J. C. Penney Company, Inc. Notice of Stock Option Grant

This Notice of Non-Qualified (also known as "Non-Statutory") Stock Option ("NSO") gives you the right to purchase the total number of shares of Common Stock of 50¢ par value ("Common Stock") of J. C. Penney Company, Inc. ("Company") at the option grant price per share as shown above.  This option 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 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 the capitalization of the Company or other similar event, the option grant price and number of shares shall be adjusted as provided in the Plan.

Terms of Exercise

Effective Exercise Date

When an option exercise instruction is given in conjunction with a sell order for the underlying stock that is an Exercise-and-Sell to Cover, an Exercise-and-Sell Order, a Limit Order or a Good ‘til Cancelled Order, the effective exercise date shall be the date on which such sale order is executed.  For a Cash Payment (Exercise and Hold) transaction, the effective exercise date shall be the date the requisite funds are received by the Company at its home office in Plano, Texas, or such other location as the Company may designate, or by a third party duly designated by the Company at the offices of such third party.  Exercise instructions received after the close of the New York Stock Exchange for the day shall be deemed received as of the opening of the next Business Day (a “Business Day” being any day on which the New York Stock Exchange is open and operating).  An effective exercise date shall never mean a non-Business Day.  If any "effective exercise date," as defined above, falls on a day Common Stock is not traded, all transactions shall be postponed until the next trading day, and the effective exercise date shall be deemed to be the next trading date, unless such day is after the Normal Expiration Date (as defined below),   in which case the option shall expire.

Transferability

This option may be assigned or transferred by will or the laws of descent and distribution. No Stock Option shall be exercisable except by you or (a) upon your incapacity, by your guardian or legal representative, or (b) upon your death, by the beneficiary you have designated on the J. C. Penney Company Equity Plan Beneficiary Designation Form or in the absence of such beneficiary, your legal representative (collectively, "Legal Transferees").

Date Option Becomes Exercisable

This option shall become  exercisable (“vest”) in accordance with the following schedule:

However, 100% of this option becomes immediately exercisable, without regard to this date, upon  Employment Termination (as defined in the Plan) following a Change of Control (as defined in Attachment A) of the Company or an Involuntary Separation from Service without Cause under, and as defined in, the Executive Termination Pay Agreement, and a portion of this option becomes immediately exercisable, without regard to this date, in the event of your employment termination due to Retirement, Disability, death, or job restructuring/reduction in force/unit closing as described below.

1

Additional Exercise Terms Of This Option Are :

While you are Employed

While you are employed by the Company, subsidiary, or other entity affiliated with the Company, you may exercise vested options any time on or after the Normal Vesting Date   until the expiration date which is (date) ( "Normal Expiration Date" ).

This option can be exercised by: