Exhibit 4

SECOND SUPPLEMENTAL INDENTURE

to
INDENTURE

Dated as of April 1, 1994, as amended and supplemented

among

J. C. PENNEY CORPORATION, INC.
(formerly J. C. Penney Company, Inc.),

as Issuer,

J. C. PENNEY COMPANY, INC.,

as Co-Obligor,

and

U.S. BANK NATIONAL ASSOCIATION

(formerly Bank of America National Trust and Savings Association),

as Trustee

Dated as of July 26, 2002

SECOND SUPPLEMENTAL INDENTURE (this "Second Supplemental Indenture"), dated as of July 26, 2002, among J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company"), J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee").

RECITALS

The Company and the Trustee have executed and delivered an Indenture dated as of April 1, 1994 (the "Base Indenture" and, as amended and supplemented, the "Indenture"), providing for the issuance from time to time of the Company's Securities.

Section 10.01(6) of the Base Indenture provides that the Company and the Trustee may at any time and from time to time enter into one or more indentures supplemental to the Indenture to establish, among other things, the form and terms of Securities of any series as permitted by Section 2.01 of the Base Indenture.

The Company has authorized the issuance of a series of Securities designated as the Company's 9.000% Notes Due 2012 (the "Notes") in the aggregate principal amount of up to $810,731,000, and the Co-Obligor has agreed to become co-obligor therefor, in each case on the terms set forth herein.

All things necessary to make this Second Supplemental Indenture a valid agreement of the Company and the Co-Obligor, in accordance with the terms of the Base Indenture and the terms of this second Supplemental Indenture, have been done.

NOW, THEREFORE, for and in consideration of the premises and the acquisition of the Notes by the Holders thereof in exchange for certain securities of the Company currently held by such Holders, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the Holders of the Notes:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01. Definitions. For all purposes of this Second Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) a term defined in the Base Indenture has the same meaning when used in this Second Supplemental Indenture;

(b) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Second Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision; and

(c) for all purposes of this Second Supplemental Indenture, except as expressly provided or the context otherwise requires:

"Add On Notes" means the Notes originally issued after the Issue Date pursuant to Section 2.09, as specified in the relevant Supplemental Indenture, including any replacement Notes and any Exchange Notes issued in exchange therefore in accordance with the Indenture; provided that no such supplement indenture shall be required in connection with the issuance on August 9, 2002 of $20,816,000 principal amount of Add on Notes.

"Base Indenture" has the meaning assigned to it in the Recitals hereto.

"Certificated Security" means any Note issued in fully-registered certificated form (other than a Global Security), which shall be substantially in the form of Annex A, with appropriate legends as specified in Annex A.

"Company" has the meaning assigned to it in the Recitals hereto.

"Co-Obligor" has the meaning assigned to it in the Recitals hereto.

"Distribution Compliance Period" means, in respect of any Regulation S Global Security, the 40 consecutive days beginning on and including the later of (a) the day on which any Notes represented thereby are offered to persons other than distributors (as defined in Regulation S under the Securities Act) pursuant to Regulation S and (b) the issue date for such Notes.

"DTC" means The Depository Trust Company, its nominees and their respective successors and assigns.

"Exchange Act" means the Securities Exchange Act of 1934, as amended or any successor statute or statutes thereto.

"Exchange Notes" means Notes issued in a Registered Exchange Offer in exchange for a like principal amount of Notes originally issued pursuant to an exemption from registration under the Securities Act, and replacement Notes issued therefor in accordance with the Indenture.

"IAI" means an institutional "accredited investor," as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, other than a QIB.

"IAI Security" means a Certificated Security that is a Restricted Note held by an IAI.

"Indenture" has the meaning assigned to it in the Recitals hereto.

"Issue Date" means July 26, 2002.

"Issue Date Notes" means the $209,387,000 aggregate principal amount of Notes originally issued on the Issue Date, and any replacement Notes and Exchange Notes issued therefor in accordance with the Indenture.

"Non-U.S. Person" means a person who is not a U.S. person, as defined in Regulation S.

"Note" has the meaning assigned to it in the Recitals hereto.

"Note Custodian" means the custodian with respect to any Global Security appointed by Company, or any successor Person thereto, and shall initially be the Trustee.

"Private Placement Legend" has the meaning assigned to it in Section 2.07(b) of this Second Supplemental Indenture.

"Registered Exchange Offer" means an exchange offer by the Company registered under the Securities Act pursuant to which Notes originally issued pursuant to an exemption from registration under the Securities Act are exchanged for Notes of like principal amount not bearing the Private Placement Legend.

"Registration Rights Agreement" means the Registration Rights Agreement among the Company, the Co-Obligor, Salomon Smith Barney Inc., Fleet Securities, Inc. and Wachovia Securities, Inc. dated the date hereof.

"Registration Statement" means an effective shelf registration statement under the Securities Act that registers the resale by Holders
(and beneficial owners) of Notes (or beneficial interests therein)
originally issued pursuant to an exemption from registration under the Securities Act.

"Regulation S" means Regulation S under the Securities Act or any successor regulation.

"Regulation S Global Security" has the meaning assigned to it in
Section 2.04(f) of this Second Supplemental Indenture.

"Resale Restriction Termination Date" means, (i) for any Restricted Note (or beneficial interest therein) other than a Regulation S Global Security, two years (or such other period as is specified in Rule 144(k)) from the Issue Date or, if any Add On Notes that are Restricted Notes have been issued after the Issue Date and before the Resale Restriction Termination Date for any Restricted Notes issued on the Issue Date, from the original issue date of such Add On Notes and (ii) for any Regulation S Global Security, the conclusion of the Distribution Compliance Period.

"Restricted Note" means any Issue Date Note (or beneficial interest therein) or any Add On Note (or beneficial interest therein) not originally issued and sold pursuant to an effective registration statement under the Securities Act other than any Exchange Note, until such time as:

(a) such Issue Date Note (or beneficial interest therein) or Add On Note (or beneficial interest therein) has been transferred pursuant to a Registration Statement;

(b) the Resale Restriction Termination Date therefor has passed; or

(c) the Private Placement Legend therefor has otherwise been removed pursuant to Section 2.08(e) of this Second Supplemental Indenture or, in the case of a beneficial interest in a Global Security, such beneficial interest has been exchanged for an interest in a Global Security not bearing a Private Placement Legend.

"Rule 144" means Rule 144 under the Securities Act (or any successor rule).

"Rule 144A" means Rule 144A under the Securities Act (or any successor rule).

"Rule 144A Global Security" has the meaning assigned to it in Section 2.04(e) of this Second Supplemental Indenture.

"QIB" means a "qualified institutional buyer" as defined in Rule 144A.

"Securities Act" means the Securities Act of 1933, as amended.

"Trustee" has the meaning assigned to it in the Recitals hereto.

SECTION 1.02. Relationship to Base Indenture. This Second Supplemental Indenture shall be construed in connection with and as part of the Base Indenture. Should any provision of this Second Supplemental Indenture limit, qualify or conflict with another provision of the Base Indenture, such provision of this Supplemental Indenture shall control. The changes, modifications and supplements to the Indenture effected by this Second Supplemental Indenture shall only be applicable with respect to, and govern the terms of, the Notes and shall not apply to any other Securities that may be issued under the Base Indenture unless a supplemental indenture

with respect to such other Securities specifically incorporates such changes, modifications and supplements.

SECTION 1.03. Governing Law. This Second Supplemental Indenture and the Notes shall be construed in accordance with and governed by the internal laws (and not the law of conflicts) of the state of New York applicable to agreements made or instruments entered into and, in each case, performed in said state.

SECTION 1.04. Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts and by telecopier, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

ARTICLE TWO

THE NOTES

SECTION 2.01. Issuance of the Notes. There is hereby created under the Indenture a Series of Securities, the Notes, known and designated as the "9.000% Notes Due 2012" of the Company. The aggregate principal amount of the Notes that may be authenticated and delivered under this Second Supplemental Indenture is limited to no more than $810,731,000 (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.06, 2.07, 2.08, 4.08 or 10.06 of the Base Indenture or Section 2.08 of this Second Supplemental Indenture and except for Notes which, pursuant to Section 2.05 of the Base Indenture, are deemed never to have been authenticated and delivered hereunder).

SECTION 2.02. Form of Notes. The Notes shall be substantially in the form provided in Exhibit A hereto, with such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange upon which the Notes may at any time be listed, or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of such Notes. Except as otherwise expressly permitted in the Indenture, all Notes shall be identical in all respects. Notwithstanding any differences among them, all Notes issued under the Indenture shall vote and consent together on all matters as one class.

SECTION 2.03. Denominations. The Notes will be issued in fully-registered form without coupons, and only in denominations of integral multiples of $1,000.

SECTION 2.04. Terms. (a) The maturity date for payment of principal of the Notes shall be August 1, 2012 and the Notes shall bear interest at the rate of 9.000% per annum, accruing from July 26, 2002 and payable on Interest Payment Dates of February 1 and August 1 of each year, commencing February 1, 2003, to the persons in whose names the Notes are registered on the corresponding Regular Record Date, which shall be January 15 or July 15 (whether or not a business day), as the case may be, next preceding such Interest Payment Date. Any "Additional Interest" payable under the Registration Rights Agreement, as such term is defined therein, shall be distributed upon the same terms as the interest on the Notes provided for hereunder.

(b) The Notes are not redeemable at the option of the Company prior to maturity and are not entitled to the benefit of any sinking fund.

(c) The Notes will be defeasible pursuant to Section 14.02 and Section 14.03 of the Base Indenture.

(d) Principal of, premium, if any, and interest on the Notes will be payable and the Notes may be presented for exchange at the office or agency of the Company maintained for such purpose (which will initially be at the institutional trust services office of the Paying Agent located at 450 West 33rd St., New York, NY 10001); provided that the Company may, at its option make any payment of interest by check mailed to the address of the person entitled thereto as it appears in the Security Register. For Notes that are represented by Global Notes, the interest payable on the Notes will be paid to the Depository for the Notes (which shall be DTC or such other depositary institution that is a clearing agency registered under the Exchange Act as is hereinafter appointed by the Company as Depository for the Notes), the nominee of the Depository, or its registered assigns as the registered owner of such Global Notes, by wire transfer of immediately available funds on each applicable Interest Payment Date. No service charge will be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

(e) Notes originally offered and sold to QIBs in reliance on Rule 144A will be issued in the form of a Global Security (a "Rule 144A Global Security").

(f) Notes originally offered and sold outside the United States of America to Non-U.S. Persons in reliance on Regulation S will be issued in the form of a Global Security (a "Regulation S Global Security").

(g) Each Note originally offered and sold to an IAI that is not a QIB and not in reliance on Regulation S will be issued in the form of an IAI Security. Upon such issuance, the Security Registrar shall register such IAI Security in the name of the beneficial owner or owners of such note (or the nominee of such beneficial owner or owners) and deliver the certificates for such IAI Securities to the respective beneficial owner or owners.

SECTION 2.05. The Co-Obligor.

(a) The Co-Obligor hereby expressly agrees to become a co-obligor on the Notes liable for the due and punctual payment of the principal of, premium (if any) and interest (if any) on the Notes.

(b) The Co-Obligor and the Company as co-obligors shall be jointly and severally liable for the due and punctual payment of the principal of, premium (if any) and interest (if any) on the Notes.

(c) Notwithstanding the agreement of the Co-Obligor to become liable for the due and punctual payment of the principal of, premium (if any) and interest (if any) on the Notes, the Company remains fully liable for all of its obligations under the Indenture and has not been released from any liabilities or obligations hereunder.

SECTION 2.06. Global Security Provisions.

(a) Each Global Security initially shall: (i) be registered in the name of DTC or the nominee of DTC and (ii) be delivered to the Note Custodian. Any Global Security may be represented by more than one certificate. The aggregate principal amount of each Global Security may from time to time be increased or decreased by adjustments made on the records of the Note Custodian, as provided in this Second Supplemental Indenture.

