-Specific Installments or Hardship Distributions.........17
         7.07   Form of Payments.............................................17
         7.08   Change of Control............................................17
         7.09   Reemployed Participants......................................20

                                        3

ARTICLE EIGHT   AMENDMENT AND TERMINATION....................................21

         8.01   Plan Amendment...............................................21
         8.02   Plan Termination.............................................21
         8.03   Automatic Plan Termination...................................21

ARTICLE NINE    MISCELLANEOUS................................................22

         9.01   Plan Administration..........................................22
         9.02   Plan Expenses................................................22
         9.03   Effect on Other Benefits.....................................22
         9.04   No Guarantee of Employment...................................23
         9.05   Disclaimer of Liability......................................23
         9.06   Severability.................................................23
         9.07   Successors...................................................23
         9.08   Governing Law................................................23
         9.09   Construction.................................................23
         9.10   Taxes........................................................24
         9.11   Non-Assignability............................................24
         9.12   Claims Procedure.............................................24

ARTICLE ONE

DEFINITIONS

As used herein, the following words and phrases have the following respective meanings unless the context clearly indicates otherwise:

In addition, Compensation includes any contributions made by the Associate's Employer on behalf of the Associate pursuant to a deferral election under any employee benefit plan containing a cash or deferred arrangement under
Section 401(k) of the Code, and any amounts that would have been received as cash but for an election to receive benefits under a cafeteria plan meeting the requirements of Section 125 of the Code.

Compensation also includes eligible cash incentive payments in the year paid to the Associate, and amounts deferred by the Active Participant pursuant to Section 2.05 of the Plan.

Compensation for a Plan Year shall be determined without regard to the limitations on annual compensation under Section 401(a)(17) of the Code.

An Associate who is in the service of the armed forces of the United States during any period in which his reemployment rights are guaranteed by law will be considered to

have received the same rate of Compensation during his absence that he was receiving immediately prior to his absence, provided he returns to employment with an Employer within the time such rights are guaranteed.

With respect to transactions or distributions initiated by a Participant or Beneficiary, (a) the date of receipt by the Plan Administrator of the request if it is received prior to the close of the New York Stock Exchange, or (b) the next trading day if the request is received after the close of the New York Stock Exchange.

With respect to distributions not initiated by a Participant, the date the distribution is processed.

ARTICLE TWO

ELIGIBILITY AND PARTICIPATION

The eligibility of each Associate to participate in the Plan as an Active Participant is determined for each Plan Year in accordance with Section 2.02 below. Eligibility for, or participation in, the Plan for a Plan Year does not give an Associate the right to defer part of his Compensation under the Plan for any other Plan Year.

An Associate shall be eligible to participate in the Plan as an Active Participant for a Plan Year if the Associate has been designated as an Eligible Associate by the Vice President and Director of Human Resources in his sole discretion (or his successor by title or position) and has received a written offer to participate in the Plan.

An Associate shall not be designated as an Eligible Associate unless he (a) is employed with the Company at a position responsibility level of 15 or above, or with an Employer at a comparable position responsibility level as determined by the Vice President and Director of Human Resources (or his successor by title or position) in his sole discretion and (b) is expected to have projected earnings of at least $100,000 for his first year of employment based on his Compensation as of his date of hire.

An Eligible Associate for a Plan Year shall participate in the Plan for that Plan Year as an Active Participant by making a timely Election to Defer in accordance with Section 2.04 below. An Eligible Associate who fails to satisfy the requirements of Section 2.04 below shall not be allowed to make an Election to Defer and shall not be an Active Participant for that Plan Year.

A Participant who is not an Active Participant for a Plan Year shall continue to participate in the Plan in all respects except that such Participant shall not have the right to defer part of his Compensation under the Plan for that Plan Year.

An Eligible Associate for a Plan Year may elect to defer a percentage (as described in Section 2.05 below) of his Compensation for such Plan Year.

The Election to Defer for a Plan Year must be made in a manner approved by the Plan Administrator and must be received by the Plan Administrator

(a) For the Plan Year ending on December 31, 1999, before September 1, 1999 and shall be effective on September 1, 1999, or

(b) For a Plan Year beginning after December 31, 1999, on or before the last day of the 30-day period ("election period") beginning on the Eligible Associate's date of hire and shall be effective on the first day of the next calendar month beginning after the end of the election period, or

(c) For any Plan Year not described in (a) or (b) above, by December 31 of the preceding Plan Year and shall be effective on January 1 following such preceding Plan Year.

The election period described in (b) above shall begin on the date of the written offer to participate in the Plan if the Vice President and Director of Human Resources (or his successor by title or position) determines in his sole discretion that the Eligible Associate did not have adequate time after his date of hire to make an Election to Defer.

An Eligible Associate may change his Election to Defer by filing a new Election to Defer with the Plan Administrator by the applicable deadline.

An Active Participant cannot change his Election to Defer during a Plan Year for that Plan Year. An Active Participant may terminate his Election to Defer during a Plan Year for that Plan Year but shall not be permitted to make another Election to Defer for that Plan Year. Such termination shall be effective as of the next available payroll period following receipt of the termination by the Plan Administrator.

An Election to Defer also shall terminate if:

(1) the Eligible Associate is eligible to participate in the J. C. Penney Company, Inc. Mirror Savings Plan II, or

(2) the Eligible Associate or Participant has a Separation from Service with an Employer, or

(3) the Plan is terminated, or

(4) upon a Change of Control that occurs before the date that payment of Compensation would have been made if not deferred.

An Active Participant for a Plan Year may defer (a) up to 14% of his Compensation in that Plan Year up to the Earnings Dollar Limit (as defined below), and (b) up to 75% of his Compensation in that Plan Year that exceeds the Earnings Dollar Limit provided, however, that for the Plan Year ending on December 31, 1999 an Active Participant may defer all or part of his supplemental cash payments and signing bonus. All deferral

amounts shall be in whole percentages and made by payroll deduction. Compensation in a Plan Year that is paid prior to the effective date of the Active Participant's Election to Defer cannot be deferred for that Plan Year.

The Earnings Dollar Limit of an Active Participant for a Plan Year shall be shall be $160,000, as adjusted for cost-of-living increases in accordance with
Section 401(a)(17) of the Code.

A Participant shall complete an election, in the manner determined by the Plan Administrator, requesting that all of his future deferral amounts (in whole percentages) be applied to the purchase for him, as of the earliest practicable Valuation Date after such amounts are deferred, of units in his Personal Accounts within any one or more of the Mirror Investment Funds in each case at a price equal to the value of such units as of such Valuation Date.

Such election initially must be made prior to the commencement of his participation in the Plan and may be changed at any time during the Plan Year. Each such election or change in election shall be effective as soon as administratively feasible following receipt by the Plan Administrator or its delegate of the Participant's election.

In the event that no timely investment election by the Participant is on file with the Plan Administrator, such Participant shall be deemed to have elected that all deferral amounts shall be applied to the purchase for him of units in the Personal Account within the Mirror Investment Fund that is the Interest Income Fund.

ARTICLE THREE

BENEFITS

A Personal Account within each Mirror Investment Fund shall be established for each Participant in the Plan as if assets were invested in a trust. All amounts credited to the Personal Accounts of a Participant shall at all times be held in the Company's general funds as part of the Company's general assets, unless a trust is established pursuant to Section 7.08.

The value, including gains and losses, of such accounts and funds shall be determined by the Plan Administrator in the same manner that the value is determined under the Savings Plan. As of each Valuation Date, the net asset value of a unit shall equal the net asset value of a unit as determined under the Savings Plan.

No funds shall be allocated by the Company to any Personal Account or Mirror Investment Fund under the Plan.

All amounts deferred by an Active Participant pursuant to Article Two shall be credited to his Personal Accounts within his Mirror Investment Funds specified in his investment election.

ARTICLE FOUR

TRANSFERS

A Participant may elect, once in each calendar day of the Plan Year, to transfer an amount (in whole percentages) equal to the value of all or part of his units in his Personal Accounts within any one or more of the Mirror Investment Funds to another one or more of his Personal Accounts within the Mirror Investment Funds. The value of such units shall be determined as of the Valuation Date. A transfer is effective only if made in the manner determined by the Plan Administrator.

ARTICLE FIVE

VESTING

A Participant shall be 100% vested in the value of his Personal Accounts within his Mirror Investment Funds at all times without regard to whether he is a Participant in the Plan for any future Plan Year.

ARTICLE SIX

TYPE OF PLAN

The Plan is intended to be a "pension plan" as defined in ERISA and is maintained by the Company on an unfunded basis primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees. As such, the Plan is intended to be construed so as not to provide income to any Participant or Beneficiary for purposes of the Internal Revenue Code prior to actual receipt of benefit payments under the Plan.

In the event that it should subsequently be determined by statute or by regulation or ruling that the Plan is not "a plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of sections 201(2), 301(a)(3), 401(a)(1), and 4021(b)(6) of ERISA and section 2520.104-24 of Chapter 29 of the Code of Federal Regulations, participation in the Plan shall be restricted by the Plan Administrator to the extent necessary to assure that it will be such a plan within the meaning of such sections.

Notwithstanding any other provision of the Plan, if the benefits of a Participant become taxable prior to distribution from the Plan, such amounts shall be distributed as soon as practicable to the affected Participant.

Plan benefits shall be payable solely from the general assets of the Company. The Company shall not be required to, but may at its discretion, segregate or physically set aside any funds or assets attributable to Plan benefits. The Company shall retain title to and beneficial ownership of all assets of the Company, including any assets which may be used to pay Plan benefits. The cost of the Plan shall be expensed and a book reserve shall be maintained on the Company's financial statements.

No Participant or Beneficiary shall be deemed to have, pursuant to the Plan, any legal or equitable interest in any specific assets of the Company. To the extent that any Participant or Beneficiary acquires any right to receive Plan benefits, such right shall arise merely as a result of a contractual obligation and shall be no greater than, nor have any preference or priority over, the rights of any general unsecured creditor of the Company.

ARTICLE SEVEN

DISTRIBUTIONS

The normal form of payment of benefits under the Plan shall be 5 substantially equal annual installments payable in accordance with Section 7.02 below.

A Participant who has a Separation from Service for a reason other than death shall be entitled to receive the vested benefits in his Personal Accounts in 5 substantially equal annual installments.

The first annual installment shall be paid in January following the year in which occurs his Separation from Service. Each annual installment thereafter shall be paid in January of each year. Payment dates shall be determined by the Plan Administrator.

