8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): May 15, 2020

J. C. PENNEY COMPANY, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-15274	26-0037077
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6501 Legacy Drive Plano, Texas	75024-3698
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (972) 431-1000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered*
Common Stock of 50 cents par value	JCP	New York Stock Exchange
Preferred Stock Purchase Rights	JCP	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

* On May 16, 2020, J. C. Penney Company, Inc. was notified by the staff of NYSE Regulation, Inc. that it had determined to commence proceedings to delist the common stock of J. C. Penney Company, Inc. from the New York Stock Exchange.

Item 1.01. Entry into a Material Definitive Agreement.

The information set forth below in Item 1.03 in this Current Report on Form 8-K under the captions “Restructuring Support Agreement” and “Debtor-in-Possession Commitment Letter” is hereby incorporated by reference in this Item 1.01.

Item 1.03. Bankruptcy or Receivership.

Voluntary Petition for Reorganization

On May 15, 2020 (the “Petition Date”), J. C. Penney Company, Inc. (“J. C. Penney” or the “Company”) and certain of its subsidiaries (together with J. C. Penney, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Bankruptcy Court has granted a motion seeking joint administration of the Chapter 11 Cases under the caption In re: J. C. Penney Company, Inc., et al., Case No. 20-20182 (DRJ).

The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. To ensure their ability to continue operating in the ordinary course of business, the Debtors have filed with the Bankruptcy Court motions seeking, and the Bankruptcy Court has entered, a variety of “first day” relief, including authority to access cash collateral, pay employee wages and benefits, honor customer programs and pay vendors and suppliers in the ordinary course for all goods and services provided after the Petition Date.

On May 16, 2020, the Bankruptcy Court entered the Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock, Docket No. 104 (the “Order”). The Order is designed to assist the Debtors in preserving certain of their tax attributes by establishing, among other things, the procedures (including notice requirements) that certain stockholders and potential stockholders must comply with regarding transfers of, or declarations of worthlessness with respect to, J. C. Penney’s common stock, as well as certain obligations with respect to notifying the Debtors with respect to current stock ownership (the “Procedures”). The terms and conditions of the Procedures were immediately effective and enforceable upon entry of the Order by the Bankruptcy Court. Any actions in violation of the Procedures (including the notice requirements) are null and void ab initio, and (a) the person or entity making such a transfer will be required to take remedial actions specified by the Debtors to appropriately reflect that such transfer of J. C. Penney’s common stock is null and void ab initio and (b) the person or entity making such a declaration of worthlessness with respect to J. C. Penney’s common stock will be required to file an amended tax return revoking such declaration and any related deduction to reflect that such declaration is void ab initio. The foregoing description of the Order is not complete and is qualified in its entirety by reference to the Order, a copy of which is attached to this Current Report on Form 8-K as Exhibit 4.1 and is hereby incorporated by reference in this Item 1.03.

Restructuring Support Agreement

On May 15, 2020, J. C. Penney and its subsidiaries (together with J. C. Penney, the “Company Parties”) entered into a Restructuring Support Agreement (together with all exhibits and schedules thereto, the “RSA”) with members of an ad hoc group of lenders and noteholders (the “Consenting Stakeholders”) under (i) the Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (as amended, supplemented or otherwise modified from time to time, the “Term Loan Credit Agreement”), by and among, inter alios, J. C. Penney Corporation, Inc. (“JCP”), as borrower, certain of the Company Parties, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto from time to time, and (ii) JCP’s 5.875% Senior Secured Notes due 2023 (the “First Lien Notes”). In the aggregate, the Consenting Stakeholders hold approximately 70 percent of the Debtor’s first lien debt. Capitalized terms used but not otherwise defined in this “Restructuring Support Agreement” section of this Current Report on Form 8-K have the meanings given to them in the RSA.

The RSA contemplates a restructuring process that will establish both a financially sustainable operating company (“New JCP”) and a real estate investment trust (the “REIT”). The contemplated restructuring process includes (i) the commencement by the Debtors of voluntary cases under chapter 11 of the Bankruptcy Code, (ii) certain of the Consenting Stakeholders and/or their affiliates providing, on a committed basis, the debtor-in-possession financing on the terms set forth therein (which is described below under “Debtor-in-Possession Commitment Letter”), (iii) the formation and implementation of the REIT, (iv) the implementation of exit financing for both New JCP and the REIT, (v) the issuance of New JCP common stock, and (vi) the issuance of equity interests in the REIT, each on the terms set forth in the RSA.

The RSA contains various milestones, including the following: (a) no later than 18 days after the Petition Date, the Bankruptcy Court shall have entered the DIP Order, (b) no later than June 15, 2020, the Debtors will have delivered a Lease Optimization Plan and an Owned Real Estate Optimization Plan, each in form and substance acceptable to the Required Consenting First Lien Lenders, to the Consenting First Lien Lenders, (c) no later than July 8, 2020, the Company Parties shall have delivered a Business Plan (consistent with the acceptable Business Plan Parameters) to the Consenting First Lien Lenders and DIP Lenders, and no later than July 14, 2020, the Company Parties and the Required Consenting First Lien Lenders shall have agreed on an acceptable Business Plan, (d) no later than 130 days after the Petition Date, the Bankruptcy Court shall have entered an order approving the Disclosure Statement or acceptable bidding procedures, (e) no later than 160 days after the Petition Date, the Bankruptcy Court shall have either entered the Confirmation Order or approved an acceptable sale or sales, and (f) no later than November 15, 2020, the Plan Effective Date shall have occurred.

The RSA also provides that the RSA may be terminated by the Required Consenting First Lien Lenders or the Company Parties (or by an individual Consenting First Lien Lender as to itself only) upon the occurrence of certain events set forth therein. In particular, the Company Parties may terminate the RSA in the event the board of directors, board of managers or such similar governing body of any Company Party determines, after consulting with counsel, (i) that proceeding with any of the transactions described therein would be inconsistent with the exercise of its fiduciary duties or applicable law or (ii) in the exercise of its fiduciary duties, to pursue an Alternative Restructuring Proposal.

Although the Company Parties intend to pursue the restructuring contemplated by the RSA, there can be no assurance that the Company Parties will be successful in completing a restructuring or any other similar transaction on the terms set forth in the RSA or at all.

The foregoing description of the RSA is not complete and is qualified in its entirety by reference to the RSA, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is hereby incorporated by reference in this Item 1.03.

Debtor-in-Possession Commitment Letter

On May 15, 2020, prior to commencement of the Chapter 11 Cases, JCP entered into a commitment letter (together with all exhibits and schedules thereto, the “Commitment Letter”) with certain of the Consenting Stakeholders and/or their affiliates (the “Commitment Parties”), pursuant to which, and subject to the satisfaction of certain customary conditions, including the approval of the Bankruptcy Court (which has not been obtained at this time), the Commitment Parties committed to provide a non-amortizing senior secured priming multi-draw delayed draw debtor-in-possession term loan facility (the “DIP Facility”) with a maximum funded principal amount equal to $450 million in new money loans and a roll-up of $450 million of term loans issued under the Term Loan Credit Agreement to be funded in multiple borrowings as follows: (i) $225 million made not later than one business day following the entry of the DIP Order (as defined in the Commitment Letter), and (ii) the remainder made available following the entry of the DIP Order on July 15, 2020, subject to satisfaction of certain conditions precedent.

The DIP Facility is expected to include conditions precedent, representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and size. The proceeds of all or a portion of the proposed DIP Facility may be used by the Debtors (as defined in the Commitment Letter) to (i) pay certain costs, fees and expenses related to the Chapter 11 Cases, (ii) make payments in respect of certain “adequate protection” obligations, and (iii) fund working capital needs and expenditures of the Company Parties, in all cases subject to the terms of the credit agreement governing the DIP Facility (the “DIP Credit Agreement”) and applicable orders of the Bankruptcy Court. The Debtors intend to use cash on hand and cash from the results of operations to fund the working capital needs of the business prior to the entry of the DIP Order.

The foregoing description of the proposed DIP Facility and the Commitment Letter does not purport to be complete and is qualified in its entirety by reference to the Commitment Letter, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and is hereby incorporated by reference in this Item 1.03, and to the DIP Credit Agreement, as may be approved by the Bankruptcy Court.

Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

The filing of the Chapter 11 Cases constitutes an event of default that accelerated obligations under the following debt instruments and agreements (the “Debt Instruments”):

• Indenture, dated as of June 23, 2016, by and between JCP, the guarantors party thereto and Wilmington Trust, National Association, as trustee, which governs the First Lien Notes;

• Indenture, dated as of March 12, 2018, by and between JCP, the guarantors party thereto and Wilmington Trust, National Association, as trustee, which governs JCP’s 8.625% second lien notes due 2025;

• Guarantee and Collateral Agreement, dated as of June 20, 2014, as amended and restated as of June 20, 2017 (as amended, supplemented or otherwise modified from time to time), among J. C. Penney, JCP, as the parent borrower, J. C. Penney Purchasing Corporation, certain other subsidiaries of J. C. Penney, Wells Fargo Bank, National Association, as administrative agent, and the other lenders from time to time party thereto, which governs JCP’s asset-based revolving credit facility; and

• The Term Loan Credit Agreement.

The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On May 16, 2020, J. C. Penney was notified by the staff of NYSE Regulation, Inc. (“NYSE Regulation”) that it had determined to commence proceedings to delist the common stock of J. C. Penney from the New York Stock Exchange (“NYSE”). NYSE Regulation reached its decision that J. C. Penney is no longer suitable for listing pursuant to NYSE Listed Company Manual Section 802.01D after J. C. Penney’s disclosure on May 15, 2020 that it has commenced voluntary cases under chapter 11 of the Bankruptcy Code. J. C. Penney does not intend to appeal the determination and, therefore, it is expected that its common stock will be delisted, which would not affect its operations or business and does not change its reporting requirements under the rules of the Securities and Exchange Commission (the “SEC”).

Item 3.03. Material Modification to Rights of Security Holders.

The information set forth in Item 1.03 of this Current Report on Form 8-K regarding the Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock, Docket No. 104, is hereby incorporated by reference in this Item 3.03.

Item 7.01. Regulation FD Disclosure.

Press Release

In connection with the filing of the Chapter 11 Cases, J. C. Penney issued a press release on May 15, 2020, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.1.

Cleansing Material

Prior to the filing of the Chapter 11 Cases, J. C. Penney entered into confidentiality agreements (collectively, the “NDAs”) with the Consenting Stakeholders and certain other creditors. Pursuant to the NDAs, the Company agreed to publicly disclose certain information (the “Cleansing Material”) upon the occurrence of certain events set forth in the NDAs. A copy of the Cleansing Material is attached to this Current Report on Form 8-K as Exhibit 99.2. The Cleansing Material was prepared by J. C. Penney solely to facilitate a discussion with the parties to the NDAs and was not prepared with a view toward public disclosure and should not be relied upon to make an investment decision with respect to J. C. Penney. The Cleansing Material should not be regarded as an indication that the Company Parties or any third party consider the Cleansing Material to be a reliable prediction of future events, and the Cleansing Material should not be relied upon as such. The Cleansing Material includes certain values for illustrative purposes only and such values are not the result of, and do not represent, actual valuations, estimates, forecasts or projections of the Company Parties or any third party and should not be relied upon as such. Neither the Company Parties nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Material or undertakes any obligation to publicly update the Cleansing Material to reflect circumstances existing after the date when the Cleansing Material was prepared or conveyed or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Cleansing Material are shown to be in error.

The information disclosed in this Item 7.01, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing.

Additional Information on the Chapter 11 Cases

Court filings and information about the Chapter 11 Cases can be found at a website maintained by the Debtors’ claim agent, Prime Clerk, at http://www.cases.primeclerk.com/JCPenney.

Item 8.01. Other Events.

Annual Meeting

The Company previously disclosed that it intended to hold its 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”) on May 22, 2020. In consideration of the Chapter 11 Cases, the Company has determined to postpone the 2020 Annual Meeting, with a new date for such meeting to be set at a later date, as required.

Cautionary Note Regarding the Company Parties’ Securities

The Company Parties caution that trading in their securities, including J. C. Penney’s common stock, during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company Parties’ securities may bear little or no relationship to the actual recovery, if any, by holders of the Company Parties’ securities in the Chapter 11 Cases. In particular, J. C. Penney expects that its equity holders could experience a significant or complete loss on their investment, depending on the outcome of the Chapter 11 Cases.

Cautionary Statement Regarding Forward-Looking Information

The Company has included statements in this Current Report on Form 8-K that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expect” and similar expressions identify forward-looking statements, which include, but are not limited to, statements regarding sales, cost of goods sold, selling, general and administrative expenses, earnings, cash flows and liquidity. Forward-looking statements are based only on the Company’s current assumptions and views of future events and financial performance. They are subject to known and unknown risks and uncertainties, many of which are outside of the Company’s control that may cause the Company’s actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, risks attendant to the bankruptcy process, including the Company’s ability to obtain court approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Chapter 11 Cases, including with respect to any proposed debtor-in-possession financing; the ability of the Company to negotiate, develop, confirm and consummate a plan of reorganization; the effects of the Chapter 11 Cases, including increased legal and other professional costs necessary to execute the Company’s reorganization, on the Company’s liquidity (including the availability of operating capital during the pendency of the Chapter 11 Cases), results of operations or business prospects; the effects of the Chapter 11 Cases on the interests of various constituents; the length of time that the Company will operate under Chapter 11 protection; risks associated with third-party motions in the Chapter 11 Cases; Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; conditions to which any debtor-in-possession financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside the Company’s control; general economic conditions, including inflation, recession, unemployment levels, consumer confidence and spending patterns, credit availability and debt levels; changes in store traffic trends; the cost of goods; more stringent or costly payment terms and/or the decision by a significant number of vendors not to sell the Company merchandise on a timely basis or at all; trade restrictions; the ability to monetize non-core assets on acceptable terms; the ability to implement the Company’s strategic plan, including its omnichannel initiatives; customer acceptance of the Company’s strategies; the Company’s ability to attract, motivate and retain key executives and other associates; the impact of cost reduction initiatives; the Company’s ability to generate or maintain liquidity; implementation of new systems and platforms; changes in tariff, freight and shipping rates; changes in the cost of fuel and other energy and transportation costs; disruptions and congestion at ports through which the Company imports goods; increases in wage and benefit costs; competition and retail industry consolidations; interest rate fluctuations; dollar and other currency valuations; the impact of weather conditions; risks associated with war, an act of terrorism or pandemic; the ability of the federal government to fund and conduct its operations; a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information; legal and regulatory proceedings; the Company’s ability to access the debt or equity markets on favorable terms or at all; risks arising from the suspension of trading of the Company’s common stock on, or delisting from, the NYSE; and the impact of natural disasters, public health crises or other catastrophic events on the Company’s financial results, in particular as the Company manages its business through the COVID-19 pandemic and the resulting restrictions and uncertainties in the general economic and business environment. Please refer to the Company’s Annual Report on

Form 10-K for the year ended February 2, 2020, and quarterly reports on Form 10-Q filed subsequently thereto, for a further discussion of risks and uncertainties. There can be no assurances that the Company will achieve expected results, and actual results may be materially less than expectations. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. Any forward-looking statement made by the Company in this Current Report on Form 8-K is based only on information currently available to it and speaks only as of the date on which such statement is made. The Company does not undertake to update these forward-looking statements as of any future date.

Item 9.01. Financial Statements and Exhibits

(d)	Exhibit 4.1	Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock
	Exhibit 10.1*	Restructuring Support Agreement
	Exhibit 10.2*	Debtor-in-Possession Commitment Letter
	Exhibit 99.1	J. C. Penney Company, Inc. News Release issued May 15, 2020
	Exhibit 99.2	Cleansing Material
	Exhibit 104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

* Certain schedules and similar attachments have been omitted. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

J. C. PENNEY COMPANY, INC.
By:	/s/ Bill Wafford
	Bill Wafford Executive Vice President, Chief Financial Officer

Date: May 18, 2020

EX-4.1

Exhibit 4.1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)
	)	Re: Docket No. 19

ORDER APPROVING NOTIFICATION AND

HEARING PROCEDURES FOR CERTAIN TRANSFERS OF AND

DECLARATIONS OF WORTHLESSNESS WITH RESPECT TO COMMON STOCK

Upon the motion (the “Motion”)² of the above-captioned debtors and debtors in possession (collectively, the “Debtors”) for entry of an order (this “Order”) (a) approving the Procedures related to transfers of and declarations of worthlessness with respect to Beneficial Ownership of Common Stock, and (b) directing that any purchase, sale, other transfer of, or declaration of worthlessness with respect to, Beneficial Ownership of Common Stock in violation of the Procedures shall be null and void ab initio; and (c) granting related relief, all as more fully set forth in the Motion; and upon the First Day Declaration; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. § 1334; and this Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and this Court having found that the relief requested in the Motion is in the best interests of the Debtors’ estates, their creditors, and other parties in interest; and this Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the Motion were appropriate under the circumstances and no other notice need be provided; and this Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing before this Court (the “Hearing”); and this Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:

1.    The Procedures, as set forth in Exhibit 1 attached hereto, are approved.

2.    Any transfer of, or declaration of worthlessness with respect to, Beneficial Ownership of Common Stock in violation of the Procedures, including but not limited to the notice requirements, shall be null and void ab initio.

3.    In the case of any such transfer of Beneficial Ownership of Common Stock in violation of the Procedures, including but not limited to the notice requirements, the person or entity making such transfer shall be required to take remedial actions specified by the Debtors, which may include the actions specified in Private Letter Ruling 201010009 (Dec. 4, 2009), to appropriately reflect that such transfer is null and void ab initio.

4.    In the case of any such declaration of worthlessness with respect to Beneficial Ownership of Common Stock in violation of the Procedures, including the notice requirements, the person or entity making such declaration shall be required to file an amended tax return revoking such declaration and any related deduction to appropriately reflect that such declaration is void ab initio.

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  Capitalized terms used but not otherwise defined herein have the meanings given to them in the Motion.

5.    The Debtors may retroactively or prospectively waive any and all restrictions, stays, and notification procedures set forth in the Procedures.

6.    To the extent that this Order is inconsistent with any prior order or pleading with respect to the Motion in these chapter 11 cases, the terms of this Order shall govern.

7.    The requirements set forth in this Order are in addition to the requirements of applicable law and do not excuse compliance therewith.

8.    Notwithstanding the relief granted herein and any actions taken pursuant to such relief, nothing contained in the Motion or this Order shall constitute, nor is it intended to constitute: (a) an admission as to the validity, priority, or amount of any particular claim against a Debtor entity; (b) a waiver of the Debtors’ right to dispute any particular claim on any grounds; (c) a promise or requirement to pay any particular claim or finding that any particular claim is an administrative expense claim or other priority claim; (d) an implication or admission that any particular claim is of a type specified or defined in this Order or the Motion; (e) a request or authorization to assume any agreement, contract, or lease pursuant to section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority, enforceability, or perfection of any lien on, security interest in, or other encumbrance on property of the Debtors’ estates (g) a waiver or limitation of the Debtors’ rights under the Bankruptcy Code or any other applicable law; or (h) a concession by the Debtors or any other party-in-interest that any liens (contractual, common law, statutory, or otherwise) satisfied pursuant to this Order are valid and the Debtors and all other parties-in-interest expressly reserve their rights to contest the extent, validity, or perfection, or to seek avoidance of all such liens. Any payment made pursuant to this Order should not be construed as an admission as to the validity, priority, or amount of any particular claim or a waiver of the Debtors’ or any other party-in-interest’s rights to subsequently dispute such claim.

9.    Nothing herein shall preclude any person desirous of acquiring any Common Stock from requesting relief from this Order from this Court, subject to the Debtors’ rights to oppose such relief.

10.    Other than to the extent that this Order expressly conditions or restricts trading in, or claiming worthless stock deductions with respect to, Common Stock, nothing in this Order or in the Motion shall, or shall be deemed to, prejudice, impair, or otherwise alter or affect the rights of any holders of Common Stock, including in connection with the treatment of any such stock under any chapter 11 plan or any applicable bankruptcy court order.

11.    Within three (3) business days of the entry of this Order or as soon as reasonably practicable, the Debtors shall post this Order and the Procedures to the website established by Debtors Noticing Agent for these chapter 11 cases at http://www.cases.primeclerk.com/JCPenney.

12.    The requirements set forth in this Order are in addition to the requirements of Bankruptcy Rule 3001(e) and applicable securities, corporate and other laws and do not excuse noncompliance therewith.

13.    Notice of the Motion as provided therein shall be deemed good and sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Bankruptcy Local Rules are satisfied by such notice.

14.    Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Order are immediately effective and enforceable upon its entry.

15.    The Debtors are authorized to take all actions necessary to effectuate the relief granted in this Order in accordance with the Motion.

16.    This Court retains exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order.

Signed: May 16, 2020.
	/s/ David R. Jones
	UNITED STATES BANKRUPTCY JUDGE

2

Exhibit 1

Procedures for Transfers of and Declarations of

Worthlessness with Respect to Beneficial Ownership of Common Stock

PROCEDURES FOR TRANSFERS OF

AND DECLARATIONS OF WORTHLESSNESS

WITH RESPECT TO BENEFICIAL OWNERSHIP OF COMMON STOCK

The following procedures apply to transfers of Beneficial Ownership of Common Stock:¹

a. Any entity (as defined in section 101(15) of the Bankruptcy Code) who currently is or becomes a Substantial Shareholder (as defined herein) must file with the Court, and serve upon: (i) the Debtors, 6501 Legacy Drive, Plano, Texas 75024, Attn: Brandy L. Treadway; (ii) proposed counsel to the Debtors, Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, Attn: Aparna Yenamandra (aparna.yenamandra@kirkland.com), Rebecca Blake Chaikin (rebecca.chaikin@kirkland.com), and Allyson Smith Weinhouse (allyson.smith@kirkland.com); (iii) proposed co-counsel to the Debtors, Jackson Walker L.L.P., 1401 McKinney Street, Suite 1900, Houston, Texas 77010, Attn.: Matthew D. Cavenaugh (mcavenaugh@jw.com), Jennifer F. Wertz (jwertz@jw.com), Kristhy M. Peguero (kpeguero@jw.com), and Veronica A. Polnick (vpolnick@jw.com); (iv) the U.S. Trustee for the Southern District of Texas, 515 Rusk Street, Suite 3516, Houston, Texas 77002, Attn.: Hector Duran and Stephen Statham; and (v) counsel to any statutory committee appointed in these chapter 11 cases (collectively, the “Declaration Notice Parties”), a declaration of such status, substantially in the form of Exhibit 1A attached to these Procedures (each, a “Declaration of Status as a Substantial Shareholder”), on or before the later of (A) twenty calendar days after the date of the Notice of Order (as defined herein), or (B) ten calendar days after becoming a Substantial Shareholder; provided that, for the avoidance of doubt, the other procedures set forth herein shall apply to any Substantial Shareholder even if no Declaration of Status as a Substantial Shareholder has been filed.

b. Prior to effectuating any transfer of Beneficial Ownership of Common Stock that would result in an increase in the amount of Common Stock of which a Substantial Shareholder has Beneficial Ownership or would result in an entity or individual becoming a Substantial Shareholder, the parties to such transaction must file with the Court, and serve upon the Declaration Notice Parties, an advance written declaration of the intended transfer of Common Stock, substantially in the form of Exhibit 1B attached to these Procedures (each, a “Declaration of Intent to Accumulate Common Stock”).

c. Prior to effectuating any transfer of Beneficial Ownership of Common Stock that would result in a decrease in the amount of Common Stock of which a Substantial Shareholder has Beneficial Ownership or would result in an entity or individual ceasing to be a Substantial Shareholder, the parties to such transaction must file with the Court, and serve upon the Declaration Notice Parties, an advance written declaration of the intended transfer of Beneficial Ownership of Common Stock, substantially in the form of Exhibit 1C attached to these Procedures (each, a “Declaration of Intent to Transfer Common Stock,” and together with a Declaration of Intent to Accumulate Common Stock, each a “Declaration of Proposed Transfer”).

d. The Debtors shall have twenty calendar days after receipt of a Declaration of Proposed Transfer to file with the Court and serve on such Substantial Shareholder or potential Substantial Shareholder an objection to any proposed transfer of Beneficial Ownership of Common Stock described in the Declaration of Proposed Transfer on the grounds that such transfer might adversely affect the Debtors’ ability to utilize their Tax Attributes. If the Debtors file an objection, such transaction will remain ineffective unless such objection is withdrawn by the Debtors, or such transaction is approved by a final and nonappealable order of the Court. If the Debtors do not object within such 20-day period, such transaction can proceed solely as set forth in the Declaration of Proposed Transfer. Further transactions within the scope of this paragraph must be the subject of additional notices in accordance with the procedures set forth herein, with an additional 20-day waiting period for each Declaration of Proposed Transfer.

e. For purposes of these Procedures a “Substantial Shareholder” is any entity or individual that has Beneficial Ownership of at least 14,487,151 shares of Common Stock (representing approximately 4.5 percent of all issued and outstanding shares of Common Stock).²

¹  Capitalized terms used but not defined herein have the meanings ascribed to them in the Motion.

²  Based on approximately 321,936,685 shares of Common Stock outstanding for purposes of section 382 of the IRC as of the Petition Date.

Procedures for Declarations of Worthlessness of Common Stock

a. Any person or entity that currently is or becomes a 50-Percent Shareholder³ must file with the Court and serve upon the Declaration Notice Parties a declaration of such status as a 50-Percent Shareholder, substantially in the form attached to the Procedures as Exhibit 1D (each, a “Declaration of Status as a 50-Percent Shareholder”), on or before the later of (i) twenty calendar days after the date of the Notice of Order, and (ii) ten calendar days after becoming a 50-Percent Shareholder; provided that, for the avoidance of doubt, the other procedures set forth herein shall apply to any 50-Percent Shareholder even if no Declaration of Status as a 50-Percent Shareholder has been filed.

b. Prior to filing any federal or state tax return, or any amendment to such a return, or taking any other action that claims any deduction for worthlessness of Beneficial Ownership of Common Stock for a taxable year ending before the Debtors’ emergence from chapter 11 protection, such 50-Percent Shareholder must file with the Court and serve upon the Declaration Notice Parties a declaration of intent to claim a worthless stock deduction (a “Declaration of Intent to Claim a Worthless Stock Deduction”), substantially in the form attached to the Procedures as Exhibit 1E.

i. The Debtors shall have twenty calendar days after receipt of a Declaration of Intent to Claim a Worthless Stock Deduction to file with the Court and serve on such 50-Percent Shareholder an objection to any proposed claim of worthlessness described in the Declaration of Intent to Claim a Worthless Stock Deduction on the grounds that such claim might adversely affect the Debtors’ ability to utilize their Tax Attributes.

ii. If the Debtors timely object, the filing of the tax return or amendment thereto with such claim will not be permitted unless approved by a final and non-appealable order of the Court, unless the Debtors withdraw such objection.

iii. If the Debtors do not object within such 20-day period, the filing of the return or amendment with such claim will be permitted solely as described in the Declaration of Intent to Claim a Worthless Stock Deduction. Additional returns and amendments within the scope of this section must be the subject of additional notices as set forth herein, with an additional 20-day waiting period. To the extent that the Debtors receive an appropriate Declaration of Intent to Claim a Worthless Stock Deduction and determine in their business judgment not to object, they shall provide notice of that decision as soon as is reasonably practicable to any statutory committee(s) appointed in these chapter 11 cases.

Notice Procedures

a. No later than two business days following entry of the Order, the Debtors shall serve a notice by first class mail, substantially in the form of Exhibit 1F attached to these Procedures (the “Notice of Order”), on: (i) the U.S. Trustee for the Southern District of Texas; (ii) the holders of the fifty largest unsecured claims against the Debtors (on a consolidated basis); (iii) any official committees appointed in these chapter 11 cases; (iv) the United States Attorney’s Office for the Southern District of Texas; (v) the Internal Revenue Service; (vi) the United States Securities and Exchange Commission; (vii) the state attorneys general for states in which the Debtors conduct business; and (viii) the registered and nominee holders of the Common Stock (with instructions to serve down to the beneficial holders of Common Stock).

b. All registered and nominee holders of Common Stock shall be required to serve the Notice of Order on any holder for whose benefit such registered or nominee holder holds such Common Stock down the chain of ownership for all such holders of Common Stock.

³  For purposes of the Procedures, a “50-Percent Shareholder” is any person or entity that at any time since December 31, 2016, has owned Beneficial Ownership of 50 percent or more of the Common Stock, (determined in accordance with section 382(g)(4)(D) of the IRC and the applicable Treasury Regulations thereunder).

2

c. Any entity or individual, or broker or agent acting on such entity’s or individual’s behalf who sells Common Stock to another entity shall be required to serve a copy of the Notice of Order on such purchaser of such Common Stock, or any broker or agent acting on such purchaser’s behalf.

d. As soon as is practicable following entry of the Order, the Debtors shall (i) submit a copy of the Notice of Order (modified for publication) for publication in The New York Times (national edition); (ii) submit a copy of the Notice of Order (modified for publication) to Bloomberg Professional Service for potential publication by Bloomberg; and (iii) file a Form 8-K with a reference to the entry of the Order.

e. To the extent confidential information is required in any declaration described in these Procedures, such confidential information may be filed and served in redacted form; provided that any such declarations served on the Debtors shall not be in redacted form but must be served via electronic mail on the Debtors’ counsel. The Debtors shall keep all information provided in such declarations strictly confidential and shall not disclose the contents thereof to any person except (i) to the extent necessary to respond to a petition or objection filed with the Court; (ii) to the extent otherwise required by law; or (iii) to the extent that the information contained therein is already public; provided that the Debtors may disclose the contents thereof to their professional advisors, who shall keep all such notices strictly confidential and shall not disclose the contents thereof to any other person, subject to further Court order. To the extent confidential information is necessary to respond to a petitioner objection filed with the Court, such confidential information shall be filed under seal or in a redacted form.

3

Exhibit 1A

Declaration of Status as a Substantial Shareholder

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)

DECLARATION OF STATUS AS A SUBSTANTIAL SHAREHOLDER²

PLEASE TAKE NOTICE that the undersigned party is/has become a Substantial Shareholder with respect to the common stock of J. C. Penney Company, Inc. or any Beneficial Ownership therein (the “Common Stock”). J. C. Penney Company, Inc. is a debtor and debtor in possession in Case No. 20-20182 (DRJ) pending in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

PLEASE TAKE FURTHER NOTICE that, as of                     , 2020, the undersigned party currently has Beneficial Ownership of                  shares of Common Stock. The following table sets forth the date(s) on which the undersigned party acquired Beneficial Ownership of such Common Stock:

Number of Shares Date Acquired

(Attach additional page or pages if necessary)

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  For purposes of these Procedures: (i) a “Substantial Shareholder” is any entity or individual that has Beneficial Ownership of at least 14,487,151 shares of Common Stock (representing approximately 4.5 percent of all issued and outstanding shares of Common Stock); (ii) “Beneficial Ownership” will be determined in accordance with the applicable rules of sections 382 and 383 of the Internal Revenue Code of 1986, 26 U.S.C. §§ 1–9834, as amended, and the Treasury Regulations thereunder (other than Treasury Regulations section 1.382-2T(h)(2)(i)(A)), and includes direct, indirect, and constructive ownership (e.g., (1) a holding company would be considered to beneficially own all equity securities owned by its subsidiaries, (2) a partner in a partnership would be considered to beneficially own its proportionate share of any equity securities owned by such partnership, (3) an individual and such individual’s family members may be treated as one individual, (4) persons and entities acting in concert to make a coordinated acquisition of equity securities may be treated as a single entity, and (5) a holder would be considered to beneficially own equity securities that such holder has an Option to acquire). An “Option” to acquire stock includes all interests described in Treasury Regulations section 1.382-4(d)(9), including any contingent purchase right, warrant, convertible debt, put, call, stock subject to risk of forfeiture, contract to acquire stock, or similar interest, regardless of whether it is contingent or otherwise not currently exercisable.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                     .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served upon the Declaration Notice Parties (as defined in the Order).

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

Respectfully submitted,

(Name of Substantial Shareholder)

By:

Name:

Address:

Telephone:

Facsimile:

Dated:                          , 2020

                        ,                 

(City)                 (State)

2

Exhibit 1B

Declaration of Intent to Accumulate Common Stock

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)

DECLARATION OF INTENT TO ACCUMULATE COMMON STOCK²

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to purchase, acquire, or otherwise accumulate (the “Proposed Transfer”) one or more shares of common stock of J. C. Penney Company, Inc. or of any Beneficial Ownership therein (the “Common Stock”). J. C. Penney Company, Inc. is a debtor and debtor in possession in Case No. 20-20182 (DRJ) pending in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                     , 2020, the undersigned party filed a Declaration of Status as a Substantial Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently has Beneficial Ownership of                      shares of Common Stock.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Transfer, the undersigned party proposes to purchase, acquire, or otherwise accumulate Beneficial Ownership of                      shares of Common Stock or an Option with respect to                      shares of Common Stock. If the Proposed Transfer is permitted to occur, the undersigned party will have Beneficial Ownership of                      shares of Common Stock.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                     .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served upon the Declaration Notice Parties (as defined in the Order).

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  For purposes of these Procedures: (i) a “Substantial Shareholder” is any entity or individual that has Beneficial Ownership of at least 14,487,151 shares of Common Stock (representing approximately 4.5 percent of all issued and outstanding shares of Common Stock); (ii) “Beneficial Ownership” will be determined in accordance with the applicable rules of sections 382 and 383 of the Internal Revenue Code of 1986, 26 U.S.C. §§ 1–9834, as amended, and the Treasury Regulations thereunder (other than Treasury Regulations section 1.382-2T(h)(2)(i)(A)), and includes direct, indirect, and constructive ownership (e.g., (1) a holding company would be considered to beneficially own all equity securities owned by its subsidiaries, (2) a partner in a partnership would be considered to beneficially own its proportionate share of any equity securities owned by such partnership, (3) an individual and such individual’s family members may be treated as one individual, (4) persons and entities acting in concert to make a coordinated acquisition of equity securities may be treated as a single entity, and (5) a holder would be considered to beneficially own equity securities that such holder has an Option to acquire). An “Option” to acquire stock includes all interests described in Treasury Regulations section 1.382-4(d)(9), including any contingent purchase right, warrant, convertible debt, put, call, stock subject to risk of forfeiture, contract to acquire stock, or similar interest, regardless of whether it is contingent or otherwise not currently exercisable.

4

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that it is prohibited from consummating the Proposed Transfer unless and until the undersigned party complies with the Procedures set forth therein.

PLEASE TAKE FURTHER NOTICE that the Debtors have twenty calendar days after receipt of this Declaration to object to the Proposed Transfer described herein. If the Debtors file an objection, such Proposed Transfer will remain ineffective unless such objection is withdrawn by the Debtors or such transaction is approved by a final and nonappealable order of the Court. If the Debtors do not object within such 20-day period, then after expiration of such period the Proposed Transfer may proceed solely as set forth in this Declaration.

PLEASE TAKE FURTHER NOTICE that any further transactions contemplated by the undersigned party that may result in the undersigned party purchasing, acquiring, or otherwise accumulating Beneficial Ownership of additional shares of Common Stock will each require an additional notice filed with the Court to be served in the same manner as this Declaration.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

Respectfully submitted,

(Name of Declarant)

By:

Name:

Address:

Telephone:

Facsimile:

Dated:                          , 2020

                        ,                 

(City)                 (State)

5

Exhibit 1C

Declaration of Intent to Transfer Common Stock

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)

DECLARATION OF INTENT TO TRANSFER COMMON STOCK²

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to sell, trade, or otherwise transfer (the “Proposed Transfer”) one or more shares of common stock of J. C. Penney Company, Inc., or of any Beneficial Ownership therein (the “Common Stock”). J. C. Penney Company, Inc., is a debtor and debtor in possession in Case No. 20-20182 (DRJ) pending in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                 , 2020, the undersigned party filed a Declaration of Status as a Substantial Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently has Beneficial Ownership of                  shares of Common Stock.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Transfer, the undersigned party proposes to sell, trade, or otherwise transfer Beneficial Ownership of                  shares of Common Stock or an Option with respect to                  shares of Common Stock. If the Proposed Transfer is permitted to occur, the undersigned party will have Beneficial Ownership of                  shares of Common Stock after such transfer becomes effective.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                 .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served upon the Declaration Notice Parties (as defined in the Order).

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  For purposes of these Procedures: (i) a “Substantial Shareholder” is any entity or individual that has Beneficial Ownership of at least 14,487,151 shares of Common Stock (representing approximately 4.5 percent of all issued and outstanding shares of Common Stock); (ii) “Beneficial Ownership” will be determined in accordance with the applicable rules of sections 382 and 383 of the Internal Revenue Code of 1986, 26 U.S.C. §§ 1–9834, as amended, and the Treasury Regulations thereunder (other than Treasury Regulations section 1.382-2T(h)(2)(i)(A)), and includes direct, indirect, and constructive ownership (e.g., (1) a holding company would be considered to beneficially own all equity securities owned by its subsidiaries, (2) a partner in a partnership would be considered to beneficially own its proportionate share of any equity securities owned by such partnership, (3) an individual and such individual’s family members may be treated as one individual, (4) persons and entities acting in concert to make a coordinated acquisition of equity securities may be treated as a single entity, and (5) a holder would be considered to beneficially own equity securities that such holder has an Option to acquire). An “Option” to acquire stock includes all interests described in Treasury Regulations section 1.382-4(d)(9), including any contingent purchase right, warrant, convertible debt, put, call, stock subject to risk of forfeiture, contract to acquire stock, or similar interest, regardless of whether it is contingent or otherwise not currently exercisable.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that it is prohibited from consummating the Proposed Transfer unless and until the undersigned party complies with the Procedures set forth therein.

PLEASE TAKE FURTHER NOTICE that the Debtors have twenty calendar days after receipt of this Declaration to object to the Proposed Transfer described herein. If the Debtors file an objection, such Proposed Transfer will remain ineffective unless such objection is withdrawn by the Debtors or such transaction is approved by a final and nonappealable order of the Court. If the Debtors do not object within such 20-day period, then after expiration of such period the Proposed Transfer may proceed solely as set forth in this Declaration.

PLEASE TAKE FURTHER NOTICE that any further transactions contemplated by the undersigned party that may result in the undersigned party selling, trading, or otherwise transferring Beneficial Ownership of additional shares of Common Stock will each require an additional notice filed with the Court to be served in the same manner as this Declaration.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

Respectfully submitted,

(Name of Declarant)

By:

Name:

Address:

Telephone:

Facsimile:

Dated:                          , 2020

                        ,                 

(City)                 (State)

7

Exhibit 1D

Declaration of Status as a 50-Percent Shareholder

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:		)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1		)	Case No. 20-20182 (DRJ)
	)
Debtors.		)	(Jointly Administered)
	)

DECLARATION OF STATUS AS A 50-PERCENT SHAREHOLDER²

PLEASE TAKE NOTICE that the undersigned party is/has become a 50-Percent Shareholder with respect to the common stock of J. C. Penney Company, Inc. or any Beneficial Ownership therein (the “Common Stock”). J. C. Penney Company, Inc. is a debtor and debtor in possession in Case No. 20-20182 (DRJ) pending in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

PLEASE TAKE FURTHER NOTICE that, as of                 , 2020, the undersigned party currently has Beneficial Ownership of                  shares of Common Stock. The following table sets forth the date(s) on which the undersigned party acquired Beneficial Ownership of such Common Stock:

Number of Shares Date Acquired

(Attach additional page or pages if necessary)

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  For purposes of this Declaration: (i) a “50-Percent Shareholder” is any person or entity that at any time since December 31, 2016, has had Beneficial Ownership of 50 percent or more of the Common Stock (determined in accordance with section 382(g)(4)(D) of the Internal Revenue Code of 1986, 26 U.S.C. §§ 1–9834, as amended (the “ICR”) and the applicable Treasury Regulations); (ii) “Beneficial Ownership” will be determined in accordance with the applicable rules of sections 382 and 383 of the IRC, and the Treasury Regulations thereunder (other than Treasury Regulations section 1.382-2T(h)(2)(i)(A)) and includes direct, indirect, and constructive ownership (e.g., (1) a holding company would be considered to beneficially own all equity securities owned by its subsidiaries, (2) a partner in a partnership would be considered to beneficially own its proportionate share of any equity securities owned by such partnership, (3) an individual and such individual’s family members may be treated as one individual, (4) persons and entities acting in concert to make a coordinated acquisition of equity securities may be treated as a single entity, and (5) a holder would be considered to beneficially own equity securities that such holder has an Option (as defined herein) to acquire); and (iii) an “Option” to acquire stock includes all interests described in Treasury Regulations section 1.382-4(d)(9), including any contingent purchase right, warrant, convertible debt, put, call, stock subject to risk of forfeiture, contract to acquire stock, or similar interest, regardless of whether it is contingent or otherwise not currently exercisable.

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                 .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served upon the Declaration Notice Parties (as defined in the Order).

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

[Remainder of page intentionally left blank]

Respectfully submitted,

(Name of 50-Percent Shareholder)

By:                                                                          

Name:                                                                     

Address:                                                                 

Telephone:                                                             

Facsimile:                                                              

Dated:                             , 20    

                        ,                     

(City)     (State)

2

Exhibit 1E

Declaration of Intent to Claim a Worthless Stock Deduction

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)

DECLARATION OF INTENT TO CLAIM A WORTHLESS STOCK DEDUCTION²

PLEASE TAKE NOTICE that the undersigned party hereby provides notice of its intention to claim a worthless stock deduction (the “Proposed Worthlessness Claim”) with respect to one or more shares of common stock of J. C. Penney Company, Inc. or any Beneficial Ownership therein (the “Common Stock”). J. C. Penney Company, Inc. is a debtor and debtor in possession in Case No. 20-20182 (DRJ) pending in the United States Bankruptcy Court for the Southern District of Texas (the “Court”).

PLEASE TAKE FURTHER NOTICE that, if applicable, on                 , 2020, the undersigned party filed a Declaration of Status as a 50-Percent Shareholder with the Court and served copies thereof as set forth therein.

PLEASE TAKE FURTHER NOTICE that the undersigned party currently has Beneficial Ownership of                  shares of Common Stock.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Proposed Worthlessness Claim, the undersigned party proposes to declare that                  shares of Common Stock became worthless during the tax year ending                     .

PLEASE TAKE FURTHER NOTICE that the last four digits of the taxpayer identification number of the undersigned party are                     .

PLEASE TAKE FURTHER NOTICE that, pursuant to that certain Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”), this declaration (this “Declaration”) is being filed with the Court and served upon the Declaration Notice Parties (as defined in the Order).

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

² For purposes of this Declaration: (i) a “50-Percent Shareholder” is any person or entity that at any time since December 31, 2016, has had Beneficial Ownership of 50 percent or more of the Common Stock (determined in accordance with section 382(g)(4)(D) of the Internal Revenue Code of 1986, 26 U.S.C. §§ 1–9834, as amended (the “ICR”) and the applicable Treasury Regulations); (ii) “Beneficial Ownership” will be determined in accordance with the applicable rules of sections 382 and 383 of the IRC, and the Treasury Regulations thereunder (other than Treasury Regulations section 1.382-2T(h)(2)(i)(A)) and includes direct, indirect, and constructive ownership (e.g., (1) a holding company would be considered to beneficially own all equity securities owned by its subsidiaries, (2) a partner in a partnership would be considered to beneficially own its proportionate share of any equity securities owned by such partnership, (3) an individual and such individual’s family members may be treated as one individual, (4) persons and entities acting in concert to make a coordinated acquisition of equity securities may be treated as a single entity, and (5) a holder would be considered to beneficially own equity securities that such holder has an Option (as defined herein) to acquire); and (iii) an “Option” to acquire stock includes all interests described in Treasury Regulations section 1.382-4(d)(9), including any contingent purchase right, warrant, convertible debt, put, call, stock subject to risk of forfeiture, contract to acquire stock, or similar interest, regardless of whether it is contingent or otherwise not currently exercisable.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the undersigned party acknowledges that the Debtors have twenty calendar days after receipt of this Declaration to object to the Proposed Worthlessness Claim described herein. If the Debtors file an objection, such Proposed Worthlessness Claim will not be effective unless such objection is withdrawn by the Debtors or such action is approved by a final and non-appealable order of the Bankruptcy Court. If the Debtors do not object within such 20-day period, then after expiration of such period the Proposed Worthlessness Claim may proceed solely as set forth in this Declaration.