(b) Certificated Securities shall be issued to all owners of beneficial interests in a Global Security in exchange for such interests if:

(i) DTC notifies the Company that it is unwilling or unable to continue as Depository for the Notes or if at any time DTC ceases to be a clearing agency registered under the Exchange Act; or

(ii) the Company in its sole discretion determines that the Notes shall be exchangeable for definitive Notes in registered form and notifies the Trustee thereof.

If the Notes are exchangeable pursuant to the preceding sentence, they shall be exchangeable for definitive Notes registered in such names as such Depository shall direct, bearing interest at the same rate, having the same date of issuance, redemption provisions, Stated Maturity and other terms and of denominations aggregating a like amount.

(c) In connection with the exchange of a portion of a Certificated Security for a beneficial interest in a Global Security, the Trustee shall cancel such Certificated Security, and the Company shall execute, and the Trustee or Authenticating Agent shall authenticate and deliver to the exchanging Holder, a new Certificated Security representing the principal amount not so exchanged.

SECTION 2.07. Legends.

(a) Each Global Security shall bear the legend specified therefor in Annex A on the face thereof.

(b) Each Restricted Note shall bear the private placement legend specified therefor in Annex A on the face thereof (together with, if applicable, the legend specified in paragraph (c) of this Section 2.07, the "Private Placement Legend").

(c) Each Certificated Security that is a Restricted Note shall bear the legend specified therefor in Annex A on the face thereof.

SECTION 2.08. Transfer and Exchange.

(a) If (1) the owner of a beneficial interest in a Rule 144A Global Security that is a Restricted Note wishes to transfer such interest (or portion thereof) to a Non-U.S. Person pursuant to Regulation S and (2) such Non-U.S. Person wishes to hold its interest in the Notes through a beneficial interest in the Regulation S Global Security, (x) upon receipt by the Note Custodian and Security Registrar of:

(A) instructions from the Holder of the Rule 144A Global Security directing the Note Custodian and Security Registrar to credit or cause to be credited a beneficial interest in the Regulation S Global Security equal to the principal amount of the beneficial interest in the Rule 144A Global Security to be transferred, and

(B) a certificate in the form of Annex D from the transferor,

and (y) subject to the rules and procedures of the Depository, the Note Custodian and Security Registrar shall increase the Regulation S Global Security and decrease the Rule 144A Global Security by such amount in accordance with the foregoing.

(b) If the owner of an interest in a Regulation S Global Security wishes to transfer such interest (or any portion thereof) prior to the expiration of the Distribution Compliance Period therefor to a QIB pursuant to Rule 144A, (x) upon receipt by the Note Custodian and Security Registrar of:

(A) instructions from the Holder of the Regulation S Global Security directing the Note Custodian and Security Registrar to credit or cause to be credited a beneficial interest in the Rule 144A Global Security equal to the principal amount of the beneficial interest in the Regulation S Global Security to be transferred, and

(B) a certificate in the form of Annex B duly executed by the transferor,

and (y) in accordance with the rules and procedures of the Depository, the Note Custodian and Security Registrar shall increase the Rule 144A Global Security and decrease the Regulation S Global Security by such amount in accordance with the foregoing.

(c) The following provisions shall apply with respect to any proposed transfer of an IAI Security (or portion thereof) :

(i) If the Holder of an IAI Security wishes to transfer such IAI Security (or a portion thereof) to a QIB pursuant to Rule 144A, (x) upon receipt by the Note Custodian and Security Registrar of:

(A) such IAI Security, duly endorsed as provided herein,

(B) instructions from such Holder directing the Note Custodian and Security Registrar to credit or cause to be credited a beneficial interest in the Rule 144A Global Security equal to the principal amount (or portion thereof) of such IAI Security to be transferred, and, if the entire principal amount of such IAI Security is not being transferred to issue one or more IAI Securities to the transferor IAI in an amount equal to the principal amount not transferred, and

(C) a certificate in the form of Annex B duly executed by the transferor,

and (y) subject to the rules and procedures of the Depository, the Note Custodian and Security Registrar shall:

(1) cancel the IAI Security delivered to it,

(2) increase the Rule 144A Global Security in accordance with the foregoing, and

(3) if applicable, issue to the IAI transferor one or more IAI Securities in accordance with the foregoing;

(ii) If the Holder of an IAI Security wishes to transfer such IAI Security (or any portion thereof) to an IAI, the Security Registrar or Authenticating Agent shall authenticate and deliver IAI Securities to the appropriate IAI(s) upon receipt by the Security Registrar of:

(A) such IAI Security, duly endorsed as provided herein,

(B) instructions from such Holder directing the Security Registrar to issue one or more IAI Securities in the amounts specified to the transferee IAI and, if the entire principal amount of such IAI Security is not being transferred, the transferor IAI in an amount equal to the principal amount not transferred, and

(C) a certificate in the form of Annex C duly executed by the transferee.

(iii) If (1) the Holder of an IAI Security wishes to transfer such IAI Security (or a portion thereof) to a Non-U.S. Person pursuant to Regulation S and (2) such Non-U.S. Person wishes to hold its interest in the Notes through a beneficial interest in the Regulation S Global Security, (x) upon receipt by the Note Custodian and the Security Registrar of:

(A) such IAI Security, duly endorsed as provided herein,

(B) instructions from the Holder of such IAI Security directing the Security Registrar to credit or cause to be credited a beneficial interest in the Regulation S Global Security equal to the principal amount of the IAI Security (or

portion thereof) to be transferred, and, if the entire principal amount of such IAI Security is not being transferred to issue one or more IAI Securities to the transferor IAI in an amount equal to the principal amount not transferred, and

(C) a certificate in the form of Annex D from the transferor,

and (y) subject to the rules and procedures of the Depository, the Note Custodian and the Security Registrar shall:

(1) cancel the IAI Security delivered to it,

(2) increase the Regulation S Global Security for such amount in accordance with the foregoing, and

(3) if applicable, issue to the IAI transferor one or more IAI Securities in accordance with the foregoing.

(d) Other Transfers. Any transfer of Restricted Notes not described above (other than a transfer of a beneficial interest in a Global Security that does not involve an exchange of such interest for a Certificated Security or a beneficial interest in another Global Security, which must be effected in accordance with applicable law and the rules and procedures of the Depository, but is not subject to any procedure required by this Second Supplemental Indenture) shall be made only upon receipt by the Security Registrar of such opinions of counsel, certificates and/or other information reasonably required by and satisfactory to the Security Registrar in order to ensure compliance with the Securities Act or in accordance with paragraph (e) of this Section 2.08.

(e) Use and Removal of Private Placement Legends. Upon the transfer, exchange or replacement of Notes (or beneficial interests in a Global Security) not bearing a Private Placement Legend, the Note Custodian and the Security Registrar shall exchange such Notes (or beneficial interests) for beneficial interests in a Global Security (or Certificated Securities if they have been issued pursuant to Section 2.04(g) of this Second Supplemental Indenture) that does not bear a Private Placement Legend. Upon the transfer, exchange or replacement of Notes (or beneficial interests in a Global Security) bearing a Private Placement Legend, the Note Custodian and Security Registrar shall deliver only Notes (or beneficial interests in a Global Security) that bear a Private Placement Legend unless:

(i) such Notes (or beneficial interests) are exchanged in a Registered Exchange Offer;

(ii) such Notes (or beneficial interests) are transferred pursuant to a Registration Statement;

(iii) such Notes (or beneficial interests) are transferred pursuant to Rule 144 upon delivery to the Security Registrar of a certificate of the transferor in the form of Annex E and an Opinion of Counsel reasonably satisfactory to the Security Registrar;

(iv) such Notes (or beneficial interests) are transferred, replaced or exchanged after the Resale Restriction Termination Date therefor; or

(v) in connection with such transfer, exchange or replacement the Security Registrar shall have received an Opinion of Counsel and other evidence reasonably satisfactory to it to the effect that neither such Private Placement Legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.

The Private Placement Legend on any Note shall be removed at the request of the Holder on or after the Resale Restriction Termination Date therefor. The Holder of a Global Security may exchange an interest therein for an equivalent interest in a Global Security not bearing a Private Placement Legend upon transfer of such interest pursuant to any of clauses (i) through (v) of this paragraph (e).

(i) If a Global Security not bearing a Private Placement Legend is Outstanding at the time of a Registered Exchange Offer, any interests in a Global Security exchanged in such Registered Exchange Offer shall be exchanged for interests in such Outstanding Global Security. The Company shall deliver to the trustee an Officers' Certificate promptly upon effectiveness, withdrawal or suspension of any Registration Statement.

(ii) Upon the transfer or exchange (including pursuant to a Registered Exchange Offer) of any Certificated Security for which a Private Placement Legend would not be required pursuant to Section 2.08(e) of this Second Supplemental Indenture following such transfer or exchange, such Certificated Security shall be exchanged for an interest in a Global Security not bearing a Private Placement Legend and, if no such Global Security is Outstanding at such time, the Company shall execute and upon Company Order the Trustee or Authenticating Agent shall authenticate a Global Security not bearing a Private Placement Legend.

(iii) Nothing in the Indenture shall provide for the consolidation of any Notes with any other Notes to the extent that they constitute, as determined pursuant to an Opinion of Counsel, different classes of securities for U.S. federal income tax purposes.

(g) Retention of Documents. The Security Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Article Two. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Security Registrar.

SECTION 2.09. Add On Notes. The Company may, from time to time, subject to compliance with any other applicable provisions of the Indenture, without the consent of the

Holders, create and issue Add On Notes having terms and conditions set forth in Exhibit A identical to those of the other Outstanding Notes, except that such Add On Notes:

(a) may have a different issue date from other Outstanding Securities;

(b) may have terms specified herein making appropriate adjustments to this Article Two and Exhibit A (and related definitions) applicable to such Add On Notes in order to conform to and ensure compliance with the Securities Act (or other applicable securities laws) and any registration rights or similar agreement applicable to such Add On Notes, which are not adverse in any material respect to the Holder of any Outstanding Securities (other than such Add On Notes).

ARTICLE THREE

SUPPLEMENTAL INDENTURES

SECTION 3.01 Supplemental Indentures without Consent of Securityholders. The Base Indenture is hereby further amended (with respect only to the Notes) by adding thereto the following Subsections to be appended to Section 10.01 of the Base Indenture:

"(9) to provide for the issuance of the Exchange Notes, which will have terms substantially identical to the other Outstanding Notes (as defined in the Second Supplemental Indenture) except for the requirement of a Private Placement Legend and related transfer restrictions applicable to the Outstanding Notes under the Securities Act and the Indenture and as to the applicability of any "Additional Interest" payable under the Registration Rights Agreement, as such term is defined therein, and which will be treated, together with any other Outstanding Notes, as a single issue of securities; or

(10) to provide for the issuance of Add On Notes as permitted by
Section 2.09 of the Second Supplemental Indenture, which will have terms substantially identical to the other Outstanding Notes except as specified in that Section 2.09, and which will be treated, together with any other Outstanding Notes, as a single issue of securities."

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first written above.

J. C. PENNEY CORPORATION, INC.,
as Issuer

         /s/ Jeffrey J. Vawrinek                      /s/ Michael P. Dastugue
Attest: --------------------------                By:-------------------------
     Name:   Jeffrey J. Vawrinek                     Name:  Michael P. Dastugue
     Title:  Associate General Counsel and           Title: Vice President and
             Assistant Secretary                            Treasurer

J. C. PENNEY COMPANY, INC.,
as Co-Obligor

         /s/ Jeffrey J. Vawrinek                        /s/ Robert B. Cavanaugh
Attest: ----------------------------                By: -----------------------
     Name:  Jeffrey J. Vawrinek                       Name: Robert B. Cavanaugh
     Title: Assistant Secretary                  Title: Executive Vice President
                                                     and Chief Financial Officer

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

        /s/ William W. MacMillan                    /s/ Seth Dodson
Attest:--------------------------              By:----------------------
     Name: William W. MacMillan                 Name:  Seth Dodson
     Title: Vice President                      Title:  Assistant Vice President

FORM OF NOTE

[Include the following legend for Global Securities only:

"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY. THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES HEREINAFTER DESCRIBED AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."]

[Include the following legend on all Notes that are Restricted Notes:

"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR OUTSIDE THE UNITED STATES TO NON-U.S. PERSONS IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION."