Notwithstanding the foregoing, if the present value of the Participant's vested benefits does not exceed $5,000, such benefits shall be distributed to the Participant in a single sum payment in January following the year in which occurs the later of (a) his Separation from Service or (b) the date of receipt by the Plan Administrator of the Participant's notice of employment termination. Such present value shall be determined as of the date of receipt by the Plan Administrator of the Participant's notice of employment termination; provided, however, that if the participant had a Separation from Service before January 1, 2000, such present value shall be determined as of December 31, 1999. The payment date shall be determined by the Plan Administrator.

The Beneficiary of a Participant who (1) has a Separation from Service because of death, or (2) dies after his Separation from Service but before receiving all of his vested Plan benefits shall be entitled to receive the remaining annual installments to which the Participant was entitled as of the date of death. The first annual installment payable to the Beneficiary shall be paid in January following the Participant's date of death, or, if later, after satisfactory proof of death is received by the Plan Administrator. Each annual installment thereafter shall be paid in January of each year. Payment dates shall be determined by the Plan Administrator.

A single-sum distribution shall be paid to the estate of the Participant if as of the date of death (1) no valid beneficiary designation by the Participant is on file with the Plan Administrator, or (2) the Beneficiary has predeceased the Participant, or (3) the Beneficiary has died within 30 days after the participant's date of death.

A single-sum distribution shall be paid to the estate of the Beneficiary if the Beneficiary dies before receiving all benefits to which he was entitled under the Plan.

Notwithstanding the foregoing, if the present value of the participant's vested benefits does not exceed $5,000, such benefits shall be distributed to the Beneficiary of the Participant in a single sum payment in January following the Participant's date of death, or, if later, after satisfactory proof of death is received by the Plan Administrator. The payment date shall be determined by the Plan Administrator.

A Participant entitled to receive benefits under Section 7.02 above may make an irrevocable election to receive (1) not more than 15 substantially equal annual installments, or (2) a single-sum distribution. The election must be made prior to the Participant's Separation from Service in a manner authorized by the Plan Administrator. If no election has been made by the Participant, benefits shall be paid in the normal form of payment in accordance with Section 7.02 above.

The first annual installment or single-sum distribution shall be paid in January following the year in which occurs his Separation from Service; provided, however, that the first annual installment or single-sum distribution shall not be paid until the January following the expiration of at least one calendar year after the year in which the Participant's election is made. Each annual installment thereafter shall be paid in January of each year.

A Participant also may make an irrevocable election to defer payment of the first installment or single-sum distribution to January of a later year provided the election is made prior to the Participant's Separation from Service in a manner authorized by the Plan Administrator. If no election has been made by the Participant, benefits shall commence in accordance with Section 7.02 or Section 7.04 above, whichever is applicable.

A Participant who elects both to change the normal form of payment and to defer payment must make the elections at the same time.

A Participant or Beneficiary entitled to vested benefits under the Plan may request a single-sum distribution to satisfy a severe financial hardship resulting from an unforseen event or emergency (as defined below) beyond his control. The distribution shall be limited to the amount necessary to satisfy the severe financial hardship (including any applicable federal, state or local taxes attributable to such distribution), and shall not exceed the current value of vested benefits payable to or on behalf of the Participant or Beneficiary.

An unforeseen event or emergency may include, but is not limited to, a sudden and unexpected illness or accident of the Participant or Beneficiary or his dependent, loss of his property due to casualty, or other similar extraordinary and unforeseeable

circumstances arising as the result of events beyond his control, but shall not include the purchase of his home or the college expenses of his child.

The determination of the existence of a severe financial hardship and the approval of a hardship distribution shall be made by the Vice President and Director of Human Resources (or his successor by title or position) or his delegate except as provided below. Approval shall be given only if, taking into account all of the facts and circumstances, continued deferral of benefits or adherence to the Plan's payment schedule would result in a severe financial hardship to the Participant or Beneficiary. Approval shall not be granted if such hardship is or may be relieved through insurance, by liquidation of his assets (to the extent such liquidation would not itself cause severe financial hardship), or by terminating his Election to Defer.

With respect to a Participant who is a member of the Management Committee of the Company or a Participant who is subject to Section 16(b) of the Exchange Act, the determination of the existence of a severe financial hardship and the approval of the hardship distribution shall be made by the Human Resources and Compensation Committee.

In the case of a Participant or Beneficiary who receives a partial hardship distribution while receiving benefit payments, the regular payment schedule of the Participant or Beneficiary shall continue following such distribution.

The payment to a Participant or Beneficiary of installments or a hardship distribution shall reduce the value of his accounts in his Mirror Investment Fund(s) as designated by the Participant or Beneficiary. In the event the Participant or Beneficiary fails to designate the Mirror Investment Funds from which payment is to be made, the value of his Mirror Investment Funds shall be reduced on a pro-rata basis.

Payment of all benefits from the Plan shall be made only by check. No payments of Company stock shall be permitted.

At the time of commencement of participation in the Plan, a Participant may make an irrevocable election to have his Plan benefits paid in a single-sum immediately upon a Change of Control (as hereafter defined). If the Participant makes such an election as described above, his vested Plan benefits shall be paid in a single-sum upon a Change of Control.

If the Participant does not make such an election, then, upon a Change of Control, assets of the Company in an amount sufficient to pay benefits then due under the Plan

shall immediately be transferred to a grantor trust to be established by the Company for the purpose of paying benefits hereunder, and the Personal Account and Company Account shall thereafter be paid to the Participant from such trust in accordance with the terms of the Plan; provided that at the time of such Change of Control, the Participant may make an irrevocable election to have his Plan benefits paid in a single-sum immediately, in which event the Participant's benefits shall be reduced by 10% as a penalty for early withdrawal, and the Participant shall receive a single-sum payment of only 90% of his benefits otherwise payable under the Plan. On each anniversary date of the date of a Change of Control, the Company shall transfer to the grantor trust an amount necessary to pay all benefits accrued under the Plan during the preceding twelve months.

For purposes of this Section 7.08, a Change of Control shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

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

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

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

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

(e) the execution of a binding agreement that if consummated would result in a Change of Control of a type specified in subparagraphs (a) or (c) above (an "Acquisition Agreement") or of a binding agreement for the sale or disposition of assets that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (an "Asset Sale Agreement") or the adoption by the Board of Directors of the Company of a plan of complete liquidation or dissolution of the Company that, if consummated, would result in a Change of Control of a type specified in subparagraph (d) above (a "Plan of Liquidation"), provided, however, that a Change of Control of the type specified in this subparagraph (e) shall not be deemed to exist or have occurred as a result of the execution of such Acquisition Agreement or Asset Sale Agreement, or the adoption of such a Plan of Liquidation, from and after the Abandonment Date. As used in this subparagraph (e), the term "Abandonment Date" shall mean the date on which (i) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is terminated (pursuant to its terms or otherwise) without having been consummated, (ii) the parties to an Acquisition Agreement or Asset Sale Agreement abandon the transactions contemplated thereby, (iii) the Company abandons a Plan of Liquidation, or (iv) a court or regulatory body having competent jurisdiction enjoins or issues a cease and desist or stop order with respect to or otherwise prevents the consummation of, or a regulatory body notifies the Company that it will not approve an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the transactions contemplated thereby and such injunction, order or notice has become final and not subject to appeal; or

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

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

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

If the Participant is reemployed, his scheduled payments under Section 7.02 or Section 7.04 shall cease and his election, if any, under Section 7.04 shall be void. The Participant may make a new election under Section 7.04 prior to his subsequent Separation from Service that shall apply to any unpaid benefits and to any additional benefits payable to or on behalf of the Participant because of a subsequent Separation from Service.

If no new election is made by the Participant, benefits shall be paid in the normal form of payment in accordance with Section 7.02 above.

ARTICLE EIGHT

AMENDMENT AND TERMINATION

The Human Resources and Compensation Committee may amend the Plan at any time and from time to time, without prior notice to any Participant or Beneficiary; provided, however, that the Human Resources Committee also may make amendments that relate primarily to the administration of the Plan, are applied in a uniform and consistent manner to all Participants, and are reported to the Human Resources and Compensation Committee.

The Board of Directors of the Company may terminate or discontinue the Plan at any time. If the Plan is terminated, it shall be on such terms and conditions as the Board of Directors of the Company shall deem appropriate.

This Plan is expressly conditioned on the continued deferral of income tax on amounts deferred by a Participant under the Plan until such amounts are actually distributed to the Participant. If, as a result of an adverse determination by the Internal Revenue Service or a change in the tax laws or applicable income tax regulations, amounts deferred by Participants under the Plan become subject to income tax prior to the actual distribution of such amounts, the Plan and each Election to Defer hereunder shall automatically terminate as of the effective date of such change in the law without any formal action by the Board of Directors to terminate the Plan.

ARTICLE NINE

MISCELLANEOUS

The Plan shall be administered under the direction of the Benefit Plans Review Committee. Except as otherwise provided below, the Benefits Administration Committee shall be considered the Plan Administrator for purposes of ERISA.

The Human Resources and Compensation Committee may delegate all or some of the responsibility for the administration of the Plan to the Human Resources Committee or the Benefits Administration Committee in which case such Committee shall assume such delegated power and authority in administering the Plan to that extent; provided, however, that in no event shall the Human Resources Committee or the Benefits Administration Committee have any power or authority with respect to matters involving a Participant who is a member of the Management Committee of the Company or a Participant who is subject to Section 16(b) of the Exchange Act.

The Plan Administrator has the authority and discretion to construe and interpret the Plan. As part of this authority, the Plan Administrator has the discretion to resolve inconsistencies or ambiguities in the language of the Plan, to supply omissions from or correct deficiencies in the language of the Plan, and to adopt rules for the administration of the Plan which are not inconsistent with the terms of the Plan. The Plan Administrator also has the authority and discretion to resolve all questions of fact relating to any claim for benefits as to any matter for which the Plan Administrator has responsibility. All determinations of the Plan Administrator are final and binding on all parties.

Each person considered to be a fiduciary with respect to the Plan shall have only those powers and responsibilities as are specifically given that person under this Plan. It is intended that each such person shall be responsible for the proper exercise of his or her own powers and responsibilities, and shall not be responsible for any act or failure to act of any other person considered to be a fiduciary or any act or failure to act of any person considered to be a non-fiduciary.

All Plan administration expenses incurred by the Company or the Plan Administrator shall be paid by the Company.

Participation in the Plan shall not reduce any welfare benefits or retirement benefits offered by the Company, except that the amounts deferred under the Plan and any Plan benefits shall not be considered "Compensation" for purposes of the Savings Plan.