PLEASE TAKE FURTHER NOTICE that any further claims of worthlessness contemplated by the undersigned party will each require an additional notice filed with the Court to be served in the same manner as this Declaration and are subject to an additional 20-day waiting period.

PLEASE TAKE FURTHER NOTICE that, pursuant to 28 U.S.C. § 1746, under penalties of perjury, the undersigned party hereby declares that he or she has examined this Declaration and accompanying attachments (if any), and, to the best of his or her knowledge and belief, this Declaration and any attachments hereto are true, correct, and complete.

Respectfully submitted,

(Name of Declarant)

By:

Name:

Address:

Telephone:

Facsimile:

Dated:                          , 2020

                        ,                 

(City)                (State)

2

Exhibit 1F

Notice of Order

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

	)
In re:	)	Chapter 11
	)
J. C. PENNEY COMPANY, INC., et al.,1	)	Case No. 20-20182 (DRJ)
	)
Debtors.	)	(Jointly Administered)
	)

NOTICE OF ORDER APPROVING NOTIFICATION

AND HEARING PROCEDURES FOR CERTAIN TRANSFERS OF AND

DECLARATIONS OF WORTHLESSNESS WITH RESPECT TO COMMON STOCK

TO: ALL ENTITIES (AS DEFINED BY SECTION 101(15) OF THE BANKRUPTCY CODE) THAT MAY HOLD BENEFICIAL OWNERSHIP OF COMMON STOCK OF J. C. PENNEY COMPANY, INC. (THE “COMMON STOCK”):

PLEASE TAKE NOTICE that, on May 15, 2020 (the “Petition Date”), the above-captioned debtors and debtors in possession (collectively, the “Debtors”) filed petitions with the United States Bankruptcy Court for the Southern District of Texas (the “Court”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Subject to certain exceptions, section 362 of the Bankruptcy Code operates as a stay of any act to obtain possession of property of or from the Debtors’ estates or to exercise control over property of or from the Debtors’ estates.

PLEASE TAKE FURTHER NOTICE that on the Petition Date, the Debtors filed the Debtors’ Emergency Motion for Entry of an Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Motion”).

PLEASE TAKE FURTHER NOTICE that on [            ], 2020, the Court entered the Order Approving Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness with Respect to Common Stock [Docket No.         ] (the “Order”) approving procedures for certain transfers of and declarations of worthlessness with respect to Common Stock, set forth in Exhibit 1 attached to the Order (the “Procedures”).²

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, a Substantial Shareholder may not consummate any purchase, sale, or other transfer of Common Stock or Beneficial Ownership of Common Stock in violation of the Procedures, any such transaction in violation of the Procedures shall be null and void ab initio, and certain remedial actions (including mandatory purchases or sales of Common Stock) may be required to restore the status quo.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Order, the Procedures shall apply to the holding and transfers of Common Stock or any Beneficial Ownership therein by a Substantial Shareholder or someone who may become a Substantial Shareholder.

PLEASE TAKE FURTHER NOTICE that pursuant to the Order, a 50-Percent Shareholder may not claim a worthless stock deduction with respect to Common Stock, or Beneficial Ownership therein, in violation of the Procedures, any such deduction in violation of the Procedures shall be null and void ab initio, and the 50-Percent Shareholder shall be required to file an amended tax return revoking such proposed deduction.

¹  A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’ proposed claims and noticing agent at http://cases.primeclerk.com/JCPenney. The location of Debtor J. C. Penney Company, Inc.’s principal place of business and the Debtors’ service address in these chapter 11 cases is 6501 Legacy Drive, Plano, Texas 75024.

²  Capitalized terms used but not defined herein have the meanings ascribed to them in the Order or the Motion, as applicable.

PLEASE TAKE FURTHER NOTICE that upon the request of any entity, the proposed notice, claims, and solicitation agent for the Debtors, Prime Clerk LLC, will provide a copy of the Order and a form of each of the declarations required to be filed by the Procedures in a reasonable period of time. Such declarations are also available via PACER on the Court’s website at https://ecf.txb.uscourts.gov for a fee, or free of charge by accessing the Debtors’ restructuring website at http://www.cases.primeclerk.com/JCPenney.

PLEASE TAKE FURTHER NOTICE that failure to follow the procedures set forth in the Order shall constitute a violation of, among other things, the automatic stay provisions of Section 362 of the Bankruptcy Code.

PLEASE TAKE FURTHER NOTICE that any prohibited purchase, sale, other transfer of, or declaration of worthlessness with respect to Common Stock, Beneficial Ownership therein, or option with respect thereto in violation of the order is prohibited and shall be null and void ab initio and may be subject to additional sanctions as this court may determine.

PLEASE TAKE FURTHER NOTICE that the requirements set forth in the Order are in addition to the requirements of applicable law and do not excuse compliance therewith.

2

Respectfully Submitted,
May 15, 2020
/s/ Matthew D. Cavenaugh
JACKSON WALKER L.L.P.	KIRKLAND & ELLIS LLP
Matthew D. Cavenaugh (TX Bar No. 24062656)	KIRKLAND & ELLIS INTERNATIONAL LLP
Jennifer F. Wertz (TX Bar No. 24072822)	Joshua A. Sussberg, P.C. (pro hac vice admission pending)
Kristhy M. Peguero (TX Bar No. 24102776)	Christopher Marcus, P.C. (pro hac vice admission pending)
Veronica A. Polnick (TX Bar No. 24079148)	Aparna Yenamandra (pro hac vice admission pending)
1401 McKinney Street, Suite 1900	601 Lexington Avenue
Houston, Texas 77010	New York, New York 10022
Telephone:         (713) 752-4200	Telephone:         (212) 446-4800
Facsimile:          (713) 752-4221	Facsimile:           (212) 446-4900
Email:                mcavenaugh@jw.com	Email:                 joshua.sussberg@kirkland.com
jwertz@jw.com	christopher.marcus@kirkland.com
kpeguero@jw.com	aparna.yenamandra@kirkland.com
vpolnick@jw.com
	Proposed Co-Counsel to the Debtors
Proposed Co-Counsel to the Debtors	and Debtors in Possession
and Debtors in Possession

EX-10.1

Exhibit 10.1

THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS RESTRUCTURING SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR, UNTIL THE OCCURRENCE OF THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE PARTIES HERETO.

RESTRUCTURING SUPPORT AGREEMENT

This RESTRUCTURING SUPPORT AGREEMENT (including all exhibits, annexes, and schedules hereto in accordance with Section 14.02, this “Agreement”) is made and entered into as of May 15, 2020 (the “Agreement Effective Date”), by and among the following parties (each of the following described in sub-clauses (i) through (iii) of this preamble, collectively, the “Parties”):¹

i. J. C. Penney Company, Inc., a company incorporated under the Laws of Delaware (“JCP”), and each of its affiliates listed on Exhibit B to this Agreement that have executed and delivered counterpart signature pages to this Agreement to counsel to the Consenting First Lien Lenders (the Entities in this clause (i), collectively, the “Company Parties”);

ii. certain entities that together with their affiliates and their and their affiliates’ respective accounts and funds managed or advised by any of them that hold First Lien Notes Claims, or other entities that hold First Lien Notes Claims directly or indirectly on behalf of the undersigned entities, their affiliates and their and their affiliates’ respective accounts and funds managed or advised by any of them, and that have executed and delivered counterpart signature pages to this Agreement, a Joinder, or a Transfer Agreement to counsel to the Company Parties (the Entities in this clause (ii), collectively, the “Consenting First Lien Noteholders”); and

iii. certain entities that together with their affiliates and their and their affiliates’ respective accounts and funds managed or advised by any of them that hold Term Loan Claims, or other entities that hold Term Loan Claims directly or indirectly on behalf of the undersigned entities, their affiliates and their and their affiliates’ respective accounts and funds managed or advised by any of them, and that have executed and delivered counterpart signature pages to this Agreement, a Joinder, or a Transfer Agreement to counsel to the Company (collectively, the “Consenting Term Lenders” and together with the Consenting First Lien Noteholders, the “Consenting First Lien Lenders”).

¹  Capitalized terms used but not defined in the preamble and recitals to this Agreement have the meanings ascribed to them in Section 1.

RECITALS

WHEREAS, the Company Parties and the Consenting First Lien Lenders have in good faith and at arms’ length negotiated or been apprised of certain restructuring and recapitalization transactions with respect to the Company Parties’ capital structure on the terms set forth in this Agreement and as specified in the term sheet attached as Exhibit A hereto, including all exhibits and annexes thereto (the “RSA Term Sheet” and, such transactions as described in this Agreement and the Restructuring Term Sheet, the “Restructuring”);

WHEREAS, the Company Parties intend to implement the Restructuring, including through the commencement by the Debtors of voluntary cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the cases commenced, the “Chapter 11 Cases”);

WHEREAS, certain of the Consenting First Lien Lenders and/or their affiliates have further agreed to provide, on a committed basis, the Company Parties with superpriority debtor-in-possession financing (the “DIP Facility”) on the terms set forth in the term sheet attached as Annex 2 to the RSA Term Sheet (the “DIP Term Sheet”);

WHEREAS, the Restructuring also contemplates the: (i) formation and implementation of the REIT on the terms that shall be set forth in a term sheet (the “REIT Term Sheet” and such transactions as described in this Agreement and the REIT Term Sheet, the “REIT Transaction”); (ii) implementation of the JCP Exit Facilities and the REIT Exit Loan on the terms set forth in the RSA Term Sheet; (iii) issuance of the New JCP Common Stock on the terms that shall be set forth in a term sheet (the “New JCP Governance Term Sheet”); (iv) issuance of the REIT Interests on the terms set forth in the RSA Term Sheet and as shall be set forth in a term sheet (such term sheet, the “REIT Governance Term Sheet” and, together with the REIT Term Sheet, and the New JCP Governance Term Sheet, the “Term Sheets”);

WHEREAS, the Parties shall act in good faith to negotiate and finalize the terms of the Term Sheets that are not finalized as of the Agreement Effective Date as soon as practicable;

WHEREAS, the Parties have agreed to take certain actions in support of the Restructuring on the terms and conditions set forth in this Agreement and the RSA Term Sheet.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Party, intending to be legally bound hereby, agrees as follows:

AGREEMENT

Section 1.    Definitions and Interpretation.

1.01.    Definitions. The following terms shall have the following definitions:

“Affiliate” means, with respect to any person, or any other person, which indirectly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean, with respect to any Person, (x) the possession, directly or

indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership, limited liability company or other ownership interests, by contract or otherwise) of such Person or (y) solely with respect to Affiliates of Consenting First Lien Lenders, the investment or voting discretion or control with respect to discretionary accounts of such Person.

“Agent” means any administrative agent, collateral agent, or similar Entity under the Term Loan Credit Agreement, the First Lien Indenture, the Pari Passu Intercreditor Agreement, or the DIP Credit Agreement, including any successors thereto.

“Agents/Trustees” means, collectively, each of the Agents and Trustees.

“Agreement” has the meaning set forth in the preamble to this Agreement and, for the avoidance of doubt, includes all the exhibits, annexes, and schedules hereto in accordance with Section 14.02 (including the RSA Term Sheet and all exhibits and annexes thereto).

“Agreement Effective Date” means the date on which the conditions set forth in Section 2 have been satisfied or waived by the appropriate Party or Parties in accordance with this Agreement.

“Agreement Effective Period” means, with respect to a Party, the period from the Agreement Effective Date to the Termination Date applicable to that Party.

“Alternative Restructuring Proposal” means any proposal, offer, bid, term sheet or agreement with respect to a sale, new-money investment, restructuring, reorganization, merger, acquisition, consolidation, dissolution, debt investment, equity investment, tender offer, recapitalization, plan of reorganization, share exchange, business combination, or similar transaction involving any one or more Company Parties or the debt, equity, or other interests in any one or more Company Parties that is an alternative to the Restructuring; provided that a “full-chain” liquidation shall not constitute an Alternative Restructuring Proposal; provided further that the 363 Sale Alternative shall not constitute an Alternative Restructuring Proposal.

“Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.

“Brokers” means a nationally recognized real estate broker specializing in retail properties and a nationally recognized real estate broker specializing in warehouse and distribution centers.

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York.

“Business Plan Parameters” means the processes and parameters related to the Business Plan, including those related to vendor agreements, lessor agreements, and go-forward self-funding capability.

“Business Plan” means a reasonably detailed business plan for New JCP and the REIT.

“Cash Collateral” has the meaning set forth in Section 363(a) of the Bankruptcy Code.

“Cash Collateral Order” means the interim order of the Bankruptcy Court authorizing the use of Cash Collateral attached as Exhibit [_] hereto, in form and substance acceptable to the Required Consenting First Lien Lenders.

“Chapter 11 Cases” has the meaning set forth in the recitals to this Agreement.

“Claim” has the meaning ascribed to it in section 101(5) of the Bankruptcy Code.

“Company Claims/Interests” means any Claim against, or Equity Interest in, a Company Party, including but not limited to the DIP Claims, the Term Loan Claims, the First Lien Notes Claims, the Second Lien Notes Claims, and the Unsecured Notes Claims.

“Company Parties” has the meaning set forth in the preamble to this Agreement.

“Confidentiality Agreement” means an executed confidentiality agreement, in connection with any proposed Restructuring.

“Confirmation Order” means an order of the Bankruptcy Court confirming the Plan in form and substance acceptable to the Required Consenting First Lien Lenders.

“Consenting First Lien Noteholders” has the meaning set forth in the preamble to this Agreement.

“Consenting First Lien Lenders” has the meaning set forth in the preamble to this Agreement.

“Consenting Term Lenders” has the meaning set forth in the preamble to this Agreement.

“Debtors” means the Company Parties that commence Chapter 11 Cases.

“Definitive Documents” has the meaning set forth in Section 3.01.

“DIP Agent” means the “Administrative Agent,” as defined in the DIP Term Sheet.

“DIP Claims” means any Claim against the Debtors arising under, derived from, or based upon the DIP Facility and the DIP Credit Agreement.

“DIP Credit Agreement” means that certain post-petition debtor-in-possession credit agreement evidencing the DIP Facility entered into in accordance with the DIP Order (as the same may be amended, amended and restated, modified or supplemented from time to time in accordance with its terms) terms and conditions of, and subject in all respects to the DIP Term Sheet and the DIP Order in form and substance acceptable to the Required Consenting First Lien Lenders.

“DIP Facility” has the meaning set forth in the preamble to this Agreement.

“DIP Lenders” has the meaning ascribed to it in the DIP Term Sheet.

“DIP Loan Documents” means the DIP Credit Agreement for the DIP Facility entered into in accordance with the DIP Order by the Company Parties and the lenders party thereto, including any amendments, modifications, supplements thereto, and together with any related notes, certificates, agreements, security agreements, documents, and instruments (including any amendments, restatements, supplements, or modifications of any of the foregoing) related to or executed in connection therewith, which, on and after the Agreement Effective Date, shall be in form and substance acceptable to the Company Parties and the DIP Secured Parties and the Required Consenting First Lien Lenders.

“DIP Order” means the order of the Bankruptcy Court authorizing entry into the DIP Facility and the use of Cash Collateral on a final basis and incorporating the terms and conditions set forth in the DIP Credit Agreement and in form and substance acceptable to the DIP Agent and the Required Consenting First Lien Lenders.

“DIP Secured Parties” means the DIP Lenders together with the DIP Agent and [the Issuing Banks and the other Secured Parties (each as defined in the DIP Credit Agreement)].

“DIP Term Sheet” has the meaning set forth in the preamble to this Agreement.

“Disclosure Statement” means the disclosure statement with respect to the Plan.

“Entity” shall have the meaning set forth in section 101(15) of the Bankruptcy Code.

“Equity Interests” means, collectively, the shares (or any class thereof), common stock, preferred stock, limited liability company interests, and any other equity, ownership, or profits interests of any Company Party, and options, warrants, rights, or other securities or agreements to acquire or subscribe for, or which are convertible into the shares (or any class thereof) of, common stock, preferred stock, limited liability company interests, or other equity, ownership, or profits interests of any Company Party (in each case whether or not arising under or in connection with any employment agreement).

“Exit Costs” means the costs and expenses of emerging from the Chapter 11 Cases pursuant to the Plan, including, without limitation, accrued but unpaid professional fees, estimated additional professional fees (including transaction, success and similar fees), unpaid 503(b)(9) claims, contract and lease cure costs, and other accrued but unpaid administrative expenses.

“Exit Costs Estimate” means a good faith estimate prepared by the Company Parties and their advisors of the Exit Costs associated with the Plan.

“First Day Pleadings” means the first-day pleadings that the Company Parties determine are necessary or desirable to file.

“First Lien Debt” means, collectively, the First Lien Notes and the Term Loans.

“First Lien Indenture” means that certain Indenture, dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among JCP, as issuer, certain of the Company Parties, as guarantors, and Wilmington Trust, National Association, as the trustee.

“First Lien Notes” means the 5.875% Senior Secured Notes, due 2023, outstanding under the First Lien Indenture.

“First Lien Notes Claim” means any Claim on account of the First Lien Notes.

“First Lien Notes Trustee” means Wilmington Trust, National Association, in its capacity as trustee under the First Lien Indenture, together with its successors and permitted assigns.

“JCP” has the meaning set forth in the preamble to this Agreement.

“JCP Exit Facilities” means the New JCP ABL and the New JCP Term Loan, collectively, in form and substance acceptable to the Required Consenting First Lien Lenders.

“JCP Exit Facilities Documents” means, collectively, the New ABL Credit Agreement, the New Term Loan Credit Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the JCP Exit Facilities, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“Joinder” means a joinder to this Agreement substantially in the form attached hereto as Exhibit D.

“Law” means any federal, state, local, or foreign law (including common law), statute, code, ordinance, rule, regulation, order, ruling, or judgment, in each case, that is validly adopted, promulgated, issued, or entered by a governmental authority of competent jurisdiction (including the Bankruptcy Court).

“Lease Optimization Plan” means a plan developed by the Company Parties and their advisors (including the applicable Broker) for the optimization of the Company Parties’ leased real estate including information regarding all discussions with existing landlords regarding lease modification or monetization.

“Market Test” means a market test process pursuant to which interest will be solicited regarding (a) providing new money debt financing to either New JCP or the REIT (including financing that would “take-out” any of the “take back” paper otherwise proposed for the Plan, (b) the sale or sale sale/leaseback of the Debtors’ owned distribution centers, (c) the provision of new capital to either New JCP or the REIT in exchange for equity in such entity, (d) the purchase of New JCP, the REIT or substantially all of the assets of either as a going concern, and (e) the purchase of all or part of the Debtors’ assets.

“Market Test Documents” means the all documents related to the Market Test, including any agreements documenting a transaction identified in the Market Test and any orders implementing such transaction.

“Milestones” means the milestones set forth in Section 4 of this Agreement.

“New JCP” means either (i) J. C. Penney Company, Inc., as reorganized pursuant to and under the Plan, or any successor or assign thereto, by merger, amalgamation, consolidation or otherwise, on or after the Plan Effective Date, or (ii) a new corporation or limited liability company that may be formed to, among other things, directly or indirectly acquire substantially all of the assets and/or stock of the Debtors in the Chapter 11 Cases and issue the New JCP Common Stock to be distributed pursuant to the Plan.

“New JCP ABL” has the meaning set forth on the RSA Term Sheet.

“New JCP ABL Credit Agreement” means that certain agreement evidencing the New JCP ABL in accordance with the terms, and subject in all respects to the conditions, as set forth in this Agreement and the RSA Term Sheet (and all exhibits and annexes thereto) in form and substance acceptable to the Required Consenting First Lien Lenders.

“New JCP ABL Documents” means, collectively, the New JCPABL Credit Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the New JCP ABL, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“New JCP Common Stock” has the meaning set forth in the RSA Term Sheet.

“New JCP Common Stock Documents” means the definitive documentation with respect to the New JCP Common Stock to be issued in accordance with the Plan in form and substance acceptable to the Required Consenting First Lien Lenders.

“New JCP Governance Documents” means the organizational and governance documents for New JCP [and its subsidiaries], including, without limitation, certificates of incorporation, certificates of formation or certificates of limited partnership (or equivalent organizational documents), bylaws, limited liability company agreements, and limited partnership agreements (or equivalent governing documents), which New JCP Governance Documents shall be in accordance with this Agreement, the RSA Term Sheet, and the New JCP Governance Term Sheet, in form and substance acceptable to the Required Consenting First Lien Lenders.

“New JCP Governance Term Sheet” has the meaning set forth in the preamble to this Agreement.

“New Organizational Documents” has the meaning set forth in the RSA Term Sheet.

“New JCP Term Loan” has the meaning set forth in the RSA Term Sheet.

“New JCP Term Loan Credit Agreement” means that certain agreement evidencing the New JCP Term Loan in accordance with the terms, and subject in all respects to the conditions, as set forth in this Agreement and the RSA Term Sheet (and all exhibits and annexes thereto) in form and substance acceptable to the Required Consenting First Lien Lenders.

“New JCP Term Loan Documents” means, collectively, the New JCP Term Loan Credit Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the New JCP Term Loan, including any guarantee agreements, pledge and

collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“New REIT Governance Documents” means the organizational and governance documents for the REIT, including, without limitation, articles of incorporation, bylaws, charter, and other similar organizational and constituent documents for the REIT, which the New REIT Governance Documents shall be in accordance with this Agreement (including the RSA Term Sheet, and all exhibits and annexes thereto), all in form and substance acceptable to the Required Consenting First Lien Lenders.

“Owned Real Estate Optimization Plan” means a plan developed by the Company Parties and their advisors (including the Brokers) for the optimization of the Company Parties’ owned real estate including information regarding all indications of value received by a Company Party or their advisors for any such owned real estate in the last twelve months.

“Pari Passu Collateral Agent” means Wilmington Trust, National Association, together with its permitted successors in its capacity as collateral agent pursuant to the Pari Passu Intercreditor Agreement.

“Pari Passu Intercreditor Agreement” means that certain Pari Passu Intercreditor Agreement, dated as of June 23, 2016, by and among inter alios, the Pari Passu Collateral Agent, JPMorgan Chase Bank, as Term Loan Authorized Representative for the Term Loan Secured Parties, Wilmington Trust, National Association, as Notes Authorized Representative for the Notes Secured Parties, and each of the additional Authorized Representatives party thereto from time to time, as amended, restated, amended and restated, extended, supplemented, or otherwise modified from time to time.

“Parties” has the meaning set forth in the preamble to this Agreement.

“Permitted Transfer” means each transfer of any Company Claims/Interests that meets the requirements of Section 9.01.

“Permitted Transferee” means each transferee of any Company Claims/Interests who meets the requirements of Section 9.01.

“Petition Date” means the first date any of the Company Parties commences a Chapter 11 Case.

“Plan” means the joint plan of reorganization filed by the Debtors under chapter 11 of the Bankruptcy Code that embodies the Restructuring.

“Plan Effective Date” means the occurrence of the effective date of the Plan according to its terms.

“Plan Supplement” means the compilation of documents and forms of documents, schedules, and exhibits to the Plan that will be filed by the Debtors with the Bankruptcy Court, all in form and substance acceptable to the Required Consenting First Lien Lenders.

“Qualified Marketmaker” means an entity that (a) holds itself out to the public or the applicable private markets as standing ready in the ordinary course of business to purchase from customers and sell to customers Company Claims/Interests (or enter with customers into long and short positions in Company Claims/Interests), in its capacity as a dealer or market maker in Company Claims/Interests and (b) is, in fact, regularly in the business of making a market in claims against issuers or borrowers (including debt securities or other debt).

“REIT” means a [newly formed] [] [corporation or statutory real estate investment trust], formed in accordance with the terms of the RSA Term Sheet, the REIT Term Sheet, and the REIT Governance Term Sheet.

“REIT Exit Loan” means the REIT Revolver and REIT Term Loan, collectively, in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Exit Loan Documents” means, collectively, the REIT Revolver Agreement, the REIT Term Loan Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the REIT Exit Loan, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Interests” has the meaning set forth in the RSA Term Sheet.

“REIT Interests Documents” means the definitive documentation with respect to the New REIT Interests to be issued in accordance with the Plan in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Revolver” has the meaning set forth in the RSA Term Sheet.

“REIT Revolver Agreement” means that certain agreement evidencing the REIT Revolver in accordance with the terms, and subject in all respects to the conditions, as set forth in this Agreement, and the RSA Term Sheet (and all exhibits and annexes thereto) in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Revolver Documents” means, collectively, the REIT Revolver Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the REIT Revolver, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Term Loan” has the meaning set forth in the RSA Term Sheet.

“REIT Term Loan Agreement” means that certain agreement evidencing the REIT Term Loan in accordance with the terms, and subject in all respects to the conditions, as set forth in this Agreement, and the RSA Term Sheet (and all exhibits and annexes thereto) in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Term Loan Documents” means, collectively, the REIT Term Loan Agreement, and all other agreements, documents, and instruments delivered or entered into in connection with the REIT Term Loan, including any guarantee agreements, pledge and collateral agreements, intercreditor agreements, subordination agreements, fee letters, and other security documents in form and substance acceptable to the Required Consenting First Lien Lenders.

“REIT Transaction” has the meaning set forth in the recitals to this Agreement.

“Reorganized Debtor” means, collectively, a Debtor, or any successor or assign thereto, by merger, consolidation, or otherwise, on and after the Effective Date.

“Required Consenting First Lien Lenders” means, as of the relevant date, Consenting First Lien Lenders holding at least 50.01% of the aggregate outstanding principal amount of First Lien Debt held by Consenting First Lien Lenders.

“Required DIP Lenders” means the Required Lenders, as defined in the DIP Term Sheet.

“Restructuring” has the meaning set forth in the recitals to this Agreement.

“RSA Term Sheet” has the meaning set forth in the recitals to this Agreement.

“Rules” means Rule 501(a)(1), (2), (3), and (7) of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended.

“Second Lien Indenture” means that certain Indenture, dated as of March 12, 2018 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among J. C. Penney Corporation, Inc., as issuer, certain of the Company Parties, as guarantors, and Wilmington Trust, National Association, as the trustee.

“Second Lien Notes” means the 8.625% Senior Secured Notes, due 2025, outstanding under the Second Lien Indenture.

“Second Lien Notes Claim” means any Claim on account of the Second Lien Notes.

“Second Lien Notes Trustee” means Wilmington Trust, National Association, in its capacity as trustee under the Second Lien Indenture, together with its successors and permitted assigns.

“Solicitation Materials” means all solicitation materials in respect of the Plan.

“Term Lenders” means the lenders party from time to time to the Term Loan Credit Agreement.

“Term Loan Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the Term Loan Credit Agreement.

“Term Loan Claims” means any Claim on account of the Term Loans.

“Term Loan Credit Agreement” means that certain Amended and Restated Credit and Guaranty Agreement (as amended, restated, amended and restated, extended, supplemented or

otherwise modified from time to time), dated as of June 23, 2016, by and among, inter alios, J. C. Penney Corporation, Inc., as borrower, certain of the Company Parties, as guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto from time to time.

“Term Loans” means loans outstanding under the Term Loan Credit Agreement.

“Term Sheets” has the meaning set forth in the recitals.

“Termination Date” means the date on which termination of this Agreement as to a Party is effective in accordance with Sections 12.01, 12.02, 12.03, 12.04, or 12.05.

“Transfer” means to sell, resell, reallocate, use, pledge, assign, transfer, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options, swaps, pledges, forward sales or other transactions).

“Transfer Agreement” means an executed form of the transfer agreement providing, among other things, that a transferee is bound by the terms of this Agreement and substantially in the form attached hereto as Exhibit C.

“Trustee” means any indenture trustee, collateral trustee, or other trustee or similar entity under the First Lien Notes.

“Unsecured Indenture” means that certain Indenture, dated as of September 15, 2014 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among JCP and J. C. Penney Corporation, Inc., as issuers and Wilmington Trust, National Association, as the trustee.

“Unsecured Notes” means the 8.125% Unsecured Notes, due 2025, outstanding under the Unsecured Indenture.

“Unsecured Notes Claim” means any Claim on account of the Unsecured Notes.

“Unsecured Notes Trustee” means Wilmington Trust, National Association, in its capacity as trustee under the Unsecured Indenture, together with its successors and permitted assigns.

1.02.    Interpretation. For purposes of this Agreement:

(a)    in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter gender;

(b)    capitalized terms defined only in the plural or singular form shall nonetheless have their defined meanings when used in the opposite form;

(c)    unless otherwise specified, any reference herein to a contract, lease, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions;

(d)    unless otherwise specified, any reference herein to an existing document, schedule, or exhibit shall mean such document, schedule, or exhibit, as it may have been or may be amended, restated, supplemented, or otherwise modified from time to time; provided that any capitalized terms herein which are defined with reference to another agreement, are defined with reference to such other agreement as of the date of this Agreement, without giving effect to any termination of such other agreement or amendments to such capitalized terms in any such other agreement following the date hereof;

(e)    unless otherwise specifically stated herein, the provisions of Bankruptcy Rule 9006(a) shall apply in computing any period of time prescribe or allowed herein. If any payment, distribution, act or deadline under the Plan is required to be made or performed or occurs on a day that is not a Business Day, then the making of such payment or distribution, the performance of such act, or the occurrence of such deadline shall be deemed to be on the next succeeding Business Day, but shall be deemed to have been completed or to have occurred as of the required date.

(f)    unless otherwise specified, all references herein to “Sections” are references to Sections of this Agreement;

(g)    the words “herein,” “hereof,” and “hereto” refer to this Agreement in its entirety rather than to any particular portion of this Agreement;

(h)    captions and headings to Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Agreement;

(i)    references to “shareholders,” “directors,” and/or “officers” shall also include “members” and/or “managers,” as applicable, as such terms are defined under the applicable limited liability company Laws; and

(j)    the use of “include” or “including” is without limitation, whether stated or not.

Section 2.    Effectiveness of this Agreement. This Agreement shall become effective and binding upon each of the Parties as of 12:01 a.m., prevailing Eastern Standard Time, on the Agreement Effective Date, which is the date on which all of the following conditions have been satisfied or waived in accordance with this Agreement:

(a)    each of the Company Parties shall have executed and delivered counterpart signature pages of this Agreement to counsel to each of the Parties and

(b)    Consenting First Lien Lenders with respect to at least 66 2/3% of the aggregate outstanding principal amount of First Lien Debt shall have executed and delivered counterpart signature pages of this Agreement.

Section 3.    Definitive Documents.

3.01.    The definitive documents governing the Restructuring shall include without limitation the following (collectively with any other material documents necessary to consummate the Restructuring, the “Definitive Documents”): (A) the Plan (and any and all exhibits, annexes, and schedules thereto); (B) the Plan Supplement (which shall include the form of the Management Incentive Plans, the form of the New Organizational Documents, [and the form of the New

Employment Agreements]; (C) the Confirmation Order; (D) the Disclosure Statement and the other Solicitation Materials; (E) the order of the Bankruptcy Court approving the Disclosure Statement and the other Solicitation Materials; (F) all pleadings filed by the Company Parties in connection with the Chapter 11 Cases (or related orders) to the extent such pleadings seek relief in connection with the transactions contemplated herein, including the First Day Pleadings and all orders sought pursuant thereto; (G) the Cash Collateral Order; (H) the DIP Loan Documents; (I) the DIP Order; (J) the New JCP Common Stock Documents; (K) the New REIT Interests Documents; (L) the JCP Exit Facilities Documents; (M) the REIT Exit Loan Documents; (N) any other disclosure documents related to the issuance of the New JCP Common Stock; (O) any other disclosure documents related to the issuance of the New REIT Interests, and (P) any Market Test Documents.

3.02.    The Definitive Documents not executed or in a form attached to this Agreement as of the Agreement Effective Date remain subject to negotiation and completion. Upon completion, the Definitive Documents shall contain terms, conditions, representations, warranties, and covenants consistent with the terms of this Agreement, as they may be modified, amended, or supplemented in accordance with Section 13. Further, the Definitive Documents not executed or in a form attached to this Agreement as of the Agreement Effective Date shall otherwise be in form and substance consistent with the term sheets attached hereto and otherwise acceptable to the Company Parties and the Required Consenting First Lien Lenders. Each Party agrees that it shall act in good faith and use and undertake commercially reasonable efforts to negotiate and finalize the terms of the Definitive Documents that are not finalized as of the date hereof, provided that the Parties shall act in good faith to negotiate and finalize the terms of the Term Sheets that are not finalized as of the Agreement Effective Date as soon as practicable following the Petition Date.

Section 4.    Milestones.

4.01.    The following Milestones shall apply to the Restructuring unless extended or waived in writing by the Company Parties and the Required Consenting First Lien Lenders:

(a)    no later than May 16, 2020 the Debtors shall commence the Chapter 11 Cases;

(b)    no later than 14 Business Days after the Petition Date, the Debtors shall have filed a motion to retain Brokers acceptable to the Required Consenting First Lien Parties;

(c)    no later than 18 calendar days after the Petition Date, the Bankruptcy Court shall have entered the DIP Order;

(d)    no later than June 15, 2020, the Debtors will have delivered a Lease Optimization Plan and an Owned Real Estate Optimization Plan, each in form and substance acceptable to the Required Consenting First Lien Lenders, to the Consenting First Lien Lenders.

(e)    no later than June 15, 2020 the Company Parties shall have delivered proposed Business Plan Parameters to the Consenting First Lien Lenders and the DIP Lenders;

(f)    no later than June 20, 2020 the Company Parties and the Required Consenting First Lien Lenders shall have agreed on acceptable Business Plan Parameters;

(g)    no later than July 8, 2020, the Company Parties shall have delivered a Business Plan (consistent with the acceptable Business Plan Parameters) to the Consenting First Lien Lenders and the DIP Lenders;

(h)    no later than July 14, 2020, the Company Parties and the Required Consenting First Lien Lenders shall have agreed on an acceptable Business Plan;

(i)    no later than 130 days after the Petition Date the Bankruptcy Court shall have entered an order either (A) approving the Disclosure Statement or (B) acceptable bidding procedures;

(j)    no later than 160 days after the Petition Date, the Bankruptcy Court shall have entered either (A) the Confirmation Order or (B) approving an acceptable sale or sales; and

(k)    no later than November 15, 2020 the Plan Effective Date shall have occurred.]

4.02.    The Milestones may be extended by the Company Parties with the prior written consent (email from counsel being sufficient) of the Required Consenting First Lien Lenders.

Section 5.    Commitments of the Consenting First Lien Lenders

5.01.    General Commitments and Waivers.

(a)    During the Agreement Effective Period, each Consenting First Lien Lender (severally and not jointly) agrees, in respect of all of its Company Claims/Interests, to:

(i)    support the Restructuring, including without limitation the REIT Transaction and the Market Test, and vote for or otherwise support any matter requiring approval to the extent necessary to implement the Restructuring;

(ii)    use commercially reasonable efforts to cooperate with and assist the Company Parties in obtaining additional support for the Restructuring from the Company Parties’ other First Lien Lenders;

(iii)    negotiate in good faith and use commercially reasonable efforts to execute and deliver any appropriate additional or alternative provisions or agreements to address any legal, financial, or structural impediment that may arise that would prevent, hinder, impede, delay, or are necessary to effectuate the consummation of, the Restructuring;

(iv)    negotiate in good faith and use commercially reasonable efforts to execute and implement the Definitive Documents that are consistent with this Agreement and to which it is required to be a party;

(v)    give any notice, order, instruction, or direction to the applicable Agents/Trustees necessary to give effect to the Restructuring, including, to the extent such Consenting First Lien Lenders holds First Lien Notes Claims or Term Loan Claims, directing the Pari Passu Collateral Agent, the First Lien Notes Trustee, and the Term Loan Agent, as applicable, to consent to adequate protection arrangements set forth in the [DIP Term Sheet/DIP Loan Documents];

(vi)    act in good faith to negotiate and finalize the terms of the Term Sheets that are not finalized as of the Agreement Effective Date as soon as practicable;

(vii)    use commercially reasonable efforts to cause the Company Parties to extend any offer made by the Company Parties to such Consenting First Lien Lender to all Consenting First Lien Lenders on a ratable basis; and

(b)    During the Agreement Effective Period, each Consenting First Lien Lender (severally and not jointly) agrees, in respect of all of its Company Claims/Interests, that it shall not directly or indirectly:

(i)    object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring, including the DIP Facility; or (y) encourage any person or entity to do any of the foregoing;

(ii)    propose, file, support, or vote for any Alternative Restructuring Proposal;

(iii)    file any motion, pleading, or other document with the Bankruptcy Court or any other court (including any modifications or amendments thereof) that, in whole or in part, is not materially consistent with this Agreement or the Plan;

(iv)    initiate, or have initiated on its behalf, any litigation or proceeding of any kind with respect to the Chapter 11 Cases, this Agreement, or the Restructuring contemplated herein against the Company Parties or the other Parties other than to enforce this Agreement or any Definitive Document or as otherwise permitted under this Agreement;

(v)    exercise, or direct any other person to exercise, any right or remedy for the enforcement, collection, or recovery of any Company Claims/Interests, including rights or remedies arising from or asserting or bringing any Claims under or with respect to the Term Loan Credit Agreement or the First Lien Indenture that are inconsistent with this Agreement or the Definitive Documents;

(vi)    object to or commence any legal proceeding challenging the adequate protection granted or proposed to be granted to the holders of First Lien Note Claims and Term Loan Claims under the DIP Order or Cash Collateral Order; or

(vii)    object to or commence any legal proceeding challenging the liens or claims (including the priority thereof) granted or proposed to be granted to the DIP Lenders under the DIP Order or Cash Collateral Order.

5.02.    Commitments with Respect to Chapter 11 Cases.

(a)    During the Agreement Effective Period, each Consenting First Lien Lender (severally and not jointly) that is entitled to vote to accept or reject the Plan pursuant to its terms agrees that it shall, subject to receipt by such Consenting First Lien Lenders of the Solicitation Materials:

(i)    vote each of its Company Claims/Interests to accept the Plan by delivering its duly executed and completed ballot accepting the Plan on a timely basis following the commencement of the solicitation of the Plan and its actual receipt of the Solicitation Materials and the ballot;

(ii)    not object to the Plan;

(iii)    support the mutual release, exculpation, and injunction provisions to be provided in the Plan;

(iv)    to the extent it is permitted to elect whether to opt out of the releases set forth in the Plan, elect not to opt out of the releases set forth in the Plan by timely delivering its duly executed and completed ballot(s) indicating such election; and

(v)    not change, withdraw, amend, or revoke (or cause to be changed, withdrawn, amended, or revoked) any vote or election referred to in clauses (i),(ii), (iii), and (iv) above.

(b)    During the Agreement Effective Period, each Consenting First Lien Lender (severally and not jointly), in respect of its Company Claims/Interests, will support, and will not directly or indirectly object to, delay, impede, or take any other action to interfere with any motion or pleading or document filed by a Company Party in the Bankruptcy Court that is consistent with this Agreement.

Section 6.    Additional Provisions Regarding the Consenting First Lien Lenders’ Commitments.

6.01.    Generally. Notwithstanding anything contained in this Agreement, nothing in this Agreement shall: (a) affect the ability of any Consenting First Lien Lenders to consult with any other Consenting First Lien Lenders, the Company Parties, or any other party in interest in the Chapter 11 Cases (including any official committee and the United States Trustee); (b) impair or waive the rights of any Consenting First Lien Lenders to assert or raise any objection permitted under this Agreement in connection with the Restructuring; and (c) prevent any Consenting First Lien Lenders from enforcing this Agreement or contesting whether any matter, fact, or thing is a breach of, or is inconsistent with, this Agreement.

6.02.    DIP Facility. Capitalized terms used but not defined in this Section 6.02 shall have the meaning set forth in the DIP Term Sheet, the DIP Loan Documents, the DIP Order, or the Cash Collateral Order, as applicable.

(a)    Notwithstanding anything contained in this Agreement, nothing in this Agreement shall affect the rights of the DIP Agent and the DIP Lenders under the DIP Order or the DIP Loan Documents and to the extent of any conflict between this Agreement and the DIP Order or the DIP Loan Documents, the DIP Order or the DIP Loan Documents, as applicable, shall govern.

(b)    Each of the Consenting First Lien Lenders irrevocably consents to (i) the DIP Facility as set forth in the DIP Term Sheet, (ii) entry of the DIP Order, and (iii) entry of the Cash Collateral Order.

Section 7.    Commitments of the Company Parties.

7.01.    Affirmative Commitments. Except as set forth in Section 8, during the Agreement Effective Period, the Company Parties agree to:

(a)    support and take all steps reasonably necessary and desirable to consummate the Restructuring in accordance with this Agreement;

(b)    to the extent any legal or structural impediment arises that would prevent, hinder, or delay the consummation of the Restructuring contemplated herein, take all steps reasonably necessary and desirable to address any such impediment;

(c)    use best efforts to obtain any and all required regulatory and/or third-party approvals for the Restructuring;

(d)    negotiate in good faith and use commercially reasonable efforts to execute and deliver the Definitive Documents and any other required agreements to effectuate and consummate the Restructuring as contemplated by this Agreement;

(e)    use commercially reasonable efforts to seek additional support for the Restructuring from their other material First Lien Lenders to the extent reasonably prudent;

(f)    provide counsel to the Consenting First Lien Lenders a reasonable opportunity to review draft copies of all First Day Pleadings and all other material pleadings filed by the Company Parties in the Chapter 11 Cases

(g)    provide on the first day of each month an updated Exit Costs Estimate to the Consenting First Lien Lenders;

(h)    provide the Consenting First Lien Lenders with drafts of the Lease Optimization Plan and the Owned Real Estate Optimization Plan no later than the Friday of each week beginning with June 1, 2020, consult with the Consenting First Lien Lenders and their advisors regarding the same, and consider in good faith all suggestions of the Consenting First Lien Lenders and their advisors regarding the same; and

(i)    Extend any offer made to one or more Consenting First Lien Lenders to all Consenting First Lien Lenders (on a pro rata basis).

7.02.    Negative Commitments. Except as set forth in Section 8, during the Agreement Effective Period, each of the Company Parties shall not directly or indirectly:

(a)    object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring;

(b)    take any action that is inconsistent in any material respect with, or is intended to frustrate or impede approval, implementation and consummation of the Restructuring described in, this Agreement or the Definitive Documents;

(c)    modify the Plan, in whole or in part, in a manner that is not consistent with this Agreement in all material respects; or

(d)    file any motion, pleading, or Definitive Documents with the Bankruptcy Court or any other court (including any modifications or amendments thereof) that, in whole or in part, is not materially consistent with this Agreement or the Plan.

Section 8.    Additional Provisions Regarding Company Parties’ Commitments.

8.01.    Notwithstanding anything to the contrary in this Agreement, if a Company Party or the board of directors, board of managers, or similar governing body of a Company Party, after consulting with counsel determines that applicable Law or its fiduciary obligations under applicable Law requires taking an action prohibited by this Agreement or refraining from taking an action required by this Agreement, the relevant Company Party may terminate this Agreement in accordance with Section 12.02(B) of this Agreement.