[Include the following legend on all Certificated Securities that are Restricted Notes:

"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE SECURITY REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE."]

[Include the following legend on all Notes that are issued with more than de minimis original issue discount:

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT AT MATURITY OF THIS SECURITY, (1) THE ISSUE PRICE IS ____________; (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS ________; (3) THE ISSUE DATE IS JULY 26, 2002; AND
(4) THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS _______%.]

[FORM OF FACE OF NOTE]

J. C. PENNEY CORPORATION, INC.
J. C. PENNEY COMPANY, INC.

9.000% Notes Due 2012

Principal Amount $______

[if the Note is a Global Security include the following two lines:

as revised by the Schedule of Increases and
Decreases in Global Security attached hereto]

No. [___] [CUSIP] [ISIN] No. ___________

J. C. PENNEY CORPORATION, INC. and J. C. PENNEY COMPANY, INC., each a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the "Company" and the "Co-Obligor," respectively, which terms include any successor corporation under the Indenture hereinafter referred to), for value received, hereby promise to pay to __________ or registered assigns, the principal sum [indicated on Schedule A hereof]* [of________ Dollars]** on August 1, 2012 and to pay interest thereon

* Applicable to Global Securities only.

from July 26, 2002 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semi-annually on each Interest Payment Date, which shall be February 1 and August 1 of each year, commencing February 1, 2003, at the rate of 9.00% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which shall be January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any interest not punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may be paid by the Company using any procedure permitted under
Section 2.09 of the Base Indenture.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if fully set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof or Authenticating Agent under the Indenture by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

** Applicable to Certificated Securities only.

IN WITNESS WHEREOF, J. C. Penney Corporation, Inc. and J. C. Penney Company, Inc. have caused this Note to be duly executed under their corporate seals.

Dated: ______________________
J. C. PENNEY CORPORATION, INC.

By:____________________________
Name:
Title:

Attest:________________________
Name:
Title:

J. C. PENNEY COMPANY, INC.

By:____________________________
Name:
Title:

Attest:________________________
Name:
Title:

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

JPMORGAN CHASE BANK

[FORM OF REVERSE OF NOTE]

J. C. PENNEY CORPORATION, INC.
J. C. PENNEY COMPANY, INC.

9.000% Senior Notes Due 2012

This note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued under an Indenture dated as of April 1, 1994 (the "Base Indenture") between J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company") and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture, dated as of July 26, 2002, among the Company, J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and the Trustee (the Base Indenture, as amended and supplemented, being referred to herein as the "Indenture"). Reference is hereby made to the Indenture and all indentures supplemental thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes, and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series of Securities designated on the face hereof, limited in aggregate principal amount to no more than $810,731,000. Terms defined in the Indenture have the same meaning when used in this Note.

The Notes are subject to the conditions set forth in the Indenture and without the consent of the Holders, the Company may issue Add On Notes. All Notes will be treated as a single class of securities under the Indenture.

Principal of, premium, if any, and interest on the Notes will be payable and the Notes may be presented for exchange at the office or agency of the Company maintained for such purpose (which will initially be at the corporate trust office of the Paying Agent located at 450 West 33rd St., New York, NY 10001); provided that the Company may, at its option make any payment of interest by check mailed to the address of the person entitled thereto as it appears in the Security Register. For Notes that are represented by Global Notes, the interest payable on the Notes will be paid to the Depository (initially the Depository Trust Company), the nominee of the Depository, or its registered assigns as the registered owner of such Global Notes, by wire transfer of immediately available funds on each applicable Interest Payment Date. No service charge will be made for any transfer of exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Notes will not be redeemable prior to maturity.

The Notes will not be entitled to any sinking fund.

If an Event of Default, as defined in the Indenture, with respect to the Notes shall occur, and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Co-Obligor and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66 2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company and the Co-Obligor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

Sections 14.02 and 14.03 of the Base Indenture contain provisions for defeasance at any time of (a) the entire indebtedness on this Note and (b) certain restrictive covenants, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Note.

Upon due presentment for registration of transfer of this Note at the office or agency to be maintained for that purpose in the Borough of Manhattan, New York City, a new Note or Notes in authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange herefor, as provided in the Indenture and subject to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith.

A Holder may transfer or exchange Notes in accordance with the Indenture. The Security Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company and the Co-Obligor, which is absolute and unconditional, to pay the principal of, premium (if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed, except that in the event the Company deposits money and/or U.S. Government Obligations as provided in Section 14.02 of the Base Indenture, such payments will be made as described therein.

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee's name, address and zip code)

(Insert assignee's Social Security or Tax I.D. Number)

and irrevocably appoint the above-named party as agent to transfer this Note on the books of the Company. The agent may substitute another to act for the agent.

(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

[TO BE ATTACHED TO GLOBAL SECURITIES ONLY]

Date of     Amount of decrease    Amount of increase in   Principal amount of    Signature of
Exchange    in Principal Amount   Principal Amount of     this Global Security   authorized signatory
            of this Global        this Global Security    following such         of Trustee or Note
             Security                                       decrease or increase   Custodian

[Date]

U.S. Bank National Association
950 17th Street, Suite 650
Denver, CO 80202

Reference is hereby made to the Indenture dated as of April 1, 1994 (the "Base Indenture") between J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company") and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture, dated as of July 26, 2002, among the Company, J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and the Trustee (the Base Indenture, as amended and supplemented, being referred to herein as the "Indenture"). Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

This letter relates to $___________ aggregate principal amount of Notes [in the case of a transfer of an interest in a Regulation S Global Security: which represents an interest in a Regulation S Global Security beneficially owned by]
[in the case of a transfer of an IAI Security: which are held in the name of] the undersigned (the "Transferor") to effect the transfer of such Notes in exchange for an equivalent beneficial interest in the Rule 144A Global Security.

In connection with such request, and with respect to such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"), to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion, and the transferee, as well as any such account, is a "qualified institutional buyer" within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction.

You, the Company and the Co-Obligor are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

Very truly yours,

[Name of Transferor]

By:____________________________

FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
TO INSTITUTIONAL ACCREDITED INVESTORS

[Date]

U.S. Bank National Association
U.S. Bank National Association
950 17th Street, Suite 650
Denver, CO 80202

Reference is hereby made to the Indenture dated as of April 1, 1994 (the "Base Indenture") between J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company") and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture, dated as of July 26, 2002, among the Company, J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and the Trustee (the Base Indenture, as amended and supplemented, being referred to herein as the "Indenture"). Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

This certificate is delivered to request a transfer of US $________ principal amount of the Notes (the "Transferred Notes") to the undersigned (the "Transferee").

Upon transfer, the Transferred Notes should be registered in the name of the new owner as follows:

Name: ___________________________________ [If applicable, add: as nominee for the Transferee]

Address: ________________________________

Taxpayer ID Number: _____________________

The undersigned represents and warrants to you that:

1. We understand that the Notes are not being registered under the Securities Act of 1933, as amended (the "Act"), and are being sold to us in a transaction that is exempt from the registration requirements of the Act.

2. We acknowledge that: (a) neither the Company nor any person acting on behalf of the Company has made any representation to us with respect to the Company or the offer or sale of any Notes; and (b) any information we desire concerning the Company and the Notes or any other matter relevant to our decision to purchase the Notes has been made available to us.

3. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Notes, and we are (or any account for which we are purchasing under paragraph 4 below is) an institutional "accredited investor" (within the meaning of Rule
501(a) (1), (2), (3) or (7) of Regulation D under the Act) able to bear the economic risk of investment in the Notes.

4. We are acquiring the Notes for our own account (or for accounts as to which we exercise sole investment discretion and have authority to make, and do make, the statements contained in this letter) and not with a view to any distribution of the Notes, subject, nevertheless, to the understanding that the disposition of our property will at all times be and remain within our control.

5. We understand that (a) the Notes will be in registered form only and that any certificates delivered to us in respect of the Notes will bear a legend substantially to the following effect:

"These Securities have not been registered under the Securities Act of 1933. Further offers or sales of these Securities are subject to certain restrictions, as set forth in the Offering Memorandum dated June 26, 2002 relating to these Securities."

and (b) the Company has agreed to reissue such certificates without the foregoing legend only in the event of a disposition of the Notes in accordance with the provisions of paragraph 6 (provided, in the case of a disposition of the Notes in accordance with paragraph 6(f) below, that the legal opinion referred to in such paragraph so permits), or at our request at such time as we would be permitted to dispose of them in accordance with paragraph 6(a) below.

6. We agree that in the event that at some future time we wish to dispose of any of the Notes, we will not do so unless such disposition is made in accordance with any applicable securities laws of any state of the United States and:

(a) the Notes are sold in compliance with Rule 144(k) under the Act; or

(b) the Notes are sold in compliance with Rule 144A under the Act; or

(c) the Notes are sold in compliance with Rule 904 of Regulation S under the Act; or

(d) the Notes are sold pursuant to an effective registration statement under the Act; or

(e) the Notes are sold to the Company; or

(f) the Notes are disposed of in any other transaction that does not require registration under the Act, and we theretofore have furnished to the Company or its designee an opinion of counsel experienced in securities law matters to such effect or such other documentation as the Company or its designee may reasonably request.

You, the Company and the Co-Obligor are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE

LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

Very truly yours,

[Name of Transferee]

By:______________________________
Authorized Signature

FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S

[Date]

U.S. Bank National Association
U.S. Bank National Association
950 17th Street, Suite 650
Denver, CO 80202

Reference is hereby made to the Indenture dated as of April 1, 1994 (the "Base Indenture") between J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company") and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture, dated as of July 26, 2002, among the Company, J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and the Trustee (the Base Indenture, as amended and supplemented, being referred to herein as the "Indenture"). Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

In connection with our proposed sale of $________ aggregate principal amount of Notes [in the case of a transfer of an interest in a 144A Global Security: , which represent an interest in a 144A Global Security beneficially owned by] [in the case of a transfer of an IAI Security: held in the name of] the undersigned ("Transferor"), we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that:

(a) the offer of the Notes was not made to a person in the United States;

(b) either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(c) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;

(d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

(e) we are the beneficial owner of the principal amount of Notes being transferred.

In addition, if the sale is made during a Distribution Compliance Period and the provisions of Rule 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 904(b)(1) or Rule 904(b)(2), as the case may be.

You, the Company and the Co-Obligor are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this letter have the meanings set forth in Regulation S.

Very truly yours,

[Name of Transferor]

By:____________________________

[Date]

U.S. Bank National Association
U.S. Bank National Association
950 17th Street, Suite 650
Denver, CO 80202

Ladies and Gentlemen:

Reference is hereby made to the Indenture dated as of April 1, 1994 (the "Base Indenture") between J. C. Penney Corporation, Inc. (formerly J. C. Penney Company, Inc.), a Delaware corporation, as issuer (the "Company") and U.S. Bank National Association (formerly Bank of America National Trust and Savings Association), a corporation organized and existing as a national banking association under the laws of the United States of America, as trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture, dated as of July 26, 2002, among the Company, J. C. Penney Company, Inc., a Delaware corporation, as co-obligor (the "Co-Obligor"), and the Trustee (the Base Indenture, as amended and supplemented, being referred to herein as the "Indenture"). Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

In connection with our proposed sale of $________ aggregate principal amount of Notes [in the case of a transfer of an interest in a 144A Global Security: , which represent an interest in a 144A Global Security beneficially owned by] [in the case of a transfer of an IAI Security: held in the name of] the undersigned ("Transferor"), we confirm that such sale has been effected pursuant to and in accordance with Rule 144 under the Securities Act.

You, the Company and the Co-Obligor are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

Very truly yours,

[Name of Transferor]

By:____________________________

The definitions in Article II entitled Board of Directors and Human Resources and Compensation Committee are amended effective April 30, 2002 to read as follows:

Exhibit 10 (b)

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

2. The definition of Subsidiary is amended effective April 30, 2002 to read as follows: ----------

3. Section 5.01 and 5.02 are amended effective April 30, 2002 to add the word "Parent" immediately before the word "Company" in each place it appears.