Neither participation in the Plan nor any action taken under the Plan shall confer upon a Participant any right to continue in the employ of an Employer or affect the right of such Employer to terminate the Participant's employment at any time.

The Employer shall be solely responsible for the payment of Plan benefits hereunder. The members of the Human Resources and Compensation Committee and the Human Resources Committee, and the officers, directors, employees, or agents of the Company or any other Employer, shall not be liable for such benefits. Unless otherwise required by law, no such person shall be liable for any action or failure to act, except where such act or omission constitutes gross negligence or willful or intentional misconduct.

If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall apply only to that provision, and shall not affect or render invalid or unenforceable any other provision of the Plan. In such event, the Plan shall be administered and construed as if such invalid or unenforceable provision were not contained herein. If the application of any Plan provision to any Participant or Beneficiary shall be held invalid or unenforceable, the application of such provision to any other Participant or Beneficiary shall not in any manner be affected thereby.

The Plan and any Election to Defer shall be binding on (i) the Company and its successors and assigns, (ii) any Employer and its successors and assigns,
(iii) each Participant, (iv) each Beneficiary, and (v) the heirs, distributees, and legal representatives of each Participant and Beneficiary.

Except to the extent that the Plan may be subject to the provisions of ERISA, the Plan shall be construed and enforced according to the laws of the State of Texas without giving effect to the conflict of laws principles thereof. In the event limitations imposed by ERISA on legal actions do not apply, the laws of the State of Texas shall apply, and a cause of action under the Plan must be brought no later than four years after the date the action accrues.

As used herein, the masculine shall include the feminine, the singular shall include the plural, and vice versa, unless the context clearly indicates otherwise. Titles and headings herein are for convenience only and shall not be considered in construing the

Plan. The words "hereof," "hereunder", and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision or Section.

Any taxes imposed on Plan benefits shall be the sole responsibility of the Participant or Beneficiary. The Company shall deduct from Plan benefits any federal taxes, state taxes, local taxes, or other taxes required to be withheld. The Company shall, unless the Plan Administrator elects otherwise, withhold such taxes at the applicable flat rate percentage. The Company shall also deduct from any payment of Compensation, including any cash incentive payments, on the date such payment would have been made if not deferred under this Plan Social Security and Medicare taxes or other taxes required to be withheld on such date.

Unless otherwise required by law, and prior to distribution to a Participant or Beneficiary, Plan benefits shall not be subject to assignment, transfer, sale, pledge, encumbrance, alienation, or charge by such Participant or Beneficiary, and any attempt to do so shall be void. Plan benefits shall not be liable for or subject to garnishment, attachment, execution, or levy, or liable for or subject to the debts, contracts, or liabilities of the Participant or Beneficiary; provided, however, that the Company may offset from the payment of any Plan benefits to a Participant or Beneficiary amounts owed by the Participant to an Employer.

If a Participant or Beneficiary ("claimant") does not receive the benefits which the claimant believes he is entitled to receive under the Plan, the claimant may file a claim for benefits with the Director of Personnel (or his successor by title or position). All claims must be made in writing and must be signed by the claimant. If the claimant does not furnish sufficient information to determine the validity of the claim, the Director of Personnel will indicate to the claimant any additional information which is required.

Each claim will be approved or disapproved by the Director of Personnel within 90 days following receipt of the information necessary to process the claim. In the event the Director of Personnel denies a claim for benefits in whole or in part, the Director of Personnel will notify the claimant in writing of the denial of the claim. Such notice by the Director of Personnel will also set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, the specific Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim with an explanation of why such material or information necessary, and an explanation of the Plan's claim review procedure as set forth below. If no action is taken by the Director of Personnel on or a claim within 90 days, the claim will be deemed to be denied for purposes of the review procedure below.

A claimant may appeal a denial of his or her claim by requesting a review of the decision by the Plan Administrator. An appeal must be submitted in writing within six months after the denial and must (i) request a review of the claim for benefits under the Plan, (ii) set forth all the grounds upon which the claimant's request for review is based and any facts in support thereof, and
(iii) set forth any issues or comments which the claimant deems pertinent to the appeal.

The Plan Administrator will make a full and fair review of each appeal and any written materials submitted in connection with the appeal. The Plan Administrator will act upon each appeal within 60 days after receipt thereof, unless special circumstances require an extension of the time for processing, in which case a decision will be rendered as soon as possible but not later than 120 days after the appeal is received. The claimant will be given the opportunity to review pertinent documents or materials upon submission of a written request to the Plan Administrator, provided the Plan Administrator finds the requested documents or materials pertinent to the appeal. On the basis of its review, the Plan Administrator will make an independent determination of the claimant's eligibility for benefits under the Plan.

The decision of the Plan Administrator on any claim for benefits will be final and conclusive upon all parties thereto. In the event the Plan Administrator denies an appeal in whole or in part, the Plan Administrator will give written notice of the decision to the claimant, which notice will set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial and specific reference to the pertinent Plan provisions on which the decision was based.

Pursuant to authority granted to me by the Board of Directors of J.C. Penney Company, Inc. at its meeting held on December 5, 2001, I hereby approve the amendments to the J.C. Penney Company, Inc. Pension Plan, the J.C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan, the J.C. Penney Company, Inc. Benefit Restoration Plan, the Supplemental Retirement Program for Management Profit-Sharing Associates of J.C. Penney Company, Inc., the J.C. Penney Company, Inc. Voluntary Early Retirement Plan, the J.C. Penney Company, Inc. Mirror Savings Plans I, II, and III, the J.C. Penney Company, Inc. Separation Pay Plan, and the JCP Telecom Systems, Inc. Early Retirement Plan in the forms annexed hereto as Exhibit A.

Dated as of January 27, 2002.

 /s/ Gary L. Davis
--------------------------------
Gary L. Davis
Executive Vice President,
Chief Human Resources and
Administration Officer

Approval of Counsel:

 /s/ T.P. Blaylock
-------------------------------------
T.P. Blaylock


 /s/ M.E. White
-------------------------------------
M.E. White

WHEREAS, the Board of Directors of J.C. Penney Company, Inc. authorized an Agreement and Plan of Merger (the "Merger Agreement") between J.C. Penney Company, Inc. ("Company"), J.C. Penney Holdings, Inc., a Delaware corporation ("Holdings"), and JCP Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdings ("Merger Sub");

WHEREAS, pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with Company surviving as a wholly-owned subsidiary of Holdings (the "Merger");

WHEREAS, pursuant to the Merger, Holdings will amend and restate its certificate of incorporation to inter alia, change its name to "J.C. Penney Company, Inc.";

WHEREAS, pursuant to the Merger, the Company will amend and restate its certificate of incorporation to inter alia, change its name to "J.C. Penney Corporation, Inc.";

NOW, THEREFORE, as authorized by the Board of Directors on December 5, 2001, the J.C. Penney Company, Inc. Pension Plan (As Amended and Restated Effective January 1, 2001); the J.C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan; the J.C. Penney Company, Inc. Benefit Restoration Plan, the Supplemental Retirement Program for Management Profit-Sharing Associates of J.C. Penney Company, Inc.; the J.C. Penney Company, Inc. Voluntary Early Retirement Plan; the J.C. Penney Company, Inc. Mirror Savings Plans I, II, and III, the J.C. Penney Company, Inc. Separation Pay Plan, and the JCP Telecom Systems, Inc. Early Retirement Plan be, and they hereby are, amended, effective as of January 27, 2002, as set forth in Exhibits 1, 2, 3, 4, 5, 6, 7, and 8, respectively.

AMENDMENT TO
J. C. PENNEY COMPANY, INC.
MIRROR SAVINGS PLANS I, II AND III

1. The names of the Plans are changed effective January 27, 2002 to J. C.
Penney Corporation, Inc. Mirror Savings Plan I, J. C. Penney Corporation, Inc. Mirror Savings Plan II, and J. C. Penney Corporation, Inc. Mirror Savings Plan III in each place they appear including the definitions in Article One of each Plan.

3. Section 2.05 is amended effective January 1, 2002 to delete "$160,000" and to substitute therefor "$200,000".

4. Section 7.08 is amended effective January 27, 2002 to delete the word "Company" and to substitute therefor the words "Parent Company" in each place in which it appears.

EXHIBIT 10(ii)(ab)

INDEMNIFICATION AGREEMENT

among

J. C. PENNEY COMPANY, INC.,

J. C. PENNEY CORPORATION, INC.

and

1.   Services to the Companies .................................................   6

2.   Indemnification ...........................................................   6

3.   Partial Indemnification ...................................................  12

4.   Determination of Entitlement to Indemnification Pursuant to Section 2(a). .  12

5.   Advancement of Costs and Expenses. ........................................  21

6.   Other Rights to Indemnification ...........................................  23

7.   Interval Protection Against Premature Enforcement .........................  24

8.   Trust Fund ................................................................  26

9.   Enforcement. ..............................................................  28

10.  Duration of Agreement. ....................................................  29

11.  Severability ..............................................................  31

12.  Identical Counterparts ....................................................  31

13.  Headings ..................................................................  32

14.  Modification and Waiver ...................................................  32

15.  Notification and Defense of Claim .........................................  32

16.  Notices ...................................................................  33

17.  Governing Law .............................................................  34

This INDEMNIFICATION AGREEMENT made and entered into as of the _____ day of ________ 2002 ("Agreement") by and among J. C. PENNEY COMPANY, INC., a Delaware corporation, J. C. PENNEY CORPORATION, INC., a Delaware corporation (formerly known as J. C. Penney Company, Inc., and now a wholly-owned subsidiary of J. C. Penney Company, Inc.) (J. C. Penney Company, Inc. and J. C. Penney Corporation, Inc. herein collectively called the "Companies"), and __________________________________ ("INDEMNITEE"):

WHEREAS, competent and experienced persons are becoming more reluctant to serve as directors or officers of publicly-held corporations unless they are provided with adequate protection against claims and actions against them for their activities on behalf or at the request of such corporations, generally through insurance and indemnification; and

WHEREAS, uncertainties in the interpretations of the statutes and regulations, laws and public policies relating to indemnification of corporate directors and officers are such as to make adequate, reliable assessment of the risks to which directors and officers of publicly held corporations may be exposed difficult, particularly in light of the proliferation of lawsuits against directors and officers; and

