J. C. Penney Corporation, Inc. Mirror Savings Plan

J. C. PENNEY CORPORATION, INC.



MIRROR SAVINGS PLAN







AMENDED AND RESTATED, EFFECTIVE DECEMBER 31, 2007
















J. C. PENNEY CORPORATION, INC.



MIRROR SAVINGS PLAN



Amended and Restated Effective

At 11:59 p.m. on December 31, 2007





INTRODUCTION





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





Effective December 31, 2006, the J.C. Penney Corporation Inc. Mirror Savings Plan I and III were closed to new deferrals and new participants. Effective on January 1, 2007, the J.C. Penney Corporation, Inc. amended and restated Mirror Savings Plan II and renames the plan the J.C. Penney Corporation, Inc. Mirror Savings Plan. As of the December 31, 2007, Mirror Savings Plans I and III are merged into the Mirror Savings Plan and the Mirror Savings Plan is the surviving plan.



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



The provisions of the Plan as amended and restated herein will apply to the entire benefit of each Participant who is an Associate on or after the above effective date and each Participant who had a Separation from Service prior to the above effective date and had not commenced receiving benefit payments under the Plan as of the effective date. For all other Participants who have commenced receiving benefits under the Plan as of the above effective date, the provisions of the Plan as in effect at the time each such Participant commenced receiving benefits will continue to be applicable. Set forth in Appendix B for reference only is a copy of the Plan as in effect on October 3, 2004, and amendments to that Plan adopted after that date. Unless otherwise indicated, no provision of the Plan as amended and restated shall amend any provision of the Plan in Appendix B.



Words and phrases with initial capital letters used throughout the Plan are defined in Article One.






J. C. PENNEY CORPORATION, INC.

MIRROR SAVINGS PLAN



TABLE OF CONTENTS





TABLE OF CONTENTS

Article Page

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

ARTICLE TWO ELIGIBILITY AND PARTICIPATION..................................................... 5

2.01 Eligibility Determined for Each Plan Year.............................................. 5
2.02 Eligible Associate..................................................................................... 5
2.03 Participation............................................................................................... 5
2.04 Election to Defer........................................................................................ 6
2.05 Deferral Amounts....................................................................................... 7
2.06 Investment Elections................................................................................ 8

ARTICLE THREE BENEFITS.............................................................................................. 9

3.01 Establishment of Accounts....................................................................... 9
3.02 Personal Accounts.................................................................................... 9
3.03 Company Accounts................................................................................... 9
3.04 Mirror Company Matching Contribution.................................................. 10
3.05 Mirror Retirement Account Contribution.................................................. 10
3.06 Mirror Discretionary Contribution............................................................. 11

ARTICLE FOUR TRANSFERS ........................................................................................... 13

4.01 Personal Accounts.................................................................................... 13
4.02 Company Accounts................................................................................... 13

ARTICLE FIVE VESTING................................................................................................. 14

5.01 Personal Accounts.................................................................................... 14
5.02 Company Accounts................................................................................... 14
5.03 Forfeitures.................................................................................................. 15

ARTICLE SIX TYPE OF PLAN......................................................................................... 16

6.01 Top Hat Plan.............................................................................................. 16
6.02 No Funding................................................................................................ 16

ARTICLE SEVEN DISTRIBUTIONS ........................................................................................ 17

7.01 Normal Form of Payment........................................................................ 17












7.02 Payment Event............................................................................................ 17
7.03 Payment Commencement Date................................................................ 17
7.04 Delayed for Specific Employees............................................................... 17
7.05 Death............................................................................................................ 18
7.06 Subsequent Changes in Time and Form of Benefit................................ 18
7.07 Distribution for an Unforseeable Emergency........................................... 18
7.08 Fund-Specific Installments or Unforseeable Emergency Distributions. 19
7.09 Form of Payments....................................................................................... 19
7.10 Change in Control....................................................................................... 19
7.11 Reemployed Participants.......................................................................... 20
7.12 Prohibition on Acceleration of Payment.................................................. 20
7.13 Limited Cashouts....................................................................................... 20

ARTICLE EIGHT AMENDMENT AND TERMINATION......................................................... 22

8.01 Plan Amendment......................................................................................... 22
8.02 Plan Termination......................................................................................... 22