Exhibit 10 (c)

AMENDMENT NUMBER ONE TO THE
J. C. PENNEY COMPANY, INC.
SUPPLEMENTAL TERM LIFE INSURANCE PLAN
FOR MANAGEMENT PROFIT-SHARING ASSOCIATES

WHEREAS, effective January 1, 2002, J. C. Penney Company, Inc, (the "Company") adopted an amended and restated J. C. Penney Company, Inc. Supplemental Term Life Insurance Plan for Management Profit-Sharing Associates ("Plan"); and

WHEREAS, the Company desires to amend the Plan; and

WHEREAS, the Company is empowered to amend the Plan pursuant to Plan
Section 8.1; and

RESOLVED, that pursuant to Plan Section 8.2, the Plan is hereby amended, effective as of January 1, 2002 (except as otherwise provided below), as follows:

3. The words "J. C. Penney Company, Inc. Supplemental Term Life Insurance Plan for Management Profit-Sharing Associates" on the cover and in sections 1.1 and 2.14 are hereby deleted and the following is inserted in lieu thereof effective January 27, 2002:

J. C. Penney Corporation, Inc. Supplemental Term Life Insurance Plan for Management Profit-Sharing Associates

4. Section 6.6 is hereby amended by adding the following new sentence at the end thereof:

Provided however, that any third party expenses incurred either (a) to set-up or administer a custodial account or trust to hold the proceeds of the Insurer's demutualization, or (b) to set-up, communicate with Participants or administer a premium holiday under the Plan, where such premium holiday results from the demutualization of the Insurer, may, at the Company's discretion, be paid from the proceeds resulting from the sale of the Insurer's stock received as part of the demutualization of the Insurer and any cash or earnings thereon held in the custodial account or trust.

RESOLVED FURTHER, that the officers of the Company and its counsel be, and they hereby are, authorized to take all such further actions and to execute and deliver all such further instruments and documents including, but not limited to, any required amendments related to the Plan's qualification under the Internal Revenue Code of 1986, as amended, as shall in their judgment be necessary, proper, or advisable in order to fully carry out the intent and to effectuate the purposes of the foregoing resolutions and each of them.

Exhibit 10 (d)

1. The definition of "Board of Directors" in Article II of the J.C. Penney Corporation, Inc. Benefit Restoration Plan ("Benefit Restoration Plan") is amended in its entirety to read as follows:

2. The definition of the "Human Resources and Compensation Committee" in Article II of the Benefit Restoration Plan (Definitions) is amended in its entirety to read as follows:

3. The definition of "Participating Employer" in Article II of the Benefit Restoration Plan (Definitions) is amended in its entirety to read as follows:

4. The first paragraph of Paragraph 1 of Article VIII (Amendment and Termination) is amended in its entirety to read as follows:

5. The third paragraph of Paragraph (1) of Article VIII of the Benefit Restoration Plan (Amendment and Termination) is amended in its entirety to read as follows:

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

6. Paragraph (2) of Article VIII (Rights of Associates) is amended in its entirety to read as follows:

7. Paragraph (4) of Article VIII of the Benefit Restoration Plan (Liability) is amended in its entirety to read as follows:

1. Section 1 of the J. C. Penney Corporation, Inc. 1989 Management Incentive Compensation Program ("Program") is amended to add the following as a new paragraph:

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

2. Section 2 of the Program is amended by adding "of the Parent Company" after the words "Board of Directors" in line 2 of the second paragraph.

3. Section 3 of the Program is amended on line 6 by deleting "J. C. Penney Company, Inc." and inserting "the Parent Company".

4. Section 4 of the Program is amended (1) by adding "of the Parent Company" after the words "Board of Directors" in line 1 and (2) by deleting "J. C. Penney Company, Inc." on line 2 and inserting "the Parent Company" in each case in the third paragraph thereof.

5. Section 6 of the Program is amended by adding the words "of Directors of the Parent Company" after the word "Board" on line 5 of the second paragraph and line 1 of the third paragraph.

6. Section 7 of the Program is amended by adding the words "of the Parent Company" after the words "Board of Directors" on line 1.

Exhibit 10 (f)

2. Paragraph (f) of Section 7.08 is amended effective April 30, 2002 to read as follows:

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

3. Section 8.02 is amended effective April 30, 2002 to read as follows:

The Board of Directors of the Parent 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 Parent Company shall deem appropriate.

Exhibit 10 (i)

ECKERD CORPORATION

KEY MANAGEMENT BONUS PLAN

Adopted effective February 1, 1999

Amended and Restated February 1, 2002

ECKERD CORPORATION

KEY MANAGEMENT BONUS PLAN

1. Purpose. The Key Management Bonus Plan (KMBP) is intended to focus the attention of plan participants on financial factors critical to Eckerd Corporation's (the "Company") success. Through a carefully tailored combination of company-wide, regional, district, departmental and personal goals, each individual participant is encouraged to concentrate effort in those areas which most affect the Company's bottom line. The KMBP rewards participants for their contribution to the achievement of the Company's established financial and operating goals.

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.

2. Administration. The KMBP shall be administered by the Board of Directors of the Company ("Board"). The Board may delegate the administration of the KMBP to the Human Resources and Investment Committee of the Board of Directors or such other committee as the Board may designate from time to time (the "Committee"). The Board of Directors or the Committee may, from time to time, establish such rules and regulations for carrying out the KMBP as they may deem necessary or desirable. The Board of Directors or the Committee shall decide all questions of fact arising in the application of the KMBP and shall interpret and construe the provisions of the KMBP and of 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.

3. Effective Date Of Plan. The KMBP became effective as of February 1, 1999, and was amended and restated effective as of February 1, 2002, in each case upon approval by the Board of Directors.

4. Eligibility. The executive officers eligible to participate in the KMBP and their participation percentages are established by the Board. Other positions eligible to participate in the KMBP are established by the Board, the Committee, or the Company's Senior Management. The Board or the Committee decides the level of the participant's participation.

To be a "qualified participant" in the KMBP, an individual must be in a KMBP position on or before the first Monday in November of the applicable fiscal year, remain in a KMBP position for at least 90 days, have a performance rating of Meets Expectations or Competent Performance (Level 3) 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 (i.e., Level 4 or 5) for the bonus period or who are on active written counseling at the time of transfer 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.

5. Bonus Period. The bonus period coincides with the Company's fiscal year.

6. Performance Measures. Eligible participants will receive a goal sheet each fiscal year showing their individual performance measures which may include, among others, sales and EBIT (earnings before interest and taxes). The KMBP will generate a payment factor based upon the percent or dollar difference between actual and planned results for established criteria.

7. Bonus Calculation. The bonus is designed to have multiple targeted steps, each step has an associated target EBIT and Sales goal with a corresponding payment factor. The program allows for a 100% KMBP percentage payment when the payment factor equals 1.00. The program has a minimum payment factor of zero (0) and a maximum payment factor of two (2). The calculation of the KMBP bonus utilizes a straight line interpolation for results that fall between any two payment factors. The amount of the bonus is calculated by multiplying the eligible participant's base salary that was paid during the year by the applicable KMBP percentage and the payment factor. The applicable KMBP percentage is based upon the participant's position level and title as approved by the Board of Directors or Committee, as provided under Section 4.

8. Bonus Payment. KMBP bonuses are paid in cash within 90 days after the end of the fiscal year. At the time of receipt of written notice of a participant's bonus award, each participant shall arrange with the Company for the payment of the amount of any taxes required to be collected or withheld as a result of the payment of the KMBP bonus.

9. Participants On Leave Of Absence. Qualified participants who go on a documented military leave or a Company approved and documented Family and Medical Leave Act, medical or maternity leave of absence during the bonus period will be eligible for a prorated bonus with credit given for the first six weeks of the leave (or longer if required by applicable

federal or state laws) and with no credit given for the remaining amount of time on leave of absence. Qualified participants who go on any other Company approved leave of absence during the bonus period will be eligible for a prorated bonus with no credit given for the amount of time on leave of absence. This bonus will be paid only when the participant returns to work directly from such a leave. If an eligible participant goes on an approved leave of absence after the end of the bonus period but before the bonus is paid, the participant shall receive the full amount of bonus due. The bonus payment will be made within 90 days after the end of the fiscal year.

10. Termination Of Employment.

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. 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 the bonus period will not be deemed to have completed the bonus period and will not be eligible for payout under the KMBP. 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, provided, however, a qualified participant whose employment terminates prior to the end of the bonus period due to one of the following reasons will receive a prorated bonus award: retirement at or after age 60, if you were a participant in the J.C. Penney Corporation, Inc. Pension Plan or the Eckerd Corporation Pension Plan (or any predecessor plan

of either of them); retirement at age 55 or later with at least 15 years of "service"; permanent and total disability; death; permanent reduction in force; approved unit closing; or if otherwise required by law. "Service" for retirement purposes means your total period of employment with J.C. Penney Corporation, Inc. and its subsidiaries, including approved leaves of absence, certain service in the U.S. Armed Forces, periods when you are credited with Social Security Disability service and any period after your employment with the Company ends, so long as you are rehired within 365 days.

11. Termination and Amendment of the Bonus Plan. The KMBP represents compensation in addition to normal salary for eligible participants. The Company reserves the right to amend the KMBP, including the right to make changes in the KMBP's provisions, payouts, and eligibility, and also reserves the right to discontinue or terminate the KMBP at any time.

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

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

14. Governing Law. The KMBP will be construed and enforced according to the laws of the State of Florida, without giving effect to the conflict of laws principles thereof. Every right of action must be brought no later than four years after the date the action accrues.

RESOLVED that the Eckerd Corporation Executive Supplement Plan be, and it hereby is, approved effective March 21, 2002 in the form submitted to the Board of Directors; and

RESOLVED that the officers of the Corporation and its counsel be, and they hereby are, authorized to take all such further actions and to execute and deliver all such further instruments and documents, in the name and on behalf of the Corporation, and under its corporate seal or otherwise, and to pay all such expenses, as shall be in their judgement be necessary, proper, or advisable in order fully to carry out the intent and effectuate the purposes of the foregoing resolution.

Exhibit 10 (k)

Amendment To Eckerd Corporation Supplemental Retirement Program

RESOLVED that the Amended and Restated Eckerd Corporation Supplemental Retirement Program (formerly know as the Supplemental Retirement Program for Management Profit-Sharing Associates of Thrift Drug, Inc.) be, and it hereby is, approved effective March 21, 2002 in the form submitted to the Board of Directors; and

RESOLVED that the officers of the Corporation and its counsel be, and they hereby are, authorized to take all such further actions and to execute and deliver all such further instruments and documents, in the name and on behalf of the Corporation, and under its corporate seal or otherwise, and to pay all such expenses, as shall be in their judgement be necessary, proper, or advisable in order fully to carry out the intent and effectuate the purposes of the foregoing resolution.

Exhibit 10 (h)

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the "Agreement"), made in the City of Plano and the State of Texas, dated as of , 2002, between J. C. Penney Corporation, Inc., a Delaware corporation ------------------------ (hereinafter called the "the Employer"), and Stephen F. Raish (hereinafter called the "the Employee").

WHEREAS, the Employer desires to ensure that it retains the Employee's management and executive services by directly engaging Employee as its Chief Information Officer;

WHEREAS, in order to induce the Employee to continue to serve in such positions, the Employer desires to provide the Employee with compensation and other benefits on the terms and conditions set forth in this Agreement; and

WHEREAS, the Employee is willing to accept such employment and perform services for the Employer, on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the promises and of the mutual covenants herein contained, it as agreed as follows:

1.1 The Employer agrees to continue to employ the Employee and the Employee hereby agrees to continue to undertake employment upon the terms and conditions herein set forth.

1.2 During the Term (as hereafter defined), the Employee will serve as Chief Information Officer, or such other position as may be assigned by the Employer's Chief Executive Officer, and shall perform such duties consistent with such position as are determined and directed by the Chief Executive Officer. The Employee shall devote his full working time, attention and ability to the business of the Employer, including, if applicable, its subsidiaries and/or affiliates to which the Employee may have been assigned responsibilities; provided, however, that it shall not be a violation of this Agreement for the Employee to (i) devote reasonable periods of time to charitable and community activities and, with the approval of the Employer, industry or professional activities, and (ii) manage personal business interests and investments, subject to Section 8, so long as such activities do not materially interfere with the performance of the Employee's responsibilities under this Agreement.