WHEREAS, the Boards of Directors of the Companies, based upon their business experience, have concluded that the continuation of present trends in litigation against corporate directors and officers will inevitably make it more difficult for the Companies to attract and retain directors and officers of the highest degree of competence committed to the active and effective direction and supervision of the business and affairs of the Companies and their subsidiaries and affiliates and the operation of their facilities, and the Boards deem such consequences to be so detrimental to the best interests of the Companies' stockholders that they have concluded that the Companies should act to provide their directors and officers with enhanced protection against inordinate risks attendant on their positions in order to assure that the most capable persons otherwise available will be attracted to such positions and, in such connection, said directors have further concluded that it is not only reasonable and prudent but necessary for the Companies to contractually obligate themselves to indemnify to the fullest extent permitted by applicable law their directors and certain of their officers and certain persons serving other entities at the request, or on behalf, of the Companies and to assume, to the maximum extent permitted by applicable law, financial responsibility for expenses and liabilities which might be incurred by such individuals in connection with claims lodged against them for their decisions and actions in such capacities; and

WHEREAS, Section 145 of the General Corporation Law of the State of Delaware, under which law the Companies are organized, empowers a corporation organized in Delaware to indemnify persons who serve as directors, officers, employees or agents of the corporation or persons who serve at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, and further specifies that the indemnification provided by said section "shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise", and further empowers a corporation to "purchase and maintain insurance" on behalf of such persons "against any liability asserted against him or incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of" said laws; and

WHEREAS, the Bylaws of the Companies permit indemnification in accordance with and to the full extent permitted by the laws of the State of Delaware, and resolutions adopted by the Board of Directors of J. C. Penney Corporation, Inc. on December 30, 1975, require that directors, officers and employees of the Companies acting as fiduciaries (within the meaning of the Employee Retirement Income Security Act of 1974) with respect to any of the Companies' employee benefit and welfare plans be indemnified in accordance with the

terms set forth in said resolution; and

WHEREAS, the Companies have (i) reviewed the type of insurance available to insure the directors and officers of the Companies and of their affiliates against costs, expenses (including attorneys' fees and disbursements), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by them in connection with any action, suit or proceeding to which they are, or are threatened to be made, a party by reason of their status and/or decisions or actions in such positions, (ii) studied the nature and extent of the coverage provided by such insurance and the cost thereof to the Companies, (iii) purchased such insurance to the extent reasonably available, and (iv) concluded, notwithstanding the purchase of such insurance to the extent reasonably available, that it would be in the best interests of the Companies and their stockholders for the Companies to enter into agreements to indemnify certain of such persons in the form of this Agreement, inasmuch as such insurance is, and is likely to continue to be, subject to certain significant exclusions and limitations or could cease to be reasonably available on any basis; and

WHEREAS, to further assure that the directors and officers of the Companies and persons serving other entities at the request, or on behalf, of the Companies will obtain the protections contemplated by this Agreement, notwithstanding future uncertainties, the Companies have concluded that it would be in the best interests of

the stockholders for such contractual indemnification to be supported by a trust fund to be established by the Companies; and

WHEREAS, the Companies desire to have INDEMNITEE serve or continue to serve as a director or officer of J. C. Penney Company, Inc. and/or J. C. Penney Corporation, Inc., and/or as a director, officer, employee, partner, trustee, agent or fiduciary of such other corporations, partnerships, joint ventures, employee benefit plans, trusts or other enterprises (herein collectively called "Company Affiliate") of which he or she has been or is serving, or will serve, at the request of or for the convenience of or to represent the interests of the Companies, free from undue concern for unpredictable, inappropriate or unreasonable claims for damages by reason of his or her being a director or officer of the Companies or a director, officer, employee, partner, trustee, agent or fiduciary of a Company Affiliate or by reason of his or her decisions or actions on their behalf; and

WHEREAS, INDEMNITEE is willing to serve, or to continue to serve, or to take on additional service for, J. C. Penney Company, Inc. and/or J. C. Penney Corporation, Inc., and/or the Company Affiliates in such aforesaid capacities on the condition that he or she be indemnified as provided for herein;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Companies and INDEMNITEE do hereby covenant and agree as follows:

(a) Except as otherwise expressly provided in this Agreement or prohibited by applicable law, the Companies, within 60 days (or such longer period, if any, as may be permitted by Section 4(a) hereof) after receipt of a written statement from INDEMNITEE requesting indemnification and reasonably evidencing the costs, expenses, judgments, penalties, fines and amounts in settlement incurred by him or

her, shall, in accordance with the applicable provisions of this Agreement, fully indemnify INDEMNITEE if INDEMNITEE is or was made a party or is threatened to be made a party to any Proceeding (as hereinafter defined) by reason of the fact that he or she is or was a director, officer, employee, agent or fiduciary of the Companies or is or was serving at the request of or for the convenience of or to represent the interests of either or both of the Companies as a director, officer, employee, partner, trustee, agent or fiduciary of a Company Affiliate, or by reason of anything done or not done by him or her in any such capacity (all of the foregoing reasons being herein collectively called "Qualifying Reasons"), against costs, expenses (including attorneys' fees and disbursements), judgments, penalties, fines and amounts in settlement incurred by him or her in connection with such Proceeding (including, but not limited to, the investigation, defense, settlement, or appeal thereof). In the event that both the foregoing sentence and Section 2(b) hereof would be applicable to the indemnification being sought, the provisions of Section 2(b) shall govern. For purposes of this Agreement, (i) a "Proceeding" shall mean any threatened, pending or completed investigation, action, suit, arbitration, alternate dispute resolution mechanism, or any other proceeding (including any appeals therefrom), whether civil, criminal, administrative or investigative in nature and whether in a court or arbitration, or before or involving a governmental, administrative or

private entity (including, but not limited to, an investigation initiated by either or both of the Companies, a Company Affiliate, or the Board of Directors or fiduciaries of any thereof), (ii) references to "fines" shall include any excise taxes assessed on INDEMNITEE with respect to any employee benefit or welfare plan, and (iii) references to "serving at the request of either or both of the Companies" shall include, without limitation, any service, while serving as a director, officer, employee, partner, trustee, agent or fiduciary of either or both of the Companies or any Company Affiliate which imposes duties on, or involves services by, INDEMNITEE with respect to any employee benefit or welfare plan of either or both of the Companies or any Company Affiliate, its participants or beneficiaries.

(b) Notwithstanding any other provision of this Agreement (except as set forth in Section 2(c) hereof), and without a requirement for any determination as described in Section 4(a) hereof, to the extent INDEMNITEE
(i) has prepared to serve or has served as a witness in any Proceeding in any way relating to either or both of the Companies, any Company Affiliate, any affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of either or both of the Companies ("Securities Act Affiliate"), any associate (as defined in said Rule 405) of either or both of the Companies or of any Securities Act Affiliate or Company Affiliate, or anything done or not done by INDEMNITEE as a director,

officer, employee, partner, trustee, agent, or fiduciary of either or both of the Companiesor any Company Affiliate or (ii) has been successful on the merits or otherwise (including, without limitation, the dismissal of an action without prejudice) in defense of any Proceeding arising out of a Qualifying Reason, or in the defense of any claim, issue or matter involved therein, whether in the final adjudication, arbitration or alternate dispute resolution mechanism or on appeal, the Companies shall fully indemnify him or her against costs and expenses (including attorneys' fees and disbursements) incurred by him or her in connection therewith (including, but not limited to, the preparation or service as a witness or the investigation, defense or appeal in connection with any such Proceeding) within 30 days after receipt by the Companies from INDEMNITEE of a statement requesting such indemnification, reasonably evidencing the expenses and costs so incurred by him or her and averring that they do not relate to matters of the type described in clauses (i) or (ii) of Section 2(c) hereof.

(c) Notwithstanding anything to the contrary in the foregoing provisions of this Section 2 (and except as provided in the proviso clause of this sentence), INDEMNITEE shall not be entitled, as a matter of right, to indemnification pursuant to this Section 2: (i) except as provided in
Section 4(e) or 9 hereof, against costs and expenses incurred in connection with any Proceeding commenced by INDEMNITEE against either or both

of the Companies, any Company Affiliate, any Securities Act Affiliate, or any person who is or was a director or officer, in his or her respective capacity as such, of the Companies, any Company Affiliate or any Securities Act Affiliate; or (ii) against costs and expenses incurred by INDEMNITEE in connection with preparing to serve or serving, prior to a Change in Control (as defined in Section 4(d)(i) hereof), as a witness in cooperation with any party or entity, who or which has threatened or commenced any Proceeding against either or both of the Companies, any Company Affiliate or Securities Act Affiliate, or any director, officer, employee, partner, trustee, agent or fiduciary of any thereof in his or her respective capacity as such; or (iii) to the extent that INDEMNITEE has theretofore received payment pursuant to any directors and officers liability insurance policy maintained by either or both of the Companies; provided, however, that indemnification may be provided by either or both of the Companies in any specific case as contemplated by Section 6 hereof notwithstanding the applicability of the foregoing clause (i) or (ii).

(d) In the event that INDEMNITEE is serving or has served as a Representative (as such term is defined in Section 4(a) of the Indemnification Trust Agreement attached hereto as Exhibit I), then, notwithstanding any other provision of this Agreement, and without a requirement for any determination as described in Section 4(a) hereof, either or both of the

Companies, within 30 days after receipt of a statement from INDEMNITEE requesting indemnification and reasonably evidencing the costs, expenses, judgments, penalties, fines and amounts in settlement incurred by him or her, shall fully indemnify INDEMNITEE if INDEMNITEE is or was made a party or is threatened to be made a party to any Proceeding by reason of the fact that he or she is or was such a Representative or by reason of anything done or not done by him or her in such capacity, against costs, expenses (including attorneys' fees and disbursements), judgments, penalties, fines, and amounts in settlement, incurred by him or her in connection with such Proceeding, provided that no indemnification shall be made with respect to (and INDEMNITEE shall state in his or her request that he or she is not seeking indemnification with respect to) any cost, expense, judgment, penalty, fine or amount in settlement as to which there has been a final judicial determination that such amount was incurred as a direct result of willful misconduct in the course of INDEMNITEE's service as a Representative.

(e) Notwithstanding any other provision of this Agreement, indemnification shall also be made to the extent that the Court of Chancery of the State of Delaware or the court in which a Proceeding was brought shall determine that INDEMNITEE is fairly and reasonably entitled to indemnification for such costs and expenses as such court shall deem proper.