ARTICLE NINE MISCELLANEOUS..................................................................................... 23

9.01 Plan Administration..................................................................................... 23
9.02 Plan Expenses............................................................................................ 23
9.03 Effect on Other Benefits............................................................................. 23
9.04 No Guarantee of Employment................................................................... 24
9.05 Disclaimer of Liability................................................................................. 24
9.06 Severability.................................................................................................. 24
9.07 Successors.................................................................................................. 24
9.08 Governing Law............................................................................................ 24
9.09 Construction................................................................................................. 25
9.10 Taxes............................................................................................................ 25
9.11 Non-Assignability........................................................................................ 25
9.12 Claims Procedure....................................................................................... 25

Exhibit A Examples of Calculations for the Company Matching Contribution

Appendix A Document History

Appendix B Prior Mirror Savings Plan document










ARTICLE ONE



DEFINITIONS



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



Active Participant : A Participant who defers part of his or her Compensation for a Plan Year (or part thereof) pursuant to an election to defer.



Associate : Any person who is classified as an associate and employed by an Employer if the relationship between the Employer and such person constitutes the legal relationship of employer and employee.



Beneficiary : The person or persons designated by the Participant on a beneficiary form required by the Company for this purpose to receive benefits payable under the Plan because of the Participant's death.



Code : The Internal Revenue Code of 1986, as amended from time to time.



Company : On and after January 27, 2002, J. C. Penney Corporation, Inc., a Delaware corporation. The term "Company" will also include any successor employer, if the successor employer expressly agrees in writing as of the effective date of succession to continue the Plan.



Company Account : A phantom account established in accordance with Article Three to which Mirror Company Matching, Mirror Retirement Account and Mirror Discretionary contributions plus earnings are credited.



Compensation : The same meaning as the term "Compensation" is defined in the Savings Plan.



For all purposes under the Plan, a Participant's "Compensation" shall exclude any awards (cash or otherwise) under the J.C. Penney Company, Inc. 2005 Equity Compensation Plan.



For purposes of applying a Participant's election to defer, a Participant's Compensation for a Plan Year shall: (i) include any cash incentive payments under the Management Incentive Compensation Program related to services performed during such year by the Associate (and exclude any such payments in the current Plan Year related to a prior Plan Year's services), and (ii) include amounts deferred by the Active Participant pursuant to Section 2.05 of the Plan.





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



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



Controlled Group : The Company and all other corporations, trades, and businesses, the employees of which, together with employees of the Company, are required by the first sentence of subsection (b), by subsection (c), by subsection (m), or by subsection (o) of Code section 414 to be treated as if they were employed by a single employer. For purposes of determining if a Separation from Service has occurred, the Controlled Group will be determined under Code sections 414(b) and 414(c) and Treasury Regulation section 1.414(c) - 2 by using the language " at least 50 percent" instead of "at least 80 percent" each place it appears in Code section 1563(a)(1),(2), and (3).





Eligible Associate : An Associate who has satisfied the eligibility requirements of the Plan for a Plan Year in accordance with Section 2.02.



Employer : The Company and any subsidiary company or affiliate of the Company that is a Participating Employer as defined in Article I of the Savings Plan.



ERISA : The Employee Retirement Security Act of 1974, as amended from time to time.



Exchange Act : The Securities Exchange Act of 1934, as amended from time to time.



Human Resources and Compensation Committee : The Human Resources and Compensation Committee of the Board of Directors of the Parent Company.



Human Resources Committee : The Human Resources Committee of the Company.



Mirror Company Matching Contributions : The phantom amounts deemed to be contributed by the Company for each Plan Year as determined under Section 3.04.



Mirror Discretionary Contributions : The phantom amounts deemed to be contributed by the Company for each Plan Year as determined under Section 3.06.



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Mirror Investment Funds : Phantom funds established as book reserve entries in the books and records of the Company to which a Participant's deferral amounts under the Plan are credited based on the investment elections of the Participant. The investment returns of such funds shall be assumed to match the returns of the same investment funds available to participants under the Savings Plan. No phantom fund shall be established in this Plan for any self directed brokerage account in the Savings Plan.