1.3 Unless otherwise agreed by the Employer and the Employee, throughout the term of this Agreement, the Employee's principal offices shall be located in Plano, Texas. The Employee shall undertake normal business travel on behalf of the Employer, the reasonable expenses of which shall be paid by the Employer pursuant to Section 4.

2.1 Initial Term. The Employee's employment under this Agreement ("Term") shall commence on May 1, 2002 (the "Start Date") and, subject to the provisions of this Agreement, shall terminate (the "Termination Date") on the earlier of (i) the third anniversary of the Start Date (the "Initial Term") or (ii) termination of the Employee's employment pursuant to Section 6.

2.2 Renewal Term. This Agreement shall expire automatically at the end of the Initial Term, unless extended as provided in this Section 2.2. Within 60 days after the second anniversary of the Initial Term or any Renewal Term (as defined below), Employer shall notify Employee regarding (i) whether the Agreement shall be extended and (ii) the terms and conditions, if any, for such extension. Any such additional extension period ("Renewal Term") shall be deemed to be part of the Term for purposes of this Agreement. If the Employer and the Employee have not entered into a written agreement to extend this Agreement within 45 days after such notice, then at the Employer's election the Employer may release the Employee from his duties during the remaining Term of the Agreement in accordance with and subject to the conditions in Sections 6.4 and 7.3. If Employee is not so released and completes the then remaining Term of the Agreement, Employee shall become employed at-will upon the expiration of such Term as provided for in
Section 2.3. Nothing in this Section 2.2 shall be deemed to grant a right of continued employment to the Employee upon expiration of the Initial Term or any Renewal Term.

2.3 Post-Term At-Will Employment. If (i) this Agreement is not terminated pursuant to Section 6, and (ii) neither party has otherwise terminated the Employee's employment, upon expiration of the Term (including any Renewal Term), this Agreement shall expire and the Employee shall become employed at-will and may be terminated from employment at any time, without notice or cause. In the event this Agreement expires and the Employee becomes employed at-will, the Employee shall not be entitled to any severance or other termination compensation or benefits under this Agreement, and the Employee's employment shall be subject to those policies and procedures that the Employer may adopt and change in its discretion from time to time. Nothing in this
Section 2.3 shall be deemed to grant a right of continued employment to the Employee upon expiration of the Term, and the Employer may terminate the Employee's employment upon expiration of the Term without any further notice and financial obligation to the Employee under Section 7.

3. Compensation

3.1 Salary. In consideration of the services of the Employee during the Term, the Employer shall pay the Employee salary at an annualized rate of $335,000.00 ("Base Salary") (less applicable withholding for taxes and authorized deductions) in accordance with the Employer's usual payroll policies. The Employee's Base Salary shall be reviewed at least annually with the first review date being the

March following the Start Date. Base Salary may be adjusted by action of the appropriate committee of the Employer's Board of Directors or its delegate, and may be increased without the necessity of written amendment pursuant to Section 10.8.

3.2 Annual Incentive Compensation. The Employee shall be eligible to participate in the 1989 Management Incentive Compensation Program (the "Comp Plan"), as set out in Exhibit A hereto.

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

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

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

5.2 Vacation and Paid Leave. The Employee will be eligible for five (5) weeks of vacation each calendar year.

6.1 Death. In the event of the Employee's death during the Term, the Employee's employment shall terminate, and the Employer shall pay or provide to the Employee's beneficiaries or estate, as appropriate, as soon as practicable after the Employee's death, the amounts and benefits provided for in Section 7.1.

6.2 Permanent Disability. If the Employee becomes totally and permanently disabled (as defined in the Employer's Long-Term Disability Plan) during the Term ("Permanent Disability"), the Employer may terminate the Employee's employment on written notice thereof in accordance with
Section 10.5, and the Employer shall provide to the Employee the amounts and benefits provided for in Section 7.1.

6.3 Termination by the Employer for Cause. During the Term the Employer may terminate the Employee's employment for "Cause." For purposes of this Agreement, the Employer will have "Cause" to terminate the Employee's employment upon a finding that (a) the Employee has been convicted by a court

          of  competent  jurisdiction  of the  commission  of a  felony,  or has
          pleaded guilty or no contest to a felony charge,  (b) the Employee has
          committed a serious  breach of the  Employer's  Statement  of Business
          Ethics,  (c) the Employee  materially  breached any of the  Employee's
          covenants  set forth in Section 8 or (d) the Employee  has  materially
          breached the Employee's  duties and obligations  under this Agreement;
          provided,  however,  that  termination  for Cause  based on clause (d)
          shall not be effective unless the Employee shall have received written
          notice from the Chief  Executive  Officer in  accordance  with Section
          10.5 (which  notice  shall  include a  description  of the reasons and
          circumstances  giving rise to such notice) not less than 30 days prior
          to the  Employee's  termination  and the  Employee  has  failed  after
          receipt of such  notice to  satisfactorily  discharge  the  Employee's
          duties.

6.4               Termination by the Employer without Cause. During the Term the
                  Employer may terminate the Employee's employment without
                  Cause. "Without Cause" shall mean for any reason other than
                  death, Permanent Disability or Cause, as provided for in
                  Sections 6.1, 6.2 and 6.3. The Employee's employment may be
                  terminated by the Employer without Cause by delivery to the
                  Employee of notice of termination in accordance with Section
                  10.5 not less than 30 days prior to termination.

6.5               Termination by the Employee for Good Reason. During the Term,
                  the Employee may terminate his employment, without the
                  Employer's consent, for Good Reason. Good Reason shall mean
                  (a) the Employer has breached any material provision of this
                  Agreement and within 30 days after written notice thereof from
                  the Employee in accordance with Section 10.5, the Employer
                  fails to cure such breach; or (b) a successor or assign
                  (whether direct or indirect, by purchase, merger,
                  consolidation or otherwise) to all or substantially all of the
                  business and/or assets of the Employer fails to assume
                  liability under the Agreement in accordance with Section 10.2.

6.6               Termination by the Employee without Good Reason. During the
                  term, the Employee may voluntarily terminate his employment
                  upon 30 days' written notice (the "Notice Period") to the
                  Employer in accordance with Section 10.5. The Employer may in
                  its sole discretion elect to release the Employee from his
                  duties prior to the expiration of the Notice Period, and pay
                  Base Salary to the Employee for the remaining Notice Period.
                  The Employer's election to release the Employee from his
                  duties during the Notice Period shall not be deemed to be a
                  constructive discharge of the Employee or termination without
                  Cause, nor shall such release from duties accelerate the
                  Employee's Termination Date or reduce the total time period
                  during which the Employee must comply with the covenants
                  contained in Section 8.

7.       Termination Payments and Benefits.

     7.1  Death or Permanent Disability.  In the event of the death or Permanent
          Disability of the Employee, as soon as practicable, the Employer shall
          pay any (i) accrued

          and unpaid Base Salary and vacation to which the Employee was entitled
          as of the date of  death  or  determination  of  Permanent  Disability
          (collectively,  the "Compensation Payments") and (ii) the target bonus
          (at $1.00 per unit) for the Comp Plan for the fiscal year in which the
          date of death or the  determination  of Permanent  Disability  occurs,
          prorated  for the actual  period of service  for that fiscal year (the
          "Prorated  Bonus").  The payment of any death  benefits or  disability
          benefits  under any  employee  benefit  or  compensation  plan that is
          maintained  by the  Employer  for  the  Employee's  benefit  shall  be
          governed by the terms of such plan.

     7.2  Termination  by the  Employer for Cause;  Termination  by the Employee
          without Good Reason.  In the event of the  termination of the Employee
          by the Employer for Cause or by the Employee without Good Reason,  the
          Employer shall pay the  Compensation  Payments to the Employee as soon
          as practicable or within the period  required by law, and the Employee
          shall be entitled to no other compensation, except as otherwise due to
          the Employee under  applicable law. The Employee shall not be entitled
          to the  payment of any  bonuses  for any portion of the fiscal year in
          which such termination occurs.

     7.3  Termination by the Employer without Cause; Termination by the Employee
          with Good Reason.

          (i)  Form and Amount.  In the event of the termination of the Employee
               by the  Employer  without  Cause  or by the  Employee  with  Good
               Reason,  the Employer shall pay the Compensation  Payments to the
               Employee as soon as practicable or within the period  required by
               law. In  addition,  conditioned  upon  receipt of the  Employee's
               written  release of claims in such form as may be required by the
               Employer,  the Employer  shall pay or provide to the Employee (a)
               as  severance  pay,  an  aggregate  amount  equal to Grand  Total
               Earnings,  multiplied by the result  obtained by dividing (x) the
               balance  of the Term,  measured  in days,  by (y) 365,  with such
               aggregate  amount to be paid in equal  installments  on the usual
               payroll  dates for the  balance  of the  Term;  (b) for 12 months
               following  termination,  outplacement services by a firm selected
               by the Employee at the expense of the  Employer,  in an amount up
               to $30,000.00,  and (c) for 24 months following  termination (the
               "Continuation   Period")  the   continuation   of  group  medical
               insurance  benefits except as offset by benefits paid or provided
               by other sources as set forth in Section 7.6, or as prohibited by
               law.  For  purposes  of  determining  the period of  continuation
               coverage  to  which  the  Employee  or  any  of  the   Employee's
               dependents  is  entitled  under  section  4980B  of the  Internal
               Revenue Code of 1986,  as amended,  (or any  successor  provision
               thereto),  the Employee shall be deemed to have remained employed
               until the end of the Continuation Period.

          (ii) Maintenance  of Benefits.  During the  Continuation  Period,  the
               Employer shall use its best efforts to maintain its group medical
               insurance  benefits  in

               full force and effect for the  continued  benefit of the Employee
               or shall arrange to make  available to the Employee group medical
               benefits  substantially  similar to those that the Employee would
               otherwise  have  been  entitled  to  receive  if  the  Employee's
               employment  had not  been  terminated.  Such  benefits  shall  be
               provided on the same terms and conditions (including the Employee
               contributions  toward  the  premium  payments)  under  which  the
               Employee was  entitled to  participate  immediately  prior to the
               Employee's termination.

          (iii)Forfeiture.  Notwithstanding  the  foregoing  provisions  of this
               Section  7, any  right of the  Employee  to  receive  termination
               payments and benefits  under  Section 7 shall be forfeited to the
               extent of any amounts  payable or benefits to be provided after a
               material breach of any covenant set forth in Section 8.

     7.4  Non-Eligibility  For  Other  Company  Separation  Pay  Benefits.   The
          Employee  shall not be eligible for any payments  under any  severance
          program  (excluding the 1999 Separation  Allowance Program) offered by
          the Company.

     7.5  Employer's Right of Offset. If the Employee is at any time indebted to
          the Employer,  or otherwise obligated to pay money to the Employer for
          any  reason,  the  Employer,  at  its  election,  may  offset  amounts
          otherwise payable to the Employee under this Agreement, including, but
          without limitation,  Base Salary and incentive  compensation payments,
          against any such  indebtedness or amounts due from the Employee to the
          Employer, to the extent permitted by law.

     7.6  Mitigation.  In the event of the  termination  of the  Employee by the
          Employer  without  Cause,  or by the Employee  with Good  Reason,  the
          Employee  shall not be required to mitigate  damages by seeking  other
          employment  or  otherwise  as a  condition  to  receiving  termination
          payments or benefits  under this  Agreement.  No amounts earned by the
          Employee  after the  Employee's  termination  by the Employer  without
          Cause  or  by  the   Employee   with   Good   Reason,   whether   from
          self-employment,  as a common law employee, or otherwise, shall reduce
          the  amount of any  payment  or benefit  under any  provision  of this
          Agreement.  Notwithstanding  the foregoing,  the  Employee's  coverage
          under the  Employer's  group medical  insurance as provided in Section
          7.3(i) shall  terminate as soon as the Employee  becomes covered under
          any group  medical  plan  made  available  by  another  employer.  The
          Employee  shall  report to the  Employer  any such  coverage  actually
          received by the Employee.