(a) Upon written request by INDEMNITEE for indemnification pursuant to the first sentence of Section 2(a) hereof, a determination, if required by Delaware law, with respect to INDEMNITEE's entitlement thereto shall be made not later than 60 days (provided that such 60 day period can be extended for an additional reasonable time if (x) the Companies pursuant to a request by INDEMNITEE have provided timely, continuous and effective Interval Protection (as defined in Section 7 hereof) and (y) the Companies in good faith require such additional time for the obtaining or evaluating of documentation reasonably available to INDEMNITEE) after the Companies shall have received such request (i) if a Change in Control (as hereinafter defined) shall have occurred, by Independent Counsel (as hereinafter defined) (unless INDEMNITEE shall make a request which is

timely under the circumstances that such determination be made by the Board of Directors or stockholders, in which case pursuant to clause (ii)(A) or
(ii)(C) of this Section 4(a) as requested by INDEMNITEE) in a written opinion to the Board of Directors, a copy of which (including each prior draft thereof) shall be simultaneously delivered to INDEMNITEE, and (ii) in all other cases (A) by the Board of Directors of J. C. Penney Company, Inc. by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if such a quorum is not obtainable or, even if obtainable, if the Board of Directors by the majority vote of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be simultaneously delivered to INDEMNITEE or (C) by the stockholders of J. C. Penney Company, Inc. The General Counsel(s) of the Companies shall, promptly upon receipt of INDEMNITEE's request for indemnification, advise the Boards of Directors in writing that INDEMNITEE has made such request for indemnification. INDEMNITEE shall cooperate with the person or entity making such determination of INDEMNITEE's entitlement to indemnification, including providing to such person or entity upon reasonable advance request any documentation or information reasonably available to INDEMNITEE and necessary to such determination. Any costs or expenses (including attorneys' fees and disbursements) incurred by INDEMNITEE in so cooperating with the person or

entity making such determination shall be borne by the Companies (irrespective of the determination as to INDEMNITEE's entitlement to indemnification pursuant to Section 2(a) hereof) and the Companies hereby indemnify and agree to hold INDEMNITEE harmless therefrom.

(b) In making a determination of entitlement pursuant to Section 4(a) or 4(e) hereof, the person or entity making such determination shall presume that INDEMNITEE is entitled to indemnification pursuant to Section 2(a) hereof and that the Companies have the burden of proof in the making of any determination contrary to such presumption. If no determination pursuant to Section 4(a) hereof is made within 60 days (or such longer period, if any, as may be permitted by Section 4(a) hereof) of the Companies' receipt of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and INDEMNITEE shall be absolutely entitled to such indemnification, absent (i) a misstatement of a material fact in the request for indemnification or an omission of a material fact necessary to make the statements in such request not materially misleading with respect to the information necessary for the determination of entitlement to indemnification or (ii) a prohibition of such indemnification under applicable law.

(d) For purposes of this Agreement:

(i) "Change in Control" shall mean a change in control of J. C. Penney Company, Inc. of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 ("Act"), whether or not J. C. Penney Company, Inc. is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred (irrespective of the applicability of the initial clause of this definition) if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act, but excluding any employee benefit plan or employee stock plan of J. C. Penney Company, Inc. or any subsidiary of J. C. Penney Company, Inc., or any entity organized, appointed, established or holding securities of J. C. Penney Company, Inc. with voting power for or pursuant to the terms of any such plan) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of J. C. Penney Company, Inc. representing 35%

or more of the combined voting power of J. C. Penney Company Inc.'s then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors of J. C. Penney Company, Inc. in office immediately prior to such person's attaining such interest; (B) J. C. Penney Company, Inc. is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors of J. C. Penney Company, Inc. in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors of J. C. Penney Company, Inc. thereafter; or (C) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of J. C. Penney Company, Inc. (including for this purpose any new director whose election or nomination for election by J. C. Penney Company, Inc.'s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors of J. C. Penney Company, Inc.

(ii) "Disinterested Director" with respect to any request by INDEMNITEE for indemnification hereunder shall mean a director of J. C. Penney Company, Inc. who neither

is nor was a party to the Proceeding in respect of which indemnification is being sought by INDEMNITEE.

(iii) "Independent Counsel" shall mean a law firm or a member of a law firm (A) that neither is nor in the past five years has been retained to represent in any material matter the Companies, or any Securities Act Affiliate, or INDEMNITEE or any other party to the Proceeding giving rise to a claim for indemnification hereunder and (B) which, under applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either of the Companies or INDEMNITEE in an action to determine INDEMNITEE's right to indemnification under this Agreement and (C) that is reasonably acceptable to the Companies and INDEMNITEE. For purposes hereof, counsel shall not be deemed to represent any government or governmental entity which may have commenced any Proceeding or be asserting any claim against INDEMNITEE solely by reason of having represented any department, commission, authority, subdivision or public benefit corporation of or created by such government or governmental entity which is a party to such Proceeding or before which it is being prosecuted or which is making any such claim. In the event that the parties are unable to agree on the selection of Independent Counsel, such counsel shall be selected by lot from among the Delaware

law firms generally reputed to be experienced in corporate law and having more than 25 attorneys or New York City law firms generally reputed to be experienced in corporate law and having more than 150 attorneys and having, in each case, a rating of "av" or better in the then current Martindale-Hubbell Law Directory. Such selection shall be made in the presence of INDEMNITEE (or his or her representative), and the parties shall contact, in the order of their selection by lot, such law firms, requesting each such firm to accept an engagement to make the determination required hereunder until one of such firms accepts such engagement. The fees and expenses of counsel in connection with making any determination contemplated hereunder (irrespective of the determination as to INDEMNITEE's entitlement to indemnification) shall be paid by either or both of the Companies and, if requested by such counsel, either or both of the Companies shall promptly give such counsel an appropriate written agreement with respect to the payment of its fees and expenses and such other matters as may be reasonably requested by such counsel.

(e) In the event that pursuant to Section 4(a) hereof a determination is made that INDEMNITEE shall not be entitled to indemnification hereunder in respect of all or any part of a claim made by INDEMNITEE therefor, INDEMNITEE shall nevertheless be entitled, at his or her option, to a final

adjudication or may seek an award in arbitration regarding his or her entitlement to indemnification hereunder in respect of such claim. In the event INDEMNITEE seeks adjudication, INDEMNITEE shall initially commence, within 180 days from INDEMNITEE's receipt of notice that he or she is not entitled to indemnification, an appropriate action in an appropriate court of the State of Delaware or any other court of competent jurisdiction. In the event INDEMNITEE seeks an award in arbitration, such arbitration, which shall be conducted in Wilmington, Delaware or in New York, New York, shall be initiated by INDEMNITEE within 180 days from INDEMNITEE's receipt of notice that he or she is not entitled to indemnification, shall be conducted by a single arbitrator who is a member of a firm that would qualify as an Independent Counsel hereunder pursuant to the commercial arbitration rules of the American Arbitration Association, and the arbitrator shall notify the parties of his or her decision within 60 days following the initiation of such arbitration. The Companies hereby agree to be bound by the determination of such arbitrator and shall bear all fees, costs and expenses imposed by the American Arbitration Association on account of such proceeding, irrespective of the determination thereof. The Companies further unconditionally and irrevocably agree that their execution of this Agreement shall also constitute a stipulation by which they shall be irrevocably bound in any court or arbitration in which such proceeding shall have been

commenced, continued or appealed that (i) they shall not oppose INDEMNITEE's right to seek or obtain any such adjudication or award in arbitration or any other claim by reason of any prior determination made pursuant to this Agreement with respect to INDEMNITEE's right to indemnification under this Agreement on such claim or any other claim, or, except in good faith, raise any objections not specifically relating to the merits of INDEMNITEE's claim; (ii) for all purposes of this Agreement any such adjudication or arbitration shall be conducted de novo and without prejudice by reason of any such prior determination to the effect that INDEMNITEE is not entitled to indemnification; and (iii) it shall be bound by all provisions of this Agreement (including, but not limited to, Sections 4(b) and 4(c) hereof). Whether or not the court or arbitrator shall determine that INDEMNITEE is entitled to indemnification hereunder as to any costs, expenses (including attorneys' fees and disbursements), judgments, penalties, fines or amounts in settlement in respect of any claim, issue or matter involved in the Proceeding in respect of which indemnification is sought hereunder, either or both of the Companies shall within 30 days after written request therefor (and submission of reasonable evidence of the nature and amount thereof), and unless there is a specific judicial finding that INDEMNITEE's suit was frivolous, pay all costs and expenses (including attorneys' fees and disbursements) incurred by INDEMNITEE in

connection with such adjudication or arbitration (including, but not limited to, any appellate proceedings).

(f) If the person or entity (including the Board of Directors of J. C. Penney Company, Inc., Independent Counsel, stockholders, court or arbitrator) making the determination as to the entitlement of INDEMNITEE to indemnification hereunder shall determine that INDEMNITEE is not entitled to indemnification in respect of all claims, issues or matters involved in a Proceeding in respect of which indemnification is sought hereunder but is entitled to indemnification for some of such claims, issues or matters, such person or entity shall equitably allocate such costs, expenses (including attorneys' fees and disbursements), judgments, penalties, fines and amounts in settlement incurred in connection with such Proceeding among the claims, issues or matters involved therein and determine those for which INDEMNITEE shall be indemnified hereunder.

(a) All costs and expenses (including attorneys' fees, retainers and advances of disbursements required of INDEMNITEE) incurred by INDEMNITEE in preparing to serve or serving as a witness in a Proceeding of the type described in clause (i) of Section 2(b) hereof, or in investigating, defending or appealing any Proceeding relating to a Qualifying Reason (and not excluded by clause (i) or (ii) of Section 2(c)

(as modified by the proviso clause contained in such Section)) or arising in connection with service as a Representative, or in connection with an adjudication or award in arbitration pursuant to Section 4(e) hereof, or relating to a Proceeding described in or arising pursuant to Section 9 hereof, shall be paid by either or both of the Companies (in advance of the final disposition of such Proceeding) at the request of INDEMNITEE within 20 days after the receipt from time to time by either or both of the Companies from INDEMNITEE of a statement or statements requesting such advance or advances, reasonably evidencing the expenses and costs incurred by him or her in connection therewith and averring that they do not relate to matters described in the aforesaid clause (i) or (ii) of Section 2(c), together with a written undertaking by INDEMNITEE to repay such amount if it is ultimately determined (in a final adjudication or conclusion of an arbitration pursuant to Section 4(e) hereof, if INDEMNITEE elects to seek such an adjudication or arbitration, and otherwise in a determination, if required hereunder, pursuant to Section 4(a) hereof) that INDEMNITEE is not entitled to be indemnified against such costs and expenses by the Companies as provided by this Agreement (or, if INDEMNITEE has sought advances (i) pursuant to Section 4(e) or 9 hereof, if there is a specific judicial finding that INDEMNITEE's suit was frivolous or (ii) in his capacity as a Representative, if there is a final judicial determination of willful misconduct in the matter

giving rise to the Proceeding as to which he or she obtained an advance or advances).