Mirror Retirement Account Contributions: The phantom amounts deemed to be contributed by the Company for each Plan Year as determined under Section 3.05.



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



Participant : An Eligible Associate who participates in the Plan in accordance with Article Two, and who has not yet received a distribution of the entire amount of his or her vested benefits under the Plan.



Payment Commencement Date : The date upon which payment of a Particpant ?s benefits is scheduled to begin as determined under Section 7.03.



Payment Event : The event set forth in Section 7.02 upon which a Participant's benefits may be paid.



Personal Account : A phantom account established in accordance with Article Three to which a Participant's deferral amounts plus earnings are credited.



Plan : The J.C. Penney Corporation Inc. Mirror Savings Plan, as amended from time to time.



Plan Administrator : The Benefits Administration Committee.



Plan Year : Each calendar year.



Savings Plan : Prior to January 27, 2002, the J. C. Penney Company, Inc. Savings, Profit-Sharing and Stock Ownership Plan, as amended from time to time, and on and after January 27, 2002, the J. C. Penney Corporation, Inc. Savings, Profit-Sharing and Stock Ownership Plan, as amended from time to time.



Separation from Service : The date an Associate dies, retires, or otherwise has a termination of employment from the Controlled Group within the meaning of Code section 409A and Treasury Regulation section 1.409A-1(h), or its successor, taking into account the definition of Controlled Group for such purpose as defined above. An Eligible Associate or Participant who transfers from one Employer to another Employer or to another member of the Controlled Group as defined in the preceding sentence without a break in employment shall not be deemed to have a Separation from Service.



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Specified Employee : A "specified employee" within the meaning of Code section 409A, as determined in accordance with the rules specified by the Board of Directors in resolutions dated December 12, 2007.



Valuation Date : With respect to all Mirror Investment Funds, each day of a calendar year on which the New York Stock Exchange is open.



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



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



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ARTICLE TWO



ELIGIBILITY AND PARTICIPATION



2.01 Eligibility Determined for Each Plan Year



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



2.02 Eligible Associate



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



(a) Satisfied the eligibility requirements to make deferrals to the Savings Plan; and



(b) Earnings in excess of $100,000 (as adjusted in accordance with Section 414(q)(1) of the Code) comprised as follows:



(1) If a current Associate, such earnings will be based on his actual Compensation through October 31 of such year plus his or her projected earnings from November 1 through December 31 of such year determined by using his or her Base Salary (as defined below) in effect on October 31 of such year.


(2) If an Associate was not an Associate in the preceding Plan Year, he or she shall be eligible to participate in the year of hire or rehire if in addition to meeting the requirements of Section 2.02(a) above, he or she is expected to have projected Base Salary of at least an amount in excess of $100,000 (as adjusted in accordance with Section 414(q)(1) of the Code) in the current Plan Year based on his rate of Base Salary.


Base Salary shall mean the aggregate amount of the base pay rate (before any deductions of contributions or deferrals), commissions and amounts under the J.C. Penney Corporation, Inc. Management Incentive Compensation Program due and payable to an Eligible Associate in the applicable Plan Year designated by his or her Employer as the Eligible Associate's monthly pay as reflected on the Employer's personnel records including any such amounts otherwise due and payable with respect to which his or her election to defer applies.



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2.03 Participation



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



A Participant who is not an Active Participant for a Plan Year shall continue to participate in the Plan in all respects except that such Participant shall not have the right to defer part of his or her Compensation under the Plan for that Plan Year, and shall not be entitled to a Mirror Company Matching Contribution or a Mirror Discretionary Contribution (as determined under Sections 3.04 or 3.06, respectively) for that Plan Year. A Participant hired on or after January 1, 2007, shall be entitled to receive a Mirror Retirement Account Contribution (as determined under 3.05) regardless of whether he or she is an Active Participant.



2.04 Election to Defer



(a) All elections to defer for a Plan Year must be made in accordance with Treasury Regulation section 1.409A-2(a), and its successor, and in a manner approved by the Plan Administrator. An Eligible Associate for a Plan Year may elect to defer a percentage (as described in Section 2.05 below) of his or her Compensation for such Plan Year by filing an election no later than the December 31 preceding the Plan Year during which the services giving rise to the Compensation are performed. With respect to cash incentive amounts, such deferral election must be submitted no later than the December 31 preceding the Plan Year during which the services giving rise to the cash incentive amounts are performed, even though such cash incentive amounts may be payable in a Plan Year subsequent to performance of the relevant services.