     7.7  Resignations. Except to the extent requested by the Employer, upon any
          termination  of the  Employee's  employment  with  the  Employer,  the
          Employee shall immediately resign all positions and directorships with
          the Employer and each of its subsidiaries and affiliates.

8.       Covenants and Representations of the Employee.
         ---------------------------------------------

     8.1  Confidentiality.  During  the  Term,  and  in  consideration  for  the
          Employee's agreement to enter into this Agreement, the Employer agrees
          that it will disclose to the Employee its  confidential or proprietary
          information   and   trade   secrets   (together,    the   "Proprietary
          Information")  to the extent  necessary  for the Employee to carry out
          his obligations  under this Agreement.  The Employee hereby  covenants
          and agrees that the  Employee  shall not,  without  the prior  written
          consent of the  Employer,  during  the Term or at any time  thereafter
          disclose  to  any  person  not  employed  by the  Employer,  or use in
          connection  with  engaging  in  competition  with  the  Employer,  any
          Proprietary Information of the Employer.

          (i)  It  is  expressly  understood  and  agreed  that  the  Employer's
               Proprietary  Information is all nonpublic information relating to
               the   Employer's   business,   including   but  not   limited  to
               information,  plans and strategies regarding suppliers,  pricing,
               marketing,   customers,   hiring   and   terminations,   employee
               performance and evaluations, internal reviews and investigations,
               short term and long range plans,  acquisitions and  divestitures,
               advertising,    information   systems,   sales   objectives   and
               performance,  as well as any  other  nonpublic  information,  the
               nondisclosure  of which may  provide a  competitive  or  economic
               advantage to the Employer.  Proprietary  Information shall not be
               deemed to have become public for purposes of this Agreement where
               it has been  disclosed or made public by or through anyone acting
               in violation of a contractual,  ethical, or legal  responsibility
               to maintain its confidentiality.

          (ii) In the event the  Employee  receives a  subpoena,  court order or
               other   summons   that  may  require  the  Employee  to  disclose
               Proprietary  Information,  on pain of civil or criminal  penalty,
               the Employee will promptly give notice of the subpoena or summons
               pursuant to Section 10.5 and provide the Employer an  opportunity
               to appear at the Employer's  expense and challenge the disclosure
               of its  Proprietary  Information,  and the Employee shall provide
               reasonable  cooperation to the Employer for purposes of affording
               the Employer the  opportunity  to prevent the  disclosure  of the
               Employer's Proprietary Information.

          8.2  Nonsolicitation  of Employees.  The Employee hereby covenants and
               agrees  that  during the Term and for two years  thereafter,  the
               Employee  shall not,  without  the prior  written  consent of the
               Employer,  on the  Employee's  own behalf or on the behalf of any
               person,  firm or  company,  directly  or  indirectly,  attempt to
               influence,  persuade or induce,  or assist any other person in so
               persuading or inducing,  any of the employees of the Employer (or
               any of its  subsidiaries  or  affiliates)  to  give up his or her
               employment  with  the  Employer  (or any of its  subsidiaries  or
               affiliates),  and the Employee  shall not directly or  indirectly
               solicit  or  hire  employees  of  the  Employer  (or  any  of its
               subsidiaries   or  affiliates)  for  employment  with  any  other
               employer.

          8.3  Noninterference  with  Business  Relations.  The Employee  hereby
               covenants  and  agrees  that  during  the Term and for two  years
               thereafter,  the Employee  shall not,  without the prior  written
               consent of the Employer,  on the  Employee's own behalf or on the
               behalf of any person,  firm or company,  directly or  indirectly,
               attempt to  influence,  persuade  or induce,  or assist any other
               person in so persuading or inducing,  any person, firm or company
               to cease  doing  business  with,  reduce its  business  with,  or
               decline to commence a business  relationship  with,  the Employer
               (or any of its subsidiaries or affiliates).

          8.4  Noncompetition. It is recognized by the Employee and the Employer
               that the Employee's duties hereunder will require the receipt and
               creation of Proprietary  Information,  as defined in Section 8.1.
               The  Proprietary  Information  has been and will  continue  to be
               developed by the Employer and its  subsidiaries and affiliates at
               substantial cost and constitutes  valuable and unique property of
               the Employer.  The Employee further  acknowledges that due to the
               nature of the Employee's position,  the Employee will have access
               to  Proprietary  Information  affecting  plans and  operations in
               every  location in which the Employer (and its  subsidiaries  and
               affiliates) does business or plans to do business  throughout the
               world, and the Employee's decisions and recommendations on behalf
               of the Employer may affect its  operations  throughout the world.
               Accordingly,  the Employee  acknowledges that the foregoing makes
               it  reasonably  necessary for the  protection  of the  Employer's
               business  interests  that  the  Employee  not  compete  with  the
               Employer or any of its subsidiaries or affiliates during the Term
               and for a reasonable and limited period  thereafter,  as provided
               below.

               (i)  The  Employee   covenants  that  during  the  Term  of  this
                    Agreement  and for a period of one year  following the later
                    of either a termination of employment  pursuant to Section 6
                    or a termination of at-will employment  following expiration
                    of the Term,  the  Employee  will not  undertake  work for a
                    Competing  Business,  as  defined in  Section  8.4(ii).  For
                    purposes  of  this  covenant,  "undertake  work  for"  shall
                    include performing services,  whether paid or unpaid, in any
                    capacity,   including  as  an  officer,   director,   owner,
                    consultant,  employee,  agent or representative,  where such
                    services  involve  the  performance  of  similar  duties  or
                    oversight   responsibilities   as  those  performed  by  the
                    Employee during the 18-month period preceding the Employee's
                    termination from the Employer for any reason.

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

                    (A)  operates  (1) any retail  department  store,  specialty
                         store,  general  merchandise  store, or drug store; (2)
                         any  retail  catalog,  telemarketing,  or  direct  mail

business; (3) any Internet-based or other electronic retailing business; (4) any other retail business that sells goods, merchandise, or services of the types sold by the Employer, including its divisions, affiliates, and licensees; or

(5) any business that provides buying office or sourcing services to any business of the types referred to in this Section 8.4(ii)(A);

(B) conducts any business of the types referred to in
Section 8.4(ii)(A) in the United States or another country in which the Employer, including its divisions, affiliates, and licensees, conducts a similar business; and

(C) from any business(es) of the types referred to in
Section 8.4(ii)(A), had aggregate net sales or revenues of $500,000,000 in the fiscal year preceding the determination or is reasonably expected to have aggregate net sales or revenues of $500,000,000 in either the current fiscal year or the next following fiscal year.

(iii)Notwithstanding the foregoing, in the case of a termination of the Employee by the Employer without Cause or by the Employee with Good Reason, the above referenced definition of "Competing Business" in Section 8.4(ii) may be modified with approval of the Chief Executive Officer.

8.5 Injunctive Relief. If the Employee shall breach the covenants contained in this Section 8, the Employer shall have no further obligation to make any payment to the Employee pursuant to this Agreement and may recover from the Employee all such damages as it may be entitled to at law or in equity. In addition, the Employee acknowledges that any such breach is likely to result in immediate and irreparable harm to the Employer for which money damages are likely to be inadequate. Accordingly, the Employee consents to injunctive and other appropriate equitable relief without the necessity of bond in excess of $500.00 (five hundred dollars) upon the institution of proceedings therefor by the Employer in order to protect the Employer's rights hereunder.

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

(i) (a) There are no restrictions, agreements or understandings whatsoever to which the Employee is a party that would prevent or make unlawful the Employee's execution of this Agreement or the Employee's employment under this Agreement, or that is or would be inconsistent, or in conflict with this Agreement or the Employee's employment under this Agreement, or would prevent, limit or impair in any way the performance by the Employee of the obligations under this Agreement; and (b) the Employee has disclosed to the Employer all restraints, confidentiality commitments or other employment restrictions that the Employee has with any other employer, person or entity.

(ii) Upon and after the Employee's termination or cessation of employment with the Employer, including any post-Term at-will employment, and until such time as no obligations of the Employee to the Employer hereunder exist, the Employee:
(a) shall provide a complete copy of this Agreement to any prospective employer or other person, entity or association in a Competing Business with whom or which the Employee proposes to be employed, affiliated, engaged, associated or to establish any business or remunerative relationship prior to the commencement thereof, provided that Employee shall first cause the compensation amounts hereunder to be deleted or not disclosed; and (b) shall notify the Employer of the name and address of any such person, entity or association prior to the Employee's employment, affiliation, engagement, association or the establishment of any business or remunerative relationship.

9. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto that accrue hereunder prior to such expiration or termination, except to the extent specifically stated herein. In addition to the foregoing, the Employee's covenants and warranties contained in Section 8, and the parties' agreements under
Section 10 shall survive the expiration of this Agreement and the termination of the Employee's employment, including any post-Term at-will employment.

10.1 Dispute Resolution. Any dispute between the parties under this Agreement shall be resolved (except as provided below) through informal arbitration by an arbitrator selected under the rules of the American Arbitration Association for arbitration of employment disputes (located in the city in which the Employer's principal executive offices are based) and the arbitration shall be conducted in that location under the rules of said Association. Each party shall be entitled to present evidence and argument to the arbitrator. The arbitrator shall have the right only to interpret and apply the provisions of this Agreement and may not change any of its provisions, except as expressly provided in Section 10.4 and only in the event Employer has not brought an action in a court of competent jurisdiction to enforce the covenants in Section 8. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or a defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator shall be conclusive and binding upon the parties and judgment upon the same may be entered in any court having jurisdiction thereof. The arbitrator shall give written notice to the parties stating the arbitrator's determination, and shall furnish to each party a signed copy of such determination. The expenses of arbitration shall be borne equally by the Employer and the Employee or as the arbitrator equitably determines consistent with the application of state or federal law; provided, however, that the Employee's share of such expenses shall not exceed the maximum permitted by law. Any arbitration or action pursuant to this Section 10.1 shall be governed by and construed in accordance with the substantive laws of the State of Texas and,

where applicable, federal law, without giving effect to the principles of conflict of laws of such State. The mandatory arbitration provisions of this Section 10.1 shall supersede in their entirety the J. C. Penney Alternative, a dispute resolution program generally applicable to employment terminations.

Notwithstanding the foregoing, the Employer shall not be required to seek or participate in arbitration regarding any actual or threatened breach of the Employee's covenants in Section 8, but may pursue its remedies, including injunctive relief, for such breach in a court of competent jurisdiction in the city in which the Employer's principal executive offices are based, or in the sole discretion of the Employer, in a court of competent jurisdiction where the Employee has committed or is threatening to commit a breach of the Employee's covenants, and no arbitrator may make any ruling inconsistent with the findings or rulings of such court.

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

10.3 Governing Law. This Agreement shall be governed, construed, interpreted, and enforced in accordance with the substantive law of the State of Texas and federal law, without regard to conflicts of law principles, except as expressly provided herein. In the event the Employer exercises its discretion under Section 10.1 to bring an action to enforce the covenants contained in Section 8 in a court of competent jurisdiction where the Employee has breached or threatened to breach such covenants, and in no other event, the parties agree that the court may apply the law of the jurisdiction in which such action is pending in order to enforce the covenants to the fullest extent permissible.

10.4 Severability. Any provision of this Agreement that is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective, to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal or unenforceable in any other jurisdiction. If any covenant in Section 8 should be deemed invalid, illegal or unenforceable because its time, geographical area, or restricted activity, is considered excessive, such covenant shall be modified to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

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

10.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

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

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

10.9 No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action that is inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

10.10Headings and Section References. The headings used in this Agreement are intended for convenience or reference only and shall not in any manner amplify, limit, modify or otherwise be used in the construction or interpretation of any provision of this Agreement. All section references are to sections of this Agreement, unless otherwise noted.

10.11Beneficiaries. The Employee shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Employee's death, and may change such election, in either case by giving the Employer written notice thereof in accordance with Section 10.5. In the event of the Employee's death or a judicial determination of the Employee's incompetence, reference in this Agreement to the "Employee" shall be deemed, where appropriate, to the Employee's beneficiary, estate or other legal representative.