(b) If and to the extent it is finally determined hereunder that INDEMNITEE is not entitled to indemnification, or is entitled only to partial indemnification, INDEMNITEE shall reimburse the Companies for all costs and expenses advanced or prepaid pursuant to INDEMNITEE's prior request or requests hereunder, or the proper proportion thereof, as the case may be, within 90 days after receipt of an itemized written statement therefor from the Companies, provided that INDEMNITEE shall have no obligation to reimburse the Companies for any of INDEMNITEE's costs and expenses relating to (i) cooperating with the Companies in making their determination, as provided in Section 4(a) hereof, (ii) an adjudication or arbitration of his or her entitlement to indemnification hereunder, as provided in Section 4(e) hereof or (iii) a Proceeding described in or arising under Section 9 hereof (unless, in the case of the foregoing clause
(ii) or (iii) there is a specific judicial finding that INDEMNITEE's suit was frivolous).

Restated Certificates of Incorporation or any Bylaw of the Companies or any other agreement or any vote of directors or stockholders or otherwise, whether as to action in his or her official capacity or in another capacity while occupying any of the positions or having any of the relationships referred to in
Section 2 of this Agreement.

During the interval between the Companies' receipt of INDEMNITEE's request for indemnification and the latest to occur of (a) payment in full to INDEMNITEE of the indemnification to which he or she is entitled hereunder, or (b) a determination (if required) pursuant to Section 4(a) hereof or a final adjudication or conclusion of an arbitration pursuant to Section 4(e) hereof (if INDEMNITEE elects to seek such an adjudication or arbitration) that INDEMNITEE is not entitled to indemnification hereunder (or, if INDEMNITEE has sought indemnification in his or her capacity as a Representative, a final judicial determination of willful misconduct in the matter giving rise to the Proceeding as to which he or she is seeking indemnification), the Companies shall provide "Interval Protection" which, for purposes of this Agreement, shall mean the taking of the necessary steps (whether or not such steps require expenditures to be made by the Companies at that time) to stay, pending a final determination of INDEMNITEE's entitlement to indemnification (and, if INDEMNITEE is so entitled, the payment thereof), the execution, enforcement or collection of any judgments, penalties, fines or any other amounts for which INDEMNITEE may be

liable (and as to which INDEMNITEE has requested indemnification hereunder) in order to avoid INDEMNITEE's being or becoming in default with respect to any such amounts (such necessary steps to include, but not be limited to, the procurement of a surety bond to achieve such stay or the loan to INDEMNITEE of amounts necessary to satisfy the judgments, penalties, fines or other amounts for which INDEMNITEE may be liable and as to which a stay of execution as aforesaid cannot be obtained, the Boards of Directors by their approval of the form of the Indemnification Agreement (as hereinafter defined) having made the judgment that, in general, such loan or similar assistance may reasonably be expected to benefit the Companies), within three days after receipt of INDEMNITEE's written request therefor, together with a written undertaking by INDEMNITEE to repay, no later than 90 days following receipt of a statement therefor from the Companies, amounts (if any) expended by the Companies for such purpose, if it is ultimately determined (in a final adjudication or conclusion of an arbitration pursuant to Section 4(e) hereof, if INDEMNITEE elects to seek such an adjudication or arbitration, and otherwise in a determination (if required) pursuant to Section 4(a) hereof) that INDEMNITEE is not entitled to be indemnified against such judgments, penalties, fines or other amounts (or, if INDEMNITEE has sought Interval Protection in his or her capacity as a Representative, if there is a final judicial determination of willful misconduct in the matter giving rise to the Proceeding as to which he obtained Interval Protection), provided that in no event shall the Companies pay the amount of any

such judgment, penalty, fine or other amount except pursuant to Section 2, 4 (if applicable) or 6 hereof.

terms prior to the termination of this Agreement, the Companies shall fund a new trust for the benefit of the INDEMNITEES (as defined in the Indemnification Trust Agreement), established upon substantially the same terms as the Trust, and funded to the same extent as would have been required if the Trust had not terminated. As more fully set forth in the Indemnification Trust Agreement, if the Companies shall fail to pay INDEMNITEE any indemnification or advances or provide Interval Protection to which INDEMNITEE is or shall become entitled pursuant to this Agreement, INDEMNITEE shall have the right to payment thereof from the Trust, upon INDEMNITEE's submission to the Trustee of a notice requesting any such payment, enclosing reasonable evidence of the amount to be so paid, stating under oath that (i) INDEMNITEE has requested and is entitled to such payment pursuant to the provisions of this Agreement, (ii) the Companies have failed to provide such payment and (iii) INDEMNITEE has not received such payment pursuant to any directors and officers liability insurance policy maintained by the Companies, and including in such notice an undertaking to repay such amounts to the Trust if any of the statements in the foregoing clause
(i), (ii) or (iii) are ultimately determined not to be true. Upon termination of the Trust pursuant to the provisions of Section 7 of the Indemnification Trust Agreement, any funds then remaining in the Trust, after the distributions provided for in the Indemnification Trust Agreement, shall (unless required for the funding of a new trust as aforesaid) revert to the Companies.

(a) The Companies unconditionally and irrevocably agree that their execution of this Agreement shall also constitute a stipulation by which they shall be irrevocably bound in any court or arbitration in which a proceeding by INDEMNITEE for enforcement of his or her rights shall have been commenced, continued or appealed that their obligations set forth in this Agreement are unique and special, and that failure of the Companies to comply with the provisions of this Agreement will cause irreparable and irremediable injury to INDEMNITEE, for which a remedy at law will be inadequate. As a result, in addition to any other right or remedy he may have at law or in equity with respect to a violation of this Agreement, INDEMNITEE shall be entitled to injunctive or mandatory relief directing specific performance by the Companies of their obligations under this Agreement, including without limitation the Companies' obligations regarding the establishment, re-establishment and funding of one or more trusts in accordance with Section 8 hereof. The Companies further irrevocably stipulate and agree that (i) they shall not, except in good faith, raise any objections not specifically relating to the merits of INDEMNITEE's claim, (ii) if a determination was made or deemed to have been made pursuant to the provisions of Section 4 hereof that INDEMNITEE is entitled to indemnification, the Companies shall be bound by such

determination and shall be precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding and enforceable, and (iii) the Companies shall be bound, in any such proceeding, by all provisions of this Agreement (including, but not limited to, Sections 4(b) and 4(c) hereof).

(b) In the event that INDEMNITEE is subject to or intervenes in any legal action in which the validity or enforceability of this Agreement is at issue or institutes any legal action, for specific performance or otherwise, to enforce his or her rights under, or to recover damages for breach of, this Agreement, INDEMNITEE shall, within 30 days after written request to the Companies therefor (and submission of reasonable evidence of the amount thereof), and unless there is a specific judicial finding that INDEMNITEE's suit was frivolous, be indemnified by the Companies against all costs and expenses (including attorneys' fees and disbursements) incurred by him or her in connection therewith.

(a) This Agreement shall continue until and terminate upon the later of (i) the tenth anniversary after INDEMNITEE has ceased to occupy any of the positions or have any of the relationships described in Section 2(a) of this Agreement or (ii) (A) the final termination or resolution of all Proceedings

with respect to INDEMNITEE commenced during such 10 year period and (B) either (x) receipt by INDEMNITEE of the indemnification to which he or she is entitled hereunder with respect thereto or (y) a final adjudication or binding arbitration that INDEMNITEE is not entitled to any further indemnification with respect thereto, as the case may be, provided that (subject to the exception set forth below), in the event that (1) the Board of Directors of J. C. Penney Corporation, Inc., in its discretion, determines to submit the Indemnification Agreements for stockholder ratification at J. C. Penney Company's 1987 Annual Meeting of Stockholders and (2) the stockholders fail to ratify the Indemnification Agreements at said Annual Meeting, then this Agreement shall terminate as of the close of business on the date of the certification (by the inspectors of election for said Annual Meeting) of said vote; except that this Agreement shall not terminate on such date pursuant to the foregoing proviso with respect to claims which have arisen (whether or not asserted) against INDEMNITEE prior to the close of business on such date, but shall continue in full force and effect until the occurrence of either of the events set forth in the foregoing clauses (x) and (y) of this paragraph (a) with respect to such claims.

(b) This Agreement shall be binding upon the Companies and their successors and assigns and shall inure to the benefit of INDEMNITEE and his or her heirs, devisees, executors, administrators or other legal representatives.

deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

of such failure. Nothing in this Agreement shall constitute a waiver of the Companies' right to seek participation at their own expense in any Proceeding which may give rise to indemnification hereunder.

(a) if to INDEMNITEE, at the address indicated on the signature page hereof,

(b) if to J. C. Penney Company, Inc.:

If Mailed:

J. C. Penney Company, Inc.
P.O. Box 10001
Dallas, Texas 75301-0005

Attn: General Counsel

If Delivered:

J. C. Penney Company, Inc.
6501 Legacy Drive, MS 005
Plano, Texas 75024-3698

Attn: General Counsel

(c) if to J. C. Penney Corporation, Inc.:

If Mailed:

J. C. Penney Company, Inc.
P.O. Box 10001
Dallas, Texas 75301-0005

Attn: General Counsel

If Delivered:

J. C. Penney Company, Inc.
6501 Legacy Drive, MS 005
Plano, Texas 75024-3698

Attn: General Counsel

or to such other address as may have been furnished to either party by the other party.

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

ATTEST:                              J. C. PENNEY COMPANY, INC.



By:________________________________  By:__________________________________
Name:______________________________  Name:________________________________
Title:_____________________________  Title:_______________________________



ATTEST:                              J. C. PENNEY CORPORATION, INC.



By:________________________________  By:__________________________________
Name:______________________________  Name:________________________________
Title:_____________________________  Title:_______________________________

INDEMNITEE

By:__________________________________
Name:
Title:
Address:

Exhibit 10(ii)(ac)
J. C. PENNEY CORPORATION, INC.
1989 MANAGEMENT
INCENTIVE COMPENSATION PROGRAM

ADOPTED BY BOARD OF DIRECTORS
JANUARY 31, 1989
EFFECTIVE FEBRUARY 1, 1989
AS AMENDED THROUGH FEBRUARY 20, 2002
(NO STOCKHOLDER APPROVAL REQUIRED)

J. C. PENNEY CORPORATION, INC.
1989 Management
Incentive Compensation Program

1. Purpose of Program. The purpose of this 1989 Management Incentive Compensation Program ("Program") is to continue in effect a fundamental policy which has been an important factor in the growth and success of J. C. Penney Corporation, Inc., and its divisions and subsidiaries (collectively, the "Company"). That policy is to base a substantial part of the compensation of management employees ("associates") of the Company holding positions of responsibility upon the operating results of the Company which such associates help to create. Those associates will be paid reasonable fixed salaries, but because their aggregate yearly remuneration may be affected substantially by variations in the operating results of the Company, they will have a direct incentive to put forth their best efforts for the development and growth of the Company.

