2009 Long-Term Incentive Plan

Restricted Stock Unit Grant

You have been granted the number of restricted stock units listed above in recognition of your expected future contributions to the success of JCPenney.  Each restricted stock unit shall at all times be deemed to have a value equal to the then-current fair market value of one share of J. C. Penney Company, Inc. Common Stock of 50¢ par value (“Common Stock”).   This grant is subject to all the terms, rules, and conditions of the J. C. Penney Company, Inc. 2009 Long-Term Incentive Plan (“Plan”) and the implementing resolutions (“Resolutions”) approved by the Human Resources and Compensation Committee of the JCPenney Board of Directors.   Capitalized terms not otherwise defined herein shall have the respective meanings assigned to them in the Plan and the Resolutions.  In the event of a change in capitalization of the Company or other similar event, the number of units shall be adjusted as provided in the Plan.

The restricted stock units shall vest, and the restrictions on your restricted stock units shall lapse, according to the following vesting schedule , PROVIDED YOU REMAIN CONTINUOUSLY EMPLOYED BY THE COMPANY THROUGH THE  VESTING DATE (unless your employment terminates due to your Retirement, Disability, death, job restructuring/reduction in force/unit closing or an Involuntary Separation from Service without Cause under, and as defined in, the Executive Termination Pay Agreement).

Your vested restricted stock units shall be paid out in shares of Common Stock as soon as practicable on or following the earlier of (i) your termination of employment as a result of your Retirement, Disability, death, or job restructuring/reduction in force/unit closing, or (ii) (date).  Notwithstanding the foregoing, if you are a specified employee as defined under Section 409A of the Code and the related Treasury regulations thereunder and you terminate your employment with the Company as a result of your Retirement, Disability, death, or job restructuring/reduction in force/unit closing, your vested restricted stock units shall be paid out in shares of Common Stock as soon as practicable following the earlier of (i) the date that is six months following your termination of service due to Retirement, Disability, or job restructuring/reduction in force/unit closing, (ii) the date of your death, or (iii) (date).  You shall not be allowed to defer the payment of your shares of Common Stock to a later date.

Dividend Equivalents

You shall not have any rights as a stockholder until your restricted stock units vest and you are issued shares of Common Stock in cancellation of the vested restricted stock units.  However, you will accrue dividend equivalents on the unvested restricted stock units in the amount of any quarterly dividend declared on the Common Stock.  Dividend equivalents shall continue to accrue until your restricted stock units vest and you receive actual shares of Common Stock in cancellation of the vested restricted stock units.  The dividend equivalents shall be credited as additional restricted stock units in your account to be paid out in shares of Common Stock on the vesting date along with the restricted stock units to which they relate.  The number of additional restricted stock units to be credited to your account shall be determined by dividing the aggregate dividend payable with respect to the number of restricted stock units in your account by the closing price of the Common Stock on the New York Stock Exchange on the dividend payment date.  The additional restricted stock units credited to your account are subject to all of the terms and conditions of this restricted stock unit award and the Plan and you shall forfeit your ad