10.12Withholding. The Employer shall be entitled to withhold from payment any amount of withholding required by law.

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

J. C. PENNEY CORPORATION, INC.

By: /s/ Allen Questrom
   ----------------------------
Name: Allen Questrom
Title:
EMPLOYEE

         /s/ Stephen F. Raish
       -------------------------
         Stephen F. Raish

EXHIBIT A

1989 Management Incentive Compensation

Comp Plan

Employee's annual target incentive units shall be 50% of Base Salary unless changed by the Human Resources and Compensation Committee.

The performance measures for the Comp Plan shall be determined by the Human Resources and Compensation Committee to include the following measures for the Total Company

Sales
Operating Profit

Performance against plan for these measures produces a unit value that is multiplied by the target incentive units to produce an annual award. The minimum unit value under this Plan shall be 0% and the maximum shall be 200%.

Exhibit 10 (g)

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the "Agreement"), made in the City of Plano and the State of Texas, dated as of ------------------------- , 2002, between J. C. Penney Corporation, Inc., a Delaware corporation (hereinafter called the "the Employer"), and Robert B. Cavanaugh (hereinafter called the "the Employee").

WHEREAS, the Employer desires to ensure that it retains the Employee's management and executive services by directly engaging Employee as its Chief Financial Officer;

WHEREAS, in order to induce the Employee to continue to serve in such positions, the Employer desires to provide the Employee with compensation and other benefits on the terms and conditions set forth in this Agreement; and

WHEREAS, the Employee is willing to accept such employment and perform services for the Employer, on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the promises and of the mutual covenants herein contained, it as agreed as follows:

1.1 The Employer agrees to continue to employ the Employee and the Employee hereby agrees to continue to undertake employment upon the terms and conditions herein set forth.

1.2 During the Term (as hereafter defined), the Employee will serve as Chief Financial Officer, or such other position as may be assigned by the Employer's Chief Executive Officer, and shall perform such duties consistent with such position as are determined and directed by the Chief Executive Officer. The Employee shall devote his full working time, attention and ability to the business of the Employer, including, if applicable, its subsidiaries and/or affiliates to which the Employee may have been assigned responsibilities; provided, however, that it shall not be a violation of this Agreement for the Employee to (i) devote reasonable periods of time to charitable and community activities and, with the approval of the Employer, industry or professional activities, and (ii) manage personal business interests and investments, subject to Section 8, so long as such activities do not materially interfere with the performance of the Employee's responsibilities under this Agreement.

1.3 Unless otherwise agreed by the Employer and the Employee, throughout the term of this Agreement, the Employee's principal offices shall be located in Plano, Texas. The Employee shall undertake normal business travel on behalf of the Employer, the reasonable expenses of which shall be paid by the Employer pursuant to Section 4.

2.1 Initial Term. The Employee's employment under this Agreement ("Term") shall commence on May 1, 2002 (the "Start Date") and, subject to the provisions of this Agreement, shall terminate (the "Termination Date") on the earlier of (i) the third anniversary of the Start Date (the "Initial Term") or (ii) termination of the Employee's employment pursuant to Section 6.

2.2 Renewal Term. This Agreement shall expire automatically at the end of the Initial Term, unless extended as provided in this Section 2.2. Within 60 days after the second anniversary of the Initial Term or any Renewal Term (as defined below), Employer shall notify Employee regarding (i) whether the Agreement shall be extended and (ii) the terms and conditions, if any, for such extension. Any such additional extension period ("Renewal Term") shall be deemed to be part of the Term for purposes of this Agreement. If the Employer and the Employee have not entered into a written agreement to extend this Agreement within 45 days after such notice, then at the Employer's election the Employer may release the Employee from his duties during the remaining Term of the Agreement in accordance with and subject to the conditions in Sections 6.4 and 7.3. If Employee is not so released and completes the then remaining Term of the Agreement, Employee shall become employed at-will upon the expiration of such Term as provided for in
Section 2.3. Nothing in this Section 2.2 shall be deemed to grant a right of continued employment to the Employee upon expiration of the Initial Term or any Renewal Term.

2.3 Post-Term At-Will Employment. If (i) this Agreement is not terminated pursuant to Section 6, and (ii) neither party has otherwise terminated the Employee's employment, upon expiration of the Term (including any Renewal Term), this Agreement shall expire and the Employee shall become employed at-will and may be terminated from employment at any time, without notice or cause. In the event this Agreement expires and the Employee becomes employed at-will, the Employee shall not be entitled to any severance or other termination compensation or benefits under this Agreement, and the Employee's employment shall be subject to those policies and procedures that the Employer may adopt and change in its discretion from time to time. Nothing in this
Section 2.3 shall be deemed to grant a right of continued employment to the Employee upon expiration of the Term, and the Employer may terminate the Employee's employment upon expiration of the Term without any further notice and financial obligation to the Employee under Section 7.

3. Compensation

3.1 Salary. In consideration of the services of the Employee during the Term, the Employer shall pay the Employee salary at an annualized rate of $500,000.00 ("Base Salary") (less applicable withholding for taxes and authorized deductions) in accordance with the Employer's usual payroll policies. The Employee's Base Salary shall be reviewed at least annually with the first review date being the

Marchfollowing the Start Date. Base Salary may be adjusted by action of the appropriate committee of the Employer's Board of Directors or its delegate, and may be increased without the necessity of written amendment pursuant to Section 10.8.

3.2 Annual Incentive Compensation. The Employee shall be eligible to participate in the 1989 Management Incentive Compensation Program (the "Comp Plan"), as set out in Exhibit A hereto.

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

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

5.2 Vacation and Paid Leave. The Employee will be eligible for five (5) weeks of vacation each calendar year.

6.1 Death. In the event of the Employee's death during the Term, the Employee's employment shall terminate, and the Employer shall pay or provide to the Employee's beneficiaries or estate, as appropriate, as soon as practicable after the Employee's death, the amounts and benefits provided for in Section 7.1.

6.2 Permanent Disability. If the Employee becomes totally and permanently disabled (as defined in the Employer's Long-Term Disability Plan) during the Term ("Permanent Disability"), the Employer may terminate the Employee's employment on written notice thereof in accordance with
Section 10.5, and the Employer shall provide to the Employee the amounts and benefits provided for in Section 7.1.

6.3 Termination by the Employer for Cause. During the Term the Employer may terminate the Employee's employment for "Cause." For purposes of this Agreement, the Employer will have "Cause" to terminate the Employee's employment upon a finding that (a) the Employee has been convicted by a court

of competent jurisdiction of the commission of a felony, or has pleaded guilty or no contest to a felony charge, (b) the Employee has committed a serious breach of the Employer's Statement of Business Ethics, (c) the Employee materially breached any of the Employee's covenants set forth in Section 8 or (d) the Employee has materially breached the Employee's duties and obligations under this Agreement; provided, however, that termination for Cause based on clause (d) shall not be effective unless the Employee shall have received written notice from the Chief Executive Officer in accordance with Section
10.5 (which notice shall include a description of the reasons and circumstances giving rise to such notice) not less than 30 days prior to the Employee's termination and the Employee has failed after receipt of such notice to satisfactorily discharge the Employee's duties.

6.4 Termination by the Employer without Cause. During the Term the Employer may terminate the Employee's employment without Cause. "Without Cause" shall mean for any reason other than death, Permanent Disability or Cause, as provided for in Sections 6.1, 6.2 and 6.3. The Employee's employment may be terminated by the Employer without Cause by delivery to the Employee of notice of termination in accordance with Section 10.5 not less than 30 days prior to termination.

6.5 Termination by the Employee for Good Reason. During the Term, the Employee may terminate his employment, without the Employer's consent, for Good Reason. Good Reason shall mean (a) the Employer has breached any material provision of this Agreement and within 30 days after written notice thereof from the Employee in accordance with Section 10.5, the Employer fails to cure such breach; or (b) a successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Employer fails to assume liability under the Agreement in accordance with Section 10.2.

6.6 Termination by the Employee without Good Reason. During the term, the Employee may voluntarily terminate his employment upon 30 days' written notice (the "Notice Period") to the Employer in accordance with Section 10.5. The Employer may in its sole discretion elect to release the Employee from his duties prior to the expiration of the Notice Period, and pay Base Salary to the Employee for the remaining Notice Period. The Employer's election to release the Employee from his duties during the Notice Period shall not be deemed to be a constructive discharge of the Employee or termination without Cause, nor shall such release from duties accelerate the Employee's Termination Date or reduce the total time period during which the Employee must comply with the covenants contained in Section 8.

7. Termination Payments and Benefits.

7.1 Death or Permanent Disability. In the event of the death or Permanent Disability of the Employee, as soon as practicable, the Employer shall pay any (i) accrued

and unpaid Base Salary and vacation to which the Employee was entitled as of the date of death or determination of Permanent Disability (collectively, the "Compensation Payments") and (ii) the target bonus (at $1.00 per unit) for the Comp Plan for the fiscal year in which the date of death or the determination of Permanent Disability occurs, prorated for the actual period of service for that fiscal year (the "Prorated Bonus"). The payment of any death benefits or disability benefits under any employee benefit or compensation plan that is maintained by the Employer for the Employee's benefit shall be governed by the terms of such plan.

7.2 Termination by the Employer for Cause; Termination by the Employee without Good Reason. In the event of the termination of the Employee by the Employer for Cause or by the Employee without Good Reason, the Employer shall pay the Compensation Payments to the Employee as soon as practicable or within the period required by law, and the Employee shall be entitled to no other compensation, except as otherwise due to the Employee under applicable law. The Employee shall not be entitled to the payment of any bonuses for any portion of the fiscal year in which such termination occurs.

7.3 Termination by the Employer without Cause; Termination by the Employee with Good Reason.

(i) Form and Amount. In the event of the termination of the Employee by the Employer without Cause or by the Employee with Good Reason, the Employer shall pay the Compensation Payments to the Employee as soon as practicable or within the period required by law. In addition, conditioned upon receipt of the Employee's written release of claims in such form as may be required by the Employer, the Employer shall pay or provide to the Employee (a) as severance pay, an aggregate amount equal to Grand Total Earnings, multiplied by the result obtained by dividing (x) the balance of the Term, measured in days, by (y) 365, with such aggregate amount to be paid in equal installments on the usual payroll dates for the balance of the Term; (b) for 12 months following termination, outplacement services by a firm selected by the Employee at the expense of the Employer, in an amount up to $30,000.00, and (c) for 24 months following termination (the "Continuation Period") the continuation of group medical insurance benefits except as offset by benefits paid or provided by other sources as set forth in Section 7.6, or as prohibited by law. For purposes of determining the period of continuation coverage to which the Employee or any of the Employee's dependents is entitled under section 4980B of the Internal Revenue Code of 1986, as amended, (or any successor provision thereto), the Employee shall be deemed to have remained employed until the end of the Continuation Period.

(ii) Maintenance of Benefits. During the Continuation Period, the Employer shall use its best efforts to maintain its group medical insurance benefits in

full force and effect for the continued benefit of the Employee or shall arrange to make available to the Employee group medical benefits substantially similar to those that the Employee would otherwise have been entitled to receive if the Employee's employment had not been terminated. Such benefits shall be provided on the same terms and conditions (including the Employee contributions toward the premium payments) under which the Employee was entitled to participate immediately prior to the Employee's termination.

(iii) Forfeiture. Notwithstanding the foregoing provisions of this
Section 7, any right of the Employee to receive termination payments and benefits under Section 7 shall be forfeited to the extent of any amounts payable or benefits to be provided after a material breach of any covenant set forth in Section 8.

7.4 Non-Eligibility For Other Company Separation Pay. The Employee shall not be eligible for any payments under any severance program (excluding the 1999 Separation Allowance Program) offered by the Employer.

7.5 Employer's Right of Offset. If the Employee is at any time indebted to the Employer, or otherwise obligated to pay money to the Employer for any reason, the Employer, at its election, may offset amounts otherwise payable to the Employee under this Agreement, including, but without limitation, Base Salary and incentive compensation payments, against any such indebtedness or amounts due from the Employee to the Employer, to the extent permitted by law.