8.02.    Notwithstanding anything to the contrary in this Agreement (but subject to Section 8.01), each Company Party and their respective directors, officers, employees, investment bankers, attorneys, accountants, consultants, and other advisors or representatives shall have the rights to: (a) consider, respond to, and facilitate Alternative Restructuring Proposals; (b) provide access to non-public information concerning any Company Party to any Entity or enter into Confidentiality Agreements or nondisclosure agreements with any Entity; (c) maintain or continue discussions or negotiations with respect to Alternative Restructuring Proposals; (d) otherwise cooperate with, assist, participate in, or facilitate any inquiries, proposals, discussions or negotiations of Alternative Restructuring Proposals; and (e) enter into or continue discussions or negotiation with holders of Claims against or Equity Interests in a Company Party (including any Consenting First Lien Lenders), any other party in interest in the Chapter 11 Cases (including any official committee and the United States Trustee), or any other Entity regarding the Restructuring or Alternative Restructuring Proposals.

8.03.    Nothing in this Agreement shall: (a) impair or waive the rights of any Company Party to assert or raise any objection permitted under this Agreement in connection with the Restructuring; or (b) prevent any Company Party from enforcing this Agreement or contesting whether any matter, fact, or thing is a breach of, or is inconsistent with, this Agreement.

Section 9.    Transfer of Interests and Securities.

9.01.    During the Agreement Effective Period, no Consenting First Lien Lender shall Transfer any ownership (including any beneficial ownership as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in any Company Claims/Interests to any affiliated or unaffiliated party, including any party in which it may hold a direct or indirect beneficial interest, unless:

(a)    the authorized transferee is either (i) a qualified institutional buyer as defined in Rule 144A of the Securities Act, (ii) a non-U.S. person in an offshore transaction as defined under Regulation S under the Securities Act, (iii) an institutional accredited investor (as defined in the Rules), or (iv) a Consenting First Lien Lender; and

(b)    either (i) the transferee executes and delivers to counsel to the Company Parties, at or before the time of the proposed Transfer, a Transfer Agreement or (ii) the transferee is a Consenting First Lien Lender and the transferee provides notice of such Transfer (including the amount and type of Company Claim/Interest Transferred) to counsel to the Company Parties at or before the time of the proposed Transfer.

9.02.    Upon compliance with the requirements of Section 9.01, the transferor shall be deemed to relinquish its rights (and be released from its obligations) under this Agreement to the extent of the rights and obligations in respect of such transferred Company Claims/Interests. Any Transfer in violation of Section 9.01 shall be void ab initio.

9.03.    This Agreement shall in no way be construed to preclude the Consenting First Lien Lenders from acquiring additional Company Claims/Interests; provided, however, that such additional Company Claims/Interests shall automatically and immediately upon acquisition by a Consenting First Lien Lender be deemed subject to the terms of this Agreement (regardless of when or whether notice of such acquisition is given to counsel to the Company Parties or counsel to the Consenting First Lien Lender).

9.04.    This Section 9 shall not impose any obligation on any Company Party to issue any “cleansing letter” or otherwise publicly disclose information for the purpose of enabling a Consenting First Lien Lender to Transfer any of its Company Claims/Interests. Notwithstanding anything to the contrary herein, to the extent a Company Party and another Party have entered into a Confidentiality Agreement, the terms of such Confidentiality Agreement shall continue to apply and remain in full force and effect according to its terms, and this Agreement does not supersede any rights or obligations otherwise arising under such Confidentiality Agreements.

9.05.    Notwithstanding Section 9.01, a Qualified Marketmaker that acquires any Company Claims/Interests with the purpose and intent of acting as a Qualified Marketmaker for such Company Claims/Interests shall not be required to execute and deliver a Transfer Agreement in respect of such Company Claims/Interests if (a) such Qualified Marketmaker subsequently Transfers such Company Claims/Interests within five (5) Business Days of its acquisition to a transferee that is an entity that is not an affiliate, affiliated fund, or affiliated entity with a common investment advisor; (b) the transferee otherwise is a Permitted Transferee; and (c) the Transfer otherwise is a Permitted Transfer. To the extent that a Consenting First Lien Lender is acting in its capacity as a Qualified Marketmaker, it may Transfer any right, title or interests in Company Claims/Interests that the Qualified Marketmaker acquires from a holder of the Company Claims/Interests who is not a Consenting First Lien Lender without the requirement that the transferee be a Permitted Transferee.

9.06.    Notwithstanding anything to the contrary in this Section 9, the restrictions on Transfer set forth in this Section 9 shall not apply to the grant of any liens or encumbrances on any claims and interests in favor of a bank or broker-dealer holding custody of such claims and interests in the ordinary course of business and which lien or encumbrance is released upon the Transfer of such claims and interests.

Section 10.    Representations and Warranties of Consenting First Lien Lenders. Each Consenting First Lien Lender severally, and not jointly, represents and warrants that, as of the date such Consenting First Lien Lender executes and delivers this Agreement and as of the Plan Effective Date:

(a)    it (or its affiliates and its and their respective accounts and funds managed by any of them or other entities that hold interests directly or indirectly on behalf of its affiliates its and their respective accounts and funds managed by any of them): (i) is the direct or indirect beneficial or record owner of the face amount of the Company Claims/Interests or is the nominee, investment manager, or advisor for beneficial holders of the Company Claims/Interests reflected in, and, having made reasonable inquiry, is not the beneficial or record owner of any Company Claims/Interests other than those reflected in, such Consenting First Lien Lender’s signature page to this Agreement or a Transfer Agreement, as applicable (as may be updated pursuant to Section 9); and (ii) has the full power and authority to act on behalf of, vote and consent to matters concerning such Company Claims/Interests;

(b)    such Company Claims/Interests are free and clear of any pledge, lien, security interest, charge, claim, equity, option, proxy, voting restriction (including, for the avoidance of doubt, any placement “on loan”), right of first refusal, or other limitation on disposition, transfer, or encumbrances of any kind, that would adversely affect in any way such Consenting First Lien Lender’s ability to perform any of its obligations under this Agreement at the time such obligations are required to be performed;

(c)    solely with respect to holders of Company Claims/Interests, (i) it is either (A) a qualified institutional buyer as defined in Rule 144A of the Securities Act, (B) not a U.S. person (as defined in Regulation S of the Securities Act), or (C) an institutional accredited investor (as defined in the Rules), and (ii) any securities acquired by the Consenting First Lien Lenders in connection with the Restructuring will have been acquired for investment and not with a view to distribution or resale in violation of the Securities Act.

Section 11.    Mutual Representations, Warranties, and Covenants. Each of the Parties represents, warrants, and covenants to each other Party, as of the date such Party executed and delivers this Agreement, on the Plan Effective Date:

(a)    it is validly existing and in good standing under the Laws of the state of its organization, and this Agreement is a legal, valid, and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability;

(b)    except as expressly provided in this Agreement, the Plan, and the Bankruptcy Code, no consent or approval is required by any other person or entity in order for it to effectuate the Restructuring contemplated by, and perform its respective obligations under, this Agreement;

(c)    the entry into and performance by it of, and the transactions contemplated by, this Agreement do not, and will not, conflict in any material respect with any Law or regulation applicable to it or with any of its articles of association, memorandum of association or other constitutional documents;

(d)    except as expressly provided in this Agreement, it has (or will have, at the relevant time) all requisite corporate or other power and authority to enter into, execute, and deliver this Agreement and to effectuate the Restructuring contemplated by, and perform its respective obligations under, this Agreement; and

(e)    except as expressly provided by this Agreement, it is not party to any restructuring or similar agreements or arrangements with the other Parties to this Agreement that have not been disclosed to all Parties to this Agreement.

Section 12.    Termination Events.

12.01.    Consenting First Lien Lenders Termination Events. This Agreement may be terminated by the Required Consenting First Lien Lenders by the delivery to the Company Parties of a written notice in accordance with Section 14.10 hereof upon the occurrence of the following events:

(a)    the breach in any material respect by a Company Party of any of the representations, warranties, or covenants of the Company Parties set forth in this Agreement that remains uncured for ten (10) Business Days after such terminating Consenting First Lien Lenders transmit a written notice in accordance with Section 14.10 hereof detailing any such breach;

(b)    the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any final, non-appealable ruling or order that (i) enjoins the consummation of a material portion of the Restructuring and (ii) remains in effect for thirty (30) calendar days after such terminating Consenting First Lien Lenders transmit a written notice in accordance with Section 14.10 hereof detailing any such issuance; provided that this termination right may not be exercised by any Consenting First Lien Lenders group if a holder of such Consenting First Lien Lenders group sought or requested such ruling or order in contravention of any obligation set out in this Agreement;

(c)    the Bankruptcy Court enters an order denying confirmation of the Plan;

(d)    the entry of an order by the Bankruptcy Court, or the filing of a motion or application by any Company Party seeking an order (without the prior written consent of the Required Consenting First Lien Lenders, not to be unreasonably withheld), (i) converting one or more of the Chapter 11 Cases of a Company Party to a case under chapter 7 of the Bankruptcy Code, (ii) appointing an examiner with expanded powers beyond those set forth in sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in one or more of the Chapter 11 Cases of a Company Party, or (iii) rejecting this Agreement;

(e)    the Company Parties lose access to the use of Cash Collateral in accordance with the Cash Collateral Order, subject to any applicable remedies notice period;

(f)    the Company Parties lose access to the use of the DIP Facility in accordance with the DIP Order, subject to any applicable remedies notice period; or

(g)    subject to any extension set forth in Section 4.02, the failure of the Company Parties to comply with a Milestone, which Milestone has not been waived or extended in a manner consistent with this Agreement, unless such failure is the result of any act, omission, or delay on the part of a holder included in the applicable the terminating Consenting First Lien Lenders group in violation of its obligations under this Agreement.

12.02.    Company Party Termination Events. Any Company Party may terminate this Agreement as to all Parties upon prior written notice to all Parties in accordance with Section 14.10 hereof upon the occurrence of any of the following events:

(a)    the breach in any material respect by one or more of the Consenting First Lien Lenders of any provision set forth in this Agreement that remains uncured for a period of fifteen (15) Business Days after the receipt by the Consenting First Lien Lenders of notice of such breach;

(b)    the board of directors, board of managers, or such similar governing body of any Company Party determines, after consulting with counsel, (i) that proceeding with any of the Restructuring would be inconsistent with the exercise of its fiduciary duties or applicable Law or (ii) in the exercise of its fiduciary duties, to pursue an Alternative Restructuring Proposal;

(c)    the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any final, non-appealable ruling or order that (i) enjoins the consummation of a material portion of the Restructuring and (ii) remains in effect for thirty (30) Business Days after such terminating Company Party transmits a written notice in accordance with Section 14.10 hereof detailing any such issuance; provided, that this termination right shall not apply to or be exercised by the Company Parties if any Company Party that sought or requested such ruling or order in contravention of any obligation or restriction set out in this Agreement;

(d)    the Bankruptcy Court enters an order denying confirmation of the Plan.

12.03.    Individual Termination. Any individual Consenting First Lien Lender may terminate this Agreement, as to itself only, by the delivery to counsel to the Company Parties and the Consenting First Lien lenders of a written notice setting forth the basis for such termination:

(a)    in the event that the Required Consenting First Lien Lenders agree to extend or waive a Milestone or to amend this Agreement to remove a Milestone, any Consenting First Lien Lender that has not agreed to such extension, waiver, or removal may terminate this Agreement as to itself by notice delivered within the earlier of (X) five Business Days after such extension, waiver, or removal and (Y) the second Business Day after such Milestone would have been required to occur but for such waiver, extension, or removal; provided that any such termination must occur before the satisfaction of such Milestone;

(b)    if the Company Parties fail to meet any Milestone (and such Milestone is not extended, waived, or removed in accordance with the terms of this Agreement) then any Consenting First Lien Lender may terminate this Agreement as to itself by notice delivered within five Business Days of such Milestone failure;

(c)    if such Consenting First Lien Lender has not consented to the form and substance of the Lease Optimization Plan or the Owned Real Estate Optimization Plan by June 15, 2020, such Consenting First Lien Lender may terminate this Agreement as to itself by notice delivered no later than June 22, 2020;or

(d)    if such Consenting First Lien Lender has not consented to the form and substance of the Plan, such Consenting First Lien Lender may terminate this Agreement as to itself by notice delivered no later than five Business Days after such Plan is filed with the Bankruptcy Court by a Company Party.

12.04.    Mutual Termination. This Agreement, and the obligations of all Parties hereunder, may be terminated by mutual written agreement among all of the following: (a) the Required Consenting First Lien Lenders; and (b) each Company Party.

12.05.    Automatic Termination. This Agreement shall terminate automatically without any further required action or notice immediately after the Plan Effective Date. This Agreement shall also automatically terminate in the event that Consenting First Lien Lenders representing a majority of the aggregate outstanding principal amount of First Lien Debt that was held by Consenting First Lien Lenders as of the Agreement Effective Date exercise their individual termination rights pursuant to Section 12.03.

12.06.    Effect of Termination. Upon the occurrence of a Termination Date as to a Party, this Agreement shall be of no further force and effect as to such Party and each Party subject to such termination shall be released from its commitments, undertakings, and agreements under or related to this Agreement and shall have the rights and remedies that it would have had, had it not entered into this Agreement, and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement, including with respect to any and all Claims or causes of action. Upon the occurrence of a Termination Date prior to the Confirmation Order being entered by a Bankruptcy Court, any and all consents or ballots tendered by the Parties subject to such termination before a Termination Date shall be deemed, for all purposes, to be null and void from the first instance and shall not be considered or otherwise used in any manner by the Parties in connection with the Restructuring and this Agreement or otherwise; provided, however, any Consenting First Lien Lender withdrawing or changing its vote pursuant to this Section 12.06 shall promptly provide written notice of such withdrawal or change to each other Party to this Agreement and, if such withdrawal or change occurs on or after the Petition Date, file notice of such withdrawal or change with the Bankruptcy Court. Nothing in this Agreement shall be construed as prohibiting a Company Party or any of the Consenting First Lien Lender from contesting whether any such termination is in accordance with its terms or to seek enforcement of any rights under this Agreement that arose or existed before a Termination Date. Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair, or restrict (a) any right of any Company Party or the ability of any Company Party to protect and reserve its rights (including rights under this Agreement), remedies, and interests, including its claims against any Consenting First Lien Lenders, and (b) any right of any Consenting First Lien Lender, or the ability of any Consenting First Lien Lender, to protect and preserve its rights (including rights under this Agreement), remedies, and interests, including its claims against any Company Party or Consenting First Lien Lenders. No purported termination of this Agreement shall be effective under this Section 12.06 or otherwise if the Party seeking to terminate this Agreement is in material breach of this Agreement, except a termination pursuant to Section 12.02(b) or Section 12.02(d). Nothing in this Section 12.06 shall restrict any Company Party’s right to terminate this Agreement in accordance with Section 12.02(b).

Section 13.    Amendments and Waivers.

(a)    This Agreement may not be modified, amended, or supplemented, and no condition or requirement of this Agreement may be waived, in any manner except in accordance with this Section 13.

(b)    This Agreement may be modified, amended, or supplemented, or a condition or requirement of this Agreement may be waived, in a writing signed by each Company Party and the Required Consenting First Lien Lenders; provided, however, that if the proposed modification, amendment, waiver, or supplement has a material, disproportionate, and adverse effect on any of the Company Claims/Interests held by a Consenting First Lien Lender in a manner different from the effect on the Company Claims/Interests held by other Consenting First Lien Lenders, then the consent of each such affected Consenting First Lien Lender shall also be required to effectuate such modification, amendment, waiver or supplement.

(c)    Any proposed modification, amendment, waiver or supplement that does not comply with this Section 13 shall be ineffective and void ab initio.

(d)    The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy under this Agreement shall operate as a waiver of any such right, power or remedy or any provision of this Agreement, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy. All remedies under this Agreement are cumulative and are not exclusive of any other remedies provided by Law.

Section 14.    Miscellaneous.

14.01.    Acknowledgement. Notwithstanding any other provision herein, this Agreement is not and shall not be deemed to be an offer with respect to any securities or solicitation of votes for the acceptance of a plan of reorganization for purposes of sections 1125 and 1126 of the Bankruptcy Code or otherwise. Any such offer or solicitation will be made only in compliance with all applicable securities Laws, provisions of the Bankruptcy Code, and/or other applicable Law.

14.02.    Exhibits Incorporated by Reference; Conflicts. Each of the exhibits, annexes, signatures pages, and schedules attached hereto is expressly incorporated herein and made a part of this Agreement, and all references to this Agreement shall include such exhibits, annexes, and schedules. In the event of any inconsistency between this Agreement (without reference to the exhibits, annexes, and schedules hereto) and the RSA Term Sheet, this Agreement (without reference to the exhibits, annexes, and schedules thereto) shall govern. In the event of any inconsistency between the RSA Term Sheet (without reference to the exhibits, annexes, and schedules thereto) and the exhibits, annexes, and schedules thereto, such exhibits, annexes, and schedules thereto shall govern. In the event of any inconsistency between the terms of this Agreement (including all exhibits, annexes, and schedules hereto) and the Plan, the terms of the Plan shall govern.

14.03.    Further Assurances. Subject to the other terms of this Agreement, the Parties agree to execute and deliver such other instruments and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, or as may be required by order of the Bankruptcy Court, from time to time, to effectuate the Restructuring, as applicable.

14.04.    Complete Agreement. Except as otherwise explicitly provided herein, this Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, oral or written, among the Parties with respect thereto, other than any Confidentiality Agreement.

14.05.    GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. Each Party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement, to the extent possible, in federal or state courts located in the City of New York, Borough of Manhattan. Notwithstanding the foregoing consent to jurisdiction, upon the commencement of the Chapter 11 Cases, each of the Parties hereby agrees that, if the Chapter 11 Cases are pending, the Bankruptcy Court shall have exclusive jurisdiction over all matters arising out of or in connection with this Agreement. Each Party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement, to the extent possible in the Bankruptcy Court, and solely in connection with claims arising under this Agreement: (a) irrevocably submits to the exclusive jurisdiction of the Bankruptcy Court; (b) waives any objection to laying venue in any such action or proceeding in the Bankruptcy Court; (c) waives any objection that the Bankruptcy Court is an inconvenient forum or does not have jurisdiction over any Party hereto; and (d) consents to entry of a final order or judgment by the Bankruptcy Court.

14.06.    TRIAL BY JURY WAIVER. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.07.    Execution of Agreement. This Agreement may be executed and delivered in any number of counterparts and by way of electronic signature and delivery, each such counterpart, when executed and delivered, shall be deemed an original, and all of which together shall constitute the same agreement. Except as expressly provided in this Agreement, each individual executing this Agreement on behalf of a Party has been duly authorized and empowered to execute and deliver this Agreement on behalf of said Party.

14.08.    Rules of Construction. This Agreement is the product of negotiations among the Company Parties and the Consenting First Lien Lenders, and in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any Party by reason of that Party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective in regard to the interpretation hereof. The Company Parties and the Consenting First Lien Lenders were each represented by counsel during the negotiations and drafting of this Agreement and continue to be represented by counsel.

14.09.    Successors and Assigns; Third Parties. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors and permitted assigns, as applicable. There are no third party beneficiaries under this Agreement, and the rights or obligations of any Party under this Agreement may not be assigned, delegated, or transferred to any other person or entity.

14.10.    Notices. All notices hereunder shall be deemed given if in writing and delivered, by electronic mail, courier, or registered or certified mail (return receipt requested), to the following addresses (or at such other addresses as shall be specified by like notice):

(a)     if to a Company Party, to:

J. C. Penney Corporation, Inc.

6501 Legacy Drive

Plano, Texas 75024

Attn: Brandy Treadway

E-mail address: btreadwa@jcp.com

with copies to (which shall not constitute notice):

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn:    Joshua Sussberg

Christopher Marcus

Aparna Yenamandra

E-mail address:         joshua.sussberg@kirkland.com;

         christopher.marcus@kirkland.com;

         aparna.yenamandra@kirkland.com

(b)     if to a Consenting First Lien Lender, to the address set forth on such Consenting First Lien Lenders’ signature page hereto:

with copies to (which shall not constitute notice):

Milbank LLP

55 Hudson Yards

New York, New York 10001

Attn:    Dennis F. Dunne

Andrew M. Leblanc

Thomas R. Kreller

Brian Kinney

E-mail address:         ddunne@milbank.com

         aleblanc@milbank.com

         tkreller@milbank.com

         bkinney@milbank.com

Any notice given by delivery, mail, or courier shall be effective when received.

14.11.    Independent Due Diligence and Decision Making. Each Consenting First Lien Lenders hereby confirms that its decision to execute this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions, and prospects of the Company Parties.

14.12.    Enforceability of Agreement. Each of the Parties to the extent enforceable waives any right to assert that the exercise of termination rights under this Agreement is subject to the automatic stay provisions of the Bankruptcy Code, and expressly stipulates and consents hereunder to the prospective modification of the automatic stay provisions of the Bankruptcy Code for purposes of exercising termination rights under this Agreement, to the extent the Bankruptcy Court determines that such relief is required.

14.13.    Waiver. If the Restructuring are not consummated, or if this Agreement is terminated for any reason, the Parties fully reserve any and all of their rights. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms or the payment of damages to which a Party may be entitled under this Agreement.

14.14.    Specific Performance. It is understood and agreed by the Parties that money damages would be an insufficient remedy for any breach of this Agreement by any Party, and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief (without the posting of any bond and without proof of actual damages) as a remedy of any such breach, including an order of the Bankruptcy Court or other court of competent jurisdiction requiring any Party to comply promptly with any of its obligations hereunder.

14.15.    Several, Not Joint, Claims. Except where otherwise specified, the agreements, representations, warranties, and obligations of the Parties under this Agreement are, in all respects, several and not joint.

14.16.    Severability and Construction. If any provision of this Agreement shall be held by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the remaining provisions shall remain in full force and effect if essential terms and conditions of this Agreement for each Party remain valid, binding, and enforceable.

14.17.    Remedies Cumulative. All rights, powers, and remedies provided under this Agreement or otherwise available in respect hereof at Law or in equity shall be cumulative and not alternative, and the exercise of any right, power, or remedy thereof by any Party shall not preclude the simultaneous or later exercise of any other such right, power, or remedy by such Party.

14.18.    Capacities of Consenting First Lien Lenders. Each Consenting First Lien Lender has entered into this agreement on account of all Company Claims/Interests that it holds (directly or through discretionary accounts that it manages or advises) and, except where otherwise specified in this Agreement, shall take or refrain from taking all actions that it is obligated to take or refrain from taking under this Agreement with respect to all such Company Claims/Interests.

14.19.    Email Consents. Where a written consent, acceptance, approval, or waiver is required pursuant to or contemplated by this Agreement, pursuant to Section 3.02, Section 13, or otherwise, including a written approval by the Company Parties or the Required Consenting First Lien Lenders, such written consent, acceptance, approval, or waiver shall be deemed to have occurred if, by agreement between counsel to the Parties submitting and receiving such consent, acceptance, approval, or waiver, it is conveyed in writing (including electronic mail) between each such counsel without representations or warranties of any kind on behalf of such counsel.

14.20.    Publicity. The Company Parties will submit to counsel to the Consenting First Lien Lenders all press releases, public filings, or public announcements, in each case, to be made relating to this Agreement or the transactions contemplated hereby and any amendments thereof in advance of release and will consult with such counsel with respect to such communications. For the avoidance of doubt, such press releases, public filings, or public announcements are to be made solely by the Company Parties and not by any other Party to this Agreement. Nothing contained herein shall be deemed to waive, amend or modify the terms of any Confidentiality Agreement.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year first above written.

COMPANY PARTIES:
J. C. PENNEY COMPANY, INC.
By:	/s/ Bill Wafford
Name:	Bill Wafford
Title:	Executive Vice President and Chief Financial Officer
J. C. PENNEY CORPORATION, INC.
By:	/s/ Bill Wafford
Name:	Bill Wafford
Title:	Executive Vice President and Chief Financial Officer
JCP REAL ESTATE HOLDINGS, LLC
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	President
J. C. PENNEY PROPERTIES, LLC
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	Vice President
J. C. PENNEY PURCHASING CORPORATION
By:	/s/ Laurie Sutandar
Name:	Laurie Sutandar
Title:	Vice President, US Sourcing
JCPENNEY SERVICES, LLC
By:	/s/ Gary Piper
Name:	Gary Piper
Title:	Vice President, Treasurer
JCP REALTY, LLC
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	Vice President

JCP NEW JERSEY, LLC
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	Vice President
jcpSSC, INC.
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	Vice President
J. C. PENNEY DIRECT MARKETING SERVICES LLC
By:	/s/ Hani Eideh
Name:	Hani Eideh
Title:	President and Treasurer
JCP CONSTRUCTION SERVICES, INC.
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	President
JCP PROCUREMENT, INC.
By:	/s/ Steve Wysong
Name:	Steve Wysong
Title:	Vice President
J. C. PENNEY EXPORT MERCHANDISING CORPORATION
By:	/s/ John Rudy Rosman
Name:	John Rudy Rosman
Title:	President
J. C. PENNEY INTERNATIONAL, INC.
By:	/s/ John Rudy Rosman
Name:	John Rudy Rosman
Title:	President

[Signature Page to Restructuring Support Agreement]

JCPENNEY PUERTO RICO, INC.
By:	/s/ Bradley Syverson
Name:	Bradley Syverson
Title:	Vice President
JCP MEDIA, INC.
By:	/s/ Gary Piper
Name:	Gary Piper
Title:	Vice President, Treasurer
JCP TELECOM SYSTEMS, INC.
By:	/s/ Gary Piper
Name:	Gary Piper
Title:	Vice President, Treasurer
FUTURE SOURCE LLC
By:	/s/ John Rudy Rosman
Name:	John Rudy Rosman
Title:	Vice President

[Signature Page to Restructuring Support Agreement]

Consenting First Lien Lenders Signature Page to

the Restructuring Support Agreement

[Consenting First Lien Lenders Signature Pages are on file with the Company]

EXHIBIT A

RSA Term Sheet

J. C. PENNEY COMPANY, INC.

RESTRUCTURING TERM SHEET

May 15, 2020

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES AS TO ANY EXCHANGE OR CHAPTER 11 PLAN WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE, IT BEING UNDERSTOOD THAT SUCH AN OFFER OR SOLICITATION, IF ANY, SHALL BE MADE ONLY IN COMPLIANCE WITH SECTION 4(A)(2) OF THE SECURITIES ACT OF 1933 AND/OR SECTION 1145 OF THE BANKRUPTCY CODE AND ALL APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY, AND/OR OTHER APPLICABLE STATUTES, RULES, AND LAWS.

This Term Sheet (the “Term Sheet”) sets forth the principal terms of a restructuring (the “Restructuring”) of J. C. Penney Company, Inc. (“JCP”), a company incorporated under the Laws of Delaware, and each of its affiliates party to the Restructuring Support Agreement (“RSA”) to which this Term Sheet is attached as Exhibit A (together with JCP, collectively, the “Company Parties” or the “Debtors”). The regulatory, corporate, tax, accounting, and other legal and financial matters related to the Restructuring have not been fully evaluated, and any such evaluation may affect the terms and structure of any Restructuring. The transactions contemplated in this Term Sheet are subject in all respects to the negotiation, execution, and delivery of definitive documentation.

This Term Sheet is proffered in the nature of a settlement proposal in furtherance of settlement discussions. Accordingly, this Term Sheet and the information contained herein are entitled to protection from any use or disclosure to any party or person pursuant to Rule 408 of the Federal Rules of Evidence and any other applicable rule, statute, or doctrine of similar import protecting the use or disclosure of confidential settlement discussions. Nothing contained in this Term Sheet shall be an admission of fact or liability or, until the occurrence of the Execution Date on the terms described herein and in the RSA, deemed binding on any of the parties hereto.

This Term Sheet does not purport to summarize all of the terms, conditions, covenants, and other provisions that may be contained in the fully negotiated and definitive documentation necessary to implement the Restructuring. Capitalized terms used but not otherwise defined in this Term Sheet shall have the meanings ascribed to such terms in the annexes attached hereto or in the RSA.

KEY PROVISIONS REGARDING THE RESTRUCTURING
Overview	The Restructuring will be accomplished through the Company Parties commencing Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court for the Southern District of Texas. The goal of the Parties will be to pursue a Chapter 11 Plan on the terms below that establishes both a financially sustainable operating company (“New JCP”) and a Real Estate Investment Trust (the “REIT”).1 In order to achieve this result, the Debtors will, in accordance with the provisions of this Term Sheet and the RSA: •  Prepare a Plan and Disclosure Statement consistent with this term sheet; •  Prepare additional diligence materials as necessary to determine the assets to be contributed to the REIT; •  Pursue a sale/leaseback of the Debtors’ owned distribution centers; •  Conduct an in-depth analysis of the Debtors’ existing leases and determine whether to reject or seek concessions form their landlords; •  Seek an order approving the adequacy of the Disclosure Statement and approving solicitation procedures; and •  Conduct a market testing process (the “Market Test”) seeking interest and bids in providing debt or equity financing to New JCP and/or purchasing some or all of the assets of the Debtors.
Current Capital Structure	Current capital structure: i.   the extensions of credit made under the Credit Agreement, dated as of June 20, 2014 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ABL Facility”), by and among JCP, J. C. Penney Corporation, Inc. (“JCP Corp.”), J. C. Penney Purchasing Corporation, the Lenders party thereto (the “ABL Lenders”), Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Revolving Agent, Swingline Lender, and LC Agent, and the other parties thereto and (B) each counterparty to a swap agreement constituting a Secured Swap Obligation (as defined in the ABL Facility) (a “Swap Counterparty”) ((A) and (B), collectively, the “ABL Claims”); ii.  the loans (the “Term Loans”) borrowed under the Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among, inter alios, JCP Corp., as Borrower, the Guarantors party thereto, the Lenders party thereto (the “Term Loan Lenders”), and JP Morgan Chase Bank, N.A., as Administrative Agent (in such capacity, the “Term Loan Agent”) (the “Term Loan Claims”);
	iii.   the 5.875% Senior Secured Notes due 2023 (the “First Lien Notes” and, the holders of the First Lien Notes, the “First Lien Noteholders”; the First Lien Noteholders, together with the Term Loan Lenders,

¹  The REIT shall be organized as an “UPREIT,” with its assets indirectly owned through an operating partnership (the “OP”). References in this term sheet to the REIT may include the REIT or the OP as context requires.

2

KEY PROVISIONS REGARDING THE RESTRUCTURING
	the “First Lien Lenders”) issued under the Indenture, dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among JCP Corp., as Issuer, the Guarantors party thereto, and Wilmington Trust National Association, as Trustee (in such capacity, the “First Lien Notes Trustee”) (the “First Lien Note Claims,” and together with the Term Loan Claims, the “First Lien Claims”); iv.   the 8.625% Senior Secured Second Priority Notes due 2025 issued under the Indenture (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), dated as of March 12, 2018, by and among JCP Corp., as Issuer, the Guarantors party thereto, and Wilmington Trust, National Association, as Trustee (the “Second Lien Note Claims”); v.  all outstanding unsecured senior notes issued by the Debtors (the “Unsecured Note Claims”); and vi  all other unsecured claims against the Debtors (the “Other Unsecured Claims”); and vii.  common equity interests in JCP.
DIP Facilities	Certain Consenting First Lien Lenders (in such capacity, collectively, the “DIP Lenders”) commit to provide a $900 million senior secured superpriority DIP Facility, $450 million of which will be in the form of new money, on the terms set forth in the DIP Term Sheet attached hereto as Annex 1.
REIT Structure	A subset of the Debtors’ properties, mutually identified by the Debtors and the Required Consenting First Lien Lenders, will be transferred to the REIT. The stores in the REIT shall be leased to New JCP pursuant to a market-rate master lease. Pursuant to the Plan and with the consent of the Required Consenting First Lien Lenders, up to 35% of the REIT Interests (defined below) may be sold to a strategic third party investor, and the proceeds of such sale may either be used to provide funding for the REIT or to allow for the distribution of cash in lieu of such equity under the Plan.
Business Plan	The Debtors will develop a business plan acceptable to the Required Consenting First Lien Lenders for New JCP and the REIT.2 The Debtors will retain a nationally recognized real estate broker acceptable to the Required Consenting First Lien Lenders to analyze the Debtors’ store portfolios and any excess real estate. The Debtors and such advisors will consult with the Consenting First Lien Lenders with respect any determination whether to assume, reject, assume with modifications, or sell any such real property leases and/or real property (or enter into any similar transaction). The assumption, rejection, or sale of such real property leases and/or real property (or enter into any similar transaction) shall be subject to the consent of the Required

²  Parties to discuss in good faith and reasonably agree on the inclusion of financial tests (if any) following review of updated budget and provision of updated Business Plan that will form the basis for operational covenants. Financial conditions to be calculated based on financial levels needed to exit.

3

KEY PROVISIONS REGARDING THE RESTRUCTURING
	Consenting First Lien Lenders. The Required Consenting First Lien Lenders will inform the Debtors by May 21, 2020 whether they consent to the rejection of the leases associated with the stores identified for closure in connection with the business plan provided on May 6, 2020 (if they so consent, the “Agreed Closing Stores”).
Distribution Centers	The Debtors will retain a nationally recognized broker specializing in warehouse and distribution centers (acceptable to the Required Consenting First Lien Lenders) to analyze the Debtors’ distribution centers and will pursue the sale (including by way of full or partial sale/leaseback) of the Debtors’ owned distribution centers property (or enter into a similar transaction) and will use the proceeds to fund the Plan. Any such sale (or similar transaction) will be subject to the approval of the Required Consenting First Lien Lenders and the Bankruptcy Court.
Plan Overview	Unless the Market Test achieves a superior outcome (as determined by the Required Consenting First Lien Lenders) or the Toggle Event occurs, the Debtors and the Consenting Lenders will pursue a Plan of Reorganization under which parties may receive the treatment set forth below. The composition of the forms of consideration set forth below (including for the avoidance of doubt the entities at which Holders of Claims receive such consideration) are preliminary and subject to change in the Definitive Documentation (which Definitive Documentation may provide for parties to hold portions of such consideration on a temporary or bridge basis): i.   The Plan will be funded, in part by (a) a new money revolving ABL loan in an amount not less than $[●] on New JCP (the “New JCP ABL”) on terms acceptable to the Required Consenting First Lien Lenders (including with respect to pro forma borrowing base) (b) a new money first lien revolving loan in an amount not less than $[●] at the REIT (the “REIT Revolver”) on terms acceptable to the Required Consenting First Lien Lenders, (c) the sale of certain owned real property and (d) the sale of the equity interests in New JCP and/or the REIT, pursuant to the Market Test described below. ii.  Holders of DIP Loans will receive $[●] in first lien take-back term debt against New JCP on terms acceptable to the DIP Lenders and the Required Consenting First Lien Lenders in full and final satisfaction of their DIP Claims. iii.   Holders of ABL Claims will receive (a) $[●] million in first lien term take-back debt against the REIT on terms acceptable to the Required Consenting First Lien Lenders (the “REIT Term Loan”), (b) an appropriate sized portion of the New JCP ABL, and/or (c) cash as appropriate. iv.   Holders of First Lien Claims will receive $[●] in first lien take-back term debt against New JCP on terms acceptable to the Required Consenting First Lien Lenders and [●]% of the equity in the REIT. v.  The Plan will be subject to a number of conditions to its confirmation and its effectiveness, including acceptance by ABL Lenders on terms acceptable to the Debtors and Required Consenting First Lien Lenders, satisfaction of an acceptable and achievable level of go-forward vendor support/terms, minimum rent savings for New JCP, minimum liquidity for New JCP and the REIT, acceptable maximum

4

KEY PROVISIONS REGARDING THE RESTRUCTURING
	exit costs and acceptable funding structure for such costs, and appropriate tax structuring and the rendering of an opinion from a nationally-recognized accounting or law firm that the REIT meets the requirements for qualification and taxation as a “real estate investment trust” and that the Master Lease is a “true lease” for US federal income tax purposes.
Equity Interests in the Reorganized Company	On the Plan Effective Date, New JCP shall issue new common stock or other equity interests (the “New JCP Common Stock”). The New JCP Common Stock shall have voting rights in New JCP on a one vote per share basis in all matters stockholders are entitled to vote on. On the Plan Effective Date, the REIT shall issue new equity interests of the REIT (the “REIT Interests”) and the OP shall issue common interests, to the extent necessary (the “OP Interests”) as set forth on the REIT Term Sheet. The voting structure of the REIT shall conform to a typical “UPREIT” structure. The Reorganized Debtors shall use commercially reasonable efforts to list the New JCP Common Stock and REIT Interests (but not, for the avoidance of doubt, the OP Interests) on a national securities exchange, as soon as reasonably practicable following the Plan Effective Date.
Market Test	Concurrently with the Plan process, the Debtors will, in consultation with the Required Consenting First Lien Lenders, conduct a robust Market Test process in accordance with the Milestones attached to the RSA. In the Market Test the Debtors shall solicit interest (a) from parties wishing to provide new money debt financing to New JCP and/or the REIT (including financing that would “take-out” any of the “take back” paper otherwise proposed for the Plan), (b) in the sale or sale sale/leaseback of the Debtors’ owned distribution centers, (c) in the provision of new capital to New JCP and/or the REIT in exchange for equity in such entity, (d) in the purchase of New JCP, the REIT or substantially all of the assets of either as a going concern, and (e) in the purchase of all or part of the Debtors’ assets. The DIP Lenders and First Lien Lenders shall have the right to credit bid in connection with any sale conducted in connection with the Market Test.
Toggle Event	By July 14, 2020, the Debtors and the Required Consenting First Lien Lenders shall have agreed on an acceptable Business Plan. By August 15, 2020, the Debtors shall also obtain binding commitments for all third-party financing (on terms acceptable to Required Consenting First Lien Lenders) necessary to finance such a business plan in accordance with the other Plan provisions of the term sheet. Upon a failure of either condition, the Debtors shall immediately cease pursing the Plan and instead pursue a 363 sale of all of their assets unless otherwise instructed by the Required Consenting First Lien Lenders and shall seek approval of any relief required to undertake such 363 sale on an expedited basis.

5

TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN
Distributions		Each holder of an Allowed Claim or Interest, as applicable, shall receive under the Plan the treatment described below (or less favorable treatment that may be agreed by the Debtors and the holder of such allowed Claim or Interest) in full and final satisfaction, settlement, release, and discharge of and in exchange for such holder’s Allowed Claim or Interest. Any action to be taken by the Debtors on the Plan Effective Date may be taken on the Plan Effective Date or as soon as is reasonably practicable thereafter.
Class No.	Type of Claim	Treatment	Voting
Unclassified Non-Voting Claims
N/A	DIP Facility Claims	On the Plan Effective Date, each holder of an allowed DIP Facility Claim shall receive its pro rata share of [●].	N/A
N/A	Administrative Claims	On the later of the Plan Effective Date and the date on which such Administrative Claim becomes due and payable in the ordinary course, each holder of an allowed Administrative Claim shall receive, at the option of the applicable Debtor(s), payment in full in cash or such other treatment (a) to render such Administrative Claim unimpaired under section 1124 of the Bankruptcy Code or (b) as otherwise permitted by section 1129(a)(9) of the Bankruptcy Code.	N/A
N/A	Priority Tax Claims	On the later of the Plan Effective Date and the date on which such Priority Tax Claim becomes due and payable in the ordinary course, each holder of an allowed Priority Tax Claim shall receive treatment in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code.	N/A
Classified Claims and Interests of the Debtors
Class 1	Other Secured Claims	On the Plan Effective Date, each holder of an allowed Other Secured Claim shall receive, at the option of the applicable Debtor(s): (a) payment in full in cash; (b) the collateral securing its allowed Other Secured Claim; (c) reinstatement of its allowed Other Secured Claim; or (d) such other treatment to render such Other Secured Claim unimpaired under section 1124 of the Bankruptcy Code.	Unimpaired; deemed to accept
Class 2	Other Priority Claims	On the later of the Plan Effective Date and the date on which such Other Priority Claim becomes due and payable in the ordinary course, each holder of an allowed Other Priority Claim shall receive, at the option of the applicable Debtor(s), payment in full in cash or such other treatment (a) to render such Administrative Claim unimpaired under section 1124 of the Bankruptcy Code or (b) as otherwise permitted by section 1129(a)(9) of the Bankruptcy Code.	Unimpaired; deemed to accept

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TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN
Class 3	ABL Claims / Hedge Claims	On the Plan Effective Date, each holder of an allowed ABL Claim or Hedge Claim shall receive its pro rata share of (a) [●], (b) payment in full in cash, or (c) such other treatment to render such ABL Claim or Hedge Claim unimpaired under section 1124 of the Bankruptcy Code.	[TBD]
Class 4	First Lien Claims	On the Plan Effective Date, each holder of an allowed First Lien Claim shall receive its Pro Rata share of [●].	Impaired; entitled to vote
Class 5	Second Lien Notes Claims3	On the Plan Effective Date, each holder of an allowed Second Lien Notes Claim shall receive [●].	Impaired; [entitled to vote]
Class 6	First Lien Deficiency Claims	On the Plan Effective Date, each holder of an allowed Secured Notes Deficiency Claim shall receive [●].	Impaired; [entitled to vote]
Class 7	Unsecured Notes Claims	On the Plan Effective Date, each holder of an allowed Unsecured Notes Claim shall receive [●].	Impaired; [entitled to vote]
Class 8	Non-Funded Debt General Unsecured Claims at [funded debt obligor entities]4	On the Plan Effective Date, each holder of an allowed Non-Funded Debt General Unsecured Claim at [●] shall receive [●].	Impaired; [entitled to vote]
Class 9	Non-Funded Debt General Unsecured Claims at [non-obligor entities]	On the Plan Effective Date, each holder of an allowed Non-Funded Debt General Unsecured Claim at [●] shall receive [●].	Impaired; [entitled to vote]
Class 10	Intercompany Claims	On the Plan Effective Date, each allowed Intercompany Claim shall be, at the option of the applicable Debtor(s) and subject to the Restructuring Transactions Memorandum, either reinstated, compromised, set off, distributed, contributed, settled, or canceled and released without any distribution.	Impaired; deemed to reject or Unimpaired; deemed to accept
Class 11	Intercompany Interests	On the Plan Effective Date, each Intercompany Interest shall be, at the option of the applicable Debtor and subject to the Restructuring Transactions Memorandum, either reinstated or canceled and released without any distribution.	Impaired; deemed to reject or Unimpaired; deemed to accept

³  Note: May classify Second Lien Notes Claims and First Lien Deficiency Claims together.

⁴  Note: Division of Non-Funded Debt General Unsecured Claims by Debtor entity (i.e., classes 8-9) subject to change.