2. Structure of Program. The Program shall initially consist of separate incentive compensation plans ("plan" or "plans") for the following groups of associates: (1) general management, (2) merchandising, and (3) catalog. The Board of Directors of the Company ("Board of Directors" or "Board") may from time to time authorize additional plans to be included in the Program or the consolidation of plans that are in the Program.

The Program and all plans shall be administered by, or under the direction of, a committee ("Committee") of the Board of Directors consisting of not less than three Board members who are not, and who have not within the year prior to such service on the

Committee been, eligible to participate in any plan or the Program. The Committee shall have plenary authority to interpret the Program and the plans and to make all determinations specified in or permitted by the Program and the plans or deemed necessary or desirable for their administration or for the conduct of the Committee's business; all 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; and the Committee may delegate its responsibilities under the Program and the plans to persons other than its members, subject to such terms and conditions as it shall determine.

3. Participants in Plans. Participants in a plan for any fiscal year shall be designated by the Committee. Such designation may be made and, may from time to time be changed, on an individual basis or by groups, according to position responsibility level, salary, or any other method of classification deemed appropriate by the committee, but only management associates (including those who are also directors, but excluding those who serve as directors only of J. C. Penney Company, Inc.) may be so designated by the Committee.

4. Determination of Bases of Participation of Participants. The basis on which each participant shall participate in a plan shall be determined by the Committee, and any bases so determined may be changed from time to time by such Committee.

The Committee may determine the basis on which each participant shall participate in a plan, on an individual basis or by groups, according to position responsibility level, salary, or any other method of classification deemed appropriate by the Committee. The Committee may specify that such determination will continue in effect until changed by it, in which event the Committee shall not be required to make a new determination for each fiscal year.

The Board of Directors shall determine the basis on which participants who are directors of J. C. Penney Company, Inc. shall participate in a plan, and from time to time may change such determination. The Board may specify that such determination shall continue in effect until changed by it, in which event the Board shall not be required to make a new determination for each fiscal year. Such initial determination and any such change shall be made only after recommendations of the Committee are considered.

5. Limit on Incentive Compensation. There are no limits on the total amount of incentive compensation payable with respect to the Program for any fiscal year.

6. Determination and Payments of Incentive Compensation. The method for determining incentive compensation payable with respect to any plan and the Program for any fiscal year shall be prescribed by the Committee, and may be changed from, time to time, and the Committee shall determine for each fiscal year the value of the incentive compensation unit under any plan included in the Program.

The amount of incentive compensation payable under the plans shall be computed in accordance with the determinations of the Committee, and shall be paid on the basis of such computation. The Committee shall adopt such rules and procedures as it shall deem necessary or desirable in order that the amounts paid under the Program be verified, and such verification be submitted to the Board for its approval. Such verified amounts, when approved by the Board shall be final, conclusive, and binding on all interested parties, including the Company and the plan participants.

The Board or the Committee may permit a participant to defer receipt of all or part of any payment under a plan, or the Board or the committee may determine to defer receipt, by all or some participants, of all or part of any such payment. Any such deferral shall be for such period and in accordance with such terms, provisions, and conditions as the Board or the Committee shall determine.

7. Termination and Amendment of Plans and Program. The Board of Directors shall have power to construe, interpret, administer, amend, modify, suspend, and terminate the Program or any plan established under the Program.

8. Effective Date. The effective date of the Program shall be February 1, 1989.

Exhibit 10(ii)(ad)

ECKERD CORPORATION

KEY MANAGEMENT BONUS PLAN

The Company is committed to a "pay for performance" philosophy. Therefore, compensation programs are designed to reward achievement of financial results. The KMBP is a pivotal component of a manager's total compensation, which includes base pay and benefits. It represents a significant corporate investment in its participants as key players on the Company's management team.

any other documents relating to it or a bonus award hereunder and any such decision, interpretation or construction shall be conclusive and binding upon all persons.

To be a "qualified participant" in the KMBP, an individual must be in a KMBP position before November 1st of the applicable fiscal year, remain in a KMBP position for at least 90 days, have a performance rating of Meeting Expectations or better for the applicable fiscal year, and be actively working for the Company on the last day of the bonus period. Associates with a performance rating of Improvement Needed or less for the bonus period or who were moved from a KMBP eligible position to a non-KMBP eligible position for performance reasons during the bonus period are not eligible to receive a bonus. If a participant holds a KMBP position for less than a full fiscal year, the participant's KMBP payment will be prorated according to the number of weeks the participant has served in a KMBP position during the applicable fiscal year. If a participant serves in more than one KMBP position in the course of the year, the bonus will be calculated for each position separately and prorated for the number of weeks in that position.

(earnings before interest and taxes) and EVA (economic value added), among others. The performance measures may be reflected on one or more matrixes. The KMBP will generate a unit value based upon the percent or dollar difference between actual and planned results for each matrix, and performance against approved EVA targets. The unit values on the matrix range from $0.00 to $3.00. Performance at plan produces a unit value of $1.00. The unit value of each matrix represents a percentage of the total unit value. A sample unit value matrix is attached as Exhibit "A". The financial measure EVA is calculated as follows:

An EVA improvement target will be established based on delivering to investors a competitive return on their capital. The target takes into consideration the demands of investors now owning or buying stock, and recognizes that performance must improve to deliver for them a competitive return. The EVA unit values will be determined by a formula that measures actual EVA dollar performance against the annual target. The formula to determine the unit value is shown as follows:

The range equals two times the EVA improvement target. To determine the variation from target, subtract the EVA improvement target from the actual EVA improvement.

applicable percentage. The applicable percentage is based upon the participant's position level as shown below:

                        Incentive                             Incentive
Eckerd Position Level  Compensation   Eckerd Position Level  Compensation
       (EPL)             Percent              (EPL)            Percent

        19                   37.2              13                27.0

        18                   34.8              12                18.0

        17                   32.3    The following schedule will apply for new
                                     bonus participants effective July 30, 2000.
        16              29.6/27.0*             11                13.9

        15                   27.0              10                10.2

        14                   27.0               9                 6.2

a. Voluntary Terminations. A qualified participant who voluntarily terminates employment with the Company before the end of the bonus period forfeits all rights to any payment under the KMBP plan. Participants who have informed the Company of their decision to leave the Company must be physically on the job on the last day of the bonus period to receive payment for that period. Participants who have notified the Company of their desire to terminate employment and who choose to take vacation prior to the end of bonus period will not be deemed to have completed the bonus period and will not be eligible for payout under the KMBP Plan. Participants who voluntarily terminate employment after the end of the bonus period but before the bonus is paid are eligible to receive the bonus payment for that period.

b. Involuntary Terminations. A qualified participant who is involuntarily terminated before the bonus is paid for the applicable bonus period forfeits all rights to any payment under the KMBP.

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 21%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
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 20%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
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 19%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 18%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 17%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 16%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 15%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 14%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 13%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 12%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 11%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
 10%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
  9%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
  8%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
  7%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
  6%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88   1.04
------------------------------------------------------------------------------------------------
  5%    .00     .05    .10    .15    .20    .25    .31    .38    .44    .50    .56    .88    .94
------------------------------------------------------------------------------------------------
  4%    .00     .00    .05    .10    .15    .20    .26    .33    .39    .45    .51    .78    .84
------------------------------------------------------------------------------------------------
  3%    .00     .00    .00    .05    .10    .15    .21    .28    .34    .40    .46    .68    .74
------------------------------------------------------------------------------------------------
  2%    .00     .00    .00    .00    .05    .10    .16    .23    .29    .35    .41    .58    .64
------------------------------------------------------------------------------------------------
  1%    .00     .00    .00    .00    .00    .05    .11    .18    .24    .30    .36    .48    .54
------------------------------------------------------------------------------------------------
MEET    .00     .00    .00    .00    .00    .00    .06    .13    .19    .25    .31    .38    .44
------------------------------------------------------------------------------------------------
 -1%    .00     .00    .00    .00    .00    .00    .00    .06    .13    .19    .25    .31    .38
------------------------------------------------------------------------------------------------
 -2%    .00     .00    .00    .00    .00    .00    .00    .00    .06    .13    .19    .25    .31
------------------------------------------------------------------------------------------------
 -3%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .06    .13    .19    .25
------------------------------------------------------------------------------------------------
 -4%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .06    .13    .19
------------------------------------------------------------------------------------------------
 -5%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .06    .13
------------------------------------------------------------------------------------------------
 -6%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .06
------------------------------------------------------------------------------------------------
 -7%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
 -8%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
 -9%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-10%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-11%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-12%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-13%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-14%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-15%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-16%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-17%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-18%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-19%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-20%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
------------------------------------------------------------------------------------------------
-21%    .00     .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00
================================================================================================
        -21%    -20%   -19%   -18%   -17%   -16%   -15%   -14%   -13%   -12%   -11%   -10%    -9%
================================================================================================