(b) To the extent permitted by Treasury Regulation section 1.409A-2(a)(7), and its successor, a newly Eligible Associate who has never participated in the Plan or in an agreement, method, program, or other arrangement that would be aggregated with this Plan under Code section 409A or Treasury Regulation section 1.409A-1(c)(2), or its successor may file his or her election with the Plan Administrator within 30 days of his or her first date of eligibility for participation in the Mirror Plan but such election shall apply only to Compensation paid for services performed after the election and the amount of Compensation deferred shall be pro-rated, to the extent required, pursuant to Treasury Regulation section 1.409A-2(a)(7) or its successor. If the election to defer is not made within 30 days or if the Eligible Associate is not otherwise newly eligible within the meaning of the preceding sentence, the Eligible Associate will not be allowed to make an election for the current Plan Year. An Eligible Associate who was previously eligible to participate in the Plan may be treated as a newly Eligible Associate if:



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(1) the Eligible Associate became ineligible to elect to defer, prior to a complete distribution of the Eligible Associate's Account and following the distribution of all remaining amounts from his or her account, the Eligible Associate has subsequently become eligible to elect to participate again; or



(2) the Eligible Associate, has not been eligible to defer at any time during the 24-month period ending on the date the Eligible Associate becomes eligible again, regardless of whether the Eligible Associate has a current Account balance or if the Eligible Associate's Account was credited with earnings or losses during such 24-month period.



Clauses (1) and (2) shall be applied by taking into account by treating an agreement, method, program, or other arrangement that would be aggregated with this Plan under Code section 409A or Treasury Regulation section 1.409A-1(c)(2) as if it were part of this Plan for purposes of determining the Participant's eligibility to defer or receipt of all remaining amounts.



(c) An Active Participant cannot change or terminate his or her election to defer during a Plan Year for that Plan Year. However, an Eligible Associate may change his or her election to defer for a subsequent Plan Year by filing a new election with the Plan Administrator by December 31 of the preceding Plan Year.



An election to defer also shall terminate:



(1) at the end of the Plan Year;


(2) if the Plan is terminated, or


(3) in the event of a Participant's request for a distribution due to an unforeseeable emergency which is determined to exist under Section 7.07 or in the event the Participant receives a hardship distribution as described in Treasury Regulation section 1.401(k)-1(d)(3).



2.05 Deferral Amounts



An Active Participant for a Plan Year may defer



(a) up to 14% of his Compensation in that Plan Year up to the earnings dollar limit, and,



(b) up to 75% of his Compensation in that Plan Year that exceeds the earnings dollar limit.



All deferral amounts shall be in whole percentages and made by payroll deduction. The earnings dollar limit of an Active Participant for a Plan Year shall be






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$225,000, as adjusted for cost of living increases in accordance with Section 401(a)(17) of the Code.



2.06 Investment Elections



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



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



In the event that no timely election by the Participant is on file with the Plan Administrator, such Participant shall be deemed to have elected that all deferral amounts shall be applied to the hypothetical purchase for him or her of units in the Personal Account within the Mirror Investment Fund that is the " Interest Income Fund" under the Savings Plan. Effective March 1, 2008, in the event that no timely election by the Participant is on file with the Plan Administrator, such Participant shall be deemed to have elected that all deferral amounts shall be applied to the purchase for him or her of units in the Personal Account within the Mirror Investment Fund that is the appropriate " Target Retirement Investment Fund" under the Savings Plan.



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ARTICLE THREE



BENEFITS



3.01 Establishment of Accounts



A Personal Account and a Company Account within each Mirror Investment Fund shall be established for each Participant in the Plan as if assets were invested in a trust. All amounts credited to the Personal Accounts and Company Accounts of a Participant shall at all times be held in the Company's general funds as part of the Company's general assets, unless a trust is established pursuant to Section 7.10(b).



The value, including gains and losses, credited to such accounts and funds shall be determined by the Plan Administrator pu ...