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TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN
Class 12	Existing Equity Interests	On the Plan Effective Date, all Equity Interests in JCP shall be extinguished and cancelled. Holders of Existing Equity Interests shall receive no recovery on account of such Existing Equity Interests.	Impaired; deemed to reject
Class 13	Section 510(b) Claims	Section 510(b) Claims shall be discharged, cancelled, released, and extinguished without any distribution to holders of such claims.	Impaired; deemed to reject

GENERAL PROVISIONS REGARDING THE PLAN
Subordination	The classification and treatment of Claims under the Plan shall conform to the respective contractual, legal, and equitable subordination rights of such Claims, and any such rights shall be settled, compromised, and released pursuant to the Plan.
Cancellation of Notes, Instruments, Certificates, and Other Documents	On the Plan Effective Date, except to the extent otherwise provided in this Term Sheet or the Plan, all notes, instruments, certificates, credit agreements, indentures, and other documents evidencing Claims or Interests shall be canceled and the obligations of the Debtors thereunder or in any way related thereto shall be deemed satisfied in full and discharged.
Exemption from SEC Registration	The issuance of all securities under the Plan will be exempt from SEC registration under applicable law.
Release and Exculpation	The Plan shall include the exculpation, Debtor releases, and “Third-Party” releases provisions set forth on Annex 2, attached hereto, in all material respects, subject to the completion of the Disinterested Directors’ investigation into potential claims held by the Company Parties, which investigation shall be completed before the entry of the Confirmation Order. Each Consenting First Lien Lender will, pursuant to the RSA, agree to “opt in” to, or not to “opt out” of, as applicable, the consensual “Third-Party” releases, including those granted to the Company’s current and former officers, directors, and employees.
Conditions Precedent to the Plan Effective Date	The occurrence of the Plan Effective Date shall be subject to the following conditions precedent: i.   the RSA shall have been executed and shall not have been terminated and remains in full force and effect; ii.  the Plan and all related Plan exhibits and other documents shall have been executed and delivered, and any conditions (other than the occurrence of the Plan Effective Date or certification by the Debtors that the Plan Effective Date has occurred) contained therein shall have been satisfied or waived in accordance therewith;

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GENERAL PROVISIONS REGARDING THE PLAN
	iii.   the orders approving the Disclosure Statement and confirming the Plan shall have been entered, consistent with the RSA, and such orders shall not have been vacated, stayed, or modified; iv.   the Bankruptcy Court shall have entered the DIP Order, consistent with the RSA, and the DIP Order shall not have been vacated, stayed, or modified without the prior written consent of the Required Lenders (as defined in the DIP Credit Agreement) or, with respect to any provisions that affect the rights or duties of the DIP Agent (as defined in the DIP Credit Agreement), the DIP Agent, and there shall be no default or event of default existing under the DIP Facility; v.  All financing necessary for the Plan shall have been obtained, and any documents related thereto shall have been executed, delivered, and be in full force and effect (with all conditions precedent thereto, other than the occurrence of the Plan Effective Date or certification by the Debtors that the Plan Effective Date has occurred, having been satisfied or waived); vi.   the issuance of the New JCP Stock, REIT Interests, and OP Interests; vii.  the Required Consenting First Lien Lenders shall have consented to the assumption or rejection of every store lease assumed or rejected by the Debtors; viii.  all professional fees and expenses of retained professionals required to be approved by the Bankruptcy Court shall have been paid in full or amounts sufficient to pay such fees and expenses after the Plan Effective Date have been placed in a professional fee escrow account pending approval by the Bankruptcy Court; ix.   all accrued and unpaid fees and expenses of the Consenting First Lien Lenders in connection with the Restructuring (including fees and expenses of the Consenting First Lien Lenders’ Advisors) shall have been paid in accordance with the terms and conditions set forth in the RSA and the DIP Credit Agreement; and x.  any and all requisite governmental, regulatory, environmental, and third-party approvals and consents shall have been obtained.
Allocation of Administrative Expenses	All Administrative Expenses, including professional fees and any wind-down expenses, shall be allocated between activities related to New JCP and the REIT pursuant to a formula mutually agreeable to the Debtors and the Required Consenting First Lien Lenders.
Post-Plan Effective Date Administration	[●]

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GENERAL PROVISIONS REGARDING THE PLAN
Waiver of Conditions Precedent to the Plan Effective Date	The Conditions Precedent to the Plan Effective Date may be waived by the Debtors, including, in the case of any Conflict Matter between any Debtors, each Debtor acting at the direction of its respective Disinterested Director or Manager (as applicable) and without the consent of any other Debtor, but with the prior written consent of the Required Consenting First Lien Lenders.
Retention of Jurisdiction	The Plan will provide for the retention of jurisdiction by the Bankruptcy Court for usual and customary matters.

OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING
Governance	The board of directors for each of New JCP and the REIT (collectively, the “New Boards”) shall be determined or selected, as applicable, by the Required Consenting First Lien Lenders. Corporate governance documents for New JCP, the other Reorganized Debtors, and the REIT, including charters, bylaws, operating agreements, or other organization documents, as applicable (collectively, the “New Organizational Documents”), shall be consistent with section 1123(a)(6) of the Bankruptcy Code and shall otherwise be in form and substance reasonably acceptable to the Required Consenting First Lien Lenders. Substantially final forms of the New Organizational Documents shall be filed as part of the Plan Supplement prior to the date upon which the Bankruptcy Court enters the Confirmation Order.
Management Incentive Plans and Employment Agreements	On the Plan Effective Date, New JCP and the REIT will implement management incentive plans that provide for New JCP Common Stock and REIT Interests to be reserved for issuance to management of New JCP, the other Reorganized Debtors, and the REIT after the Plan Effective Date on terms to be agreed by the respective boards of directors of New JCP and the REIT.
Employee Compensation and Benefit Programs	On the Plan Effective Date, the Debtors shall assume (and assign to the applicable Reorganized Debtor, if necessary) the employee compensation and benefits plans and programs applicable to any of the Debtors’ employees and retirees, in each case existing as of the Plan Effective Date, on terms to be agreed between the Debtors and the Required Consenting First Lien Lenders and as will be set forth in the Plan.
Indemnification of Prepetition Directors, Officers, Managers, et al.	Consistent with applicable law, all indemnification provisions currently in place (whether in the by-laws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors, as applicable, shall be reinstated and remain intact, irrevocable, and shall survive the effectiveness of the Restructuring on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors than the indemnification provisions in place prior to the Restructuring.

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OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING

Director, Officer, Manager, and Employee Tail Insurance Coverage

On or before the Petition Date, the Debtors shall purchase and maintain directors, officers, managers, and employee liability tail coverage for the six-year period following the Plan Effective Date on terms no less favorable than the Debtors’ existing director, officer, manager, and employee coverage and with an aggregate limit of liability upon the Plan Effective Date of no less than the aggregate limit of liability under the existing director, officer, manager, and employee coverage upon placement. Directors and officers insurance policies shall remain in place in the ordinary course during the Chapter 11 Cases and from and after the Plan Effective Date. Furthermore, the Debtors shall not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including, without limitation, the “tail policy”) in effect prior to the Plan Effective Date, and any directors and officers of the Company Parties who served in such capacity at any time before or after the Plan Effective Date shall be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such directors and/or officers remain in such positions after the Plan Effective Date. Notwithstanding anything herein to the contrary, the Company Parties shall retain the ability to supplement such directors’ and officers’ insurance policies as the Company Parties deem necessary, including purchasing any tail coverage.

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Annex 1

DIP Term Sheet

$450 MILLION SECURED SUPERPRIORITY DEBTOR IN POSSESSION CREDIT FACILITY

SUMMARY OF TERMS AND CONDITIONS

This summary of terms and conditions (this “DIP Term Sheet”) outlines certain terms and conditions of the DIP Facility referred to below. Capitalized terms used and not defined herein have the meanings assigned to such terms in the Restructuring Support Agreement (“RSA”) or the Restructuring Term Sheet (the “RSA Term Sheet”) to which this DIP Term Sheet is attached as Annex 2.

Executive Summary:	This DIP Term Sheet provides for a $450 million secured superpriority debtor in possession credit facility, to be funded on a delayed draw basis as appropriate in light of case liquidity needs, access to cash collateral, and milestones in order to (i) finance the Debtors and their operations in accordance with the Budget and (ii) ensure that the Debtors have sufficient liquidity, taking into account access to cash collateral. Pursuant to the RSA and as described herein, the DIP Lenders will agree to convert certain of their Loans into loans under an exit facility to be made available on terms and conditions customary for facilities and transactions of such type and in each case satisfactory to the DIP Lenders and the Debtors (such loans, the “Exit Loans”). The DIP Facility will be fully committed to by the DIP Lenders (determined on a pro rata basis among the DIP Lenders based on the aggregate amount of the Prepetition First Lien Obligations held by the DIP Lenders as of the date of this DIP Term Sheet (the “Pro Rata Allocations”)) pursuant to the terms and conditions described in this DIP Term Sheet and the Commitment Letter to which this DIP Term Sheet is attached (the “Commitment Letter”).
Borrower:	J. C. Penney Corporation, Inc. (the “DIP Borrower”), as a debtor and debtor in possession under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended (the “Bankruptcy Code”). The DIP Borrower and its affiliated debtors and debtors in possession, collectively, the “Debtors”.
DIP Facility:	A non-amortizing senior secured priming multi-draw delayed draw term loan facility (the “DIP Facility”) with a maximum funded principal amount equal to $450 million in “new money” (such principal amount, together with the Prepetition First Lien Obligations rolled up into the DIP Facility as set forth below, the “Total Aggregate Commitment” and the loans thereunder, the “Loans”) to be funded in two borrowings as follows: (a) $225 million made not later than one business day following

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	the entry of the DIP Order (as defined below) (the “Initial Borrowing”) and subject to satisfaction of the Conditions Precedent to Initial Borrowing and (b) the remainder of the Total Aggregate Commitment in an aggregate principal amount equal to $225 million (the “Subsequent Borrowing”) shall be made available following the entry of the DIP Order on July 15, 2020 subject to satisfaction of the Conditions Precedent to Initial Borrowing and the Conditions Precedent to The Subsequent Borrowing (and no other conditions precedent), and otherwise on the terms and conditions in this DIP Term Sheet, the Commitment Letter and the Operative Documents referred to below. With respect to the DIP Facility, (i) upon satisfaction of the Conditions Precedent to Initial Borrowing, funds with respect to the Initial Borrowing shall be funded directly to the Debtors for use in accordance with the Budget and (ii) upon satisfaction of the Conditions Precedent to The Subsequent Borrowing, all funded amounts shall be deposited in a blocked controlled account in favor of the DIP Agent (the “Escrow Account”; the funds deposited therein “Drawn Funds”). The Subsequent Borrowing shall be in an aggregate principal amount equal to $225 million, which represents the remainder of the Total Aggregate Commitment. Drawn Funds may be withdrawn from the Escrow Account once per week, subject to a draw request being delivered to the DIP Agent, which shall certify (i) that such applicable Drawn Funds will be required during the subsequent week in accordance with the Budget (giving effect to any maximum Permitted Variances with respect to such week) and (ii) no Default or Event of Default (each as defined in the Operative Documents) shall have occurred and be continuing.
Guarantors:	The obligations of the DIP Borrower shall be unconditionally guaranteed, on a joint and several basis, by each other Debtor (each, a “Guarantor” and collectively, the “Guarantors”). Each entity which guarantees (or is required to guarantee) the Prepetition First Lien Obligations shall be a Guarantor and a Debtor.
Case:	The bankruptcy cases (the “Chapter 11 Cases”) of the Debtors to be filed under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) (the date of filing of such petition, the “Petition Date”). The Petition Date shall be no later than May 16, 2020.

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DIP Agent:	GLAS USA LLC (“GLAS”) shall act as administrative agent and collateral agent for the DIP Facility (in such capacity, the “DIP Agent”) on behalf of the DIP Lenders (as defined below). Any action, exercise of remedies, approval, consent or similar action to be taken or not taken by the DIP Agent in respect of the DIP Facility shall only be taken (or not taken) as may be directed by the Required Lenders. The DIP Agent and the DIP Borrower shall enter into an agency fee letter providing for fees to be payable to the DIP Agent to be mutually agreed and reasonably acceptable to the Debtors.
DIP Lenders:	All rights and obligations of the DIP Lenders under the DIP Facility shall be several and not joint.
Prepetition ABL Credit Agreement:	The Amended and Restated Credit Agreement dated as of June 20, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition ABL Credit Agreement”) by and among the DIP Borrower, Wells Fargo Bank, National Association, as administrative agent and collateral agent (the “Prepetition ABL Agent”), the lenders from time to time party thereto (the “Prepetition ABL Lenders”) and the other parties thereto.
Prepetition Term Loan Credit Agreement:	The Amended and Restated Term Loan Credit Agreement dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition Term Loan Credit Agreement”) by and among the DIP Borrower, the Lenders party thereto (the “Prepetition Term Loan Lender”), JPMorgan Chase Bank, N.A., as administrative agent (the “Prepetition Term Loan Agent”), and the other parties thereto. The loans under the Prepetition Term Loan Credit Agreement are referred to herein as the “Prepetition Term Loans”.
Prepetition First Lien Notes	The senior secured notes (the “Prepetition First Lien Notes”) outstanding under that Indenture, dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition First Lien Notes Indenture”) by and among the DIP Borrower, Wilmington Trust, National Association, as trustee (the “Prepetition First Lien Notes Trustee”), and the other parties thereto. The holders of such Prepetition First Lien Notes are referred to herein as the “Prepetition First Lien Noteholders”. The Prepetition Term Loans together with the Prepetition First Lien Notes are referred to herein as the “Prepetition First Lien Obligations”.

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ABL Intercreditor Agreement:	The Intercreditor and Collateral Cooperation Agreement dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”) by and among the DIP Borrower, the Prepetition ABL Agent, Wilmington Trust, National Association, as collateral agent under the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Notes Indenture (the “Prepetition First Lien Collateral Agent”), and the other parties thereto.
Restructuring Support Agreement:	A restructuring support agreement executed on or prior to the Petition Date and which is mutually acceptable to the DIP Lenders and the Debtors (the “RSA”).
Tenor of DIP Facility:	The DIP Facility will mature on the earliest of (such earliest date, the “Maturity Date”): (a)   the date that is 180 days after the Petition Date (the “Scheduled Maturity Date”); (b)   20 days after the Petition Date, if the DIP Order (as defined below) has not been entered by the Bankruptcy Court prior to the expiration of such 20-day period; (c)   the effective date of a plan of reorganization or liquidation in the Chapter 11 Cases; (d)   the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to section 363 of the Bankruptcy Code or otherwise; (e)   without the DIP Agent’s prior written consent, the date of filing or express written support by the Debtors of bidding procedures, sale processes, transactions, plans of liquidation or reorganization or related disclosure statements that are not in accordance with the RSA, if applicable, and that are not otherwise acceptable to the DIP Lenders; (f)   the date of termination of the DIP Lenders’ commitments and the acceleration of any outstanding Loans, in each case, under the DIP Facility in accordance with the terms of the DIP Facility credit agreement (the “DIP Credit Agreement”) and the other definitive documentation with respect to the DIP Facility (collectively with the DIP Credit Agreement and the related security documents, the “Operative Documents”);

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	(g)   any breach by the Debtors which has not been cured or waived or termination of the RSA after the effectiveness thereof; (h)   dismissal of the Chapter 11 Cases or conversion of the Chapter 11 Cases into cases under chapter 7 of the Bankruptcy Code; (i) the Debtors shall lose access to the use of cash collateral in accordance with the Cash Collateral Order (as defined below), subject to any applicable remedies notice period; and (j) other customary circumstances to be mutually agreed.
Closing Date:	The date of the effectiveness of the Operative Documents (the “Closing Date”) (which, for the avoidance of doubt, shall not occur prior to the entry of the DIP Order).
DIP Facility Interest Rate:	Loans under the DIP Facility will bear interest at a rate, at the DIP Borrower’s option, equal to the Base Rate plus 10.75% per annum or LIBOR (subject to a 1.25% floor) plus 11.75% per annum, compounded monthly and payable monthly in cash in arrears. At any time when an Event of Default under the DIP Facility has occurred and is continuing, all outstanding amounts under the DIP Facility shall bear interest, to the fullest extent permitted by law, at the interest rate applicable to base rate loans plus 2.00% per annum and shall be payable on demand in cash (the “Default Rate”). Interest on overdue amounts under the DIP Facility shall also accrue at the Default Rate and shall be payable in cash.
DIP Facility Premiums:	A commitment premium payable in cash to the DIP Lenders equal to 6.00% of each DIP Lender’s initial commitments in respect of the $450 million “new money” portion of the DIP Facility on the Petition Date, which shall be earned, due and payable upon execution of the Commitment Letter. An upfront premium payable in cash to the DIP Lenders equal to 4.00% of each DIP Lender’s commitments in respect of the $450 million “new money” portion of the DIP Facility on the Petition Date, which shall be earned, due and payable upon execution of the Commitment Letter. An exit premium payable in cash to the DIP Lenders equal to 3.00% of each DIP Lender’s funded Loans or unfunded commitments under the DIP Facility (including the “new money” and rolled up portion of the DIP Facility) on the Maturity Date or on the date of any earlier voluntary or mandatory prepayment (the “Exit Premium”).

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Exit Loans:	Upon terms and conditions to be agreed in the RSA, but in any event including the following: Exit Loans will bear interest at a rate, at the DIP Borrower’s option, equal to the Base Rate plus 10.00% per annum or LIBOR (subject to a 1.25% floor) plus 11.00% per annum, compounded monthly and payable monthly in cash in arrears.
	A commitment premium payable in cash equal to 2.00% of the commitments in respect of the Exit Loans, which shall be due and payable in cash on the date that the Business Plan is approved (in accordance with the timeline set forth in the DIP Milestones (as defined below)). An upfront premium payable in cash equal to 3.00% of the commitments in respect of the Exit Loans, which shall be earned, due and payable on the closing date of the Exit Loans.
Roll Up:	On the date of entry of the DIP Order, $225 million in principal amount of the Prepetition Term Loans held by the DIP Lenders (or their applicable designees) shall be rolled up into the DIP Facility in accordance with each such DIP Lender’s (or its applicable designee’s) share of the DIP Facility. On the date of the Subsequent Borrowing, an additional $225 million of principal amount of the Prepetition Term Loans held by the DIP Lenders (or their applicable designees) shall be rolled up into the DIP Facility on a dollar-for-dollar basis in accordance with each such DIP Lender’s (or its applicable designee’s) share of the DIP Facility. Except with respect to the Exit Premium, the premiums set forth above shall only be payable with respect to the $450 million “new money” portion of the DIP Facility and shall not be payable with respect to any rolled up Prepetition Term Loans. Notwithstanding the foregoing, in the event that any DIP Lender (or any of its designees) does not hold sufficient Prepetition Term Loans to fully participate in the roll up on a pro rata basis based on its pro rata share of the funded Loans, such DIP Lender (or its applicable designee) shall be permitted to roll up its Prepetition First Lien Notes to the extent necessary to achieve such pro rata share of the roll up.
Adequate Protection:	As adequate protection for any diminution in the value of the interests of the Prepetition Term Loan Lenders and the Prepetition First Lien Noteholders in the collateral securing the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Noteholders in the collateral securing the Prepetition First Lien Notes Indenture, respectively, the Prepetition Term Loan Lenders and the Prepetition

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	First Lien Noteholders will receive, subject in all cases to the Carve-Out, the following as adequate protection: (A) the payment of the reasonable and documented out-of-pocket fees and expenses of legal counsel and financial advisors retained by the Prepetition Term Loan Lenders that are also DIP Lenders, (B) cash payments of accrued and unpaid interest on the Prepetition Term Loans and Prepetition First Lien Notes upon entry of the DIP Order and each date thereafter on which such interest payment would otherwise become due under the Prepetition Term Loan Credit Agreement or Prepetition First Lien Notes Indenture, as applicable, (C) validly perfected liens on and security interests in the Debtors’ post-petition Collateral junior only to the liens granted to the DIP Lenders under the DIP Facility and existing valid, perfected, and superior liens in the Collateral held by other creditors (including, for the avoidance of doubt, the liens of the Prepetition ABL Lenders with respect to the ABL Priority Collateral) and (D) a superpriority administrative expense claim as contemplated by section 507(b) of the Bankruptcy Code, which claim shall have priority over all priority claims (other than the claims of the DIP Lenders under the DIP Facility) and unsecured claims against the Debtors and their estates, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 503(a), 506(c), 507(a), 507(b), 546(c), 726(b), and 1114 of the Bankruptcy Code or otherwise (collectively, “Adequate Protection”).
Optional Prepayments and Commitment Reductions:	The DIP Borrower may, upon at least one business day’s notice, prepay or terminate in full (but not in part), with the payment of the Exit Premium but without other premium or penalty, subject to breakage costs, if applicable, the outstanding Loans and unfunded commitments. Once repaid, Loans may not be re-borrowed.
Mandatory Prepayments:	Mandatory prepayments of the Loans customary for similar debtor-in-possession financings shall be required, including, in an amount equal to (a) 100% of insurance and condemnation proceeds, (b) 100% of net cash proceeds from the issuance of post-petition indebtedness not permitted by the DIP Credit Agreement and (c) 100% of the net cash proceeds of any sale of assets constituting Collateral and other asset sales (without any reinvestment rights, but subject to de minimis dollar carveouts to be agreed, but subject, in the case of ABL Priority Collateral (or proceeds thereof), to prior repayment of the Prepetition ABL Credit Agreement solely to the extent required pursuant to the Cash Collateral Arrangements).

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	All voluntary prepayments and mandatory prepayments (within one business day of receipt thereof) shall be applied as follows: first, to pay accrued and unpaid interest on, and expenses in respect of, the obligations under the DIP Facility, to the extent then due and payable; and second, to any principal amounts or other obligations (including the Exit Premium) which are outstanding under the DIP Facility. Other than the Exit Premium, there shall be no premium or penalty payable in connection with mandatory prepayments.
Security:	All amounts owing by the DIP Borrower under the DIP Facility and by the Guarantors in respect thereof will be secured by a perfected security interest in, with the priority described below under “Priority,” and lien on substantially all of the Debtors’ tangible and intangible assets, including, without limitation, the following (collectively, the “Collateral”): accounts receivable, equipment, inventory, contracts, fee owned and ground leased real estate, real property leaseholds, investment property, insurance proceeds, deposit accounts (other than payroll, trust and tax accounts), monies, equity interests of subsidiaries of each Debtor and the products and proceeds thereof and, upon entry of the DIP Order, any proceeds of avoidance actions available to the Debtors’ bankruptcy estates pursuant to the Bankruptcy Code, subject to certain exclusions to be mutually agreed. Notwithstanding anything to the contrary, no mortgages shall be required and perfection on the Collateral shall be obtained solely through entry of the DIP Order.
Priority:	Subject in all cases to the Carve-Out and certain exclusions to be mutually agreed, all amounts owing by the DIP Borrower under the DIP Facility and by the Guarantors in respect thereof shall at all times: (a)    pursuant to section 364(c)(1) of the Bankruptcy Code, be entitled to joint and several superpriority administrative expense claims status in the Chapter 11 Cases; (b)    pursuant to section 364(c)(2) of the Bankruptcy Code, be secured by a perfected first priority lien on all Collateral that is not subject to valid, perfected, and non-avoidable liens as of the Petition Date, including all unencumbered fee-owned, ground-leased and space-leased real estate, and including upon entry of the DIP Order, any proceeds of avoidance actions available to the Debtors’ bankruptcy estates pursuant to the Bankruptcy Code;

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	(c)    (i) pursuant to section 364(d) of the Bankruptcy Code, be secured by a perfected first priority and priming lien on all collateral that secures obligations under the Prepetition Term Loan Credit Agreement (other than ABL Priority Collateral, as defined in the ABL Intercreditor Agreement (“ABL Priority Collateral”)) and (ii) pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected second priority lien on all ABL Priority Collateral, junior only to the lien securing the claims in respect of the Prepetition ABL Credit Agreement (“Prepetition Collateral”); and (d)    pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected second priority lien on all other property of the Debtors that is subject to valid and perfected liens in existence as of the Petition Date (including liens (if any) perfected subsequent to the Petition Date as permitted by and in accordance with section 546(b) of the Bankruptcy Code) but with a priority immediately junior to such liens. Such liens shall be senior to all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code. All liens authorized and granted pursuant to the DIP Order, as applicable, in each case, entered by the Bankruptcy Court approving the DIP Facility shall be deemed effective and perfected as of the Petition Date, and no further filing, notice or act will be required to effect such perfection. The DIP Lenders, or the DIP Agent on behalf of the DIP Lenders, shall be permitted, but not required, to make any filings, deliver any notices or take any other acts as may be desirable under state law or other law in order to reflect the perfection and priority of the DIP Lenders’ claims described herein.
Carve-Out:	See Schedule II to this DIP Term Sheet.
Conditions Precedent to Initial Borrowing:	The Operative Documents will contain customary conditions precedent to the Initial Borrowing under the DIP Facility and other conditions deemed by the DIP Agent to be appropriate to the specific transaction, and in any event, including, without limitation: (a)   The execution of the RSA and the filing of the executed RSA.

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(b)   The preparation, authorization and execution of the Operative Documents with respect to the DIP Facility, in form and substance satisfactory to the DIP Agent.

(c)   No later than 18 calendar days after the Petition Date, the Bankruptcy Court shall have entered a final order approving the DIP Facility on a final basis (the “DIP Order”), in form and substance satisfactory to the DIP Agent in their sole discretion as confirmed by the DIP Agent in writing, authorizing and approving the DIP Facility and the transactions contemplated hereby, including Adequate Protection and the DIP Order shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the DIP Agent.

(d)   All premiums, fees and documented out-of-pocket fees and expenses (including fees and expenses of counsel and financial advisors) required to be paid to the DIP Lenders and DIP Agent (and with respect to which invoices have been received by the Debtors at least one (1) business day before the Closing Date) on or before the Closing Date (whether incurred before or after the Petition Date and including estimated fees and expenses through the Closing Date) shall have been paid.

(e)   The delivery of a 13-week cash flow projection (the “Initial DIP Budget”) in form and substance reasonably satisfactory to the DIP Agent in its reasonable discretion as confirmed by the DIP Agent in writing. Such Initial DIP Budget and all updates thereto (in accordance with reporting requirements described herein) shall include the same line item detail as provided in the Alix Partners 13 week cash flow provided on May 13, 2020 prepetition, and will forecast, on a weekly basis, the period commencing May 17, 2020 through the end of the fiscal month following the last week of such 13-week period, and on a monthly basis for each month thereafter through the Maturity Date; provided that with the written consent and approval of the DIP Agent the Initial Budget may be updated by the DIP Borrower no more than once per month, which update shall be effective three calendar

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    days following delivery to the DIP Agent except to the extent objected to by the DIP Agent in writing. Upon effectiveness, such updated budget shall thereupon become the “budget” for purposes of the DIP Facility (as so approved, the “Budget”).

(f)   The Debtors shall have obtained requisite consents from the Prepetition ABL Agent and the Prepetition ABL Lenders to the use of cash collateral in the Chapter 11 Cases in an amount and on terms satisfactory to the Prepetition ABL Agent, the Prepetition ABL Lenders and the DIP Lenders, or the Bankruptcy Court shall have entered a cash collateral order acceptable to the DIP Agent (the “Cash Collateral Order”). For the avoidance of doubt the DIP Agent may not determine the Cash Collateral Order is not acceptable solely on account of the Prepetition ABL Agent and the Prepetition ABL Lenders not consensually consenting to the use of such cash collateral.

(g)   Subject to a post-closing period to be agreed upon, the DIP Agent shall have received endorsements naming the DIP Agent as additional insureds, loss payee, lender loss payee and mortgagee under all insurance policies to be maintained with respect to the properties of the Debtors forming part of the Collateral.

(h)   The DIP Agent shall have a valid and perfected lien on and security interest in the Collateral with the priority described herein. All filings, recordations and searches necessary or desirable in connection with such liens and security interests shall have been duly made; and all filing and recording fees and taxes shall have been duly paid.

(i) Since January 31, 2020, there shall not exist any action, suit, investigation, litigation or proceeding pending (other than the Chapter 11 Cases) or threatened in any court or before any arbitrator or governmental authority that, in the opinion of the DIP Agent, affects any of the transactions contemplated hereby, or that has or could be reasonably likely to have a material adverse change or material adverse condition in or affecting the businesses, assets, operations or condition (financial or otherwise) of any of the Debtors and their respective direct and indirect subsidiaries or any of the transactions contemplated hereby; provided, that none of (i) the Chapter 11 Cases, the events and conditions

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    leading up to the Chapter 11 Cases, or their reasonably anticipated consequences, (ii) the actions required to be taken pursuant to the DIP Credit Agreement, the RSA, the DIP Order, or the Cash Collateral Order, or (iii) the occurrence of the COVID-19 pandemic or the impacts thereof on the business, financial condition or results of the DIP Borrower or its subsidiaries shall constitute a “material adverse effect” for any purpose.

(j) No default or event of default shall exist under the Operative Documents.

(k)   The representations and warranties of the DIP Borrower and each Guarantor under the Operative Documents shall be true and correct in all material respects after giving effect to such funding.

(l) The making of such Loan shall not violate any requirement of law and shall not be enjoined, temporarily, preliminarily or permanently.

(m) The DIP Agent shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the U.S. Patriot Act.

(n)   No later than five business days after the Petition Date, the Debtors shall have filed a motion seeking the retention of AlixPartners LLP as the Debtors’ restructuring advisor and Lazard as the Debtors’ investment banker.

(o)   An order approving the Debtors’ cash management system, the form of which is reasonably acceptable to the DIP Agent, shall have been entered by the Bankruptcy Court.

(p)   Orders approving customary “first day” relief, the form of which is reasonably acceptable to the DIP Agent, shall have been entered by the Bankruptcy Court.

(q)   The Debtors shall not have entered into, or made any payment in respect of, any critical vendor agreements or otherwise entered into any agreement to pay, or made on a postpetition basis any payment in respect of, any prepetition trade obligations except as consented to by the DIP Agent pursuant to an order of the Bankruptcy Court (which may be via consent to the “first day” orders).

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(r)   Other customary conditions to be mutually agreed.

Conditions Precedent to The Subsequent Borrowing:

On the funding date of the Subsequent Borrowing, the following conditions precedent shall have been satisfied: (a)   The RSA shall be in full force and effect. (b)   No default or event of default shall exist under the Operative Documents. (c)   The representations and warranties of the DIP Borrower and each Guarantor under the Operative Documents shall be true and correct in all material respects after giving effect to such funding (except to the extent such representation relates to an earlier date, in which case such representation shall have been true and correct in all material respects as of such date). (d)   The making of such Loan shall not violate any requirement of law and shall not be enjoined, temporarily, preliminarily or permanently. (e)   The DIP Agent shall have received a borrowing notice, substantially in the form as attached to the DIP Credit Agreement, at least three business days in advance of the requested borrowing. (f)   The DIP Order shall have been entered by the Bankruptcy Court, shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the DIP Agent. (g)   All premiums, fees and documented out-of-pocket fees and expenses (including fees and expenses of counsel and financial advisors) required to be paid to the DIP Lenders and the DIP Agent on or before the date of such funding shall have been paid in cash. (h)   The Debtors shall be in compliance with the Operative Documents and the DIP Milestones; provided that the DIP Milestones relating to the Business Plan (other than the receipt of the Business Plan and the Business Plan Parameters in accordance with the DIP Milestones) shall not be a condition precedent to the funding of the Subsequent Borrowing into the Escrow Account; provided, further, that no Drawn Funds in respect of the Subsequent Borrowing shall be permitted to be withdrawn from the Escrow Account until the Business Plan has been approved or disapproved in accordance with the DIP Milestones, with (i) $225

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	million permitted to be withdrawn from the Escrow Account commencing July 15, 2020 in accordance with the Budget if the Business Plan is approved in accordance with the DIP Milestones or (ii) upon the occurrence of a Toggle Event, $50 million shall remain in the Escrow Account in connection with a toggle to a 363 sale, with the release of such $50 million from the Escrow Account subject to agreement among the DIP Borrower, the DIP Agent and the Prepetition ABL Agent to an acceptable 363 sale budget and released in amounts and at times in accordance with such budget, and $175 million shall be released from the Escrow Account to the DIP Lenders within 2 business days of the date of the occurrence of such Toggle Event.
Representations and Warranties:	The Operative Documents will contain representations and warranties that are (a) customary for similar debtor-in-possession financings and (b) and additional representations and warranties required by the DIP Lenders as mutually agreed with the Debtors.
Reporting Requirements:	The Operative Documents will contain financial reporting requirements that are customary for similar debtor-in-possession financings, including, without limitation, (i) monthly updates of the Budget for each fiscal month of the Debtors to be provided within five business days following the end of any fiscal month of the Debtors, (ii) all financial, operating and other reporting provided to the Prepetition ABL Lenders during the Chapter 11 Cases, including pursuant to the Cash Collateral Order, as and when so provided, (iii) a weekly cash flow forecast budget to actuals for each line item in a form to be attached to the DIP Credit Agreement and otherwise acceptable to the DIP Agent, with management commentary on any individual line item with a positive or negative variance of 5.0% or more as compared to the Budget (unless the dollar amount corresponding to such percentage variance is less than $1,000,000, in which case no management commentary shall be required) (the “Weekly Variance Report”), (iv) monthly delivery of operating statements and balance sheets for the Debtors and their consolidated subsidiaries within 15 business days following the end of the applicable period, (v) quarterly store-level operating statements for all properties within 45 days following the end of the applicable period and (vi) reasonable reporting requirements to be agreed with respect to professional fee monitoring no later than June 15, 2020.

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The Operative Documents will contain additional requirements that the Debtors’ counsel provide advance copies of all pleadings and/or filings in the Chapter 11 Cases to be made by the Debtors. The Debtors shall also provide copies of any monthly reporting provided to the Bankruptcy Court or the U.S. Trustee.

Other Maintenance Covenants:

The Debtors shall not pay any expenses or other disbursements other than those set forth in the Budget. The DIP Borrower’s cumulative actual receipts shall not be less than 85% of budgeted receipts for the corresponding test period (the “Permitted Collections Budget Variances”). The DIP Borrower’s cumulative actual disbursements (excluding professional fees) will be not more than 12.5% greater than the budgeted disbursements for the corresponding test period (the “Permitted Expenditures Budget Variances”). The DIP Borrower’s cumulative actual disbursements to merchandise vendors (domestic and foreign) will not be more than 10% greater than the budgeted disbursements for the corresponding test period (the “Permitted Inventory Budget Variances”). The Permitted Collections Budget Variances, Permitted Expenditures Budget Variances, and Permitted Inventory Budget Variances, collectively the “Budget Variances”, in each case, as set forth in the then operative Budget. Notwithstanding anything to the contrary herein, the Debtors and Required Lenders shall agree to include provisions in the Operative Documents providing for the implementation of increased Permitted Expenditures Budget Variances and Permitted Inventory Budget Variances, in each case, in the event that the Debtors are able to more rapidly open store locations than anticipated in the Initial DIP Budget; provided, that Permitted Collections Budget Variances shall be adjusted accordingly to the extent agreed. The Budget Variances shall each be tested (i) first, on June 6, 2020 on a cumulative basis for the prior two weeks, (ii) second, on June 13, 2020 on a cumulative basis for the prior three weeks, and (iii) at the end of each week thereafter on a cumulative four week basis for the prior four weeks. The Debtors shall deliver a Weekly Variance Report to the DIP Agent by 12:00 p.m., Eastern time, on Friday of each week. Simultaneously with the delivery of the Weekly Variance Report, the DIP Borrower shall report on consolidated unrestricted book cash as of the end of the preceding week (as reported in the Weekly Variance Report), which shall not be less than $50 million.

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By June 1, 2020, the DIP Borrower and its real estate advisors will present to the DIP Agent and the DIP Lenders a summary of lease renegotiation discussions with content of such presentation to be acceptable to the DIP Agent with landlords, including the asks made of each landlord by property. Thereafter, the DIP Borrower shall report on a weekly basis the status of lease renegotiations by property, including any settlements achieved with any landlords by property, to the DIP Agent and the DIP Lenders, with associated terms of such settlements acceptable to the DIP Agent. By July 1, 2020, the DIP Borrower and its real estate advisors will present to the DIP Agent and the DIP Lenders a proposed monetization strategy of the DIP Borrower’s fee-owned and ground-leased real estate assets, including any offers or indications of value received by property for the last 12 months. Thereafter, the DIP Borrower shall report on a bi-weekly basis any offers or indications of value received by property to the DIP Agent and the DIP Lenders. Process for construct for monthly reporting on allocation of disbursements by entity to be agreed between Required Lenders and the DIP Borrower by June 15, 2020, which shall be implemented as promptly as practical thereafter and provided on a monthly basis once implemented.

Affirmative Covenants:

The Operative Documents will contain (a) affirmative covenants that are customary for similar debtor-in-possession financings and (b) additional affirmative covenants required by the DIP Lenders and mutually agreeable to the Debtors and shall, in any event, include without limitation (i) the advance delivery of all material pleadings, motions and other material documents filed with the Bankruptcy Court on behalf of the Debtors in the Chapter 11 Cases to the DIP Lenders and their counsel, (ii) compliance with Budget covenants consistent with the section titled “Budget and Variances,” (iii) compliance with the DIP Milestones in the administration of the Chapter 11 Cases, (iv) update meetings and/or calls with the Debtors’ senior management and advisors and the DIP Lenders no less than weekly if requested and (v) one or more members of the Debtors’ senior management team shall be available for discussion with the DIP Lenders upon reasonable notice.

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Negative Covenants:

The Operative Documents will contain negative covenants that are (a) customary for similar debtor-in-possession financings and (b) additional negative covenants required by the DIP Lenders and mutually agreeable to the Debtors, and including, without limitation, restrictions on (i) incurrence of additional debt and liens (it being understood that any debt secured by the ABL Priority Collateral on a senior basis shall be capped at the amount of the Prepetition ABL Credit Agreement as of the Petition Date, subject to providing the ability of the DIP Borrower to access renewals or replacements of letters of credit thereunder, in each case, subject to the requirements and terms of the Cash Collateral Order), (ii) asset sales, (iii) investments, (iv) restricted payments, (v) fundamental changes and (vi) affiliate transactions.

Events of Default:

The Operative Documents will contain (a) events of default that are customary for similar debtor-in-possession financings and (b) additional events of default required by the DIP Lenders and mutually agreeable to the Debtors (collectively, the “Events of Default”) and shall, in any event, include without limitation the following (subject to mutually agreeable grace periods as applicable): (i)  failure to make any payment when due under the Operative Documents; (ii)   noncompliance with covenants or breaches in any material respect of representations and warranties, in either case, under the Operative Documents; (iii)   cross-default to any prepetition indebtedness in a principal amount above a threshold to be agreed that is not stayed by the automatic stay in the Chapter 11 Cases; (iv)  failure to satisfy or stay execution of judgments above a threshold to be agreed; (v)    the existence of certain employee benefit or environmental liabilities,, which would constitute a material adverse effect; (vi)  impairment of the Operative Documents or the security interests described in “Security” above; (vii)  change of ownership or control; (viii)   a trustee or receiver shall have been appointed in one or more of the Chapter 11 Cases; (ix)  appointment of a responsible officer or examiner with enlarged powers relating to the operation of the business of any Debtor;

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(x)    granting of relief from any stay of proceeding (including the automatic stay) so as to allow a third party to proceed against any asset of the Debtors in an amount in excess of $1,000,000 in the aggregate;

(xi)  entry of an order granting any superpriority claim which is senior to or pari passu with the DIP Lenders’ claims under the DIP Facility without the prior consent of the DIP Agent (other than as described under the caption “Priority” above);

(xii)  any termination of the RSA as to all parties thereto, except as to any individual DIP Lender pursuant to Section 12.03 of the RSA;

(xiii)   any Debtor shall have filed, proposed, or supported a plan of reorganization, plan of liquidation, or a motion seeking to approve a sale of any material portion of the Collateral, in each case unless contemplated by, and in accordance with, the RSA or as otherwise agreed to by the DIP Agent;

(xiv) entry of an order staying, reversing, vacating or otherwise modifying, without the prior written consent of the DIP Agent, the DIP Facility, or the DIP Order;

(xv)   payment of, or granting adequate protection with respect to, prepetition debt (other than as contemplated by the Operative Documents) unless otherwise agreed by the DIP Agent;

(xvi) cessation of liens or superpriority claims granted with respect to the Collateral securing the Debtors’ obligations in respect of the DIP Facility to be valid, perfected and enforceable in all respects with the priority described herein;

(xvii)  failure to comply with this DIP Term Sheet, the Operative Documents or any of the DIP Milestones; and

(xviii)  entry into, or the making of any payment in respect of, any critical vendor agreements or otherwise entry into any agreement to pay, or the making of any payment in respect of, any prepetition trade obligations except as consented to by the DIP Agent (which may be via consent to the “first day” orders).

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Remedies:

Upon the occurrence and during the continuance of an Event of Default: (a)   the Required Lenders (as defined below) may direct the DIP Agent, in their discretion, to immediately take any or all of the following actions: (i) deliver a notice of an Event of Default; (ii) charge the Default Rate of interest on the Loans and other outstanding obligations; and (iii) terminate all commitments under the DIP Facility; and (b)   upon five (5) business days’ written notice from the DIP Lenders, in their sole and absolute discretion, the automatic stay of section 362 of the Bankruptcy Code shall be terminated without further order of the Bankruptcy Court, without the need for filing any motion for relief from the automatic stay or any other pleading, for the limited purpose of permitting the DIP Lenders Trustee, and counsel to the to do any of the following: (i) foreclose on the Collateral; (ii) enforce all of the guaranty rights; (iii) accelerate all Loans and other outstanding obligations under the DIP Facility; and (iv) declare the principal of and accrued interest, premiums, fees and expenses constituting the obligations under the DIP Facility to be due and payable. Section 362 relief from the stay in favor of the DIP Lenders shall be embodied in any order approving the DIP Facility and the use of cash collateral. At any hearing addressing the exercise of remedies by the DIP Lenders under the Operative Documents, the only objection that may be raised by the Debtors or the Committee shall be whether an Event of Default has in fact occurred and is continuing, and the Debtors and the Committee shall waive their right to seek any relief, whether under section 105 of the Bankruptcy Code or otherwise, that would in any way impair, limit, restrict or delay the rights and remedies of the DIP Agent under the Operative Documents.

Milestones:

The DIP Borrower shall comply with the following chapter 11 milestones which Milestones may be extended in writing by the DIP Agent in its sole and absolute discretion (the “Milestones”): (a)   on the Petition Date, the Debtors shall have filed a motion seeking approval of the DIP Facility;

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(b)   no later than 14 business days following the Petition Date, the Debtors shall have filed a motion to retain Brokers acceptable to the Required Lenders;

(c)   no later than 18 calendar days after the Petition Date, the Bankruptcy Court shall enter an order approving the DIP Credit Agreement, in form and substance satisfactory to the DIP Agent in its discretion as confirmed by the DIP Agent in writing;

(d)   no later than 18 calendar days after the Petition Date, the Bankruptcy Court shall have entered the DIP Order;

(e)   no later than June 15, 2020, the Debtors will have delivered a Lease Optimization Plan and an Owned Real Estate Optimization Plan, each in form and substance acceptable to the Required Lenders;

(f)   no later than June 15, 2020 the Debtors shall have delivered proposed processes and parameters related to a proposed business plan (the “Business Plan”) including those related to vendor agreements, lessor agreements, and go-forward self-funding capability (the “Business Plan Parameters”) to the DIP Lenders;

(g)   no later than June 20, 2020 the Debtors and the Required Lenders shall have agreed on acceptable Business Plan Parameters;

(h)   no later than July 8, 2020, the Debtors shall have delivered a Business Plan (consistent with the agreed acceptable Business Plan Parameters) to the DIP Lenders;

(i) no later than July 14, 2020, the Debtors and the Required Lenders shall have agreed on an acceptable Business Plan;

(j) no later than 90 days after the Petition Date, the Debtors will (unless otherwise provided for in the RSA) have filed either (A) a motion seeking approval of a disclosure statement with respect to a chapter 11 plan that is acceptable to the DIP Agent or (B) a motion seeking approval of bidding procedures and a sale that is acceptable to the DIP Agent;

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	(k)   no later than 130 days after the Petition Date, the Bankruptcy Court shall have entered an order acceptable to the DIP Agent either approving (A) an acceptable disclosure statement or (B) acceptable bidding procedures; (l) no later than 160 days after the Petition Date, the Bankruptcy Court shall have entered one or more orders acceptable to the DIP Agent either (A) confirming an acceptable chapter 11 plan or (B) approving an acceptable sale or sales; and (m) no later than November 15, 2020 the Plan Effective Date shall have occurred.
Toggle Event:	A “Toggle Event” shall occur if either: (x) by July 15, 2020, the failure of 66.7% of the DIP Lenders to approve the Business Plan or (y) by August 15, 2020, the Debtors shall have failed to obtain binding commitments for all third-party financing (on terms acceptable to the Required Lenders) necessary to finance Business Plan in accordance with the other plan provisions of the RSA Term Sheet. Upon a failure of such condition, the Debtors shall immediately cease pursing the Plan and instead pursue a 363 sale of all of their assets unless otherwise instructed by the Required Lenders and shall seek approval of any relief required to undertake such 363 sale on an expedited basis.
Indemnification:	The DIP Borrower shall indemnify and hold harmless the DIP Agent, each DIP Lender, each of their respective affiliates and each of their respective officers, directors, partners, security-holders, employees, agents, advisors, attorneys and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including all reasonable and documented fees, expenses and disbursements of their respective specified legal counsel, specified financial advisors or other specified professionals retained by the DIP Agent or DIP Lenders, in each case as agreed and specifically set forth in the Commitment Letter and the Operative Documents1), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party (including in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense in connection therewith), in each case, arising out of or in connection with or by reason of the DIP Facility, the Operative Documents or any of the transactions contemplated thereby, or any actual or proposed use of the

¹  In all cases, DB, Hillco, Houlihan, Milbank, S&C and others to be determined.