--------------------------------------------------------------------------------------------------------------
 21%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   3.00   3.00   3.00  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 20%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   3.00   3.00   3.00  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 19%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.90   3.00   3.00  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 18%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.80   2.95   3.00  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 17%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.70   2.85   3.00  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 16%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.60   2.75   2.90  3.00   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 15%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.50   2.65   2.80  2.95   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 14%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.40   2.55   2.70  2.85   3.00   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 13%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.30   2.45   2.60  2.75   2.90   3.00   3.00
--------------------------------------------------------------------------------------------------------------
 12%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.20   2.35   2.50  2.65   2.80   2.95   3.00
--------------------------------------------------------------------------------------------------------------
 11%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.10   2.25   2.40  2.55   2.70   2.85   3.00
--------------------------------------------------------------------------------------------------------------
 10%     1.20   1.36   1.53   1.69   1.75   1.81   1.88   1.94   2.00   2.15   2.30  2.45   2.60   2.75   2.90
--------------------------------------------------------------------------------------------------------------
  9%     1.20   1.36   1.53   1.59   1.65   1.71   1.78   1.84   1.90   2.05   2.20  2.35   2.50   2.65   2.80
--------------------------------------------------------------------------------------------------------------
  8%     1.20   1.36   1.43   1.49   1.55   1.61   1.68   1.74   1.80   1.95   2.10  2.25   2.40   2.55   2.70
--------------------------------------------------------------------------------------------------------------
  7%     1.20   1.26   1.33   1.39   1.45   1.51   1.58   1.64   1.70   1.85   2.00  2.15   2.30   2.45   2.60
--------------------------------------------------------------------------------------------------------------
  6%     1.10   1.16   1.23   1.29   1.35   1.41   1.48   1.54   1.60   1.75   1.90  2.05   2.20   2.35   2.50
--------------------------------------------------------------------------------------------------------------
  5%     1.00   1.06   1.13   1.19   1.25   1.31   1.38   1.44   1.50   1.65   1.80  1.95   2.10   2.25   2.35
--------------------------------------------------------------------------------------------------------------
  4%      .90    .96   1.03   1.09   1.15   1.21   1.28   1.34   1.40   1.55   1.70  1.85   2.00   2.10   2.20
--------------------------------------------------------------------------------------------------------------
  3%      .80    .86    .93    .99   1.05   1.11   1.18   1.24   1.30   1.45   1.60  1.75   1.85   1.95   2.05
--------------------------------------------------------------------------------------------------------------
  2%      .70    .76    .83    .89    .95   1.01   1.08   1.14   1.20   1.35   1.50  1.60   1.70   1.80   1.90
--------------------------------------------------------------------------------------------------------------
  1%      .60    .66    .73    .79    .85    .91    .98   1.04   1.10   1.25   1.35  1.45   1.55   1.65   1.75
--------------------------------------------------------------------------------------------------------------
MEET      .50    .56    .63    .69    .75    .81    .88    .94   1.00   1.10   1.20  1.30   1.40   1.50   1.60
--------------------------------------------------------------------------------------------------------------
 -1%      .44    .50    .56    .63    .69    .75    .81    .88    .94   1.04   1.14  1.24   1.34   1.44   1.54
--------------------------------------------------------------------------------------------------------------
 -2%      .38    .44    .50    .56    .63    .69    .75    .81    .88    .98   1.08  1.18   1.28   1.38   1.48
--------------------------------------------------------------------------------------------------------------
 -3%      .31    .38    .44    .50    .56    .63    .69    .75    .81    .91   1.01  1.11   1.21   1.31   1.41
--------------------------------------------------------------------------------------------------------------
 -4%      .25    .31    .38    .44    .50    .56    .63    .69    .75    .85    .95  1.05   1.15   1.25   1.35
--------------------------------------------------------------------------------------------------------------
 -5%      .19    .25    .31    .38    .44    .50    .56    .63    .69    .79    .89   .99   1.09   1.19   1.29
--------------------------------------------------------------------------------------------------------------
 -6%      .13    .19    .25    .31    .38    .44    .50    .56    .63    .73    .83   .93   1.03   1.13   1.23
--------------------------------------------------------------------------------------------------------------
 -7%      .06    .13    .19    .25    .31    .38    .44    .50    .56    .66    .76   .86    .96   1.06   1.16
--------------------------------------------------------------------------------------------------------------
 -8%      .00    .06    .13    .19    .25    .31    .38    .44    .50    .60    .70   .80    .90   1.00   1.10
--------------------------------------------------------------------------------------------------------------
 -9%      .00    .00    .06    .13    .19    .25    .31    .38    .44    .54    .64   .74    .84    .94   1.04
--------------------------------------------------------------------------------------------------------------
-10%      .00    .00    .00    .06    .13    .19    .25    .31    .38    .48    .58   .68    .78    .88    .88
--------------------------------------------------------------------------------------------------------------
-11%      .00    .00    .00    .00    .06    .13    .19    .25    .31    .36    .41   .46    .51    .56    .56
--------------------------------------------------------------------------------------------------------------
-12%      .00    .00    .00    .00    .00    .06    .13    .19    .25    .30    .35   .40    .45    .50    .50
--------------------------------------------------------------------------------------------------------------
-13%      .00    .00    .00    .00    .00    .00    .06    .13    .19    .24    .29   .34    .39    .44    .44
--------------------------------------------------------------------------------------------------------------
-14%      .00    .00    .00    .00    .00    .00    .00    .06    .13    .18    .23   .28    .33    .38    .38
--------------------------------------------------------------------------------------------------------------
-15%      .00    .00    .00    .00    .00    .00    .00    .00    .06    .11    .16   .21    .26    .31    .31
--------------------------------------------------------------------------------------------------------------
-16%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .05    .10   .15    .20    .25    .25
--------------------------------------------------------------------------------------------------------------
-17%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .05   .10    .15    .20    .20
--------------------------------------------------------------------------------------------------------------
-18%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00   .05    .10    .15    .15
--------------------------------------------------------------------------------------------------------------
-19%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00   .00    .05    .10    .10
--------------------------------------------------------------------------------------------------------------
-20%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00   .00    .00    .05    .05
--------------------------------------------------------------------------------------------------------------
-21%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00    .00   .00    .00    .00    .00
==============================================================================================================
           -8%    -7%    -6%    -5%    -4%    -3%    -2%    -1%  MEET      1%     2%    3%     4%     5%     6%
==============================================================================================================

----------------------------------------------------------------------------------------------------------------
 21%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 20%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 19%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 18%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 17%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 16%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 15%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 14%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 13%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 12%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 11%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 10%     3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  9%     2.95   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  8%     2.85   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  7%     2.75   2.85   2.95   3.00   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  6%     2.60   2.70   2.80   2.90   3.00   3.00   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  5%     2.45   2.55   2.65   2.75   2.85   2.95   3.00   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  4%     2.30   2.40   2.50   2.60   2.70   2.80   2.90   3.00   3.00   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  3%     2.15   2.25   2.35   2.45   2.55   2.65   2.75   2.85   2.95   3.00    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  2%     2.00   2.10   2.20   2.30   2.40   2.50   2.60   2.70   2.80   2.90    3.00   3.00   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
  1%     1.85   1.95   2.05   2.15   2.25   2.35   2.45   2.55   2.65   2.75    2.85   2.95   3.00   3.00   3.00
----------------------------------------------------------------------------------------------------------------
MEET     1.70   1.80   1.90   2.00   2.10   2.20   2.30   2.40   2.50   2.60    2.70   2.80   2.90   3.00   3.00
----------------------------------------------------------------------------------------------------------------
 -1%     1.64   1.74   1.84   1.94   1.94   1.94   1.94   1.94   1.94   1.94    1.94   1.94   1.94   1.94   1.94
----------------------------------------------------------------------------------------------------------------
 -2%     1.58   1.68   1.78   1.88   1.88   1.88   1.88   1.88   1.88   1.88    1.88   1.88   1.88   1.88   1.88
----------------------------------------------------------------------------------------------------------------
 -3%     1.51   1.61   1.71   1.81   1.81   1.81   1.81   1.81   1.81   1.81    1.81   1.81   1.81   1.81   1.81
----------------------------------------------------------------------------------------------------------------
 -4%     1.45   1.55   1.65   1.75   1.75   1.75   1.75   1.75   1.75   1.75    1.75   1.75   1.75   1.75   1.75
----------------------------------------------------------------------------------------------------------------
 -5%     1.39   1.49   1.59   1.69   1.69   1.69   1.69   1.69   1.69   1.69    1.69   1.69   1.69   1.69   1.69
----------------------------------------------------------------------------------------------------------------
 -6%     1.33   1.43   1.53   1.53   1.53   1.53   1.53   1.53   1.53   1.53    1.53   1.53   1.53   1.53   1.53
----------------------------------------------------------------------------------------------------------------
 -7%     1.26   1.36   1.36   1.36   1.36   1.36   1.36   1.36   1.36   1.36    1.36   1.36   1.36   1.36   1.36
----------------------------------------------------------------------------------------------------------------
 -8%     1.20   1.20   1.20   1.20   1.20   1.20   1.20   1.20   1.20   1.20    1.20   1.20   1.20   1.20   1.20
----------------------------------------------------------------------------------------------------------------
 -9%     1.04   1.04   1.04   1.04   1.04   1.04   1.04   1.04   1.04   1.04    1.04   1.04   1.04   1.04   1.04
----------------------------------------------------------------------------------------------------------------
-10%      .88    .88    .88    .88    .88    .88    .88    .88    .88    .88     .88    .88    .88    .88    .88
----------------------------------------------------------------------------------------------------------------
-11%      .56    .56    .56    .56    .56    .56    .56    .56    .56    .56     .56    .56    .56    .56    .56
----------------------------------------------------------------------------------------------------------------
-12%      .50    .50    .50    .50    .50    .50    .50    .50    .50    .50     .50    .50    .50    .50    .50
----------------------------------------------------------------------------------------------------------------
-13%      .44    .44    .44    .44    .44    .44    .44    .44    .44    .44     .44    .44    .44    .44    .44
----------------------------------------------------------------------------------------------------------------
-14%      .38    .38    .38    .38    .38    .38    .38    .38    .38    .38     .38    .38    .38    .38    .38
----------------------------------------------------------------------------------------------------------------
-15%      .31    .31    .31    .31    .31    .31    .31    .31    .31    .31     .31    .31    .31    .31    .31
----------------------------------------------------------------------------------------------------------------
-16%      .25    .25    .25    .25    .25    .25    .25    .25    .25    .25     .25    .25    .25    .25    .25
----------------------------------------------------------------------------------------------------------------
-17%      .20    .20    .20    .20    .20    .20    .20    .20    .20    .20     .20    .20    .20    .20    .20
----------------------------------------------------------------------------------------------------------------
-18%      .15    .15    .15    .15    .15    .15    .15    .15    .15    .15     .15    .15    .15    .15    .15
----------------------------------------------------------------------------------------------------------------
-19%      .10    .10    .10    .10    .10    .10    .10    .10    .10    .10     .10    .10    .10    .10    .10
----------------------------------------------------------------------------------------------------------------
-20%      .05    .05    .05    .05    .05    .05    .05    .05    .05    .05     .05    .05    .05    .05    .05
----------------------------------------------------------------------------------------------------------------
-21%      .00    .00    .00    .00    .00    .00    .00    .00    .00    .00     .00    .00    .00    .00    .00
================================================================================================================
            7%     8%     9%    10%    11%    12%    13%    14%    15%    16%     17%    18%    19%    20%    21%
================================================================================================================

PROFIT $ % OVER/UNDER PLAN