7.6 Mitigation. In the event of the termination of the Employee by the Employer without Cause, or by the Employee with Good Reason, the Employee shall not be required to mitigate damages by seeking other employment or otherwise as a condition to receiving termination payments or benefits under this Agreement. No amounts earned by the Employee after the Employee's termination by the Employer without Cause or by the Employee with Good Reason, whether from self-employment, as a common law employee, or otherwise, shall reduce the amount of any payment or benefit under any provision of this Agreement. Notwithstanding the foregoing, the Employee's coverage under the Employer's group medical insurance as provided in Section 7.3(i) shall terminate as soon as the Employee becomes covered under any group medical plan made available by another employer. The Employee shall report to the Employer any such coverage actually received by the Employee.

7.7 Resignations. Except to the extent requested by the Employer, upon any termination of the Employee's employment with the Employer, the Employee shall immediately resign all positions and directorships with the Employer and each of its subsidiaries and affiliates.

8.1 Confidentiality. During the Term, and in consideration for the Employee's agreement to enter into this Agreement, the Employer agrees that it will disclose to the Employee its confidential or proprietary information and trade secrets (together, the "Proprietary Information") to the extent necessary for the Employee to carry out his obligations under this Agreement. The Employee hereby covenants and agrees that the Employee shall not, without the prior written consent of the Employer, during the Term or at any time thereafter disclose to any person not employed by the Employer, or use in connection with engaging in competition with the Employer, any Proprietary Information of the Employer.

(i) It is expressly understood and agreed that the Employer's Proprietary Information is all nonpublic information relating to the Employer's business, including but not limited to information, plans and strategies regarding suppliers, pricing, marketing, customers, hiring and terminations, employee performance and evaluations, internal reviews and investigations, short term and long range plans, acquisitions and divestitures, advertising, information systems, sales objectives and performance, as well as any other nonpublic information, the nondisclosure of which may provide a competitive or economic advantage to the Employer. Proprietary Information shall not be deemed to have become public for purposes of this Agreement where it has been disclosed or made public by or through anyone acting in violation of a contractual, ethical, or legal responsibility to maintain its confidentiality.

(ii) In the event the Employee receives a subpoena, court order or other summons that may require the Employee to disclose Proprietary Information, on pain of civil or criminal penalty, the Employee will promptly give notice of the subpoena or summons pursuant to Section 10.5 and provide the Employer an opportunity to appear at the Employer's expense and challenge the disclosure of its Proprietary Information, and the Employee shall provide reasonable cooperation to the Employer for purposes of affording the Employer the opportunity to prevent the disclosure of the Employer's Proprietary Information.

8.2 Nonsolicitation of Employees. The Employee hereby covenants and agrees that during the Term and for two years thereafter, the Employee shall not, without the prior written consent of the Employer, on the Employee's own behalf or on the behalf of any person, firm or company, directly or indirectly, attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any of the employees of the Employer (or any of its subsidiaries or affiliates) to give up his or her employment with the Employer (or any of its subsidiaries or affiliates), and the Employee shall not directly or indirectly solicit or hire employees of the Employer (or any of its subsidiaries or affiliates) for employment with any other employer.

8.3 Noninterference with Business Relations. The Employee hereby covenants and agrees that during the Term and for two years thereafter, the Employee shall not, without the prior written consent of the Employer, on the Employee's own behalf or on the behalf of any person, firm or company, directly or indirectly, attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any person, firm or company to cease doing business with, reduce its business with, or decline to commence a business relationship with, the Employer (or any of its subsidiaries or affiliates).

8.4 Noncompetition. It is recognized by the Employee and the Employer that the Employee's duties hereunder will require the receipt and creation of Proprietary Information, as defined in Section 8.1. The Proprietary Information has been and will continue to be developed by the Employer and its subsidiaries and affiliates at substantial cost and constitutes valuable and unique property of the Employer. The Employee further acknowledges that due to the nature of the Employee's position, the Employee will have access to Proprietary Information affecting plans and operations in every location in which the Employer (and its subsidiaries and affiliates) does business or plans to do business throughout the world, and the Employee's decisions and recommendations on behalf of the Employer may affect its operations throughout the world. Accordingly, the Employee acknowledges that the foregoing makes it reasonably necessary for the protection of the Employer's business interests that the Employee not compete with the Employer or any of its subsidiaries or affiliates during the Term and for a reasonable and limited period thereafter, as provided below.

(i) The Employee covenants that during the Term of this Agreement and for a period of one year following the later of either a termination of employment pursuant to Section 6 or a termination of at-will employment following expiration of the Term, the Employee will not undertake work for a Competing Business, as defined in Section 8.4(ii). For purposes of this covenant, "undertake work for" shall include performing services, whether paid or unpaid, in any capacity, including as an officer, director, owner, consultant, employee, agent or representative, where such services involve the performance of similar duties or oversight responsibilities as those performed by the Employee during the 18-month period preceding the Employee's termination from the Employer for any reason.

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

(A) operates (1) any retail department store, specialty store, general merchandise store, or drug store; (2) any retail catalog, telemarketing, or direct mail business; (3) any Internet-based or other electronic retailing business; (4) any other retail business that sells goods, merchandise, or services of the types sold by the Employer, including its divisions, affiliates, and licensees; or

(5) any business that provides buying office or sourcing services to any business of the types referred to in this
Section 8.4(ii)(A);

(B) conducts any business of the types referred to in Section 8.4(ii)(A) in the United States or another country in which the Employer, including its divisions, affiliates, and licensees, conducts a similar business; and

(C) from any business(es) of the types referred to in Section 8.4(ii)(A), had aggregate net sales or revenues of $500,000,000 in the fiscal year preceding the determination or is reasonably expected to have aggregate net sales or revenues of $500,000,000 in either the current fiscal year or the next following fiscal year.

(iii)Notwithstanding the foregoing, in the case of a termination of the Employee by the Employer without Cause or by the Employee with Good Reason, the above referenced definition of "Competing Business" in Section 8.4(ii) may be modified with approval of the Chief Executive Officer.

8.5 Injunctive Relief. If the Employee shall breach the covenants contained in this Section 8, the Employer shall have no further obligation to make any payment to the Employee pursuant to this Agreement and may recover from the Employee all such damages as it may be entitled to at law or in equity. In addition, the Employee acknowledges that any such breach is likely to result in immediate and irreparable harm to the Employer for which money damages are likely to be inadequate. Accordingly, the Employee consents to injunctive and other appropriate equitable relief without the necessity of bond in excess of $500.00 (five hundred dollars) upon the institution of proceedings therefor by the Employer in order to protect the Employer's rights hereunder.

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

(i) (a) There are no restrictions, agreements or understandings whatsoever to which the Employee is a party that would prevent or make unlawful the Employee's execution of this Agreement or the Employee's employment under this Agreement, or that is or would be inconsistent, or in conflict with this Agreement or the Employee's employment under this Agreement, or would prevent, limit or impair in any way the performance by the Employee of the obligations under this Agreement; and (b) the Employee has disclosed to the Employer all restraints, confidentiality commitments or other employment restrictions that the Employee has with any other employer, person or entity.

(ii) Upon and after the Employee's termination or cessation of employment with the Employer, including any post-Term at-will employment, and until such time as no obligations of the Employee to the Employer hereunder exist, the Employee: (a) shall provide a complete copy of this Agreement to any prospective employer or other person, entity or association in a Competing Business with whom or which the Employee proposes to be employed, affiliated, engaged, associated or to establish any business or remunerative relationship prior to the commencement thereof, provided that Employee shall first cause the compensation amounts hereunder to be deleted or not disclosed; and (b) shall notify the Employer of the name and address of any such person, entity or association prior to the Employee's employment, affiliation, engagement, association or the establishment of any business or remunerative relationship.

9. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto that accrue hereunder prior to such expiration or termination, except to the extent specifically stated herein. In addition to the foregoing, the Employee's covenants and warranties contained in Section 8, and the parties' agreements under
Section 10 shall survive the expiration of this Agreement and the termination of the Employee's employment, including any post-Term at-will employment.

10.1 Dispute Resolution. Any dispute between the parties under this Agreement shall be resolved (except as provided below) through informal arbitration by an arbitrator selected under the rules of the American Arbitration Association for arbitration of employment disputes (located in the city in which the Employer's principal executive offices are based) and the arbitration shall be conducted in that location under the rules of said Association. Each party shall be entitled to present evidence and argument to the arbitrator. The arbitrator shall have the right only to interpret and apply the provisions of this Agreement and may not change any of its provisions, except as expressly provided in Section 10.4 and only in the event Employer has not brought an action in a court of competent jurisdiction to enforce the covenants in Section 8. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or a defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator shall be conclusive and binding upon the parties and judgment upon the same may be entered in any court having jurisdiction thereof. The arbitrator shall give written notice to the parties stating the arbitrator's determination, and shall furnish to each party a signed copy of such determination. The expenses of arbitration shall be borne equally by the Employer and the Employee or as the arbitrator equitably determines consistent with the application of state or federal law; provided, however, that the Employee's share of such expenses shall not exceed the maximum permitted by law. Any arbitration or action pursuant to this Section 10.1 shall be governed by and construed in accordance with the substantive laws of the State of Texas and,

where applicable, federal law, without giving effect to the principles of conflict of laws of such State. The mandatory arbitration provisions of this Section 10.1 shall supersede in their entirety the J. C. Penney Alternative, a dispute resolution program generally applicable to employment terminations.

Notwithstanding the foregoing, the Employer shall not be required to seek or participate in arbitration regarding any actual or threatened breach of the Employee's covenants in Section 8, but may pursue its remedies, including injunctive relief, for such breach in a court of competent jurisdiction in the city in which the Employer's principal executive offices are based, or in the sole discretion of the Employer, in a court of competent jurisdiction where the Employee has committed or is threatening to commit a breach of the Employee's covenants, and no arbitrator may make any ruling inconsistent with the findings or rulings of such court.

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

10.3 Governing Law. This Agreement shall be governed, construed, interpreted, and enforced in accordance with the substantive law of the State of Texas and federal law, without regard to conflicts of law principles, except as expressly provided herein. In the event the Employer exercises its discretion under Section 10.1 to bring an action to enforce the covenants contained in Section 8 in a court of competent jurisdiction where the Employee has breached or threatened to breach such covenants, and in no other event, the parties agree that the court may apply the law of the jurisdiction in which such action is pending in order to enforce the covenants to the fullest extent permissible.

10.4 Severability. Any provision of this Agreement that is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective, to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal or unenforceable in any other jurisdiction. If any covenant in Section 8 should be deemed invalid, illegal or unenforceable because its time, geographical area, or restricted activity, is considered excessive, such covenant shall be modified to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

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

10.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

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

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

10.9 No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action that is inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

10.10Headings and Section References. The headings used in this Agreement are intended for convenience or reference only and shall not in any manner amplify, limit, modify or otherwise be used in the construction or interpretation of any provision of this Agreement. All section references are to sections of this Agreement, unless otherwise noted.

10.11Beneficiaries. The Employee shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Employee's death, and may change such election, in either case by giving the Employer written notice thereof in accordance with Section 10.5. In the event of the Employee's death or a judicial determination of the Employee's incompetence, reference in this Agreement to the "Employee" shall be deemed, where appropriate, to the Employee's beneficiary, estate or other legal representative.

10.12Withholding. The Employer shall be entitled to withhold from payment any amount of withholding required by law.

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

J. C. PENNEY CORPORATION, INC.

By:   /s/ Allen Questrom
    ------------------------------
Name: Allen Questrom
Title:

EMPLOYEE

/s/ Robert B. Cavanaugh
------------------------------
Robert B. Cavanaugh

EXHIBIT A

1989 Management Incentive Compensation

Comp Plan

Employee's annual target incentive units shall be 50% of Base Salary unless changed by the Human Resources and Compensation Committee.

The performance measures for the Comp Plan shall be determined by the Human Resources and Compensation Committee to include the following measures for the Total Company

Sales
Operating Profit

Performance against plan for these measures produces a unit value that is multiplied by the target incentive units to produce an annual award. The minimum unit value under this Plan shall be 0% and the maximum shall be 200%.