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	proceeds of the DIP Facility, or any operation of any business by any Debtor. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the DIP Borrower, any of its directors, security-holders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.
Expenses:	Each Debtor shall jointly and severally be obligated to pay all reasonable and documented out-of-pocket costs and expenses of the DIP Lenders and the DIP Agent, including all reasonable and documented fees, expenses and disbursements of their respective specified legal counsel, specified financial advisors or other specified professionals retained by the DIP Agent or DIP Lenders, in each case as agreed and specifically set forth in the Commitment Letter and the Operative Documents2, in connection with (a) the discussion, negotiation, preparation, execution and delivery of any documents in connection with the proposed financing contemplated by this DIP Term Sheet, including the Operative Documents and the funding of all Loans under the DIP Facility, the administration of the DIP Facility and any amendment, modification or waiver of any provision of the Operative Documents, (b) the interpretation, enforcement or protection of any of their rights and remedies under the Operative Documents or (c) the Chapter 11 Cases.
Other Bankruptcy Matters:	The DIP Order shall be in form and substance reasonably satisfactory to the DIP Agent as confirmed by the DIP Agent in writing (it being understood that any communication by email shall suffice), and all motions relating thereto, shall be in form and substance reasonably satisfactory to the DIP Agent in its discretion and, unless otherwise agreed by the DIP Agent in writing, shall include the following provisions: (a)   modifying the automatic stay to permit the creation and perfection of the DIP Lenders’ liens on the Collateral; (b)   prohibiting the assertion of claims arising under section 506(c) of the Bankruptcy Code against any of the DIP Agent, the DIP Lenders, the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders or, except as expressly

²  In all cases, DB, Hillco, Houlihan, Milbank, S&C and others to be determined.

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    permitted therein, the commencement by the Debtors of other actions adverse to the DIP Agent, the DIP Lenders, the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders or any of their respective rights and remedies under the DIP Facility, the Prepetition Term Loan Credit Agreement or the Prepetition First Lien Notes Indenture, as applicable, the DIP Order, or any other order;

(c)   prohibiting the incurrence of any debt with priority equal to or greater than the DIP Facility;

(d)   prohibiting any granting or imposition of liens senior to the liens granted under the Operative Documents;

(e)   authorizing and approving the DIP Facility and the transactions contemplated thereby, including the granting of the superpriority status, security interests and liens and the payment of all premiums and fees, referred to herein;

(f)   acknowledging the validity and enforceability of the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Notes Indenture, the debt outstanding thereunder and the liens granted in connection therewith;

(g)   waiving any and all claims or causes of action against the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee and the Prepetition First Lien Noteholders, whether arising prior to or after the Petition Date including, without limitation, any lender or noteholder liability claims, any subordination claims or any claims under any non-disclosure or confidentiality agreement;

(h)   providing that the DIP Lenders and their respective counsel, advisors and consultants shall be entitled to the benefit of a “good faith” finding pursuant to section 364(e) of the Bankruptcy Code;

(i) providing that the DIP Lenders, the Prepetition First Lien Lenders and the Prepetition First Lien Noteholders reserve the right to credit bid (pursuant to section 363(k) of the Bankruptcy Code and/or applicable law) the Loans (including any prepetition loans or notes rolled-up) and the Prepetition First Lien Obligations, in each case, in whole or in part, in connection with any sale or disposition of assets in the Chapter 11 Cases and shall not be prohibited from making such credit bid “for cause” under section 363(k) of the Bankruptcy Code;

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	(j) providing that the Prepetition Term Loan Lenders, the Prepetition Term Loan Agent, the Prepetition First Lien Notes Trustee and the Prepetition First Lien Noteholders are entitled to all of the benefits of section 552(b) of the Bankruptcy Code and that the “equities of the case” exception thereunder shall not apply to any of the Prepetition Term Loan Lenders, the Prepetition Term Loan Agent, the Prepetition First Lien Notes Trustee or the Prepetition First Lien Noteholders with respect to proceeds, product, offspring, or profits of any of the collateral securing the Prepetition Term Loan Credit Agreement or the Prepetition First Lien Notes Indenture; and (k)   providing that in no event shall any of the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders the DIP Agent or the DIP Lenders be subject to the equitable doctrine of “marshaling” or any similar doctrine with respect to the Collateral.
Assignments:	Customary for similar debtor-in-possession financings; provided that if no Event of Default has occurred and is continuing, the DIP Borrower’s consent shall be required (except with respect to an assignment to any other DIP Lender or any entity described in the definition of DIP Lender) for assignments of the Loans, which such consent shall not be unreasonably withheld, conditioned or delayed, and the DIP Borrower shall deemed to consent to any such assignment if it is has failed to respond to any such request for consent within five business says thereof.
Required Lenders:	DIP Lenders, as of any date of determination, holding greater than 50% of the outstanding Loans and commitments under the DIP Facility (the “Required Lenders”); provided that the consent of each DIP Lender adversely affected thereby shall be required to any amendment or modification (i) to extend the final maturity of any Loan, (ii) to waive, reduce or postpone any scheduled repayment (but not prepayment) of any Loan, (iii) to reduce the rate of interest on any Loan (other than any waiver of default interest) or any premium set forth in this DIP Term Sheet, (iv) to the definition of Pro Rata Allocation or (v)

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	that adversely and disproportionately affects such DIP Lender in a material respect relative to the other DIP Lenders taken as a whole (it being understood that, for the avoidance of doubt, any DIP Lender declining an opportunity or option offered ratably to all DIP Lenders shall not constitute disproportionate treatment for purposes of this clause (v)); provided, further, that in each case such adversely affected DIP Lender is in compliance with its funding obligations under the Commitment Letter; provided, further, that any amendment or modification of any of the dates or consents in clauses (f), (g), (h) or (i) of the DIP Milestones related to the Business Plan, the Toggle Event or the funding the Subsequent Borrowing will require the consent of 66.7% of the DIP Lenders.
Governing Law and Submission to Jurisdiction:	State of New York. Exclusive jurisdiction of the Bankruptcy Court, including with respect to the exercise of the remedies by the DIP Lenders and preservation of the value of the Collateral.
Counsel to the DIP Lenders:	Milbank LLP.
Local Counsel to the DIP Lenders:	To be determined.
Counsel to the DIP Agent:	Arnold & Porter.

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Schedule II

DIP Carve Out

(a)    Notwithstanding anything to the contrary in this Final Order, the Debtors’ obligations to the DIP Secured Parties and [Prepetition Secured Parties] and the liens, security interests, and superpriority claims granted herein, under the DIP Loan Documents, and/or under the Prepetition Loan Documents, including the DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Claims, and the Prepetition Liens, shall be subject in all respects and subordinate to the Carve Out.

(b)    As used in this Order, the “Carve Out” means the sum of (i) all fees required to be paid to the Clerk of the Court and to the Office of the United States Trustee under section 1930(a) of title 28 of the United States Code plus interest at the statutory rate (without regard to the notice set forth in (iii) below); (ii) all reasonable fees and expenses up to $25,000 incurred by a trustee under section 726(b) of the Bankruptcy Code (without regard to the notice set forth in (iii) below); (iii) to the extent allowed at any time, whether by interim order, procedural order, or otherwise, all unpaid fees and expenses (including any restructuring, sale, success, or other transaction fee of any investment bankers or financial advisors of the Debtors or any Official Committee) (the “Allowed Professional Fees”) incurred by persons or firms retained by the Debtors pursuant to section 327, 328, or 363 of the Bankruptcy Code (the “Debtor Professionals”) and the Creditors’ Committee pursuant to section 328 or 1103 of the Bankruptcy Code (the “Committee Professionals” and, together with the Debtor Professionals, the “Professional Persons”) at any time before or on the first business day following delivery by the DIP Agent of a Carve Out Trigger Notice (as defined below), whether allowed by the Court prior to or after delivery of a Carve Out Trigger Notice; and (iv) Allowed Professional Fees of Professional Persons in an aggregate amount

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not to exceed $4,000,000 incurred after the first business day following delivery by the DIP Agent of the Carve Out Trigger Notice, to the extent allowed at any time, whether by interim order, procedural order, or otherwise (the amounts set forth in this clause (iv) being the “Post-Carve Out Trigger Notice Cap”). For purposes of the foregoing, “Carve Out Trigger Notice” shall mean a written notice delivered by email (or other electronic means) by the DIP Agent to the Debtors, their lead restructuring counsel, the U.S. Trustee, and counsel to the Creditors’ Committee, which notice may be delivered following the occurrence and during the continuation of an Event of Default and acceleration of the DIP Obligations under the DIP Facility, stating that the Post-Carve Out Trigger Notice Cap has been invoked.

(c)    Carve Out Reserves. The Debtors shall establish and fund a segregated account (the “Funded Reserve Account”) for purposes of funding the Carve Out. The Funded Reserve Account will be funded first from the [DIP Proceeds Account], then from the DIP Priority Collateral. Notwithstanding anything to the contrary in this Order, the DIP Documents, or the Prepetition Loan Documents, (i) in no circumstances (which, for the avoidance of doubt, includes, but is not limited to, an Event of Default or a termination of the DIP Credit Agreement or DIP Loan Documents) shall the Debtors be prohibited in any way from accessing or drawing upon the [DIP Proceeds Account] for the purpose of funding the Funded Reserve Account, and (ii) the [DIP Proceeds Account] shall not be ABL Priority Collateral or Prepetition ABL Collateral. Upon entry of this Order, the Debtors will deposit into the Funded Reserve Account an amount equal to the aggregate amount of Allowed Professional Fees projected to accrue from entry of this Order through June 30, 2020 (the “Initial Funded Reserve Amount”), which, for the avoidance of doubt, shall not include the Post-Carve Out Trigger Notice Cap. Commencing July 1, 2020 (or the first business day thereafter), on the first business day of each month, the Debtors shall deposit in the

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Funded Reserve Account an amount equal to the aggregate amount of Allowed Professional Fees (excluding restructuring, sale, financing, or other success fees) projected to accrue for the following month in the Budget plus twenty percent of such aggregate amount of Allowed Professional Fees in the following month in the Budget (the “Monthly Funded Reserve Amount”). Each Professional Person may deliver to the Debtors a good-faith estimate of the cumulative total amount of unreimbursed fees and expenses incurred in the preceding month (each such statement, a “Fee Statement”), and to the extent the amount of Allowed Professional Fees accrued and claimed in a Fee Statement exceeds the Initial Funded Reserve Amount or the Monthly Funded Reserve Amount for the applicable period or month, respectively, and such fees and expenses have otherwise not been paid by the Debtors, the Debtors shall, within one business day, fund additional amounts into the Funded Reserve Account equal to the difference between, as applicable, the Initial Funded Reserve Amount or the Monthly Funded Reserve Amount and the amount accrued and claimed in the applicable Fee Statement (each, a “Top Off Amount”). At any time, if the Debtors in good faith believe a restructuring, sale, financing, or other success fee has been earned by a Professional Person and is then due and payable, the Debtors shall deposit in the Funded Reserve Account an amount equal to such fee. Upon entry of the Order, the Debtors shall deposit into the Funded Reserve Account an amount equal to (i) the Post Carve Out Trigger Notice Cap plus (ii) the amounts contemplated under (b)(i) and (ii) above. The Funded Reserve Account shall be maintained, and the funds therein (the “Funded Reserve Amount”) shall be held in trust for the benefit of Professional Persons. Any and all amounts in the Funded Reserve Account shall not be subject to any cash sweep and/or foreclosure provisions in the Prepetition Loan Documents or DIP Loan Documents and neither the [Prepetition Secured Parties] nor the DIP Secured Parties shall be entitled to sweep or foreclose on such amounts notwithstanding any provision to the contrary

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in the [Prepetition Loan Documents] or DIP Loan Documents. Notwithstanding the foregoing, any and all payments to Professional Persons allowed by the Court (excluding restructuring, sale, financing, or other success fees) shall be paid first from the Funded Reserve Account.

(d)    On the day on which a Carve Out Trigger Notice is given by the DIP Agent to the Debtors in accordance with paragraph [[    ](b)] above, with a copy to counsel to the Creditors’ Committee (the “Termination Declaration Date”), the Carve Out Trigger Notice shall constitute a demand to the Debtors to utilize all cash on hand as of such date and any available cash thereafter held by any Debtor, including cash in the DIP Proceeds Account, to fund a reserve in an amount equal to the then unpaid amounts of the Allowed Professional Fees in excess of the Funded Reserve Amount; provided that in the event that a Termination Declaration Date occurs, Professional Persons shall have two business days to deliver additional Fee Statements to the Debtors, and the Debtors shall fund into the Funded Reserve Amount and Top Off Amounts. The Debtors shall deposit and hold such amounts in the Funded Reserve Account in trust to pay such then unpaid Allowed Professional Fees (the “Pre-Carve Out Trigger Notice Reserve”) prior to any and all other claims. On the Termination Declaration Date, the Carve Out Trigger Notice shall also constitute a demand to the Debtors to utilize all cash on hand as of such date and any available cash thereafter held by any Debtor, including cash in the DIP Proceeds Account, after funding the Pre-Carve Out Trigger Notice Reserve, to fund a reserve in an amount equal to the Post Carve Out Trigger Notice Cap to the extent not already funded (including upon entry of the Order as set forth above). The Debtors shall deposit and hold such amounts in a segregated account at an institution designated by the DIP Agent in trust to pay such Allowed Professional Fees benefiting from the Post-Carve Out Trigger Notice Cap (the “Post Carve Out Trigger Notice Reserve” and, together with the Pre-Carve Out Trigger Notice Reserve, the “Carve Out Reserves”) prior to any and all other claims. All

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funds in the Pre-Carve Out Trigger Notice Reserve shall be used first to pay the obligations set forth in clauses (i) through (iii) of the definition of Carve Out set forth above (the “Pre-Carve Out Amounts”), but not, for the avoidance of doubt, the Post-Carve Out Trigger Notice Cap, until paid in full, and then, to the extent the Pre Carve Out Trigger Notice Reserve has not been reduced to zero, to pay the DIP Agent for the benefit of the DIP Lenders, unless the DIP Obligations have been indefeasibly paid in full, in cash (or other form of payment pursuant to an Acceptable Plan), and all Commitments have been terminated, in which case any such excess shall be paid to the [Prepetition Secured Parties] in accordance with their rights and priorities as set forth herein. All funds in the Post-Carve Out Trigger Notice Reserve shall be used first to pay the obligations set forth in clause (iv) of the definition of Carve Out set forth above (the “Post-Carve Out Amounts”), and then, to the extent the Post Carve Out Trigger Notice Reserve has not been reduced to zero, to pay the DIP Agent for the benefit of the DIP Lenders, unless the DIP Obligations have been indefeasibly paid in full, in cash (or other form of payment pursuant to an Acceptable Plan), and all Commitments have been terminated, in which case any such excess shall be paid to the [Prepetition Secured Parties] in accordance with their rights and priorities as set forth herein. Notwithstanding anything to the contrary in the DIP Loan Documents, or this Order, if either of the Carve Out Reserves is not funded in full in the amounts set forth in this paragraph [    ], then, any excess funds in one of the Carve Out Reserves following the payment of the Pre-Carve Out Amounts and Post-Carve Out Amounts, respectively, shall be used to fund the other Carve Out Reserve, up to the applicable amount set forth in this paragraph [    ], prior to making any payments to the DIP Agent or the [Prepetition Secured Parties], as applicable. Notwithstanding anything to the contrary in the DIP Loan Documents or this Order, following delivery of a Carve Out Trigger Notice, the DIP Agent and the [Prepetition Agents] shall not sweep or foreclose on cash (including

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cash received as a result of the sale or other disposition of any assets) of the Debtors until the Carve Out Reserves have been fully funded, but shall have a security interest in any residual interest in the Carve Out Reserves, with any excess paid to the DIP Agent for application in accordance with the DIP Loan Documents. Further, notwithstanding anything to the contrary in this Order, (i) disbursements by the Debtors from the Carve Out Reserves shall not constitute DIP Loans or increase or reduce the DIP Obligations, (ii) the failure of the Carve Out Reserves to satisfy in full the Allowed Professional Fees shall not affect the priority of the Carve Out, and (iii) in no way shall the Initial Budget, Budget, Carve Out, Post-Carve Out Trigger Notice Cap, Carve Out Reserves, or any of the foregoing be construed as a cap or limitation on the amount of the Allowed Professional Fees due and payable by the Debtors. For the avoidance of doubt and notwithstanding anything to the contrary in this Order, the DIP Loan Documents, or in any Prepetition Loan Documents, the Carve Out shall be senior to all liens and claims securing the DIP Facility, the Adequate Protection Liens, the Prepetition Liens, and the DIP Superpriority Claims, and any and all other forms of adequate protection, liens, or claims securing the DIP Obligations or the Prepetition Secured Obligations.

(e)    Payment of Allowed Professional Fees Prior to the Termination Declaration Date. Any payment or reimbursement made prior to the occurrence of the Termination Declaration Date in respect of any Allowed Professional Fees shall not reduce the Carve Out and shall be funded first from the Funded Reserve Account.

(f)    No Direct Obligation To Pay Allowed Professional Fees. None of the DIP Agent, DIP Lenders, or the [Prepetition Secured Parties] shall be responsible for the payment or reimbursement of any fees or disbursements of any Professional Person incurred in connection with the Chapter 11 Cases or any successor cases under any chapter of the Bankruptcy Code.

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Nothing in this Order or otherwise shall be construed to obligate the DIP Agent, the DIP Lenders, or the [Prepetition Secured Parties], in any way, to pay compensation to, or to reimburse expenses of, any Professional Person or to guarantee that the Debtors have sufficient funds to pay such compensation or reimbursement.

(g)    Payment of Carve Out On or After the Termination Declaration Date. Any payment or reimbursement made on or after the occurrence of the Termination Declaration Date in respect of any Allowed Professional Fees shall permanently reduce the Carve Out on a dollar for-dollar basis.

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Annex 2⁵

Exculpation and Release Language

⁵  [NOTE – ALL DEFINITIONS SUBJECT TO REVIEW AND CHANGE BASED ON PLAN STRUCTURE]

Defined Terms⁶

“Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims, actions, or remedies that may be brought by or on behalf of the Debtors or their Estates or other authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy law, including actions or remedies under sections 502, 510, 542, 544, 545, 547 through 553, and 724(a) of the Bankruptcy Code or under similar or related state or federal statutes and common law, including fraudulent transfer laws.

“Causes of Action” means claims, interests, damages, remedies, causes of action, demands, rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges, licenses, liens, indemnities, guaranties, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or non-contingent, liquidated or unliquidated, secured or unsecured, assertable, directly or derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and claims under contracts or for breaches of duties imposed by law; (b) the right to object to or otherwise contest Claims or Interests; (c) claims pursuant to sections 362, 510, 542, 543, 544 through 550, or 553 of the Bankruptcy Code; and (d) such claims and defenses as fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code.

“Disinterested Directors’ Settlement” means the settlement negotiated by and among the Disinterested Directors regarding Debtor Intercompany Claims incorporated in [this Plan].

“Exculpated Party” means collectively, and in each case in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the ABL Agent; (d) the ABL Lenders; (e) the Term Loan Agent; (f) the Term Loan Lenders; (g) the First Lien Notes Trustee; (h) the First Lien Noteholders; (i) the Second Lien Notes Trustee; (j) the Second Lien Noteholders; (k) the Unsecured Notes Trustee; (l) the Unsecured Noteholders; (m) the Plan Sponsors; (n) the DIP Agent; (o) the DIP Lenders; (p) the Consenting First Lien Lenders; (q) the Plan Administrator; (r) with respect to each of the foregoing parties in clauses (a) through (q), each of such party’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), assigns, subsidiaries, direct and indirect equity holders, funds, portfolio companies, and management companies; and (s) with respect to each of the foregoing parties in clauses (a) through (r), each of such party’s current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, investment bankers, advisory board members, investment advisors, and other professionals.

“Released Party” means each of the following, solely in its capacity as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the Wind-Down Debtors; (d) the Plan Administrator; (e) the ABL Agent; (f) the ABL Lenders; (g) the Term Loan Agent; (h) the Term Loan Lenders; (i) the First Lien Notes Trustee; (j) the First Lien Noteholders; (k) the Second Lien Notes Trustee; (l) the Second Lien Noteholders; (m) the Unsecured Notes Trustee; (n) the Unsecured Noteholders; (o) the Plan Sponsors; (p) the DIP Agent; (q) the DIP Lenders; (r) the Consenting First Lien Lenders; (s); with respect to each of the foregoing parties in clauses (a) through (r), each of such party’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), assigns, subsidiaries, direct and indirect equity holders, funds, portfolio companies, and management companies; and (r) with respect to each of the foregoing parties in clauses (a) through (r), each of such party’s current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, investment bankers, advisory board

⁶  Capitalized terms used but not defined in this Annex 2 to the RSA Term Sheet shall have the meanings ascribed to them in the Plan.

members, investment advisors, and other professionals; provided that any holder of a Claim or Interest that (x) validly opts out of the releases contained in the Plan, (y) files an objection to the releases contained in the Plan, or (z) votes to reject the Plan shall not be a “Released Party.”

“Releasing Party” means each of the following, solely in its capacity as such: (a) the ABL Agent; (b) the ABL Lenders; (c) the Term Loan Agent; (d) the Term Loan Lenders; (e) the First Lien Notes Trustee; (f) the First Lien Noteholders; (g) the Second Lien Notes Trustee; (h) the Second Lien Noteholders; (i) the Unsecured Notes Trustee; (j) the Unsecured Noteholders; (k) the Plan Sponsors; (l) the DIP Agent; (m) the DIP Lenders; (n) the Consenting First Lien Lenders; (o) with respect to the foregoing clauses (a) through (n), each of such party’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), assigns, subsidiaries, direct and indirect equity holders, funds, portfolio companies, and management companies; (p) with respect to each of the foregoing parties in clauses (a) through (o), each of such party’s current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, investment bankers, advisory board members, investment advisors, and other professionals; and (q) all holders of Claims or Interests; provided that any holder of a Claim or Interest that (x) validly opts out of the releases contained in the Plan, (y) files an objection to the releases contained in the Plan, or (z) votes to reject the Plan shall not be a “Releasing Party.”

Releases by the Debtors

Notwithstanding anything contained in the Plan to the contrary, pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, the Wind-Down Debtors, and their Estates from any and all Claims and Causes of Action, including Claims and Causes of Action identified, claimed, or released in the Disinterested Directors’ Settlement, as well as other Claims and Causes of Action, whether known or unknown, including any derivative claims asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors, the Wind-Down Debtors, or their Estates (as applicable) would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim against, or Interest in, a Debtor or other Entity, or that any holder of any Claim against, or Interest in, a Debtor or other Entity could have asserted on behalf of the Debtors, based on or relating to, or in any manner arising from, in whole or in part: the Debtors or the Wind-Down Debtors (including the management, ownership, or operation thereof), any securities issued by the Debtors and the ownership thereof, the Debtors’ or the or the Wind-Down Debtors’ restructuring efforts, any Avoidance Actions (but excluding Avoidance Actions brought as counterclaims or defenses to Claims asserted against the Debtors), any intercompany transactions, the Tax Sharing Agreement, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the RSA, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including any legal opinion requested by any Entity regarding any transaction, contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the RSA, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Transaction, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan or (b) any individual from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained in the Plan, and further, shall constitute the Bankruptcy Court’s finding that the Debtor Release is: (a) in exchange for the good and valuable consideration provided by the Released Parties, including, without limitation, the Released Parties’ contributions to facilitating the Restructuring and implementing the Plan; (b) a good faith settlement and compromise of the Claims released by the Debtor Release; (c) in the best interests of the Debtors and all holders of Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made after due notice and opportunity for hearing; and (f) a bar to any of the Debtors, the Reorganized Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Release.

Releases by Holders of Claims and Interests

Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date, each Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, Wind-Down Debtor, and Released Party from any and all Claims and Causes of Action, including Claims and Causes of Action identified, claimed, or released in the Disinterested Directors’ Settlement, as well as other Claims and Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, the Wind-Down Debtors, or their Estates (as applicable), that such Entity would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors or the Wind-Down Debtors (including the management, ownership or operation thereof), any securities issued by the Debtors and the ownership thereof, the Debtors’ or the Wind-Down Debtors’ restructuring efforts, any Avoidance Actions (but excluding Avoidance Actions brought as counterclaims or defenses to Claims asserted against the Debtors), intercompany transactions, the Tax Sharing Agreement, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the RSA, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including any legal opinion requested by any Entity regarding any transaction, contract, instrument, document or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the RSA, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Transaction, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan or (b) any individual from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding that the Third-Party Release is: (a) consensual; (b) essential to the confirmation of the Plan; (c) given in exchange for the good and valuable consideration provided by the Released Parties; (d) a good faith settlement and compromise of the Claims released by the Third-Party Release; (e) in the best interests of the Debtors and

their Estates; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the Releasing Parties asserting any claim or Cause of Action released pursuant to the Third-Party Release.

Exculpation

Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur liability for and each Exculpated Party is hereby released and exculpated from any Cause of Action for any claim related to any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, filing, or termination of the RSA and related prepetition transactions, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document (including any legal opinion requested by any Entity regarding any transaction, contract, instrument, document or other agreement contemplated by the Plan or the reliance by any Released Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the RSA, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Disinterested Directors’ Settlement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, except for claims related to any act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan.

The Exculpated Parties and other parties set forth above have, and upon confirmation of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the solicitation of votes and distribution of consideration pursuant to the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan.

EXHIBIT B

Company Parties

Future Source, LLC

J. C. Penney Company, Inc.

J. C. Penney Corporation, Inc.

J. C. Penney de Guatemala, Sociedad Anonimad

J. C. Penney de Honduras, S.A.

J. C. Penney Direct Marketing Services, LLC

J. C. Penney Export Merchandising Corporation

J. C. Penney Business Information Consulting (Shanghai) Co., Ltd.

J. C. Penney International, Inc.

J. C. Penney Korea

J. C. Penney Properties, LLC

J. C. Penney Purchasing Corporation

J. C. Penney Purchasing Hong Kong Limited

J. C. Penney Purchasing India Private Limited

J. C. Penney Services India Private Limited

JCP Construction Services, Inc.

JCP Media, Inc.

JCP New Jersey, LLC

JCP Procurement, Inc.

JCP Real Estate Holdings, LLC

JCP Realty, LLC

JCP Telecom Systems, Inc.

JCPenney Insurance Agency, Inc.

JCPenney Puerto Rico, Inc.

JCPenney Services, LLC

jcpSSC, Inc.

EXHIBIT C

Provision for Transfer Agreement

The undersigned (“Transferee”) hereby acknowledges that it has read and understands the Restructuring Support Agreement, dated as of                      (the “Agreement”)¹ by and among J. C. Penney Company, Inc. (“JCP”) and its affiliates and subsidiaries bound thereto and the Consenting First Lien Lenders, including the transferor to the Transferee of any Company Claims/Interests (each such transferor, a “Transferor”), and agrees to be bound by the terms and conditions thereof to the extent the Transferor was thereby bound, and shall be deemed a “Consenting First Lien Lenders” and a [“Consenting Term Lender”] [“Consenting First Lien Noteholder”] under the terms of the Agreement.

The Transferee specifically agrees to be bound by the terms and conditions of the Agreement and makes all representations and warranties contained therein as of the date of the Transfer, including the agreement to be bound by the vote of the Transferor if such vote was cast before the effectiveness of the Transfer discussed herein.

Date Executed:

Name:

Title:

Address:

E-mail address(es):

Aggregate Amounts Beneficially Owned or Managed the above-named Transferee, its affiliates and its and their respective accounts and funds managed or advised by any of them or other entities that hold interests directly or indirectly on behalf of such Transferee, its affiliates its and their respective accounts and funds managed or advised by any of them

[ABL Loans]

First Lien Notes

[Second Lien Notes]

[Unsecured Notes]

Term Loans

[Equity Interests]

¹  Capitalized terms used but not otherwise defined herein shall having the meaning ascribed to such terms in the Agreement.

EXHIBIT D

Form of Joinder Agreement

The undersigned (“Joinder Party”) hereby acknowledges that it has read and understands the Restructuring Support Agreement, dated as of                      (the “Agreement”),¹ by and among J. C. Penney Company, Inc. (“JCP”) and its affiliates and subsidiaries bound thereto and the Consenting First Lien Lenders and agrees to be bound by the terms and conditions thereof to the extent the other Parties are thereby bound, and shall be deemed a [“Consenting Term Lender”] [“Consenting First Lien Noteholder”] under the terms of the Agreement.

The Joinder Party specifically agrees to be bound by the terms and conditions of the Agreement and makes all representations and warranties contained therein as of the date of this joinder and any further date specified in the Agreement.

Date Executed:

Name:

Title:

Address:

E-mail address(es):

Aggregate Amounts Beneficially Owned or Managed the above-named Joinder Party, its affiliates and its and their respective accounts and funds managed or advised by any of them or other entities that hold interests directly or indirectly on behalf of such Joinder Party, its affiliates its and their respective accounts and funds managed or advised by any of them

[ABL Loans]

First Lien Notes

[Second Lien Notes]

[Unsecured Notes]

Term Loans

[Equity Interests]

¹  Capitalized terms used but not otherwise defined herein shall having the meaning ascribed to such terms in the Agreement.

EX-10.2

Exhibit 10.2

May 15, 2020

PERSONAL AND CONFIDENTIAL

J. C. Penney Corporation, Inc.

6501 Legacy Drive, Mail Code 1304

Plano, TX 75024

Attention: Treasurer

$450 Million Superpriority Senior Secured Debtor-In-Possession Term Loan Credit Facility Commitment Letter

J. C. Penney Corporation, Inc. (“JCP”, “you” or “your”) has (i) advised the DIP Lenders (as defined in the DIP Term Sheet (as defined below)) (the “Commitment Parties”, “we”, “us” or “our”), that JCP and certain of its subsidiaries (the “Subsidiary Debtors”) and J. C. Penney Company, Inc., a Delaware corporation and the direct parent of JCP (“Holdings” and, collectively with JCP and the Subsidiary Debtors, the “Debtors”), are considering filing voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended, the “Bankruptcy Code”), and (ii) in connection with the foregoing, requested that the Commitment Parties agree to commit to provide a $450 million superpriority senior secured debtor-in-possession term loan credit facility for JCP under Sections 364(c) and 364(d) of the Bankruptcy Code (the “DIP Facility”) subject solely to the Conditions Precedent to the Initial Borrowing and the Conditions Precedent to The Subsequent Borrowing that are applicable to the relevant borrowing (collectively, the “Conditions Precedents”). Unless otherwise specified herein, all references to “$” shall refer to U.S. dollars. Capitalized terms used herein without definition shall have the meaning assigned thereto in the DIP Term Sheet.

1. Commitment.

To provide assurance that the DIP Facility shall be available on the terms and conditions set forth herein and in the DIP Term Sheet, each Commitment Party is pleased to advise JCP of its several, but not joint, commitment (the “Commitment”) to provide the amount of the DIP Facility set forth on Schedule 1 hereto, on the terms set forth in the DIP Term Sheet attached hereto as Exhibit A (the “DIP Term Sheet and together with this letter, this “Commitment Letter”), subject solely to the Conditions Precedent that are applicable to the relevant borrowing.

You acknowledge and agree that nothing in this Commitment Letter or the nature of our services or in any prior relationship will be deemed to create an advisory, fiduciary or agency relationship between any Commitment Party, the DIP Agent or any of their respective affiliates, on the one hand, and you, your equity holders or your affiliates, on the other hand, and you waive, to the fullest extent permitted by law, any claims you may have against any Commitment Party, the DIP Agent or any of their respective affiliates for breach of fiduciary duty or alleged breach of fiduciary duty in connection with this Commitment Letter or the transactions contemplated hereby, and agree that no Commitment Party, Agent or affiliates of any of the foregoing will have any liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on your behalf, including your equity holders, employees or creditors. You acknowledge that the transactions contemplated

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hereby (including the exercise of rights and remedies hereunder) are arm’s-length commercial transactions and that we and the DIP Agent are acting as principal and in our own respective best interests. You are relying on your own experts and advisors to determine whether the transactions contemplated hereby are in your best interests and are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated hereby. In addition, you acknowledge that we and the DIP Agent may employ the services of our respective affiliates in providing certain services hereunder and may exchange with such affiliates information concerning JCP and other companies that may be the subject of the transactions contemplated hereby and such affiliates will be entitled to the benefits afforded to us and the DIP Agent hereunder; provided that any such affiliates receiving information concerning JCP and other companies in accordance with this paragraph shall be subject to the same confidentiality obligations provided for in this Commitment Letter (with each Commitment Party responsible for its affiliates’ compliance with this paragraph).

2. Information.

You hereby represent, warrant and covenant that (a) all written information concerning you and your subsidiaries and your and their respective business (other than financial projections, estimates, forecasts and budgets and other forward-looking information (collectively, the “Projections”) and information of a general economic or industry specific nature) (the “Information”) that has been or will be made available to us or any of our respective affiliates by or on behalf of you is or will be, when furnished, complete and correct in all material respects, when taken as a whole, and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to the updates provided for in the penultimate sentence of this Section 2) and (b) the Projections that have been or will be made available to us or any of our affiliates by or on behalf of you or any of your representatives have been or will be prepared in good faith based upon assumptions that are believed by the preparer thereof to be reasonable at the time made and at the time the related Projections are made available to us or any of our affiliates (it being acknowledged that (i) such Projections are merely a prediction as to future events and are not to be viewed as facts, (ii) such Projections are subject to significant uncertainties and contingencies, many of which are beyond your control, (iii) the actual results during the period or periods covered by any such Projections may differ significantly from the projected results, and (iv) no guarantee or assurance can be given that the projected results will be realized). In particular, where Projections expressly or implicitly take into account the current market volatility and widespread impact of the COVID-19 outbreak, the extent of the impact of these developments on the Debtors’ and their subsidiaries’ operational and financial performance will depend on future developments, including the duration and spread of the outbreak and related governmental advisories and restrictions, and the impact of the COVID-19 outbreak on overall demand for the Debtors’ and their subsidiaries’ products and services, all of which are outside of the control of the Debtors or their subsidiaries, highly uncertain and cannot be predicted. You agree that if, at any time prior to the entry of the Final DIP Order approving the DIP Facility, any of the representations, warranties and covenants in the preceding sentence would be incorrect in any material respect if the Information and Projections were being furnished, and such representations, warranties and covenants were being made, at such subsequent time, then you will promptly supplement the Information and the Projections so that

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such representations, warranties and covenants would be correct in material respects; provided, for the avoidance of doubt, there will be no requirement to update previously delivered Projections to reflect new assumptions so long as the assumptions were reasonable at the time made and made available to us or any of our affiliates. Without limiting the representations, warranties and covenants to be contained in the Operative Documents or the Conditions Precedent that are applicable to the relevant borrowing, the accuracy of the foregoing representations and warranties, whether or not cured, shall not be a condition to the obligations of the Commitment Parties hereunder or the availability of the DIP Facility.

3. Premiums.

Without duplication of the commitment premium set forth in the DIP Term Sheet under the heading “DIP Facility Premiums”, as consideration for the Commitments and agreements of the Commitment Parties hereunder, JCP agrees to pay (or cause to be paid) to the Commitment Parties a non-refundable commitment premium equal to 6.00% of $450 million (the “Commitment Premium”), which shall be allocated to each Commitment Party in an amount equal to its percentage set forth on Schedule 1 hereto multiplied by the Commitment Premium, which shall be earned on the date of this Commitment Letter and shall be due and payable in cash on the date of this Commitment Letter free and clear of any withholding or deduction on account of taxes. The parties hereto hereby acknowledge and agree that the obligation of JCP to pay the Commitment Premium shall constitute an “Obligation” under and as defined in the Operative Documents.

Without duplication of the upfront premium set forth in the DIP Term Sheet under the heading “DIP Facility Premiums”, as consideration for the Commitments and agreements of the Commitment Parties hereunder, JCP agrees to pay (or cause to be paid) to the Commitment Parties a non-refundable upfront premium equal to 4.00% of $450 million (the “Upfront Premium”), which shall be allocated to each Commitment Party in an amount equal to its percentage set forth on Schedule 1 hereto multiplied by the Upfront Premium, which shall be earned on the date of this Commitment Letter and shall be due and payable in cash on the date of this Commitment Letter free and clear of any withholding or deduction on account of taxes. The parties hereto hereby acknowledge and agree that the obligation of JCP to pay the Upfront Premium shall constitute an “Obligation” under and as defined in the Operative Documents.

4. Conditions.

The Commitment Parties’ Commitments and agreements hereunder in respect of the DIP Facility are subject solely to the satisfaction (or waiver by the Commitment Parties) of the Conditions Precedent that are applicable to the relevant borrowing. The Commitment Parties’ commitments to fund the DIP Facility on the date of the relevant borrowing are subject solely to the satisfaction (or waiver by the Commitment Parties) of the Conditions Precedent that are applicable to the relevant borrowing. There are no conditions (implied or otherwise) to the Commitments hereunder in respect of the DIP Facility, and there will be no conditions (implied or otherwise) to the availability of the DIP Facility on the date of the relevant borrowing, including compliance with the terms of this Commitment Letter or the DIP Term Sheet, other than the Conditions Precedent that are applicable to the relevant borrowing. For the avoidance of doubt, the Commitment Parties’ commitments to fund the DIP Facility on the date of the

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relevant borrowing are subject to their receipt of the Commitment Premium and Upfront Premium on the date of this Commitment Letter subject to the confirmation by the escrow agent that the Commitment Premium and the Upfront Premium have been received, along with irrevocable instructions from the Debtors to disburse the funds to the DIP Lenders, by the escrow agent on the date of this Commitment Letter prior to the filing of the petition by the Debtors commencing the Chapter 11 Cases.

5. Indemnification and Expenses.

You agree to (a) indemnify and hold harmless each Commitment Party and the DIP Agent, their respective affiliates and their and their affiliates’ respective officers, directors, employees, agents, attorneys, accountants, advisors (including investment managers, financial advisors and advisers), consultants, representatives, controlling persons, members and permitted successors and assigns (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and expenses, joint or several (“Losses”) to which any such Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the DIP Facility, the use of proceeds thereof or any claim, litigation, investigation or proceeding relating to any of the foregoing, and to (b) reimburse each Commitment Party promptly (but in any event within ten business days) upon receipt of their demand for any reasonable and documented out-of-pocket (i) legal or other expenses (including Milbank LLP, Sullivan & Cromwell LLP and any reasonably necessary local legal counsel) and (iii) fees and expenses of Deutsche Bank Securities Inc., Houlihan Lokey, Inc., and Hilco Real Estate, LLC) incurred in connection with the Chapter 11 Cases, the DIP Facility, the enforcement of this Commitment Letter, the definitive documentation for the DIP Facility, and any ancillary documents and security arrangements in connection therewith, but no other third-party financial advisors (other than Deutsche Bank Securities Inc., Houlihan Lokey, Inc., and Hilco Real Estate, LLC) without your prior written consent; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses to the extent (a) they are found in a final non-appealable judgment of a court of competent jurisdiction to have resulted from such Indemnified Person’s (i) gross negligence, bad faith or willful misconduct or (ii) material breach of its obligations under this Commitment Letter, or (b) they relate to a dispute solely among Indemnified Persons and not arising out of any act or omission of the Debtors or any of their respective subsidiaries (other than any claim, litigation, investigation or proceeding against the DIP Agent, in its capacity or in fulfilling its role as such).

None of you, Holdings, the other Debtors, any of your or their respective subsidiaries, we nor any other Indemnified Person will be responsible or liable to one another for any indirect, special, punitive or consequential damages which may be alleged as a result of or arising out of, or in any way related to, the DIP Facility, the enforcement of this Commitment Letter, the definitive documentation for the DIP Facility, or any ancillary documents and security arrangements in connection therewith; provided that your indemnity and reimbursement obligations under this Section 5 shall not be limited by this sentence.

6. Assignments, Amendments.

This Commitment Letter shall not be assignable by you or us without the prior written consent of the other parties hereto (and any attempted assignment without such consent shall be

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null and void), is intended to be solely for the benefit of the parties hereto, the Indemnified Persons and with respect to Section 5 and this Section 6, the DIP Agent, and is not intended to confer any benefits upon, or create any rights in favor of, any person or entity other than the parties hereto, the Indemnified Persons and with respect to Section 5 and this Section 6, the DIP Agent; provided that, for the avoidance of doubt, any DIP Lender may assign its rights, commitments and obligations under this Commitment Letter to any other DIP Lender (including any entity described in the definition of “DIP Lender”). This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by (a) except to the extent a greater percentage of the DIP Lenders is expressly required in the DIP Term Sheet, the Required Lenders and (b) you.

This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile or other electronic transmission (including E-Signature) shall be effective as delivery of a manually executed counterpart hereof. Section headings used herein are for convenience of reference only, are not part of this Commitment Letter and are not to affect the construction of, or to be taken into consideration in interpreting, this Commitment Letter. You acknowledge that information and documents relating to the DIP Facility may be transmitted through the internet, e-mail or similar electronic transmission systems and that neither any Commitment Party nor the DIP Agent, nor any of their respective affiliates, shall be liable for any damages arising from the unauthorized use by others of information or documents transmitted in such manner.

This Commitment Letter, together with the RSA, supersedes all prior understandings, whether written or oral, between us with respect to the DIP Facility.

7. Governing Law, Etc.; Jurisdiction.

THIS COMMITMENT LETTER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMMITMENT LETTER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE).

Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof and the Bankruptcy Court, in any suit, action or proceeding arising out of or relating to this Commitment Letter or the DIP Facility, and agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court, or, to the extent applicable, the Bankruptcy Court; provided that suit for the recognition or enforcement of any judgment obtained in any such court may be brought in any other court of competent jurisdiction, (b) waives, to the fullest extent it may legally and effectively do so, any objection

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which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Commitment Letter or the DIP Facility in any New York State court, in any such Federal court or in Bankruptcy Court, (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in any such court, and (d) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

You hereby agree that you shall not bring any suit, action, proceeding, claim or counterclaim under this Commitment Letter or with respect to the transactions contemplated hereby in any court other than such New York State court or Federal Court of the United States of America sitting in the Borough of Manhattan in New York City. Service of any process, summons, notice or document by registered mail addressed to you at the address above shall be effective service of process against you for any suit, action or proceeding brought in any such court.

8. Waiver of Jury Trial.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

9. Confidentiality.

This Commitment Letter is delivered to JCP on the understanding that neither this Commitment Letter nor any of its terms or substance shall be disclosed, directly or indirectly, to any other person or entity except (a) you, Holdings and its subsidiaries and your and their respective officers, directors, employees, legal counsel, accountants, financial advisors on a confidential and “need to know” basis and, in each case, who are involved in the consideration of the financing transactions contemplated hereby who have been informed by you, Holdings or any of its subsidiaries, as applicable, of the confidential nature of this Commitment Letter and have agreed to treat such information confidentially, (b) in any legal, judicial or administrative proceeding or as otherwise required by law or regulation or as requested by a governmental authority (in which case you agree, to the extent not prohibited by law, to inform Commitment Parties promptly in advance thereof), (c) the office of the U.S. Trustee, any ad-hoc or statutorily appointed committee of unsecured creditors, and their respective representatives and professional advisors on a confidential and “need to know” basis, (d) to the Bankruptcy Court, (e) as and to the extent required in any financial statements or for other customary accounting purposes and (f) you may disclose the aggregate amount of the premiums hereunder as part of projections, pro forma information and a generic disclosure of aggregate sources and uses.

Each Commitment Party agrees to keep confidential, and not to publish, disclose or otherwise divulge, confidential information with respect to the transactions contemplated hereby or obtained from or on behalf of you, Holdings or your and its respective affiliates in the course

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of the transactions contemplated hereby, except that the Commitment Parties shall be permitted to disclose such confidential information (a) to their affiliates and their and their affiliates’ respective directors, officers, agents, employees, attorneys, accountants and advisors involved in the transactions contemplated hereby on a “need to know” basis and who are made aware of and agree to comply with the provisions of this paragraph, in each case on a confidential basis (with the Commitment Party responsible for such persons’ compliance with this paragraph), (b) on a confidential basis to any bona fide prospective DIP Lender, prospective participant or swap counterparty (in accordance with the terms of the DIP Term Sheet) that agrees to keep such information confidential in accordance with (x) the provisions of this paragraph (or language substantially similar to this paragraph that is reasonably acceptable to you) for your benefit or (y) other customary confidentiality language in a “click-through” arrangement, (c) as required by the order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law, regulation or compulsory legal process (in which case you agree, to the extent not prohibited by law, to inform Commitment Parties promptly in advance thereof), (d) to the extent such information: (i) becomes publicly available other than as a result of a breach of this Commitment Letter or other confidentiality obligation owed by such Commitment Party to you or your affiliates or (ii) becomes available to the Commitment Parties on a non-confidential basis from a source other than you or on your behalf that, to such Commitment Party’s knowledge, is not in violation of any confidentiality obligation owed to you or your affiliates, (e) to the extent you shall have consented to such disclosure in writing (which may include through electronic means), (f) as is necessary in protecting and enforcing the Commitment Parties’ rights with respect to this Commitment Letter and/or the DIP Facility, (g) to the extent independently developed by such Commitment Party or its affiliates without reliance on confidential information, (h) with respect to the existence and contents of the DIP Term Sheet and Operative Documents, in consultation with you, to the rating agencies or (i) with respect to the existence and contents of this Commitment Letter and the DIP Facility, to market data collectors or similar service providers in connection with the arrangement, administration or management of the DIP Facility and to industry trade organizations where such information with respect to the DIP Facility is customarily included in league table measurements. The Commitment Parties’ and their respective affiliates’, if any, obligations under this paragraph shall terminate automatically to the extent superseded by the confidentiality provisions in the Operative Documents upon the effectiveness thereof and, in any event, will terminate one year from the date of this Commitment Letter.

10. Miscellaneous.

You acknowledge and agree that nothing in this Commitment Letter or the nature of our services or in any prior relationship will be deemed to create an advisory, fiduciary or agency relationship between any Commitment Party, the DIP Agent or any of their respective affiliates, on the one hand, and you, your equity holders or your affiliates, on the other hand, and you waive, to the fullest extent permitted by law, any claims you may have against any Commitment Party, the DIP Agent or any of their respective affiliates for breach of fiduciary duty or alleged breach of fiduciary duty in connection with this Commitment Letter or the transactions contemplated hereby, and agree that no Commitment Party, Agent or affiliates of any of the foregoing will have any liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on your behalf, including your

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equity holders, employees or creditors. You acknowledge that the transactions contemplated hereby (including the exercise of rights and remedies hereunder) are arm’s-length commercial transactions and that we and the DIP Agent are acting as principal and in our own respective best interests. You are relying on your own experts and advisors to determine whether the transactions contemplated hereby are in your best interests and are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated hereby. In addition, you acknowledge that we and the DIP Agent may employ the services of our respective affiliates in providing certain services hereunder and may exchange with such affiliates information concerning JCP and other companies that may be the subject of the transactions contemplated hereby and such affiliates will be entitled to the benefits afforded to us and the DIP Agent hereunder; provided, that any such affiliates receiving information concerning JCP and other companies in accordance with this paragraph shall be subject to the same confidentiality obligations provided for in this Commitment Letter (with each Commitment Party responsible for its affiliates’ compliance with this paragraph).

The Commitment Parties hereby notify JCP that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the “PATRIOT Act”) and the requirements of 31 C.F.R. § 1010.230 (the “Beneficial Ownership Regulation”), it and its affiliates are required to obtain, verify and record information that identifies each Credit Party, which information includes names, addresses, tax identification numbers and other information that will allow Commitment Parties and its affiliates to identify each Credit Party in accordance with the PATRIOT Act and the Beneficial Ownership Regulation. This notice is given in accordance with the requirements of the PATRIOT Act and the Beneficial Ownership Regulation and is effective for Commitment Parties and its affiliates.

Absent a change in applicable tax law or a contrary determination (as defined in Section 1313(a) of the Internal Revenue Code of 1986, as amended), each of the parties hereto agrees that (i) each of the Commitment Premium and the Upfront Premium shall be treated as a premium paid by JCP to the relevant Commitment Party in exchange for the issuance of a put right to JCP with respect to the DIP Facility and (ii) to not take any tax position inconsistent with the tax treatment described in the foregoing clause (i).

Each of the parties hereto agrees that this Commitment Letter is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law)) with respect to the subject matter contained herein, including an agreement to negotiate in good faith the definitive documentation for the DIP Facility by the parties hereto in a manner consistent with this Commitment Letter, it being acknowledged and agreed that the availability of the DIP Facility is subject solely to the Conditions Precedent that are applicable to the relevant borrowing.

If the foregoing correctly sets forth our agreement, please indicate JCP’s acceptance of the terms of this Commitment Letter by returning to the Commitment Parties executed counterparts of this Commitment Letter not later than 11:59 p.m., New York City time, on the date first written above. This offer will automatically expire at such time if the Commitment Parties have not received such executed counterparts in accordance with the preceding sentence.

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This Commitment Letter and the Commitments and agreements hereunder shall automatically terminate on the earlier of (i) the date of the effectiveness of the Operative Documents and (ii) unless the Commitment Parties shall, in their sole discretion, agree in writing to an extension, 11:59 p.m., New York City time, on June 9, 2020. Notwithstanding the immediately preceding sentence, Section 3 above, as well as the indemnification and expenses, confidentiality, information, jurisdiction, governing law and waiver of jury trial provisions contained herein shall remain in full force and effect in accordance with their terms notwithstanding the termination of this Commitment Letter or the Commitment Parties’ Commitments hereunder; provided that your obligations under this Commitment Letter, other than those pursuant to Section 3 and with respect to confidentiality, shall automatically terminate and be superseded by the applicable provisions in the Operative Documents, in each case, to the extent covered thereby, on the date of the effectiveness of the Operative Documents, and you shall be released from all liability in connection therewith at such time.

[Signature Pages Follow]

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The undersigned, acting on behalf of its affiliates and its and their respective accounts and funds advised or managed by any of them and entities who hold interests in the Prepetition First Lien Obligations, directly or indirectly, on behalf of the undersigned, is pleased to have been given the opportunity to assist JCP and the other Debtors in connection with the DIP Facility.

Very truly yours, ALM 2020, LTD.
By: Apollo Capital Management (CLO), LLC, its collateral manager
/s/ Joseph D. Glatt
Name:	Joseph D. Glatt
Title:	Vice President

Ares CLO Management LLC
/s/ Daniel Hayward
Name:	Daniel Hayward
Title:	Authorized Signatory

Brigade Capital Management, LP as Investment Manager on Behalf of its Various Funds and Accounts
/s/ Patrick Criscillo
Name:	Patrick Criscillo
Title:	Chief Financial Officer

H/2 Capital Partners LLC
/s/ Ashvin Rao
Name:	Ashvin Rao
Title:	Authorized Signatory

KKR Credit Advisors (US) LLC
/s/ Jeffrey M. Smith
Name:	Jeffrey M. Smith
Title:	Authorized Signatory

[Signature Page to Commitment Letter]

Owl Creek Asset Management, L.P.
/s/ Reuben Kopel
Name:	Reuben Kopel
Title:	General Counsel

Sculptor Special Master Fund, Ltd.
By: Sculptor Capital LP, its investment manager By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

Sculptor GC Opportunities Master Fund, Ltd.
By: Sculptor Capital LP, its investment manager By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

[Signature Page to Commitment Letter]

Sculptor SC II, LP
By: Sculptor Capital II LP, its investment manager By: Sculptor Capital Holding II LLC, its General Partner By: Sculptor Capital LP, its Member By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

Sculptor Credit Opportunities Master Fund, Ltd.
By: Sculptor Capital LP, its investment manager By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

Sculptor Enhanced Master Fund, Ltd.
By: Sculptor Capital LP, its investment manager By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

[Signature Page to Commitment Letter]

Sculptor Master Fund, Ltd.
By: Sculptor Capital LP, its investment manager By: Sculptor Capital Holding Corporation, its General Partner
/s/ Wayne Cohen
Name:	Wayne Cohen
Title:	President and Chief Operating Officer

SPCP Access Holdings, LLC
/s/ Stacey Hatch
Name:	Stacey Hatch
Title:	Authorized Signatory

SPCP Group, LLC
/s/ Stacey Hatch
Name:	Stacey Hatch
Title:	Authorized Signatory

SPCP Institutional Group, LLC
/s/ Stacey Hatch
Name:	Stacey Hatch
Title:	Authorized Signatory

TPG SPECIALTY LENDING, INC.
/s/ Joshua Easterly
Name:	Joshua Easterly
Title:	Chief Executive Officer

REDWOOD IV FINANCE 3, LLC
/s/ Joshua Peck
Name:	Joshua Peck
Title:	Vice President

[Signature Page to Commitment Letter]

TAO FINANCE 3-A, LLC
/s/ Joshua Peck
Name:	Joshua Peck
Title:	Vice President

WHITEBOX ADVISORS LLC, on behalf of certain of its managed funds and accounts
/s/ Mark Strefling
Name:	Mark Strefling
Title:	CEO & Chief Legal Officer

[Signature Page to Commitment Letter]

Accepted and agreed to as of May 15, 2020:
J. C. PENNEY CORPORATION, INC.
By:	/s/ Bill Wafford
Name:	Bill Wafford
Title:	Executive Vice President and Chief Financial Officer

[Signature Page to Commitment Letter]

Exhibit A

See Attached.

$450 MILLION SECURED SUPERPRIORITY DEBTOR IN POSSESSION CREDIT FACILITY

SUMMARY OF TERMS AND CONDITIONS

This summary of terms and conditions (this “DIP Term Sheet”) outlines certain terms and conditions of the DIP Facility referred to below. Capitalized terms used and not defined herein have the meanings assigned to such terms in the Restructuring Support Agreement (“RSA”) or the Restructuring Term Sheet (the “RSA Term Sheet”) to which this DIP Term Sheet is attached as Annex 2.

Executive Summary:	This DIP Term Sheet provides for a $450 million secured superpriority debtor in possession credit facility, to be funded on a delayed draw basis as appropriate in light of case liquidity needs, access to cash collateral, and milestones in order to (i) finance the Debtors and their operations in accordance with the Budget and (ii) ensure that the Debtors have sufficient liquidity, taking into account access to cash collateral. Pursuant to the RSA and as described herein, the DIP Lenders will agree to convert certain of their Loans into loans under an exit facility to be made available on terms and conditions customary for facilities and transactions of such type and in each case satisfactory to the DIP Lenders and the Debtors (such loans, the “Exit Loans”). The DIP Facility will be fully committed to by the DIP Lenders (determined on a pro rata basis among the DIP Lenders based on the aggregate amount of the Prepetition First Lien Obligations held by the DIP Lenders as of the date of this DIP Term Sheet (the “Pro Rata Allocations”)) pursuant to the terms and conditions described in this DIP Term Sheet and the Commitment Letter to which this DIP Term Sheet is attached (the “Commitment Letter”).
Borrower:	J. C. Penney Corporation, Inc. (the “DIP Borrower”), as a debtor and debtor in possession under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended (the “Bankruptcy Code”). The DIP Borrower and its affiliated debtors and debtors in possession, collectively, the “Debtors”.
DIP Facility:	A non-amortizing senior secured priming multi-draw delayed draw term loan facility (the “DIP Facility”) with a maximum funded principal amount equal to $450 million in “new money” (such principal amount, together with the Prepetition First Lien Obligations rolled up into the DIP Facility as set forth below, the “Total Aggregate Commitment” and the loans thereunder, the “Loans”) to be funded in two borrowings as follows: (a) $225 million made not later than one business day following

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	the entry of the DIP Order (as defined below) (the “Initial Borrowing”) and subject to satisfaction of the Conditions Precedent to Initial Borrowing and (b) the remainder of the Total Aggregate Commitment in an aggregate principal amount equal to $225 million (the “Subsequent Borrowing”) shall be made available following the entry of the DIP Order on July 15, 2020 subject to satisfaction of the Conditions Precedent to Initial Borrowing and the Conditions Precedent to The Subsequent Borrowing (and no other conditions precedent), and otherwise on the terms and conditions in this DIP Term Sheet, the Commitment Letter and the Operative Documents referred to below. With respect to the DIP Facility, (i) upon satisfaction of the Conditions Precedent to Initial Borrowing, funds with respect to the Initial Borrowing shall be funded directly to the Debtors for use in accordance with the Budget and (ii) upon satisfaction of the Conditions Precedent to The Subsequent Borrowing, all funded amounts shall be deposited in a blocked controlled account in favor of the DIP Agent (the “Escrow Account”; the funds deposited therein “Drawn Funds”). The Subsequent Borrowing shall be in an aggregate principal amount equal to $225 million, which represents the remainder of the Total Aggregate Commitment. Drawn Funds may be withdrawn from the Escrow Account once per week, subject to a draw request being delivered to the DIP Agent, which shall certify (i) that such applicable Drawn Funds will be required during the subsequent week in accordance with the Budget (giving effect to any maximum Permitted Variances with respect to such week) and (ii) no Default or Event of Default (each as defined in the Operative Documents) shall have occurred and be continuing.
Guarantors:	The obligations of the DIP Borrower shall be unconditionally guaranteed, on a joint and several basis, by each other Debtor (each, a “Guarantor” and collectively, the “Guarantors”). Each entity which guarantees (or is required to guarantee) the Prepetition First Lien Obligations shall be a Guarantor and a Debtor.
Case:	The bankruptcy cases (the “Chapter 11 Cases”) of the Debtors to be filed under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) (the date of filing of such petition, the “Petition Date”). The Petition Date shall be no later than May 16, 2020.

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DIP Agent:	GLAS USA LLC (“GLAS”) shall act as administrative agent and collateral agent for the DIP Facility (in such capacity, the “DIP Agent”) on behalf of the DIP Lenders (as defined below). Any action, exercise of remedies, approval, consent or similar action to be taken or not taken by the DIP Agent in respect of the DIP Facility shall only be taken (or not taken) as may be directed by the Required Lenders. The DIP Agent and the DIP Borrower shall enter into an agency fee letter providing for fees to be payable to the DIP Agent to be mutually agreed and reasonably acceptable to the Debtors.
DIP Lenders:	All rights and obligations of the DIP Lenders under the DIP Facility shall be several and not joint.
Prepetition ABL Credit Agreement:	The Amended and Restated Credit Agreement dated as of June 20, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition ABL Credit Agreement”) by and among the DIP Borrower, Wells Fargo Bank, National Association, as administrative agent and collateral agent (the “Prepetition ABL Agent”), the lenders from time to time party thereto (the “Prepetition ABL Lenders”) and the other parties thereto.
Prepetition Term Loan Credit Agreement:	The Amended and Restated Term Loan Credit Agreement dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition Term Loan Credit Agreement”) by and among the DIP Borrower, the Lenders party thereto (the “Prepetition Term Loan Lender”), JPMorgan Chase Bank, N.A., as administrative agent (the “Prepetition Term Loan Agent”), and the other parties thereto. The loans under the Prepetition Term Loan Credit Agreement are referred to herein as the “Prepetition Term Loans”.
Prepetition First Lien Notes	The senior secured notes (the “Prepetition First Lien Notes”) outstanding under that Indenture, dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Prepetition First Lien Notes Indenture”) by and among the DIP Borrower, Wilmington Trust, National Association, as trustee (the “Prepetition First Lien Notes Trustee”), and the other parties thereto. The holders of such Prepetition First Lien Notes are referred to herein as the “Prepetition First Lien Noteholders”. The Prepetition Term Loans together with the Prepetition First Lien Notes are referred to herein as the “Prepetition First Lien Obligations”.

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ABL Intercreditor Agreement:	The Intercreditor and Collateral Cooperation Agreement dated as of June 23, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”) by and among the DIP Borrower, the Prepetition ABL Agent, Wilmington Trust, National Association, as collateral agent under the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Notes Indenture (the “Prepetition First Lien Collateral Agent”), and the other parties thereto.
Restructuring Support Agreement:	A restructuring support agreement executed on or prior to the Petition Date and which is mutually acceptable to the DIP Lenders and the Debtors (the “RSA”).
Tenor of DIP Facility:	The DIP Facility will mature on the earliest of (such earliest date, the “Maturity Date”): (a)   the date that is 180 days after the Petition Date (the “Scheduled Maturity Date”); (b)   20 days after the Petition Date, if the DIP Order (as defined below) has not been entered by the Bankruptcy Court prior to the expiration of such 20-day period; (c)   the effective date of a plan of reorganization or liquidation in the Chapter 11 Cases; (d)   the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to section 363 of the Bankruptcy Code or otherwise; (e)   without the DIP Agent’s prior written consent, the date of filing or express written support by the Debtors of bidding procedures, sale processes, transactions, plans of liquidation or reorganization or related disclosure statements that are not in accordance with the RSA, if applicable, and that are not otherwise acceptable to the DIP Lenders; (f)   the date of termination of the DIP Lenders’ commitments and the acceleration of any outstanding Loans, in each case, under the DIP Facility in accordance with the terms of the DIP Facility credit agreement (the “DIP Credit Agreement”) and the other definitive documentation with respect to the DIP Facility (collectively with the DIP Credit Agreement and the related security documents, the “Operative Documents”);

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	(g)   any breach by the Debtors which has not been cured or waived or termination of the RSA after the effectiveness thereof; (h)   dismissal of the Chapter 11 Cases or conversion of the Chapter 11 Cases into cases under chapter 7 of the Bankruptcy Code; (i) the Debtors shall lose access to the use of cash collateral in accordance with the Cash Collateral Order (as defined below), subject to any applicable remedies notice period; and (j) other customary circumstances to be mutually agreed.
Closing Date:	The date of the effectiveness of the Operative Documents (the “Closing Date”) (which, for the avoidance of doubt, shall not occur prior to the entry of the DIP Order).
DIP Facility Interest Rate:	Loans under the DIP Facility will bear interest at a rate, at the DIP Borrower’s option, equal to the Base Rate plus 10.75% per annum or LIBOR (subject to a 1.25% floor) plus 11.75% per annum, compounded monthly and payable monthly in cash in arrears. At any time when an Event of Default under the DIP Facility has occurred and is continuing, all outstanding amounts under the DIP Facility shall bear interest, to the fullest extent permitted by law, at the interest rate applicable to base rate loans plus 2.00% per annum and shall be payable on demand in cash (the “Default Rate”). Interest on overdue amounts under the DIP Facility shall also accrue at the Default Rate and shall be payable in cash.
DIP Facility Premiums:	A commitment premium payable in cash to the DIP Lenders equal to 6.00% of each DIP Lender’s initial commitments in respect of the $450 million “new money” portion of the DIP Facility on the Petition Date, which shall be earned, due and payable upon execution of the Commitment Letter. An upfront premium payable in cash to the DIP Lenders equal to 4.00% of each DIP Lender’s commitments in respect of the $450 million “new money” portion of the DIP Facility on the Petition Date, which shall be earned, due and payable upon execution of the Commitment Letter. An exit premium payable in cash to the DIP Lenders equal to 3.00% of each DIP Lender’s funded Loans or unfunded commitments under the DIP Facility (including the “new money” and rolled up portion of the DIP Facility) on the Maturity Date or on the date of any earlier voluntary or mandatory prepayment (the “Exit Premium”).

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Exit Loans:	Upon terms and conditions to be agreed in the RSA, but in any event including the following: Exit Loans will bear interest at a rate, at the DIP Borrower’s option, equal to the Base Rate plus 10.00% per annum or LIBOR (subject to a 1.25% floor) plus 11.00% per annum, compounded monthly and payable monthly in cash in arrears.
	A commitment premium payable in cash equal to 2.00% of the commitments in respect of the Exit Loans, which shall be due and payable in cash on the date that the Business Plan is approved (in accordance with the timeline set forth in the DIP Milestones (as defined below)). An upfront premium payable in cash equal to 3.00% of the commitments in respect of the Exit Loans, which shall be earned, due and payable on the closing date of the Exit Loans.
Roll Up:	On the date of entry of the DIP Order, $225 million in principal amount of the Prepetition Term Loans held by the DIP Lenders (or their applicable designees) shall be rolled up into the DIP Facility in accordance with each such DIP Lender’s (or its applicable designee’s) share of the DIP Facility. On the date of the Subsequent Borrowing, an additional $225 million of principal amount of the Prepetition Term Loans held by the DIP Lenders (or their applicable designees) shall be rolled up into the DIP Facility on a dollar-for-dollar basis in accordance with each such DIP Lender’s (or its applicable designee’s) share of the DIP Facility. Except with respect to the Exit Premium, the premiums set forth above shall only be payable with respect to the $450 million “new money” portion of the DIP Facility and shall not be payable with respect to any rolled up Prepetition Term Loans. Notwithstanding the foregoing, in the event that any DIP Lender (or any of its designees) does not hold sufficient Prepetition Term Loans to fully participate in the roll up on a pro rata basis based on its pro rata share of the funded Loans, such DIP Lender (or its applicable designee) shall be permitted to roll up its Prepetition First Lien Notes to the extent necessary to achieve such pro rata share of the roll up.
Adequate Protection:	As adequate protection for any diminution in the value of the interests of the Prepetition Term Loan Lenders and the Prepetition First Lien Noteholders in the collateral securing the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Noteholders in the collateral securing the Prepetition

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	First Lien Notes Indenture, respectively, the Prepetition Term Loan Lenders and the Prepetition First Lien Noteholders will receive, subject in all cases to the Carve-Out, the following as adequate protection: (A) the payment of the reasonable and documented out-of-pocket fees and expenses of legal counsel and financial advisors retained by the Prepetition Term Loan Lenders that are also DIP Lenders, (B) cash payments of accrued and unpaid interest on the Prepetition Term Loans and Prepetition First Lien Notes upon entry of the DIP Order and each date thereafter on which such interest payment would otherwise become due under the Prepetition Term Loan Credit Agreement or Prepetition First Lien Notes Indenture, as applicable, (C) validly perfected liens on and security interests in the Debtors’ post-petition Collateral junior only to the liens granted to the DIP Lenders under the DIP Facility and existing valid, perfected, and superior liens in the Collateral held by other creditors (including, for the avoidance of doubt, the liens of the Prepetition ABL Lenders with respect to the ABL Priority Collateral) and (D) a superpriority administrative expense claim as contemplated by section 507(b) of the Bankruptcy Code, which claim shall have priority over all priority claims (other than the claims of the DIP Lenders under the DIP Facility) and unsecured claims against the Debtors and their estates, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 503(a), 506(c), 507(a), 507(b), 546(c), 726(b), and 1114 of the Bankruptcy Code or otherwise (collectively, “Adequate Protection”).
Optional Prepayments and Commitment Reductions:	The DIP Borrower may, upon at least one business day’s notice, prepay or terminate in full (but not in part), with the payment of the Exit Premium but without other premium or penalty, subject to breakage costs, if applicable, the outstanding Loans and unfunded commitments. Once repaid, Loans may not be re-borrowed.
Mandatory Prepayments:	Mandatory prepayments of the Loans customary for similar debtor-in-possession financings shall be required, including, in an amount equal to (a) 100% of insurance and condemnation proceeds, (b) 100% of net cash proceeds from the issuance of post-petition indebtedness not permitted by the DIP Credit Agreement and (c) 100% of the net cash proceeds of any sale of assets constituting Collateral and other asset sales (without any reinvestment rights, but subject to de minimis dollar carveouts to be agreed, but subject, in the case of

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	ABL Priority Collateral (or proceeds thereof), to prior repayment of the Prepetition ABL Credit Agreement solely to the extent required pursuant to the Cash Collateral Arrangements).
	All voluntary prepayments and mandatory prepayments (within one business day of receipt thereof) shall be applied as follows: first, to pay accrued and unpaid interest on, and expenses in respect of, the obligations under the DIP Facility, to the extent then due and payable; and second, to any principal amounts or other obligations (including the Exit Premium) which are outstanding under the DIP Facility. Other than the Exit Premium, there shall be no premium or penalty payable in connection with mandatory prepayments.
Security:	All amounts owing by the DIP Borrower under the DIP Facility and by the Guarantors in respect thereof will be secured by a perfected security interest in, with the priority described below under “Priority,” and lien on substantially all of the Debtors’ tangible and intangible assets, including, without limitation, the following (collectively, the “Collateral”): accounts receivable, equipment, inventory, contracts, fee owned and ground leased real estate, real property leaseholds, investment property, insurance proceeds, deposit accounts (other than payroll, trust and tax accounts), monies, equity interests of subsidiaries of each Debtor and the products and proceeds thereof and, upon entry of the DIP Order, any proceeds of avoidance actions available to the Debtors’ bankruptcy estates pursuant to the Bankruptcy Code, subject to certain exclusions to be mutually agreed. Notwithstanding anything to the contrary, no mortgages shall be required and perfection on the Collateral shall be obtained solely through entry of the DIP Order.
Priority:	Subject in all cases to the Carve-Out and certain exclusions to be mutually agreed, all amounts owing by the DIP Borrower under the DIP Facility and by the Guarantors in respect thereof shall at all times: (a) pursuant to section 364(c)(1) of the Bankruptcy Code, be entitled to joint and several superpriority administrative expense claims status in the Chapter 11 Cases; (b) pursuant to section 364(c)(2) of the Bankruptcy Code, be secured by a perfected first priority lien on all Collateral that is not subject to valid, perfected, and non-avoidable liens as of the Petition Date, including all unencumbered fee-owned, ground-leased and space-leased

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	real estate, and including upon entry of the DIP Order, any proceeds of avoidance actions available to the Debtors’ bankruptcy estates pursuant to the Bankruptcy Code;
	(c)    (i) pursuant to section 364(d) of the Bankruptcy Code, be secured by a perfected first priority and priming lien on all collateral that secures obligations under the Prepetition Term Loan Credit Agreement (other than ABL Priority Collateral, as defined in the ABL Intercreditor Agreement (“ABL Priority Collateral”)) and (ii) pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected second priority lien on all ABL Priority Collateral, junior only to the lien securing the claims in respect of the Prepetition ABL Credit Agreement (“Prepetition Collateral”); and (d) pursuant to section 364(c)(3) of the Bankruptcy Code, be secured by a perfected second priority lien on all other property of the Debtors that is subject to valid and perfected liens in existence as of the Petition Date (including liens (if any) perfected subsequent to the Petition Date as permitted by and in accordance with section 546(b) of the Bankruptcy Code) but with a priority immediately junior to such liens. Such liens shall be senior to all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code. All liens authorized and granted pursuant to the DIP Order, as applicable, in each case, entered by the Bankruptcy Court approving the DIP Facility shall be deemed effective and perfected as of the Petition Date, and no further filing, notice or act will be required to effect such perfection. The DIP Lenders, or the DIP Agent on behalf of the DIP Lenders, shall be permitted, but not required, to make any filings, deliver any notices or take any other acts as may be desirable under state law or other law in order to reflect the perfection and priority of the DIP Lenders’ claims described herein.
Carve-Out:	See Schedule II to this DIP Term Sheet.
Conditions Precedent to Initial Borrowing:	The Operative Documents will contain customary conditions precedent to the Initial Borrowing under the DIP Facility and other conditions deemed by the DIP Agent to be appropriate to the specific transaction, and in any event, including, without limitation: (a)   The execution of the RSA and the filing of the executed RSA.

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(b)   The preparation, authorization and execution of the Operative Documents with respect to the DIP Facility, in form and substance satisfactory to the DIP Agent.

(c)   No later than 18 calendar days after the Petition Date, the Bankruptcy Court shall have entered a final order approving the DIP Facility on a final basis (the “DIP Order”), in form and substance satisfactory to the DIP Agent in their sole discretion as confirmed by the DIP Agent in writing, authorizing and approving the DIP Facility and the transactions contemplated hereby, including Adequate Protection and the DIP Order shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the DIP Agent.

(d)   All premiums, fees and documented out-of-pocket fees and expenses (including fees and expenses of counsel and financial advisors) required to be paid to the DIP Lenders and DIP Agent (and with respect to which invoices have been received by the Debtors at least one (1) business day before the Closing Date) on or before the Closing Date (whether incurred before or after the Petition Date and including estimated fees and expenses through the Closing Date) shall have been paid.

(e)   The delivery of a 13-week cash flow projection (the “Initial DIP Budget”) in form and substance reasonably satisfactory to the DIP Agent in its reasonable discretion as confirmed by the DIP Agent in writing. Such Initial DIP Budget and all updates thereto (in accordance with reporting requirements described herein) shall include the same line item detail as provided in the Alix Partners 13 week cash flow provided on May 13, 2020 prepetition, and will forecast, on a weekly basis, the period commencing May 17, 2020 through the end of the fiscal month following the last week of such 13-week period, and on a monthly basis for each month thereafter through the Maturity Date; provided that with the written consent and approval of the DIP Agent the Initial Budget may be updated by the DIP Borrower no more than once per month, which update shall be effective three calendar days following delivery to the DIP Agent except to the extent objected to by the DIP Agent in writing. Upon effectiveness, such updated budget shall thereupon become the “budget” for purposes of the DIP Facility (as so approved, the “Budget”).

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(f)   The Debtors shall have obtained requisite consents from the Prepetition ABL Agent and the Prepetition ABL Lenders to the use of cash collateral in the Chapter 11 Cases in an amount and on terms satisfactory to the Prepetition ABL Agent, the Prepetition ABL Lenders and the DIP Lenders, or the Bankruptcy Court shall have entered a cash collateral order acceptable to the DIP Agent (the “Cash Collateral Order”). For the avoidance of doubt the DIP Agent may not determine the Cash Collateral Order is not acceptable solely on account of the Prepetition ABL Agent and the Prepetition ABL Lenders not consensually consenting to the use of such cash collateral.

(g)   Subject to a post-closing period to be agreed upon, the DIP Agent shall have received endorsements naming the DIP Agent as additional insureds, loss payee, lender loss payee and mortgagee under all insurance policies to be maintained with respect to the properties of the Debtors forming part of the Collateral.

(h)   The DIP Agent shall have a valid and perfected lien on and security interest in the Collateral with the priority described herein. All filings, recordations and searches necessary or desirable in connection with such liens and security interests shall have been duly made; and all filing and recording fees and taxes shall have been duly paid.

(i) Since January 31, 2020, there shall not exist any action, suit, investigation, litigation or proceeding pending (other than the Chapter 11 Cases) or threatened in any court or before any arbitrator or governmental authority that, in the opinion of the DIP Agent, affects any of the transactions contemplated hereby, or that has or could be reasonably likely to have a material adverse change or material adverse condition in or affecting the businesses, assets, operations or condition (financial or otherwise) of any of the Debtors and their respective direct and indirect subsidiaries or any of the transactions contemplated hereby; provided, that none of (i) the Chapter 11 Cases, the events and conditions leading up to the Chapter 11 Cases, or their reasonably anticipated consequences, (ii) the actions required to be taken pursuant to the DIP Credit Agreement, the RSA, the DIP Order, or the Cash Collateral Order, or (iii) the occurrence of the COVID-19 pandemic or the impacts thereof on the business, financial condition or results of the DIP Borrower or its subsidiaries shall constitute a “material adverse effect” for any purpose.

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(j) No default or event of default shall exist under the Operative Documents.

(k)   The representations and warranties of the DIP Borrower and each Guarantor under the Operative Documents shall be true and correct in all material respects after giving effect to such funding.

(l) The making of such Loan shall not violate any requirement of law and shall not be enjoined, temporarily, preliminarily or permanently.

(m) The DIP Agent shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the U.S. Patriot Act.

(n)   No later than five business days after the Petition Date, the Debtors shall have filed a motion seeking the retention of AlixPartners LLP as the Debtors’ restructuring advisor and Lazard as the Debtors’ investment banker.

(o)   An order approving the Debtors’ cash management system, the form of which is reasonably acceptable to the DIP Agent, shall have been entered by the Bankruptcy Court.

(p)   Orders approving customary “first day” relief, the form of which is reasonably acceptable to the DIP Agent, shall have been entered by the Bankruptcy Court.

(q)   The Debtors shall not have entered into, or made any payment in respect of, any critical vendor agreements or otherwise entered into any agreement to pay, or made on a postpetition basis any payment in respect of, any prepetition trade obligations except as consented to by the DIP Agent pursuant to an order of the Bankruptcy Court (which may be via consent to the “first day” orders).

(r)   Other customary conditions to be mutually agreed.

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Conditions Precedent to The Subsequent Borrowing: On the funding date of the Subsequent Borrowing, the following conditions precedent shall have been satisfied:   (a)   The RSA shall be in full force and effect.   (b)   No default or event of default shall exist under the Operative Documents.   (c)   The representations and warranties of the DIP Borrower and each Guarantor under the Operative Documents shall be true and correct in all material respects after giving effect to such funding (except to the extent such representation relates to an earlier date, in which case such representation shall have been true and correct in all material respects as of such date).   (d)   The making of such Loan shall not violate any requirement of law and shall not be enjoined, temporarily, preliminarily or permanently.   (e)   The DIP Agent shall have received a borrowing notice, substantially in the form as attached to the DIP Credit Agreement, at least three business days in advance of the requested borrowing.   (f)   The DIP Order shall have been entered by the Bankruptcy Court, shall be in full force and effect and shall not have been vacated, reversed, modified, amended or stayed without the prior written consent of the DIP Agent.   (g)   All premiums, fees and documented out-of-pocket fees and expenses (including fees and expenses of counsel and financial advisors) required to be paid to the DIP Lenders and the DIP Agent on or before the date of such funding shall have been paid in cash.   (h)The Debtors shall be in compliance with the Operative Documents and the DIP Milestones; provided that the DIP Milestones relating to the Business Plan (other than the receipt of the Business Plan and the Business Plan Parameters in accordance with the DIP Milestones) shall not be a condition precedent to the funding of the Subsequent Borrowing into the Escrow Account; provided, further, that no Drawn Funds in respect of the Subsequent Borrowing shall be permitted to be withdrawn from the Escrow Account until the Business Plan has been approved or disapproved in accordance with the DIP Milestones, with (i) $225

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	million permitted to be withdrawn from the Escrow Account commencing July 15, 2020 in accordance with the Budget if the Business Plan is approved in accordance with the DIP Milestones or (ii) upon the occurrence of a Toggle Event, $50 million shall remain in the Escrow Account in connection with a toggle to a 363 sale, with the release of such $50 million from the Escrow Account subject to agreement among the DIP Borrower, the DIP Agent and the Prepetition ABL Agent to an acceptable 363 sale budget and released in amounts and at times in accordance with such budget, and $175 million shall be released from the Escrow Account to the DIP Lenders within 2 business days of the date of the occurrence of such Toggle Event.
Representations and Warranties:	The Operative Documents will contain representations and warranties that are (a) customary for similar debtor-in-possession financings and (b) and additional representations and warranties required by the DIP Lenders as mutually agreed with the Debtors.
Reporting Requirements:	The Operative Documents will contain financial reporting requirements that are customary for similar debtor-in-possession financings, including, without limitation, (i) monthly updates of the Budget for each fiscal month of the Debtors to be provided within five business days following the end of any fiscal month of the Debtors, (ii) all financial, operating and other reporting provided to the Prepetition ABL Lenders during the Chapter 11 Cases, including pursuant to the Cash Collateral Order, as and when so provided, (iii) a weekly cash flow forecast budget to actuals for each line item in a form to be attached to the DIP Credit Agreement and otherwise acceptable to the DIP Agent, with management commentary on any individual line item with a positive or negative variance of 5.0% or more as compared to the Budget (unless the dollar amount corresponding to such percentage variance is less than $1,000,000, in which case no management commentary shall be required) (the “Weekly Variance Report”), (iv) monthly delivery of operating statements and balance sheets for the Debtors and their consolidated subsidiaries within 15 business days following the end of the applicable period, (v) quarterly store-level operating statements for all properties within 45 days following the end of the applicable period and (vi) reasonable reporting requirements to be agreed with respect to professional fee monitoring no later than June 15, 2020.

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The Operative Documents will contain additional requirements that the Debtors’ counsel provide advance copies of all pleadings and/or filings in the Chapter 11 Cases to be made by the Debtors. The Debtors shall also provide copies of any monthly reporting provided to the Bankruptcy Court or the U.S. Trustee.

Other Maintenance Covenants:

The Debtors shall not pay any expenses or other disbursements other than those set forth in the Budget. The DIP Borrower’s cumulative actual receipts shall not be less than 85% of budgeted receipts for the corresponding test period (the “Permitted Collections Budget Variances”). The DIP Borrower’s cumulative actual disbursements (excluding professional fees) will be not more than 12.5% greater than the budgeted disbursements for the corresponding test period (the “Permitted Expenditures Budget Variances”). The DIP Borrower’s cumulative actual disbursements to merchandise vendors (domestic and foreign) will not be more than 10% greater than the budgeted disbursements for the corresponding test period (the “Permitted Inventory Budget Variances”). The Permitted Collections Budget Variances, Permitted Expenditures Budget Variances, and Permitted Inventory Budget Variances, collectively the “Budget Variances”, in each case, as set forth in the then operative Budget. Notwithstanding anything to the contrary herein, the Debtors and Required Lenders shall agree to include provisions in the Operative Documents providing for the implementation of increased Permitted Expenditures Budget Variances and Permitted Inventory Budget Variances, in each case, in the event that the Debtors are able to more rapidly open store locations than anticipated in the Initial DIP Budget; provided, that Permitted Collections Budget Variances shall be adjusted accordingly to the extent agreed. The Budget Variances shall each be tested (i) first, on June 6, 2020 on a cumulative basis for the prior two weeks, (ii) second, on June 13, 2020 on a cumulative basis for the prior three weeks, and (iii) at the end of each week thereafter on a cumulative four week basis for the prior four weeks. The Debtors shall deliver a Weekly Variance Report to the DIP Agent by 12:00 p.m., Eastern time, on Friday of each week. Simultaneously with the delivery of the Weekly Variance Report, the DIP Borrower shall report on consolidated unrestricted book cash as of the end of the preceding week (as reported in the Weekly Variance Report), which shall not be less than $50 million.

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By June 1, 2020, the DIP Borrower and its real estate advisors will present to the DIP Agent and the DIP Lenders a summary of lease renegotiation discussions with content of such presentation to be acceptable to the DIP Agent with landlords, including the asks made of each landlord by property. Thereafter, the DIP Borrower shall report on a weekly basis the status of lease renegotiations by property, including any settlements achieved with any landlords by property, to the DIP Agent and the DIP Lenders, with associated terms of such settlements acceptable to the DIP Agent. By July 1, 2020, the DIP Borrower and its real estate advisors will present to the DIP Agent and the DIP Lenders a proposed monetization strategy of the DIP Borrower’s fee-owned and ground-leased real estate assets, including any offers or indications of value received by property for the last 12 months. Thereafter, the DIP Borrower shall report on a bi-weekly basis any offers or indications of value received by property to the DIP Agent and the DIP Lenders. Process for construct for monthly reporting on allocation of disbursements by entity to be agreed between Required Lenders and the DIP Borrower by June 15, 2020, which shall be implemented as promptly as practical thereafter and provided on a monthly basis once implemented.

Affirmative Covenants:

The Operative Documents will contain (a) affirmative covenants that are customary for similar debtor-in-possession financings and (b) additional affirmative covenants required by the DIP Lenders and mutually agreeable to the Debtors and shall, in any event, include without limitation (i) the advance delivery of all material pleadings, motions and other material documents filed with the Bankruptcy Court on behalf of the Debtors in the Chapter 11 Cases to the DIP Lenders and their counsel, (ii) compliance with Budget covenants consistent with the section titled “Budget and Variances,” (iii) compliance with the DIP Milestones in the administration of the Chapter 11 Cases, (iv) update meetings and/or calls with the Debtors’ senior management and advisors and the DIP Lenders no less than weekly if requested and (v) one or more members of the Debtors’ senior management team shall be available for discussion with the DIP Lenders upon reasonable notice.

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Negative Covenants:

The Operative Documents will contain negative covenants that are (a) customary for similar debtor-in-possession financings and (b) additional negative covenants required by the DIP Lenders and mutually agreeable to the Debtors, and including, without limitation, restrictions on (i) incurrence of additional debt and liens (it being understood that any debt secured by the ABL Priority Collateral on a senior basis shall be capped at the amount of the Prepetition ABL Credit Agreement as of the Petition Date, subject to providing the ability of the DIP Borrower to access renewals or replacements of letters of credit thereunder, in each case, subject to the requirements and terms of the Cash Collateral Order), (ii) asset sales, (iii) investments, (iv) restricted payments, (v) fundamental changes and (vi) affiliate transactions.

Events of Default:

The Operative Documents will contain (a) events of default that are customary for similar debtor-in-possession financings and (b) additional events of default required by the DIP Lenders and mutually agreeable to the Debtors (collectively, the “Events of Default”) and shall, in any event, include without limitation the following (subject to mutually agreeable grace periods as applicable): (i)  failure to make any payment when due under the Operative Documents; (ii)   noncompliance with covenants or breaches in any material respect of representations and warranties, in either case, under the Operative Documents; (iii)   cross-default to any prepetition indebtedness in a principal amount above a threshold to be agreed that is not stayed by the automatic stay in the Chapter 11 Cases; (iv)  failure to satisfy or stay execution of judgments above a threshold to be agreed; (v)    the existence of certain employee benefit or environmental liabilities,, which would constitute a material adverse effect; (vi)  impairment of the Operative Documents or the security interests described in “Security” above; (vii)  change of ownership or control; (viii)   a trustee or receiver shall have been appointed in one or more of the Chapter 11 Cases; (ix)  appointment of a responsible officer or examiner with enlarged powers relating to the operation of the business of any Debtor;

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(x)    granting of relief from any stay of proceeding (including the automatic stay) so as to allow a third party to proceed against any asset of the Debtors in an amount in excess of $1,000,000 in the aggregate;

(xi)  entry of an order granting any superpriority claim which is senior to or pari passu with the DIP Lenders’ claims under the DIP Facility without the prior consent of the DIP Agent (other than as described under the caption “Priority” above);

(xii)  any termination of the RSA as to all parties thereto, except as to any individual DIP Lender pursuant to Section 12.03 of the RSA;

(xiii)   any Debtor shall have filed, proposed, or supported a plan of reorganization, plan of liquidation, or a motion seeking to approve a sale of any material portion of the Collateral, in each case unless contemplated by, and in accordance with, the RSA or as otherwise agreed to by the DIP Agent;

(xiv) entry of an order staying, reversing, vacating or otherwise modifying, without the prior written consent of the DIP Agent, the DIP Facility, or the DIP Order;

(xv)   payment of, or granting adequate protection with respect to, prepetition debt (other than as contemplated by the Operative Documents) unless otherwise agreed by the DIP Agent;

(xvi) cessation of liens or superpriority claims granted with respect to the Collateral securing the Debtors’ obligations in respect of the DIP Facility to be valid, perfected and enforceable in all respects with the priority described herein;

(xvii)  failure to comply with this DIP Term Sheet, the Operative Documents or any of the DIP Milestones; and

(xviii)  entry into, or the making of any payment in respect of, any critical vendor agreements or otherwise entry into any agreement to pay, or the making of any payment in respect of, any prepetition trade obligations except as consented to by the DIP Agent (which may be via consent to the “first day” orders).

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Remedies:

Upon the occurrence and during the continuance of an Event of Default: (a)   the Required Lenders (as defined below) may direct the DIP Agent, in their discretion, to immediately take any or all of the following actions: (i) deliver a notice of an Event of Default; (ii) charge the Default Rate of interest on the Loans and other outstanding obligations; and (iii) terminate all commitments under the DIP Facility; and (b)   upon five (5) business days’ written notice from the DIP Lenders, in their sole and absolute discretion, the automatic stay of section 362 of the Bankruptcy Code shall be terminated without further order of the Bankruptcy Court, without the need for filing any motion for relief from the automatic stay or any other pleading, for the limited purpose of permitting the DIP Lenders Trustee, and counsel to the to do any of the following: (i) foreclose on the Collateral; (ii) enforce all of the guaranty rights; (iii) accelerate all Loans and other outstanding obligations under the DIP Facility; and (iv) declare the principal of and accrued interest, premiums, fees and expenses constituting the obligations under the DIP Facility to be due and payable. Section 362 relief from the stay in favor of the DIP Lenders shall be embodied in any order approving the DIP Facility and the use of cash collateral. At any hearing addressing the exercise of remedies by the DIP Lenders under the Operative Documents, the only objection that may be raised by the Debtors or the Committee shall be whether an Event of Default has in fact occurred and is continuing, and the Debtors and the Committee shall waive their right to seek any relief, whether under section 105 of the Bankruptcy Code or otherwise, that would in any way impair, limit, restrict or delay the rights and remedies of the DIP Agent under the Operative Documents.

Milestones:

The DIP Borrower shall comply with the following chapter 11 milestones which Milestones may be extended in writing by the DIP Agent in its sole and absolute discretion (the “Milestones”): (a)   on the Petition Date, the Debtors shall have filed a motion seeking approval of the DIP Facility;

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(b)   no later than 14 business days following the Petition Date, the Debtors shall have filed a motion to retain Brokers acceptable to the Required Lenders;

(c)   no later than 18 calendar days after the Petition Date, the Bankruptcy Court shall enter an order approving the DIP Credit Agreement, in form and substance satisfactory to the DIP Agent in its discretion as confirmed by the DIP Agent in writing;

(d)   no later than 18 calendar days after the Petition Date, the Bankruptcy Court shall have entered the DIP Order;

(e)   no later than June 15, 2020, the Debtors will have delivered a Lease Optimization Plan and an Owned Real Estate Optimization Plan, each in form and substance acceptable to the Required Lenders;

(f)   no later than June 15, 2020 the Debtors shall have delivered proposed processes and parameters related to a proposed business plan (the “Business Plan”) including those related to vendor agreements, lessor agreements, and go-forward self-funding capability (the “Business Plan Parameters”) to the DIP Lenders;

(g)   no later than June 20, 2020 the Debtors and the Required Lenders shall have agreed on acceptable Business Plan Parameters;

(h)   no later than July 8, 2020, the Debtors shall have delivered a Business Plan (consistent with the agreed acceptable Business Plan Parameters) to the DIP Lenders;

(i) no later than July 14, 2020, the Debtors and the Required Lenders shall have agreed on an acceptable Business Plan;

(j) no later than 90 days after the Petition Date, the Debtors will (unless otherwise provided for in the RSA) have filed either (A) a motion seeking approval of a disclosure statement with respect to a chapter 11 plan that is acceptable to the DIP Agent or (B) a motion seeking approval of bidding procedures and a sale that is acceptable to the DIP Agent;

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	(k)   no later than 130 days after the Petition Date, the Bankruptcy Court shall have entered an order acceptable to the DIP Agent either approving (A) an acceptable disclosure statement or (B) acceptable bidding procedures; (l) no later than 160 days after the Petition Date, the Bankruptcy Court shall have entered one or more orders acceptable to the DIP Agent either (A) confirming an acceptable chapter 11 plan or (B) approving an acceptable sale or sales; and (m) no later than November 15, 2020 the Plan Effective Date shall have occurred.
Toggle Event:	A “Toggle Event” shall occur if either: (x) by July 15, 2020, the failure of 66.7% of the DIP Lenders to approve the Business Plan or (y) by August 15, 2020, the Debtors shall have failed to obtain binding commitments for all third-party financing (on terms acceptable to the Required Lenders) necessary to finance Business Plan in accordance with the other plan provisions of the RSA Term Sheet. Upon a failure of such condition, the Debtors shall immediately cease pursing the Plan and instead pursue a 363 sale of all of their assets unless otherwise instructed by the Required Lenders and shall seek approval of any relief required to undertake such 363 sale on an expedited basis.
Indemnification:	The DIP Borrower shall indemnify and hold harmless the DIP Agent, each DIP Lender, each of their respective affiliates and each of their respective officers, directors, partners, security-holders, employees, agents, advisors, attorneys and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including all reasonable and documented fees, expenses and disbursements of their respective specified legal counsel, specified financial advisors or other specified professionals retained by the DIP Agent or DIP Lenders, in each case as agreed and specifically set forth in the Commitment Letter and the Operative Documents1), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party (including in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense in connection therewith), in each case, arising out of or in connection with or by reason of the DIP Facility, the Operative Documents or any of the transactions contemplated thereby, or any actual or proposed use of the

¹  In all cases, DB, Hillco, Houlihan, Milbank, S&C and others to be determined.

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	proceeds of the DIP Facility, or any operation of any business by any Debtor. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the DIP Borrower, any of its directors, security-holders or creditors, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.
Expenses:	Each Debtor shall jointly and severally be obligated to pay all reasonable and documented out-of-pocket costs and expenses of the DIP Lenders and the DIP Agent, including all reasonable and documented fees, expenses and disbursements of their respective specified legal counsel, specified financial advisors or other specified professionals retained by the DIP Agent or DIP Lenders, in each case as agreed and specifically set forth in the Commitment Letter and the Operative Documents2, in connection with (a) the discussion, negotiation, preparation, execution and delivery of any documents in connection with the proposed financing contemplated by this DIP Term Sheet, including the Operative Documents and the funding of all Loans under the DIP Facility, the administration of the DIP Facility and any amendment, modification or waiver of any provision of the Operative Documents, (b) the interpretation, enforcement or protection of any of their rights and remedies under the Operative Documents or (c) the Chapter 11 Cases.
Other Bankruptcy Matters:	The DIP Order shall be in form and substance reasonably satisfactory to the DIP Agent as confirmed by the DIP Agent in writing (it being understood that any communication by email shall suffice), and all motions relating thereto, shall be in form and substance reasonably satisfactory to the DIP Agent in its discretion and, unless otherwise agreed by the DIP Agent in writing, shall include the following provisions: (a)   modifying the automatic stay to permit the creation and perfection of the DIP Lenders’ liens on the Collateral; (b)   prohibiting the assertion of claims arising under section 506(c) of the Bankruptcy Code against any of the DIP Agent, the DIP Lenders, the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders or, except as expressly permitted therein, the commencement by the Debtors of other actions adverse to the DIP Agent, the DIP Lenders, the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders or any of their respective rights and remedies under the DIP Facility, the Prepetition Term Loan Credit Agreement or the Prepetition First Lien Notes Indenture, as applicable, the DIP Order, or any other order;

²  In all cases, DB, Hillco, Houlihan, Milbank, S&C and others to be determined.

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(c)   prohibiting the incurrence of any debt with priority equal to or greater than the DIP Facility;

(d)   prohibiting any granting or imposition of liens senior to the liens granted under the Operative Documents;

(e)   authorizing and approving the DIP Facility and the transactions contemplated thereby, including the granting of the superpriority status, security interests and liens and the payment of all premiums and fees, referred to herein;

(f)   acknowledging the validity and enforceability of the Prepetition Term Loan Credit Agreement and the Prepetition First Lien Notes Indenture, the debt outstanding thereunder and the liens granted in connection therewith;

(g)   waiving any and all claims or causes of action against the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee and the Prepetition First Lien Noteholders, whether arising prior to or after the Petition Date including, without limitation, any lender or noteholder liability claims, any subordination claims or any claims under any non-disclosure or confidentiality agreement;

(h)   providing that the DIP Lenders and their respective counsel, advisors and consultants shall be entitled to the benefit of a “good faith” finding pursuant to section 364(e) of the Bankruptcy Code;

(i) providing that the DIP Lenders, the Prepetition First Lien Lenders and the Prepetition First Lien Noteholders reserve the right to credit bid (pursuant to section 363(k) of the Bankruptcy Code and/or applicable law) the Loans (including any prepetition loans or notes rolled-up) and the Prepetition First Lien Obligations, in each case, in whole or in part, in connection with any sale or disposition of assets in the Chapter 11 Cases and shall not be prohibited from making such credit bid “for cause” under section 363(k) of the Bankruptcy Code;

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	(j) providing that the Prepetition Term Loan Lenders, the Prepetition Term Loan Agent, the Prepetition First Lien Notes Trustee and the Prepetition First Lien Noteholders are entitled to all of the benefits of section 552(b) of the Bankruptcy Code and that the “equities of the case” exception thereunder shall not apply to any of the Prepetition Term Loan Lenders, the Prepetition Term Loan Agent, the Prepetition First Lien Notes Trustee or the Prepetition First Lien Noteholders with respect to proceeds, product, offspring, or profits of any of the collateral securing the Prepetition Term Loan Credit Agreement or the Prepetition First Lien Notes Indenture; and (k)   providing that in no event shall any of the Prepetition Term Loan Agent, the Prepetition Term Loan Lenders, the Prepetition First Lien Notes Trustee, the Prepetition First Lien Noteholders the DIP Agent or the DIP Lenders be subject to the equitable doctrine of “marshaling” or any similar doctrine with respect to the Collateral.
Assignments:	Customary for similar debtor-in-possession financings; provided that if no Event of Default has occurred and is continuing, the DIP Borrower’s consent shall be required (except with respect to an assignment to any other DIP Lender or any entity described in the definition of DIP Lender) for assignments of the Loans, which such consent shall not be unreasonably withheld, conditioned or delayed, and the DIP Borrower shall deemed to consent to any such assignment if it is has failed to respond to any such request for consent within five business says thereof.
Required Lenders:	DIP Lenders, as of any date of determination, holding greater than 50% of the outstanding Loans and commitments under the DIP Facility (the “Required Lenders”); provided that the consent of each DIP Lender adversely affected thereby shall be required to any amendment or modification (i) to extend the final maturity of any Loan, (ii) to waive, reduce or postpone any scheduled repayment (but not prepayment) of any Loan, (iii) to reduce the rate of interest on any Loan (other than any waiver of default interest) or any premium set forth in this DIP Term Sheet, (iv) to the definition of Pro Rata Allocation or

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	(v) that adversely and disproportionately affects such DIP Lender in a material respect relative to the other DIP Lenders taken as a whole (it being understood that, for the avoidance of doubt, any DIP Lender declining an opportunity or option offered ratably to all DIP Lenders shall not constitute disproportionate treatment for purposes of this clause (v)); provided, further, that in each case such adversely affected DIP Lender is in compliance with its funding obligations under the Commitment Letter; provided, further, that any amendment or modification of any of the dates or consents in clauses (f), (g), (h) or (i) of the DIP Milestones related to the Business Plan, the Toggle Event or the funding the Subsequent Borrowing will require the consent of 66.7% of the DIP Lenders.
Governing Law and Submission to Jurisdiction:	State of New York. Exclusive jurisdiction of the Bankruptcy Court, including with respect to the exercise of the remedies by the DIP Lenders and preservation of the value of the Collateral.
Counsel to the DIP Lenders:	Milbank LLP.
Local Counsel to the DIP Lenders:	To be determined.
Counsel to the DIP Agent:	Arnold & Porter.

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Schedule II

DIP Carve Out

(a)    Notwithstanding anything to the contrary in this Final Order, the Debtors’ obligations to the DIP Secured Parties and [Prepetition Secured Parties] and the liens, security interests, and superpriority claims granted herein, under the DIP Loan Documents, and/or under the Prepetition Loan Documents, including the DIP Liens, the DIP Superpriority Claims, the Adequate Protection Liens, the Adequate Protection Claims, and the Prepetition Liens, shall be subject in all respects and subordinate to the Carve Out.

(b)    As used in this Order, the “Carve Out” means the sum of (i) all fees required to be paid to the Clerk of the Court and to the Office of the United States Trustee under section 1930(a) of title 28 of the United States Code plus interest at the statutory rate (without regard to the notice set forth in (iii) below); (ii) all reasonable fees and expenses up to $25,000 incurred by a trustee under section 726(b) of the Bankruptcy Code (without regard to the notice set forth in (iii) below); (iii) to the extent allowed at any time, whether by interim order, procedural order, or otherwise, all unpaid fees and expenses (including any restructuring, sale, success, or other transaction fee of any investment bankers or financial advisors of the Debtors or any Official Committee) (the “Allowed Professional Fees”) incurred by persons or firms retained by the Debtors pursuant to section 327, 328, or 363 of the Bankruptcy Code (the “Debtor Professionals”) and the Creditors’ Committee pursuant to section 328 or 1103 of the Bankruptcy Code (the “Committee Professionals” and, together with the Debtor Professionals, the “Professional Persons”) at any time before or on the first business day following delivery by the DIP Agent of a Carve Out Trigger Notice (as defined below), whether allowed by the Court prior to or after delivery of a Carve Out Trigger Notice; and (iv) Allowed Professional Fees of Professional Persons in an aggregate amount

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not to exceed $4,000,000 incurred after the first business day following delivery by the DIP Agent of the Carve Out Trigger Notice, to the extent allowed at any time, whether by interim order, procedural order, or otherwise (the amounts set forth in this clause (iv) being the “Post-Carve Out Trigger Notice Cap”). For purposes of the foregoing, “Carve Out Trigger Notice” shall mean a written notice delivered by email (or other electronic means) by the DIP Agent to the Debtors, their lead restructuring counsel, the U.S. Trustee, and counsel to the Creditors’ Committee, which notice may be delivered following the occurrence and during the continuation of an Event of Default and acceleration of the DIP Obligations under the DIP Facility, stating that the Post-Carve Out Trigger Notice Cap has been invoked.

(c)    Carve Out Reserves. The Debtors shall establish and fund a segregated account (the “Funded Reserve Account”) for purposes of funding the Carve Out. The Funded Reserve Account will be funded first from the [DIP Proceeds Account], then from the DIP Priority Collateral. Notwithstanding anything to the contrary in this Order, the DIP Documents, or the Prepetition Loan Documents, (i) in no circumstances (which, for the avoidance of doubt, includes, but is not limited to, an Event of Default or a termination of the DIP Credit Agreement or DIP Loan Documents) shall the Debtors be prohibited in any way from accessing or drawing upon the [DIP Proceeds Account] for the purpose of funding the Funded Reserve Account, and (ii) the [DIP Proceeds Account] shall not be ABL Priority Collateral or Prepetition ABL Collateral. Upon entry of this Order, the Debtors will deposit into the Funded Reserve Account an amount equal to the aggregate amount of Allowed Professional Fees projected to accrue from entry of this Order through June 30, 2020 (the “Initial Funded Reserve Amount”), which, for the avoidance of doubt, shall not include the Post-Carve Out Trigger Notice Cap. Commencing July 1, 2020 (or the first business day thereafter), on the first business day of each month, the Debtors shall deposit in the

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Funded Reserve Account an amount equal to the aggregate amount of Allowed Professional Fees (excluding restructuring, sale, financing, or other success fees) projected to accrue for the following month in the Budget plus twenty percent of such aggregate amount of Allowed Professional Fees in the following month in the Budget (the “Monthly Funded Reserve Amount”). Each Professional Person may deliver to the Debtors a good-faith estimate of the cumulative total amount of unreimbursed fees and expenses incurred in the preceding month (each such statement, a “Fee Statement”), and to the extent the amount of Allowed Professional Fees accrued and claimed in a Fee Statement exceeds the Initial Funded Reserve Amount or the Monthly Funded Reserve Amount for the applicable period or month, respectively, and such fees and expenses have otherwise not been paid by the Debtors, the Debtors shall, within one business day, fund additional amounts into the Funded Reserve Account equal to the difference between, as applicable, the Initial Funded Reserve Amount or the Monthly Funded Reserve Amount and the amount accrued and claimed in the applicable Fee Statement (each, a “Top Off Amount”). At any time, if the Debtors in good faith believe a restructuring, sale, financing, or other success fee has been earned by a Professional Person and is then due and payable, the Debtors shall deposit in the Funded Reserve Account an amount equal to such fee. Upon entry of the Order, the Debtors shall deposit into the Funded Reserve Account an amount equal to (i) the Post Carve Out Trigger Notice Cap plus (ii) the amounts contemplated under (b)(i) and (ii) above. The Funded Reserve Account shall be maintained, and the funds therein (the “Funded Reserve Amount”) shall be held in trust for the benefit of Professional Persons. Any and all amounts in the Funded Reserve Account shall not be subject to any cash sweep and/or foreclosure provisions in the Prepetition Loan Documents or DIP Loan Documents and neither the [Prepetition Secured Parties] nor the DIP Secured Parties shall be entitled to sweep or foreclose on such amounts notwithstanding any provision to the contrary

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in the [Prepetition Loan Documents] or DIP Loan Documents. Notwithstanding the foregoing, any and all payments to Professional Persons allowed by the Court (excluding restructuring, sale, financing, or other success fees) shall be paid first from the Funded Reserve Account.

(d)    On the day on which a Carve Out Trigger Notice is given by the DIP Agent to the Debtors in accordance with paragraph [[        ](b)] above, with a copy to counsel to the Creditors’ Committee (the “Termination Declaration Date”), the Carve Out Trigger Notice shall constitute a demand to the Debtors to utilize all cash on hand as of such date and any available cash thereafter held by any Debtor, including cash in the DIP Proceeds Account, to fund a reserve in an amount equal to the then unpaid amounts of the Allowed Professional Fees in excess of the Funded Reserve Amount; provided that in the event that a Termination Declaration Date occurs, Professional Persons shall have two business days to deliver additional Fee Statements to the Debtors, and the Debtors shall fund into the Funded Reserve Amount and Top Off Amounts. The Debtors shall deposit and hold such amounts in the Funded Reserve Account in trust to pay such then unpaid Allowed Professional Fees (the “Pre-Carve Out Trigger Notice Reserve”) prior to any and all other claims. On the Termination Declaration Date, the Carve Out Trigger Notice shall also constitute a demand to the Debtors to utilize all cash on hand as of such date and any available cash thereafter held by any Debtor, including cash in the DIP Proceeds Account, after funding the Pre-Carve Out Trigger Notice Reserve, to fund a reserve in an amount equal to the Post Carve Out Trigger Notice Cap to the extent not already funded (including upon entry of the Order as set forth above). The Debtors shall deposit and hold such amounts in a segregated account at an institution designated by the DIP Agent in trust to pay such Allowed Professional Fees benefiting from the Post-Carve Out Trigger Notice Cap (the “Post Carve Out Trigger Notice Reserve” and, together with the Pre-Carve Out Trigger Notice Reserve, the “Carve Out Reserves”) prior to any and all other claims.    All

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funds in the Pre-Carve Out Trigger Notice Reserve shall be used first to pay the obligations set forth in clauses (i) through (iii) of the definition of Carve Out set forth above (the “Pre-Carve Out Amounts”), but not, for the avoidance of doubt, the Post-Carve Out Trigger Notice Cap, until paid in full, and then, to the extent the Pre Carve Out Trigger Notice Reserve has not been reduced to zero, to pay the DIP Agent for the benefit of the DIP Lenders, unless the DIP Obligations have been indefeasibly paid in full, in cash (or other form of payment pursuant to an Acceptable Plan), and all Commitments have been terminated, in which case any such excess shall be paid to the [Prepetition Secured Parties] in accordance with their rights and priorities as set forth herein. All funds in the Post-Carve Out Trigger Notice Reserve shall be used first to pay the obligations set forth in clause (iv) of the definition of Carve Out set forth above (the “Post-Carve Out Amounts”), and then, to the extent the Post Carve Out Trigger Notice Reserve has not been reduced to zero, to pay the DIP Agent for the benefit of the DIP Lenders, unless the DIP Obligations have been indefeasibly paid in full, in cash (or other form of payment pursuant to an Acceptable Plan), and all Commitments have been terminated, in which case any such excess shall be paid to the [Prepetition Secured Parties] in accordance with their rights and priorities as set forth herein. Notwithstanding anything to the contrary in the DIP Loan Documents, or this Order, if either of the Carve Out Reserves is not funded in full in the amounts set forth in this paragraph [        ], then, any excess funds in one of the Carve Out Reserves following the payment of the Pre-Carve Out Amounts and Post-Carve Out Amounts, respectively, shall be used to fund the other Carve Out Reserve, up to the applicable amount set forth in this paragraph [        ], prior to making any payments to the DIP Agent or the [Prepetition Secured Parties], as applicable. Notwithstanding anything to the contrary in the DIP Loan Documents or this Order, following delivery of a Carve Out Trigger Notice, the DIP Agent and the [Prepetition Agents] shall not sweep or foreclose on cash (including

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cash received as a result of the sale or other disposition of any assets) of the Debtors until the Carve Out Reserves have been fully funded, but shall have a security interest in any residual interest in the Carve Out Reserves, with any excess paid to the DIP Agent for application in accordance with the DIP Loan Documents. Further, notwithstanding anything to the contrary in this Order, (i) disbursements by the Debtors from the Carve Out Reserves shall not constitute DIP Loans or increase or reduce the DIP Obligations, (ii) the failure of the Carve Out Reserves to satisfy in full the Allowed Professional Fees shall not affect the priority of the Carve Out, and (iii) in no way shall the Initial Budget, Budget, Carve Out, Post-Carve Out Trigger Notice Cap, Carve Out Reserves, or any of the foregoing be construed as a cap or limitation on the amount of the Allowed Professional Fees due and payable by the Debtors. For the avoidance of doubt and notwithstanding anything to the contrary in this Order, the DIP Loan Documents, or in any Prepetition Loan Documents, the Carve Out shall be senior to all liens and claims securing the DIP Facility, the Adequate Protection Liens, the Prepetition Liens, and the DIP Superpriority Claims, and any and all other forms of adequate protection, liens, or claims securing the DIP Obligations or the Prepetition Secured Obligations.

(e)    Payment of Allowed Professional Fees Prior to the Termination Declaration Date. Any payment or reimbursement made prior to the occurrence of the Termination Declaration Date in respect of any Allowed Professional Fees shall not reduce the Carve Out and shall be funded first from the Funded Reserve Account.

(f)    No Direct Obligation To Pay Allowed Professional Fees. None of the DIP Agent, DIP Lenders, or the [Prepetition Secured Parties] shall be responsible for the payment or reimbursement of any fees or disbursements of any Professional Person incurred in connection with the Chapter 11 Cases or any successor cases under any chapter of the Bankruptcy Code.

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Nothing in this Order or otherwise shall be construed to obligate the DIP Agent, the DIP Lenders, or the [Prepetition Secured Parties], in any way, to pay compensation to, or to reimburse expenses of, any Professional Person or to guarantee that the Debtors have sufficient funds to pay such compensation or reimbursement.

(g)    Payment of Carve Out On or After the Termination Declaration Date. Any payment or reimbursement made on or after the occurrence of the Termination Declaration Date in respect of any Allowed Professional Fees shall permanently reduce the Carve Out on a dollar for-dollar basis.

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

JCPenney to Reduce Debt and Strengthen Financial Position

Through Restructuring Support Agreement

Despite JCPenney’s Significant Progress in Executing its Transformation Strategy, Impact of

Unprecedented Coronavirus (COVID-19) Pandemic Necessitates Accelerated Financial Restructuring

Customers Continue to Find the Stylish Merchandise in Select Stores and on jcp.com

Highly Experienced and Dedicated Retail Leadership Team Continuing to Lead JCPenney

Restructuring Support Agreement Supported by Approximately 70% of First Lien Lenders; Files Voluntary

Chapter 11 Petitions to Implement Financial Restructuring Plan

Secures $900 Million in Debtor-in-Possession Financing

PLANO, Texas (May 15, 2020) – J. C. Penney Company, Inc. (NYSE: JCP) today announced that it has entered into a restructuring support agreement (the “RSA”) with lenders holding approximately 70% of JCPenney’s first lien debt to reduce the Company’s outstanding indebtedness and strengthen its financial position. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan (the “Plan”) that is expected to reduce several billion dollars of indebtedness, provide increased financial flexibility to help navigate through the Coronavirus (COVID-19) pandemic, and better position JCPenney for the long-term. To implement the Plan, the Company today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, TX (the “Court”).

During this process, JCPenney will continue to be one of the nation’s largest apparel and home retailers with an expansive footprint of hundreds of stores across the U.S. and Puerto Rico and a powerful eCommerce site, jcp.com. JCPenney is welcoming customers back to select stores and continuing to offer its Contact-free curbside pickup service at all open stores. At the same time, JCPenney’s eCommerce distribution centers continue to fulfill online orders and customer care centers are answering inquiries as usual. The health and safety of associates, customers, and communities remains a top priority, and the Company is gradually reopening stores and offices in a phased approach while following guidance from local and state orders.

“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company. Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy – and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt,” said Jill Soltau, chief executive officer of JCPenney.

Ms. Soltau continued, “Implementing this financial restructuring plan through a court-supervised process is the best path to ensure that JCPenney will build on its over 100-year history to serve our customers for decades to come. We believe the RSA and the widespread support we have received from our asset-based lenders and first lien lenders will allow us to pursue a financial restructuring on an expedited timeframe. We are also encouraged by the level of support we have received from our vendor partners, landlords, and other stakeholders, whose confidence in our business and our people is expected to contribute to a successful reorganization.”

“We have a newly refreshed, highly experienced team of retail executives who remain focused on rebuilding our business and restoring financial strength to JCPenney. This team has continued to innovate even during these challenging times, implementing substantial improvements to our flagship eCommerce platform to increase efficiency and ensure our loyal customers continue to have access to the products they need through elevated shopping experiences. I would also like to thank all of our outstanding associates for their continued dedication to our company and their passion for meeting and exceeding our customers’ expectations. We are continuing to serve our customers as we move through this process with a commitment to working seamlessly with our vendor partners and landlords. We look forward to emerging from both Chapter 11 and this pandemic as a stronger retailer, continuing to implement our Plan for Renewal, and building capabilities focused on satisfying customers’ wants and needs,” Soltau concluded.

JCPenney’s Transformation Strategy

JCPenney has been successfully implementing its Plan for Renewal transformation strategy to improve gross margin, reduce inventory, eliminate inefficient spending, and design an engaging, inspiring shopping experience. Specifically, JCPenney has made foundational improvements to:

• Offer Compelling Merchandise

• Drive Traffic

• Deliver an Engaging Experience

• Fuel Growth

• Build a Results-Minded Culture

While the challenging market conditions have impacted the Company’s ability to meet its current operational and financial objectives, the Company remains focused on returning JCPenney to sustainable, profitable growth by reestablishing the fundamentals of retail, re-envisioning its merchandise offerings, and rolling out new innovations. The Company will continue to gather customer feedback and make improvements that enhance the shopping experience throughout this difficult time and over the long-term. Prior to the unprecedented Coronavirus (COVID-19) pandemic, the Company had made meaningful progress on its Plan for Renewal and successfully met or exceeded guidance on all five financial objectives for 2019 and saw comparable store sales improvement in six of eight merchandise divisions in the second half of 2019 over the first half.

Financing and Ongoing Operations

JCPenney has approximately $500 million in cash on hand as of the Chapter 11 filing date. JCPenney has received commitments for $900 million in debtor-in-possession (“DIP”) financing from its existing first lien lenders, which includes $450 million of new money. Following Court approval, this financing, combined with cash flow generated by the Company’s ongoing operations, is expected to be sufficient to meet JCPenney’s operational and restructuring needs. As part of the DIP commitment from its existing lenders, JCPenney will explore additional opportunities to maximize value, including a third-party sale process.

JCPenney will file a number of customary first day motions with the U.S. Bankruptcy Court seeking authorization to support its operations during the financial restructuring process, including authority to pay non-furloughed associate wages, provide certain benefits to all associates, and to pay vendor partners in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.

Store Optimization

Implementing the financial restructuring will allow JCPenney to accelerate its store optimization strategy. As part of its ongoing transformation, JCPenney will reduce its store footprint to better align its business with the current operating environment. Stores will close in phases throughout the Chapter 11 process – and the first phase of closures, including specific store details and timing, will be disclosed in the coming weeks.

Additional Information

Additional information regarding JCPenney’s financial restructuring is available at www.jcprestructuring.com. Court filings and information about the claims process are available at http://cases.primeclerk.com/JCPenney, by calling the Company’s claims agent, Prime Clerk, toll-free at 877-720-6576 or sending an email to JCPenneyinfo@primeclerk.com.

Advisors

Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company.

Forward-Looking Statements

The Company has included statements in this communication that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expect” and similar expressions identify forward-looking statements, which include, but are not limited to, statements regarding sales, cost of goods sold, selling, general and administrative expenses, earnings, cash flows and liquidity. Forward-looking statements are based only on the Company’s current assumptions and views of future events and financial performance. They are subject to known and unknown risks and uncertainties, many of which are outside of the Company’s control that may cause the Company’s actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, risks attendant to the bankruptcy process, including the Company’s ability to obtain court approval from the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) with respect to motions or other requests made to the Bankruptcy Court throughout the course of the Company and its subsidiaries’ Chapter 11 cases (the “Chapter 11 Cases”), including with respect to any proposed debtor-in-possession financing; the ability of the Company to negotiate, develop, confirm and consummate a plan of reorganization; the effects of the Chapter 11 Cases, including increased legal and other professional costs necessary to execute the Company’s reorganization, on the Company’s liquidity (including the availability of operating capital during the pendency of the Chapter 11 Cases), results of operations or business prospects; the effects of the Chapter 11 Cases on the interests of various constituents; the length of time that the Company will operate under Chapter 11 protection; risks associated with third-party motions in the Chapter 11 Cases; Bankruptcy Court rulings in the Chapter 11 Cases and the outcome of the Chapter 11 Cases in general; conditions to which any debtor-in-possession financing is subject and the risk that these conditions may not be satisfied for various reasons, including for reasons outside the Company’s control; general economic conditions, including inflation, recession, unemployment levels, consumer confidence and spending patterns, credit availability and debt levels; changes in store traffic trends; the cost of goods; more stringent or costly payment terms and/or the decision by a significant number of vendors not to sell the Company merchandise on a timely basis or at all; trade restrictions; the ability to monetize non-core assets on acceptable terms; the ability to implement the Company’s strategic plan, including its omnichannel initiatives; customer acceptance of the Company’s strategies; the Company’s ability to attract, motivate and retain key executives and other associates; the impact of cost reduction initiatives; the Company’s ability to generate or maintain liquidity; implementation of new systems and platforms; changes in tariff, freight and shipping rates; changes in the cost of fuel and other energy and transportation costs; disruptions and congestion at ports through which the Company imports goods; increases in wage and benefit costs; competition and retail industry consolidations; interest rate

fluctuations; dollar and other currency valuations; the impact of weather conditions; risks associated with war, an act of terrorism or pandemic; the ability of the federal government to fund and conduct its operations; a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information; legal and regulatory proceedings; the Company’s ability to access the debt or equity markets on favorable terms or at all; the Company’s ability to comply with the continued listing criteria of the New York Stock Exchange (the “NYSE”) and risks arising from the potential suspension of trading of the Company’s common stock on, or delisting from, the NYSE; and the impact of natural disasters, public health crises or other catastrophic events on the Company’s financial results, in particular as the Company manages its business through the COVID-19 pandemic and the resulting restrictions and uncertainties in the general economic and business environment. Please refer to the Company’s Annual Report on Form 10-K for the year ended February 2, 2020, and quarterly reports on Form 10-Q filed subsequently thereto, for a further discussion of risks and uncertainties. There can be no assurances that the Company will achieve expected results, and actual results may be materially less than expectations. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. Any forward-looking statement made by the Company in this communication is based only on information currently available to it and speaks only as of the date on which such statement is made. The Company does not undertake to update these forward-looking statements as of any future date.

Media Relations:

Brooke Buchanan

(972) 431-3400 or jcpnews@jcp.com; Follow us @jcpnews

Meaghan Repko / Jed Repko / Dan Moore

Joele Frank Wilkinson Brimmer Katcher

212-355-4449

Investor Relations:

(972) 431-5500 or jcpinvestorrelations@jcp.com

About JCPenney

J. C. Penney Company, Inc. (NYSE: JCP), one of the nation’s largest apparel and home retailers, combines an expansive footprint of approximately 850 stores across the United States and Puerto Rico with a powerful e-commerce site, jcp.com, to deliver style and value for all hard-working American families. At every touchpoint, customers will discover stylish merchandise at incredible value from an extensive portfolio of private, exclusive and national brands. Reinforcing this shopping experience is the customer service and warrior spirit of nearly 85,000 associates across the globe, all driving toward the Company’s mission to help customers find what they love for less time, money and effort. For additional information, please visit jcp.com.

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EX-99.2

Exhibit 99.2 JCPenney Business Plan May 2020 Confidential – Subject to Non‐Disclosure AgreementExhibit 99.2 JCPenney Business Plan May 2020 Confidential – Subject to Non‐Disclosure Agreement

Disclaimer This presentation and all information contained therein (this “Presentation”) has been prepared at the direction of J. C. Penney Company, Inc. (“J. C. Penney” or the “Company”) and is being delivered for informational purposes only  on behalf of the Company to a limited number of parties by the following financial and legal advisors: Lazard Frères & Co.  LLC, Kirkland & Ellis LLP, and AlixPartners LLP (collectively, the “Advisors”).  This Presentation is being provided  as a preliminary draft and is subject to material change, does not purport to be all‐inclusive or to necessarily contain all  information that a prospective counterparty may desire in investigating the Company, and is subject to Federal  Rule of Evidence 408 and all similar rules under applicable law.  This Presentation has not been independently verified by the Advisors. None of the Company, the Advisors, their respective affiliates or their  respective employees, directors, officers, contractors, advisors, members, successors,  representatives or agents make any express or implied representation or warranty as to the accuracy or completeness of this Presentation, and  no such party shall have any liability for any material misstatements, omissions or other  errors in this Presentation or any other written or oral communications transmitted to the recipient in connection therewith. The recipient shall not rely on any information set forth in this Presentation, and should conduct its own  independent investigation of the Company and any proposed transaction. This Presentation is provided as of the date hereof and is subject to change.  Neither the Company nor the Advisors is under any obligation to update, amend or supplement this Presentation.  The Company reserves the right, at any  time, to negotiate with any one or more interested parties or to enter into any definitive agreement with respect to, or to determine  not to proceed with, any transaction, without prior notice to any other interested parties.  The  Company reserves the unconditional right to terminate, at any time, and for any or no reason, further participation by any party and to modify any other procedures.  Except as otherwise expressly agreed, the Company shall have no  legal commitment or obligation to any recipient of this Presentation unless and until a definitive agreement has been fully executed.  The existence and contents of this Presentation are being provided to you pursuant to the Confidentiality Agreement previously entered into by  you and the Company (the “Confidentiality Agreement”) and recipients are therefore  bound by the Confidentiality Agreement in respect of all information contained in this presentation.   This Presentation shall not constitute an offer, nor a solicitation of an offer, of the sale or purchase of securities, nor shall any  securities of the Company be offered or sold, in any jurisdiction in which such an offer, solicitation or sale  would be unlawful.  Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the  transactions contemplated hereby or determined if this Presentation is truthful or  complete.  Recipients of this Presentation should not construe the contents hereof to constitute legal, tax, regulatory, financial, accounting or  other advice.  Any recipient of this Presentation should seek advice from its own  independent tax advisor, legal counsel and/or other advisor with respect to such matters. In addition, this Presentation includes certain estimates, targets, projections and forward‐looking statements provided by the Company with respect  to the anticipated future performance of the Company.  Such estimates, targets,  projections and forward‐looking statements reflect various assumptions and subjective judgments of management concerning the future performance of the  Company, and are subject to significant business, economic and  competitive risks, uncertainties and contingencies, many of which are beyond the control of the Company.  Accordingly, these statements are  inherently speculative, and there can be no assurances or guarantees that such estimates,  targets, projections or forward‐looking statements will be realized.  Actual results may vary from anticipated results and such variations may  be material. Past performance is not a guarantee of future results.  No representations or  warranties are made as to the accuracy or reasonableness of such assumptions or the estimates, targets, projections or forward‐looking  statements based thereon.  You are cautioned not to place undue reliance upon any of these  projections or statements, which speak only as of the date made. Each recipient of this Presentation should make an independent assessment of the merits of pursuing a transaction and should consult its  own professional advisors.  Except as otherwise expressly indicated herein, this Presentation speaks as of the date hereof and as of the date at which such  information contained therein is expressed to be stated, as applicable.  The delivery of this Presentation  does not create any implication that there has been no change in the business and affairs of the Company since such date. Neither  the Company nor the Advisors nor any of their respective directors, officers, employees, affiliates or  representatives undertakes any obligation to update this Presentation or any of the information contained herein or to correct any inaccuracies  or omissions that may become apparent. The Company reserves the right to conduct the process for the transaction as it determines in its sole discretion (including, without limitation, terminating further participation in the process by any party, rejecting any proposals or  indications of interest, negotiating with any one or more prospective buyers and entering into any agreement with respect to any transaction without prior notice to you or any other person) and any procedures relating to such  transaction may be changed at any time without prior notice to you or any other person. The recipient acknowledges that no representation  or warranty, express or implied, has been made with respect to such process or proposed  structuring.  None of the Company, the Advisors or any of their respective affiliates has any legal, fiduciary or other duty to the  recipient with respect to the manner in which the proposed process is conducted. No legal relationship shall be created between the Company or the Advisors and any recipient of this Presentation by virtue of the  issuance or delivery of this Presentation.  The recipient of this Presentation may not construe the  contents of this Presentation as legal or investment advice. Each recipient should consult its own counsel, accountants, and business advisors  as to legal, tax, and related matters concerning future involvement with the Company. 2 Confidential – Subject to Non‐Disclosure Agreement     |Disclaimer This presentation and all information contained therein (this “Presentation”) has been prepared at the direction of J. C. Penney Company, Inc. (“J. C. Penney” or the “Company”) and is being delivered for informational purposes only on behalf of the Company to a limited number of parties by the following financial and legal advisors: Lazard Frères & Co. LLC, Kirkland & Ellis LLP, and AlixPartners LLP (collectively, the “Advisors”). This Presentation is being provided as a preliminary draft and is subject to material change, does not purport to be all‐inclusive or to necessarily contain all information that a prospective counterparty may desire in investigating the Company, and is subject to Federal Rule of Evidence 408 and all similar rules under applicable law. This Presentation has not been independently verified by the Advisors. None of the Company, the Advisors, their respective affiliates or their respective employees, directors, officers, contractors, advisors, members, successors, representatives or agents make any express or implied representation or warranty as to the accuracy or completeness of this Presentation, and no such party shall have any liability for any material misstatements, omissions or other errors in this Presentation or any other written or oral communications transmitted to the recipient in connection therewith. The recipient shall not rely on any information set forth in this Presentation, and should conduct its own independent investigation of the Company and any proposed transaction. This Presentation is provided as of the date hereof and is subject to change. Neither the Company nor the Advisors is under any obligation to update, amend or supplement this Presentation. The Company reserves the right, at any time, to negotiate with any one or more interested parties or to enter into any definitive agreement with respect to, or to determine not to proceed with, any transaction, without prior notice to any other interested parties. The Company reserves the unconditional right to terminate, at any time, and for any or no reason, further participation by any party and to modify any other procedures. Except as otherwise expressly agreed, the Company shall have no legal commitment or obligation to any recipient of this Presentation unless and until a definitive agreement has been fully executed. The existence and contents of this Presentation are being provided to you pursuant to the Confidentiality Agreement previously entered into by you and the Company (the “Confidentiality Agreement”) and recipients are therefore bound by the Confidentiality Agreement in respect of all information contained in this presentation. This Presentation shall not constitute an offer, nor a solicitation of an offer, of the sale or purchase of securities, nor shall any securities of the Company be offered or sold, in any jurisdiction in which such an offer, solicitation or sale would be unlawful. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the transactions contemplated hereby or determined if this Presentation is truthful or complete. Recipients of this Presentation should not construe the contents hereof to constitute legal, tax, regulatory, financial, accounting or other advice. Any recipient of this Presentation should seek advice from its own independent tax advisor, legal counsel and/or other advisor with respect to such matters. In addition, this Presentation includes certain estimates, targets, projections and forward‐looking statements provided by the Company with respect to the anticipated future performance of the Company. Such estimates, targets, projections and forward‐looking statements reflect various assumptions and subjective judgments of management concerning the future performance of the Company, and are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are beyond the control of the Company. Accordingly, these statements are inherently speculative, and there can be no assurances or guarantees that such estimates, targets, projections or forward‐looking statements will be realized. Actual results may vary from anticipated results and such variations may be material. Past performance is not a guarantee of future results. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the estimates, targets, projections or forward‐looking statements based thereon. You are cautioned not to place undue reliance upon any of these projections or statements, which speak only as of the date made. Each recipient of this Presentation should make an independent assessment of the merits of pursuing a transaction and should consult its own professional advisors. Except as otherwise expressly indicated herein, this Presentation speaks as of the date hereof and as of the date at which such information contained therein is expressed to be stated, as applicable. The delivery of this Presentation does not create any implication that there has been no change in the business and affairs of the Company since such date. Neither the Company nor the Advisors nor any of their respective directors, officers, employees, affiliates or representatives undertakes any obligation to update this Presentation or any of the information contained herein or to correct any inaccuracies or omissions that may become apparent. The Company reserves the right to conduct the process for the transaction as it determines in its sole discretion (including, without limitation, terminating further participation in the process by any party, rejecting any proposals or indications of interest, negotiating with any one or more prospective buyers and entering into any agreement with respect to any transaction without prior notice to you or any other person) and any procedures relating to such transaction may be changed at any time without prior notice to you or any other person. The recipient acknowledges that no representation or warranty, express or implied, has been made with respect to such process or proposed structuring. None of the Company, the Advisors or any of their respective affiliates has any legal, fiduciary or other duty to the recipient with respect to the manner in which the proposed process is conducted. No legal relationship shall be created between the Company or the Advisors and any recipient of this Presentation by virtue of the issuance or delivery of this Presentation. The recipient of this Presentation may not construe the contents of this Presentation as legal or investment advice. Each recipient should consult its own counsel, accountants, and business advisors as to legal, tax, and related matters concerning future involvement with the Company. 2 Confidential – Subject to Non‐Disclosure Agreement |

Topics for today’s presentation What we’ll cover What we hope you take away Current state and recent transformation  We understand the root causes of our historical  momentum performance decline, implemented actions to address those  issues and are seeing early traction The COVID‐19 disruption and our expected  We have a detailed understanding of the short‐term  recovery financial impacts of COVID‐19, as well as the potential  consumer behavior shifts  Our Plan for Renewal We’ve made thoughtful strategic choices to guide our  transformation, and we will continue to evolve those choices  as the macro conditions change Historical and projected financial overview Our Plan for Renewal will drive a return to sustainable,  profitable growth and a financially sound business for the  long term 3 Confidential – Subject to Non‐Disclosure Agreement     |Topics for today’s presentation What we’ll cover What we hope you take away Current state and recent transformation We understand the root causes of our historical momentum performance decline, implemented actions to address those issues and are seeing early traction The COVID‐19 disruption and our expected We have a detailed understanding of the short‐term recovery financial impacts of COVID‐19, as well as the potential consumer behavior shifts Our Plan for Renewal We’ve made thoughtful strategic choices to guide our transformation, and we will continue to evolve those choices as the macro conditions change Historical and projected financial overview Our Plan for Renewal will drive a return to sustainable, profitable growth and a financially sound business for the long term 3 Confidential – Subject to Non‐Disclosure Agreement |

Current state and recent  transformation momentum 4 Confidential – Subject to Non‐Disclosure Agreement     |Current state and recent transformation momentum 4 Confidential – Subject to Non‐Disclosure Agreement |

JCPenney has 100+ years of heritage serving American  families and meaningful strengths to  build upon in this transformation journey Brand strength Loyal Customer base Omnichannel assets People & culture • ~85K associates, 80% women  • Omnichannel capabilities  • 200M+ transactions from  • Recognized and celebrated  and 56% ethnically diverse ~46M customers combined with a strong  American brand technology platform • Associates committed and  • ~32M Loyalty customers that  • $10.7B in FY19 net sales from  connected to achievements  • Expansive real estate  drive ~70% of net sales a mix of national & private  larger than themselves 1 portfolio across 48 states and  brands Puerto Rico • Strong values: Passion.  • 3 beloved $500M+ private  Confidence. Service. Courage. brands and a total of 10 that  represent $100M+ 1 In 2019, we derived $2,361 million in sales from top 5 private brands, $3,866 million from top 15 private brands and $4,399 million  from all private brands. In 2019, top 5 private brands represented 53.7% of all private brand sales; top 15 private brands represented  87.9%  of private brand sales. As of April 15, 2020, we had $672 million of supplier payables, approximately 50% of which were attributed to  our top 33 suppliers and approximately 20% of which were attributable to our top 5 suppliers. 5 Confidential – Subject to Non‐Disclosure Agreement     |JCPenney has 100+ years of heritage serving American families and meaningful strengths to build upon in this transformation journey Brand strength Loyal Customer base Omnichannel assets People & culture • ~85K associates, 80% women • Omnichannel capabilities • 200M+ transactions from • Recognized and celebrated and 56% ethnically diverse ~46M customers combined with a strong American brand technology platform • Associates committed and • ~32M Loyalty customers that • $10.7B in FY19 net sales from connected to achievements • Expansive real estate drive ~70% of net sales a mix of national & private larger than themselves 1 portfolio across 48 states and brands Puerto Rico • Strong values: Passion. • 3 beloved $500M+ private Confidence. Service. Courage. brands and a total of 10 that represent $100M+ 1 In 2019, we derived $2,361 million in sales from top 5 private brands, $3,866 million from top 15 private brands and $4,399 million from all private brands. In 2019, top 5 private brands represented 53.7% of all private brand sales; top 15 private brands represented 87.9% of private brand sales. As of April 15, 2020, we had $672 million of supplier payables, approximately 50% of which were attributed to our top 33 suppliers and approximately 20% of which were attributable to our top 5 suppliers. 5 Confidential – Subject to Non‐Disclosure Agreement |

However, our financial performance was challenged leading up  to the most recent CEO  transition and launch of our transformation 1  Net Sales CAGR as of Sep 2018 Total return to shareholders (TRS) index through Sep 2018, Percent January 2012 = 100, USD Five year Two year One year CEO transition JCP S&P 500 Industry index 7 8 8 350 0 ‐1 3 300 0 0 2 250 1 2 3 200 5 4 4 150 0 ‐2 ‐3 100 ‐2 ‐4 ‐4 50 ‐16 ‐19 ‐25 2012 13 14 15 16 17 18 19 In the period prior to the transformation launch, JCP sales had declined faster than most competitors and accelerated over  time while shareholder value creation lagged peers and the market Sour ce: S&P Capital IQ, annual reports 1 Sears and Nordstrom uses CAGR from 2017 6 Confidential – Subject to Non‐Disclosure Agreement     |However, our financial performance was challenged leading up to the most recent CEO transition and launch of our transformation 1 Net Sales CAGR as of Sep 2018 Total return to shareholders (TRS) index through Sep 2018, Percent January 2012 = 100, USD Five year Two year One year CEO transition JCP S&P 500 Industry index 7 8 8 350 0 ‐1 3 300 0 0 2 250 1 2 3 200 5 4 4 150 0 ‐2 ‐3 100 ‐2 ‐4 ‐4 50 ‐16 ‐19 ‐25 2012 13 14 15 16 17 18 19 In the period prior to the transformation launch, JCP sales had declined faster than most competitors and accelerated over time while shareholder value creation lagged peers and the market Sour ce: S&P Capital IQ, annual reports 1 Sears and Nordstrom uses CAGR from 2017 6 Confidential – Subject to Non‐Disclosure Agreement |

As we set out to turn this trajectory, we first  identified the root cause issues that had driven  performance decline Customer, margin & channel issues Category issues Ÿ Confusing and ineffective pricing and promotions Ÿ Shift of unit volume from traffic driving and  compressed gross margin, while consumer value  acquisition categories like women’s apparel to  perception lagged peers lower margin categories like big ticket alienated  core consumer  Ÿ Outdated traditional marketing strategy lacked 1:1  Ÿ Assortment and planning based on historical sales  engagement and prioritization on top 20% of loyal  vs. market trends reduced relevance and  customers that drive business accelerated share declines in key categories (tops  Ÿ Poor eCommerce user experience drove a large share  vs. bottoms) of one‐time, promotionally sensitive eComm  Ÿ Lack of visual merchandising created “sea of  customers sameness” Ÿ Higher than industry shrink rates and product loss Ÿ Private brands needed refresh to improve  driven by operational decisions in‐store relevance and clearly segment positioning 7 Confidential – Subject to Non‐Disclosure Agreement     |As we set out to turn this trajectory, we first identified the root cause issues that had driven performance decline Customer, margin & channel issues Category issues Ÿ Confusing and ineffective pricing and promotions Ÿ Shift of unit volume from traffic driving and compressed gross margin, while consumer value acquisition categories like women’s apparel to perception lagged peers lower margin categories like big ticket alienated core consumer Ÿ Outdated traditional marketing strategy lacked 1:1 Ÿ Assortment and planning based on historical sales engagement and prioritization on top 20% of loyal vs. market trends reduced relevance and customers that drive business accelerated share declines in key categories (tops Ÿ Poor eCommerce user experience drove a large share vs. bottoms) of one‐time, promotionally sensitive eComm Ÿ Lack of visual merchandising created “sea of customers sameness” Ÿ Higher than industry shrink rates and product loss Ÿ Private brands needed refresh to improve driven by operational decisions in‐store relevance and clearly segment positioning 7 Confidential – Subject to Non‐Disclosure Agreement |

We are methodically fixing our problems, making foundational  improvements  and creating transformational change for our customer focus segment Fixed our problems and  Deep dive on our customer and their  took immediate actions needs/wants/attitudes Ÿ Reduced and enhanced inventory position Ÿ Identified a powerful insight into how to best serve, retain, and  acquire customers Ÿ Reduced shrink with in‐store operational discipline Ÿ Defined our customer focus segment, who represents 28% of  Ÿ Redesigned and streamlined store processes  our sales today with additional upside through expanded share  (e.g., checkout, in‐store pickup) of wallet Ÿ Strengthened omnichannel navigation, presentation and  Ÿ Developed a plan to delight this customer focus segment that  curation could also activate complementary halo segments that together  Ÿ Aligned merchandise assortment and choice counts with  represent 70% of home and apparel spending the trends, quality and styles for our customers 8 Confidential – Subject to Non‐Disclosure Agreement     |We are methodically fixing our problems, making foundational improvements and creating transformational change for our customer focus segment Fixed our problems and Deep dive on our customer and their took immediate actions needs/wants/attitudes Ÿ Reduced and enhanced inventory position Ÿ Identified a powerful insight into how to best serve, retain, and acquire customers Ÿ Reduced shrink with in‐store operational discipline Ÿ Defined our customer focus segment, who represents 28% of Ÿ Redesigned and streamlined store processes our sales today with additional upside through expanded share (e.g., checkout, in‐store pickup) of wallet Ÿ Strengthened omnichannel navigation, presentation and Ÿ Developed a plan to delight this customer focus segment that curation could also activate complementary halo segments that together Ÿ Aligned merchandise assortment and choice counts with represent 70% of home and apparel spending the trends, quality and styles for our customers 8 Confidential – Subject to Non‐Disclosure Agreement |

We have clearly defined our strategic choices, and these  choices are outlined in our Plan  For Renewal Offer Compelling Merchandise Drive Traffic Deliver Engaging Experience PLAN FOR RENEWAL Fuel Growth Build a Results‐Minded Culture 9 9 Confidential  Confidential – – Subj Subject  ect to  to Non‐Disclosur Non‐Disclosure e Agr  Agreement  eement           | |We have clearly defined our strategic choices, and these choices are outlined in our Plan For Renewal Offer Compelling Merchandise Drive Traffic Deliver Engaging Experience PLAN FOR RENEWAL Fuel Growth Build a Results‐Minded Culture 9 9 Confidential Confidential – – Subj Subject ect to to Non‐Disclosur Non‐Disclosure e Agr Agreement eement | |

These efforts led to meaningful change in trajectory in  FY19 and early FY20 Category Met guidance on Channel / Margin progress Metrics through FY19 progress Fixed our problems and took immediate actions 10 Confidential – Subject to Non‐Disclosure Agreement     |These efforts led to meaningful change in trajectory in FY19 and early FY20 Category Met guidance on Channel / Margin progress Metrics through FY19 progress Fixed our problems and took immediate actions 10 Confidential – Subject to Non‐Disclosure Agreement |

Financial performance was meaningfully improved in FY19 based  on early traction from  our Plan for Renewal Met or exceeded guidance on metrics through FY19 Net sales momentum Gross margin improvement Sales met guidance, with q4 positive comps in several categories Gross margin rate up ~210 bps by optimizing markdown cadence differently,  refining pricing/promotion strategy, and improving shrink Q4 FY18‐FY19 % YoY comp net sales 32.5% 34.6% +10.0% +6.8% +6.4% +2.6% Activewear Women’s            Men’s Dresses FY18 gross margin (%) FY19 gross (%) margin Wear to Work Big & Tall    Inventory, $B EBITDA (A), $M EBITDA (A) growth Increased inventory productivity Adjusted EBITDA substantially exceeded target  Inventory declined, freeing working capital & giving  EBITDA (A) % of sales despite topline trend with rate expansion ~50bps customers a better experience ‐11% 583 568 2.44 2.17 FY18 FY19 FY18 FY19 4.9% 5.4% 11 Confidential – Subject to Non‐Disclosure Agreement     |Financial performance was meaningfully improved in FY19 based on early traction from our Plan for Renewal Met or exceeded guidance on metrics through FY19 Net sales momentum Gross margin improvement Sales met guidance, with q4 positive comps in several categories Gross margin rate up ~210 bps by optimizing markdown cadence differently, refining pricing/promotion strategy, and improving shrink Q4 FY18‐FY19 % YoY comp net sales 32.5% 34.6% +10.0% +6.8% +6.4% +2.6% Activewear Women’s Men’s Dresses FY18 gross margin (%) FY19 gross (%) margin Wear to Work Big & Tall Inventory, $B EBITDA (A), $M EBITDA (A) growth Increased inventory productivity Adjusted EBITDA substantially exceeded target Inventory declined, freeing working capital & giving EBITDA (A) % of sales despite topline trend with rate expansion ~50bps customers a better experience ‐11% 583 568 2.44 2.17 FY18 FY19 FY18 FY19 4.9% 5.4% 11 Confidential – Subject to Non‐Disclosure Agreement |

In FY19, we have made significant improvements to  identified channel and  margin root cause issues Channel /Margin progress Enhanced customer  Developed new  Improved overall  Brand strength Loyal Customer base Omnichannel assets People & culture experience fulfillment models digital experience • Launched new eComm experience in Q1 FY20  • Drove increase in BOPIS of over • Launched ‘Test & Learns’ – single store  and generating significant momentum – with  80% Y/Y tests that enhance customer engagement bounce rates down ~15% and conversion up  • Began offering contact‐free curbside  • Took Test & Learns’ findings and combined  ~40%+ in initial A/B tests pickup; rolled out in early March to 50  into one store, layering in occasion  stores and have expanded since with  merchandising and visual merchandising overwhelming positive customer response  • Implemented occasion merchandising and  (NPS of 91) visual merchandising in 92 stores • Launched our ‘Brand Defining Store’ – a lab  that is informing future actions 12 Confidential – Subject to Non‐Disclosure Agreement     |In FY19, we have made significant improvements to identified channel and margin root cause issues Channel /Margin progress Enhanced customer Developed new Improved overall Brand strength Loyal Customer base Omnichannel assets People & culture experience fulfillment models digital experience • Launched new eComm experience in Q1 FY20 • Drove increase in BOPIS of over • Launched ‘Test & Learns’ – single store and generating significant momentum – with 80% Y/Y tests that enhance customer engagement bounce rates down ~15% and conversion up • Began offering contact‐free curbside • Took Test & Learns’ findings and combined ~40%+ in initial A/B tests pickup; rolled out in early March to 50 into one store, layering in occasion stores and have expanded since with merchandising and visual merchandising overwhelming positive customer response • Implemented occasion merchandising and (NPS of 91) visual merchandising in 92 stores • Launched our ‘Brand Defining Store’ – a lab that is informing future actions 12 Confidential – Subject to Non‐Disclosure Agreement |

We have redefined our merchandise strategy and discipline,  improving our offering to the  customer and building momentum Category progress Built comp sales Improved curation Enhanced assortment Brand strength Loyal Customer base Omnichannel assets People & culture momentum • Relaunched private brand a.n.a in February 2020  • FY19 ending inventory was down 11% vs.  • Six of eight divisions demonstrated comp  leading to immediate share gains in denim and  end of FY18; down 23% compared to end  improvement 2H FY19 vs. 1H FY19 beginning multi‐year roadmap of brand launches  of FY17 • Women’s apparel saw sequential improvement  and relaunches • Improved curation, reducing choice count  in third and fourth quarter of FY19 driven by  while retaining sales • Assortment enhancements stabilized market  positive comps in dresses and broadening of  share position in key categories assortment in sportswear • Reduced inventory enhances productivity  • No longer losing share in Women’s apparel and has improved our shopping experience • Positive comps in Q4 FY19 across high market  • Taking share in Men’s Big & Tall through  growth athletic apparel, in both private and  choice in active and core essentials national brands • Taking share in Baby and Toddler 13 Confidential – Subject to Non‐Disclosure Agreement     |We have redefined our merchandise strategy and discipline, improving our offering to the customer and building momentum Category progress Built comp sales Improved curation Enhanced assortment Brand strength Loyal Customer base Omnichannel assets People & culture momentum • Relaunched private brand a.n.a in February 2020 • FY19 ending inventory was down 11% vs. • Six of eight divisions demonstrated comp leading to immediate share gains in denim and end of FY18; down 23% compared to end improvement 2H FY19 vs. 1H FY19 beginning multi‐year roadmap of brand launches of FY17 • Women’s apparel saw sequential improvement and relaunches • Improved curation, reducing choice count in third and fourth quarter of FY19 driven by while retaining sales • Assortment enhancements stabilized market positive comps in dresses and broadening of share position in key categories assortment in sportswear • Reduced inventory enhances productivity • No longer losing share in Women’s apparel and has improved our shopping experience • Positive comps in Q4 FY19 across high market • Taking share in Men’s Big & Tall through growth athletic apparel, in both private and choice in active and core essentials national brands • Taking share in Baby and Toddler 13 Confidential – Subject to Non‐Disclosure Agreement |

The COVID‐19 disruption and our  expected recovery 14 Confidential – Subject to Non‐Disclosure Agreement     |The COVID‐19 disruption and our expected recovery 14 Confidential – Subject to Non‐Disclosure Agreement |

COVID‐19 has created unprecedented disruptions within the  apparel space, but could allow  JCPenney to accelerate within a “new normal” Offline O nline Illustrative apparel retail impact and phasing | COVID‐19 Spread Mid‐ to long‐term recovery of consumer  E volution towards the  sentiment & supply “new normal” ‘Shock’ during lock down Initia l recovery as stores re‐open • Nationwide store closures • Lower consumer discretionary spend • Growing consumer spend during  • Fully restored  economic recovery consumer confidence • Suppressed eComm sales  • Decreased store traffic due to local  in most categories regulations and consumer hesitation to  • Sustained return in store traffic to  • Permanently changed  What the  enter stores near pre COVID‐19 levels shopping behaviors  industry is  caused by COVID‐19  facing • Accelerated rebound in eComm sales as  • Continued growth in eComm category  crisis customers return to “normalcy” as consumers grow more comfortable  online • Control and reduce costs  • Execute store re‐opening strategy to  • Maintain or grow share of brick‐and‐ • Leapfrog to the “new  where possible protect customers while driving traffic mortar sales  normal” of consumer  shopping behaviors • “Double down” on  • Streamline store network to be more  • Capitalize on customer preference  What JCPenney  eComm business  resilient and profitable shift toward eComm to drive  • Reinvent for the future  must do to  (including tech enabled  sustained growth in the business in real‐time • Continue investment in eComm channel to  overcome curbside pickup) to  accelerate recovery and growth • Leverage agility and growth mindset  maintain customer  led by management relationships and gain  share 15 Confidential – Subject to Non‐Disclosure Agreement     |COVID‐19 has created unprecedented disruptions within the apparel space, but could allow JCPenney to accelerate within a “new normal” Offline O nline Illustrative apparel retail impact and phasing | COVID‐19 Spread Mid‐ to long‐term recovery of consumer E volution towards the sentiment & supply “new normal” ‘Shock’ during lock down Initia l recovery as stores re‐open • Nationwide store closures • Lower consumer discretionary spend • Growing consumer spend during • Fully restored economic recovery consumer confidence • Suppressed eComm sales • Decreased store traffic due to local in most categories regulations and consumer hesitation to • Sustained return in store traffic to • Permanently changed What the enter stores near pre COVID‐19 levels shopping behaviors industry is caused by COVID‐19 facing • Accelerated rebound in eComm sales as • Continued growth in eComm category crisis customers return to “normalcy” as consumers grow more comfortable online • Control and reduce costs • Execute store re‐opening strategy to • Maintain or grow share of brick‐and‐ • Leapfrog to the “new where possible protect customers while driving traffic mortar sales normal” of consumer shopping behaviors • “Double down” on • Streamline store network to be more • Capitalize on customer preference What JCPenney eComm business resilient and profitable shift toward eComm to drive • Reinvent for the future must do to (including tech enabled sustained growth in the business in real‐time • Continue investment in eComm channel to overcome curbside pickup) to accelerate recovery and growth • Leverage agility and growth mindset maintain customer led by management relationships and gain share 15 Confidential – Subject to Non‐Disclosure Agreement |

While short‐term sales will be impacted, we project  eComm channel to return to FY19  trajectory in Q2 FY21 and stores to stabilize by holiday FY21 Annual stores net sales, $B, including Services & “Other” Annual eComm net sales, $B 9,172 6,745 6,681 6,632 6,666 3,763 1,544 2,331 2,119 1,926 1,607 1,322 FY19 FY20 FY21 FY22 FY23 FY24 Gross  FY19 FY20 FY21 FY22 FY23 FY24 1 profit , 3,272  1,140  2,347  2,575  2,584  2,617  419  294  433  522  574  632  $M  Store  846 654  ~604 ~604 ~604 ~604 2 count ‐60‐70% ‐15‐20% FY20 JCPenney stores net sales FY20 JCPenney eComm net sales % change YoY % change YoY Q4 FY21 Q2 FY21 Return to pre‐crisis trajectory Return to pre‐crisis trajectory Quarter Quarter 1 Gross profit excludes adjustments for services, allocations of certain sourcing and distribution center operating expenses, and enterprise co‐op  that are included in GAAP gross margin; gross margin not available at channel level 2 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 16 Confidential – Subject to Non‐Disclosure Agreement     | Source: Daxue, NBS, Industry expert, COVID‐19 US Consumer Pulse Survey 3/16‐3/17/2020, Earnest DataWhile short‐term sales will be impacted, we project eComm channel to return to FY19 trajectory in Q2 FY21 and stores to stabilize by holiday FY21 Annual stores net sales, $B, including Services & “Other” Annual eComm net sales, $B 9,172 6,745 6,681 6,632 6,666 3,763 1,544 2,331 2,119 1,926 1,607 1,322 FY19 FY20 FY21 FY22 FY23 FY24 Gross FY19 FY20 FY21 FY22 FY23 FY24 1 profit , 3,272 1,140 2,347 2,575 2,584 2,617 419 294 433 522 574 632 $M Store 846 654 ~604 ~604 ~604 ~604 2 count ‐60‐70% ‐15‐20% FY20 JCPenney stores net sales FY20 JCPenney eComm net sales % change YoY % change YoY Q4 FY21 Q2 FY21 Return to pre‐crisis trajectory Return to pre‐crisis trajectory Quarter Quarter 1 Gross profit excludes adjustments for services, allocations of certain sourcing and distribution center operating expenses, and enterprise co‐op that are included in GAAP gross margin; gross margin not available at channel level 2 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 16 Confidential – Subject to Non‐Disclosure Agreement | Source: Daxue, NBS, Industry expert, COVID‐19 US Consumer Pulse Survey 3/16‐3/17/2020, Earnest Data

We will streamline our footprint by ~30%, transitioning to  a stronger and more  sustainable fleet Store network optimized... …creating positive footprint shifts FY19 stores net sales,  $B,  1 Store count including Services & “Other” A/B malls On mall Per‐store revenue, FY19 Current  846 $9.2B 58% 72% $10.8M network Go‐forward  ~604 $7.5B 62% 74% $12.4M network Driven by… Optimizing for… • Balanced benefits of maximized per‐store  • Strongest stores with positive trending historical comps, low competitive  performance and economies of scale pressure, and high target income demo representation • KPI thresholds with business judgement layered  • Exiting 116 MSAs that compose only 7% of FY19 revenue as stores are  in: driving complexity in the business ─ Operating margin • Balanced nationwide portfolio, indexed toward the Midwest (30% of future  ─ Full year revenue network), South (21%), and Southeast (17%) ─ Space productivity 1  Reflects latest thinking on stores as of April 2020; exact number continues to evolve 17 Confidential – Subject to Non‐Disclosure Agreement     |We will streamline our footprint by ~30%, transitioning to a stronger and more sustainable fleet Store network optimized... …creating positive footprint shifts FY19 stores net sales, $B, 1 Store count including Services & “Other” A/B malls On mall Per‐store revenue, FY19 Current 846 $9.2B 58% 72% $10.8M network Go‐forward ~604 $7.5B 62% 74% $12.4M network Driven by… Optimizing for… • Balanced benefits of maximized per‐store • Strongest stores with positive trending historical comps, low competitive performance and economies of scale pressure, and high target income demo representation • KPI thresholds with business judgement layered • Exiting 116 MSAs that compose only 7% of FY19 revenue as stores are in: driving complexity in the business ─ Operating margin • Balanced nationwide portfolio, indexed toward the Midwest (30% of future ─ Full year revenue network), South (21%), and Southeast (17%) ─ Space productivity 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 17 Confidential – Subject to Non‐Disclosure Agreement |

In light of channel shifts, we are doubling down in  eComm to create a curated shopping  experience with digital flagship driving ~$2.3B in sales by FY24 eComm will be a bigger driver of enterprise sales Where JCPenney is well positioned to grow FY19 FY24 Marketing  Fulfillment  $1.5B $2.3B eComm  efficiency enhancements net sales +9% p.a. 14% 26% Higher  % of enterprise  Site experience net sales basket +12 pts JCPenney eComm strategy is critical to fueling future growth Mid Digital channel serving as primary means of retaining a portion of customers lost by store closures Long Increasing digital penetration to be on par with competitors to fuel growth 18 Confidential – Subject to Non‐Disclosure Agreement     |In light of channel shifts, we are doubling down in eComm to create a curated shopping experience with digital flagship driving ~$2.3B in sales by FY24 eComm will be a bigger driver of enterprise sales Where JCPenney is well positioned to grow FY19 FY24 Marketing Fulfillment $1.5B $2.3B eComm efficiency enhancements net sales +9% p.a. 14% 26% Higher % of enterprise Site experience net sales basket +12 pts JCPenney eComm strategy is critical to fueling future growth Mid Digital channel serving as primary means of retaining a portion of customers lost by store closures Long Increasing digital penetration to be on par with competitors to fuel growth 18 Confidential – Subject to Non‐Disclosure Agreement |

Our Plan for Renewal 19 Confidential – Subject to Non‐Disclosure Agreement     |Our Plan for Renewal 19 Confidential – Subject to Non‐Disclosure Agreement |

Offer Compelling Merchandise Drive Traffic Deliver Engaging Experience PLAN FOR RENEWAL Fuel Growth Build a Results‐Minded Culture 20 20 Confidential  Confidential – – Subj Subject  ect to  to Non‐Disclosur Non‐Disclosure e Agr  Agreement  eement           | |Offer Compelling Merchandise Drive Traffic Deliver Engaging Experience PLAN FOR RENEWAL Fuel Growth Build a Results‐Minded Culture 20 20 Confidential Confidential – – Subj Subject ect to to Non‐Disclosur Non‐Disclosure e Agr Agreement eement | |

Our compelling merchandise strategy is the framework for  how we bring product to life  online and in our stores Ÿ Market share – supports our choices and focus; we defined our category  roles based on customer importance and market‐share relevance Compelling Category  Ÿ Assortment architecture and choice count – pivotal to a curated  merchandise management assortment; every item we select has clear purpose and intent Ÿ Pricing – delivers upon our value positioning with strategic investment in  pricing and promotion where the customer most values it, with consistent  and compelling value available every day Ÿ Inventory management – creates easy experience thru strategic inventory  levels; choice count management, buy‐to‐sales, detailed channel flow,  timely markdowns, and aged inventory management Brand management • Brand architecture – framework to ensure each brand is distinct and  purposeful and does not compete with another brand  • Complementary private and national brands – each have a role, working  together to provide the customer the product, quality and value they’re  looking for 21 Confidential – Subject to Non‐Disclosure Agreement     |Our compelling merchandise strategy is the framework for how we bring product to life online and in our stores Ÿ Market share – supports our choices and focus; we defined our category roles based on customer importance and market‐share relevance Compelling Category Ÿ Assortment architecture and choice count – pivotal to a curated merchandise management assortment; every item we select has clear purpose and intent Ÿ Pricing – delivers upon our value positioning with strategic investment in pricing and promotion where the customer most values it, with consistent and compelling value available every day Ÿ Inventory management – creates easy experience thru strategic inventory levels; choice count management, buy‐to‐sales, detailed channel flow, timely markdowns, and aged inventory management Brand management • Brand architecture – framework to ensure each brand is distinct and purposeful and does not compete with another brand • Complementary private and national brands – each have a role, working together to provide the customer the product, quality and value they’re looking for 21 Confidential – Subject to Non‐Disclosure Agreement |

We drive traffic by knowing our customer and engaging  them across channels Ÿ Build value proposition around customer focus segment (All‐in Shopping  Enthusiast), creating a place fun to shop, making it easier to put outfits  Know our Drive traffic together, supporting them in celebrating life’s events, and providing a fair  deal, that’s easy to understand customers Ÿ Capture more than fair share of halo customer segments, who seek  product quality and price/value Ÿ Continue to drive sales and traffic with less marketing spend by: — Fully integrating merchandising and eComm priorities into marketing  messages to communicate relevant stories (e.g., product, inspiration,  Drive traffic across  value) everyday — Leveraging analytics to continually optimize digital and traditional spend  our existing channels across mechanisms and customer audiences (e.g., top 20%, store only,  online only)  — Personalizing our customer interactions across channels (e.g., email, site,  social, display) — Enhancing customer affinity program to better engage loyal customers 22 Confidential – Subject to Non‐Disclosure Agreement     |We drive traffic by knowing our customer and engaging them across channels Ÿ Build value proposition around customer focus segment (All‐in Shopping Enthusiast), creating a place fun to shop, making it easier to put outfits Know our Drive traffic together, supporting them in celebrating life’s events, and providing a fair deal, that’s easy to understand customers Ÿ Capture more than fair share of halo customer segments, who seek product quality and price/value Ÿ Continue to drive sales and traffic with less marketing spend by: — Fully integrating merchandising and eComm priorities into marketing messages to communicate relevant stories (e.g., product, inspiration, Drive traffic across value) everyday — Leveraging analytics to continually optimize digital and traditional spend our existing channels across mechanisms and customer audiences (e.g., top 20%, store only, online only) — Personalizing our customer interactions across channels (e.g., email, site, social, display) — Enhancing customer affinity program to better engage loyal customers 22 Confidential – Subject to Non‐Disclosure Agreement |

We meet our customers where they are with an engaging  experience on our digital flagship  and in our stores Ÿ Digital is becoming a core part of all customer experiences, as nearly 90%  of customers start their path to purchase online, even those that ultimately  Deliver engaging Digital lead to our stores experiences Ÿ Digital experience enhancement with mobile‐first design is already  improving customer experience on our digital platforms Ÿ Impactful digital merchandising ensures we lead with and feature our  compelling product proposition Ÿ Seamless fulfillment meets the customer where, when, and how they  prefer Ÿ Stores remain a critical asset for building personal connections with  Stores customers Ÿ FY19 tests informed our physical initiatives rollout and expansion plans  and our learnings give us the confidence to invest in our store fleet 23 Confidential – Subject to Non‐Disclosure Agreement     |We meet our customers where they are with an engaging experience on our digital flagship and in our stores Ÿ Digital is becoming a core part of all customer experiences, as nearly 90% of customers start their path to purchase online, even those that ultimately Deliver engaging Digital lead to our stores experiences Ÿ Digital experience enhancement with mobile‐first design is already improving customer experience on our digital platforms Ÿ Impactful digital merchandising ensures we lead with and feature our compelling product proposition Ÿ Seamless fulfillment meets the customer where, when, and how they prefer Ÿ Stores remain a critical asset for building personal connections with Stores customers Ÿ FY19 tests informed our physical initiatives rollout and expansion plans and our learnings give us the confidence to invest in our store fleet 23 Confidential – Subject to Non‐Disclosure Agreement |

The go‐forward business will be a smaller but  stronger, more effective, and more profitable  enterprise Ÿ The approximately 604 future fleet represent the highest sales‐generating,  most profitable, and most productive stores in the network Fuel growth Leaner more  Ÿ These stores make up 82% of FY19 net sales resilient fleet Ÿ The go‐forward network will enable better allocation of centralized  resources and capital expenditure while maximizing cash generation Ÿ Although the network will be streamlined, we will still maintain nationwide  coverage, allowing us to continue inspiring JCPenney shoppers across the  country Ÿ EBITDA (A) on path to exceed 10% of net sales by FY24 Ÿ SG&A rate down 390 bps to 29.6% by FY22 with further leverage (~65 bps  Right sized  per year) through FY24 cost structure 24 Confidential – Subject to Non‐Disclosure Agreement     |The go‐forward business will be a smaller but stronger, more effective, and more profitable enterprise Ÿ The approximately 604 future fleet represent the highest sales‐generating, most profitable, and most productive stores in the network Fuel growth Leaner more Ÿ These stores make up 82% of FY19 net sales resilient fleet Ÿ The go‐forward network will enable better allocation of centralized resources and capital expenditure while maximizing cash generation Ÿ Although the network will be streamlined, we will still maintain nationwide coverage, allowing us to continue inspiring JCPenney shoppers across the country Ÿ EBITDA (A) on path to exceed 10% of net sales by FY24 Ÿ SG&A rate down 390 bps to 29.6% by FY22 with further leverage (~65 bps Right sized per year) through FY24 cost structure 24 Confidential – Subject to Non‐Disclosure Agreement |

We are committed to our Plan for Renewal and  acknowledge the current landscape requires  agility as customer behavior shifts We recognize the world has changed And we’re responding accordingly Customers seek contactless experiences (56%  • Accelerate enhancements to eCommerce user experiences currently expect to continue post‐crisis),  • Enhance development of fulfillment options that meet customer accelerating the channel shift to eComm (both  where they are while driving cost‐efficiencies; developed the  ship to home and ship to store models) technology to efficiently deliver curbside pickup We will continue to  Customers are trying new retailers, brands, and  • Accelerate customer engagement and personalization efforts to  categories (~20% of consumers reported switching  ensure we retain our loyal customers while capitalizing on  evolve with the market  brands or retailers) creating opportunity to gain new  opportunity to engage new customers and our customers’  customers (but risk to current customers) preferences while  retaining a clear sense of  Behavioral shifts will alter category and occasion  • Leverage our breadth of categories and occasions to ensure we  priorities as at‐home occasions gain importance  offer and highlight relevant merchandise during and beyond the  our strategic direction  vs. away‐from‐home current crisis, e.g. at‐home chill, family time, outdoor escapes through and after the  current health and  Economic uncertainty is driving a shift to value,  • Build on progress to‐date to continue delivering value and price  economic crisis which in turn is increasing promotional and price  clarity in a way that resonates with customers and cuts through  pressure from retailers (expanded ~15% vs. year  in a more promotionally intensive environment ago mid‐April) All retailers are facing inventory overhang, further  • Continue to execute improvements to inventory management  compounding promotional and markdown  and clearance, including thoughtful allocation of assortment and  intensity in 2H FY20 and into FY21 inventory across digital and stores 25 Confidential – Subject to Non‐Disclosure Agreement     | Sour ce: COVID‐19 customer sentiment surveys March‐April 2020; EDITED price scrapingWe are committed to our Plan for Renewal and acknowledge the current landscape requires agility as customer behavior shifts We recognize the world has changed And we’re responding accordingly Customers seek contactless experiences (56% • Accelerate enhancements to eCommerce user experiences currently expect to continue post‐crisis), • Enhance development of fulfillment options that meet customer accelerating the channel shift to eComm (both where they are while driving cost‐efficiencies; developed the ship to home and ship to store models) technology to efficiently deliver curbside pickup We will continue to Customers are trying new retailers, brands, and • Accelerate customer engagement and personalization efforts to categories (~20% of consumers reported switching ensure we retain our loyal customers while capitalizing on evolve with the market brands or retailers) creating opportunity to gain new opportunity to engage new customers and our customers’ customers (but risk to current customers) preferences while retaining a clear sense of Behavioral shifts will alter category and occasion • Leverage our breadth of categories and occasions to ensure we priorities as at‐home occasions gain importance offer and highlight relevant merchandise during and beyond the our strategic direction vs. away‐from‐home current crisis, e.g. at‐home chill, family time, outdoor escapes through and after the current health and Economic uncertainty is driving a shift to value, • Build on progress to‐date to continue delivering value and price economic crisis which in turn is increasing promotional and price clarity in a way that resonates with customers and cuts through pressure from retailers (expanded ~15% vs. year in a more promotionally intensive environment ago mid‐April) All retailers are facing inventory overhang, further • Continue to execute improvements to inventory management compounding promotional and markdown and clearance, including thoughtful allocation of assortment and intensity in 2H FY20 and into FY21 inventory across digital and stores 25 Confidential – Subject to Non‐Disclosure Agreement | Sour ce: COVID‐19 customer sentiment surveys March‐April 2020; EDITED price scraping

Historic and Projected Financial  Overview 26 Confidential – Subject to Non‐Disclosure Agreement     |Historic and Projected Financial Overview 26 Confidential – Subject to Non‐Disclosure Agreement |

Financial summary Our planned reemergence from the COVID‐19 crisis is built upon the components of our Plan for Renewal, plus a more rationalized store  portfolio and an accelerated reduction in our enterprise cost structure, that will deliver over $2.8B in adjusted EBITDA (A) from FY21  through  FY24 with four actions:  1 2 3 4 Rationalize store fleet  Drive eComm  Expand gross  Reduce SG&A and drive comp growth margin Rationalizing our store portfolio  Driving double digit  Expanding gross margin 100bps  Reducing SG&A spend  from 846 stores to approximately  growth in our digital  by FY22 and stabilizing above  by over $1B versus FY19 604 stores and driving positive  flagship channel by FY21 35% despite channel shifts enterprise comps from FY22  forward The sales, margin, and cost improvements drive EBITDA (A) rate expansion (490 bps to 10.3% of net sales by FY24)  and absolute EBITDA (A) growth despite a smaller sales base resulting from the streamlined store portfolio 27 Confidential – Subject to Non‐Disclosure Agreement     |Financial summary Our planned reemergence from the COVID‐19 crisis is built upon the components of our Plan for Renewal, plus a more rationalized store portfolio and an accelerated reduction in our enterprise cost structure, that will deliver over $2.8B in adjusted EBITDA (A) from FY21 through FY24 with four actions: 1 2 3 4 Rationalize store fleet Drive eComm Expand gross Reduce SG&A and drive comp growth margin Rationalizing our store portfolio Driving double digit Expanding gross margin 100bps Reducing SG&A spend from 846 stores to approximately growth in our digital by FY22 and stabilizing above by over $1B versus FY19 604 stores and driving positive flagship channel by FY21 35% despite channel shifts enterprise comps from FY22 forward The sales, margin, and cost improvements drive EBITDA (A) rate expansion (490 bps to 10.3% of net sales by FY24) and absolute EBITDA (A) growth despite a smaller sales base resulting from the streamlined store portfolio 27 Confidential – Subject to Non‐Disclosure Agreement |

Income Statement 1  Adjusted EBITDA to exceed $900M and reach 10% of net sales in FY24 as we return the business to topline growth and expand operating  margin ($ in millions) FY19 FY20 FY21 vs LLY FY22 FY23 FY24 Store Sales $8,518 $3,440 $6,168 $6,123 $6,154 $6,231 Store Comp% (6.0%) (58.8%) 81.1% (15.8%) 2.7% 0.5% 1.3% eComm Sales $1,544 $1,322 $1,607 $1,926 $2,119 $2,331 eComm Comp% (4.1%) (14.3%) 21.6% 4.1% 20.0% 10.0% 10.0% Merch Sales $10,062 $4,762 $7,776 $8,050 $8,273 $8,562 Ÿ Rationalizing our store portfolio from 846  Services & Other $654 $323 $513 $509 $511 $514 stores to approximately 604 stores (192  1 closures in FY20 and the closure and sale of  Total Net Sales $10,716 $5,085 $8,288 $8,558 $8,784 $9,076 Enterprise Comp% (5.6%) (48.7%) 64.4% (8.4%) 6.0% 2.6% 3.3% 50 owned stores by the end of Q2 FY21) Credit Income $451 $194 $258 $294 $298 $302 Ÿ Positive enterprise comps FY22 – FY24 Gross Margin $3,703 $1,340 $2,705 $3,048 $3,109 $3,199 % Net Sales 34.6% 26.4% 32.6% 35.6% 35.4% 35.2% Ÿ Closure of two distribution centers in FY21 SG&A $3,585 $2,189 $2,685 $2,537 $2,546 $2,566 % Net Sales 33.5% 43.0% 32.4% 29.6% 29.0% 28.3% Ÿ Reduction of corporate overhead by a  Real Estate Gain/(Loss) $15 ($178) $70 $0 $0 $0 minimum of 25% by FY22 and a $1B reduction  % Net Sales 0.1% (3.5%) 0.8% 0.0% 0.0% 0.0% Reorganization $0 $92 $0 $0 $0 $0 in SG&A % Net Sales 0.0% 1.8% 0.0% 0.0% 0.0% 0.0% Restructuring $48 $180 $49 $0 $0 $0 Ÿ Capital investment of approximately $240M  % Net Sales 0.5% 3.5% 0.6% 0.0% 0.0% 0.0% per year (FY21 – FY24)  Depreciation $544 $508 $476 $469 $481 $488 % Net Sales 5.1% 10.0% 5.7% 5.5% 5.5% 5.4% EBITDA (A) $583 ($638) $279 $806 $861 $935 % Net Sales 5.4% (12.5%) 3.4% 9.4% 9.8% 10.3% 2019 is go forward comp EBITDA (A) excludes depreciation, restruturing, reorganization and non-operating Real Estate Gains/Losses 1  Reflects latest thinking on stores as of April 2020; exact number continues to evolve 28 Confidential – Subject to Non‐Disclosure Agreement     |Income Statement 1 Adjusted EBITDA to exceed $900M and reach 10% of net sales in FY24 as we return the business to topline growth and expand operating margin ($ in millions) FY19 FY20 FY21 vs LLY FY22 FY23 FY24 Store Sales $8,518 $3,440 $6,168 $6,123 $6,154 $6,231 Store Comp% (6.0%) (58.8%) 81.1% (15.8%) 2.7% 0.5% 1.3% eComm Sales $1,544 $1,322 $1,607 $1,926 $2,119 $2,331 eComm Comp% (4.1%) (14.3%) 21.6% 4.1% 20.0% 10.0% 10.0% Merch Sales $10,062 $4,762 $7,776 $8,050 $8,273 $8,562 Ÿ Rationalizing our store portfolio from 846 Services & Other $654 $323 $513 $509 $511 $514 stores to approximately 604 stores (192 1 closures in FY20 and the closure and sale of Total Net Sales $10,716 $5,085 $8,288 $8,558 $8,784 $9,076 Enterprise Comp% (5.6%) (48.7%) 64.4% (8.4%) 6.0% 2.6% 3.3% 50 owned stores by the end of Q2 FY21) Credit Income $451 $194 $258 $294 $298 $302 Ÿ Positive enterprise comps FY22 – FY24 Gross Margin $3,703 $1,340 $2,705 $3,048 $3,109 $3,199 % Net Sales 34.6% 26.4% 32.6% 35.6% 35.4% 35.2% Ÿ Closure of two distribution centers in FY21 SG&A $3,585 $2,189 $2,685 $2,537 $2,546 $2,566 % Net Sales 33.5% 43.0% 32.4% 29.6% 29.0% 28.3% Ÿ Reduction of corporate overhead by a Real Estate Gain/(Loss) $15 ($178) $70 $0 $0 $0 minimum of 25% by FY22 and a $1B reduction % Net Sales 0.1% (3.5%) 0.8% 0.0% 0.0% 0.0% Reorganization $0 $92 $0 $0 $0 $0 in SG&A % Net Sales 0.0% 1.8% 0.0% 0.0% 0.0% 0.0% Restructuring $48 $180 $49 $0 $0 $0 Ÿ Capital investment of approximately $240M % Net Sales 0.5% 3.5% 0.6% 0.0% 0.0% 0.0% per year (FY21 – FY24) Depreciation $544 $508 $476 $469 $481 $488 % Net Sales 5.1% 10.0% 5.7% 5.5% 5.5% 5.4% EBITDA (A) $583 ($638) $279 $806 $861 $935 % Net Sales 5.4% (12.5%) 3.4% 9.4% 9.8% 10.3% 2019 is go forward comp EBITDA (A) excludes depreciation, restruturing, reorganization and non-operating Real Estate Gains/Losses 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 28 Confidential – Subject to Non‐Disclosure Agreement |

Enterprise sales ‐ Comparable sales turn positive as we close unproductive stores and  eComm growth offsets negative store sales $ millions Total Increase Decrease 10,716 ‐1,615 242 Closing ‐70 Stores +798 9,076 ‐753 3 5 Discontinued  FY19 Sales Closed Stores Stores & Services eComm FY24 Sales 4 Merchandise 1 2(vs. LLY) Comp Sales FY19 FY20 FY21 FY22 FY23 FY24 Stores (6.0%) (58.8%) (15.8%) 2.7% 0.5% 1.3% eComm (4.1%) (14.3%) 4.1% 20.0% 10.0% 10.0% 1 Shown excluding discontinued businesses 2 Comp FY21 is shown in comparison to FY19 3 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 4  $59M stores and $11M eComm 5  Net of impact from closed stores on eComm sales, excluding discontinued merchandise impact displayed separately 29 Confidential – Subject to Non‐Disclosure Agreement     |Enterprise sales ‐ Comparable sales turn positive as we close unproductive stores and eComm growth offsets negative store sales $ millions Total Increase Decrease 10,716 ‐1,615 242 Closing ‐70 Stores +798 9,076 ‐753 3 5 Discontinued FY19 Sales Closed Stores Stores & Services eComm FY24 Sales 4 Merchandise 1 2(vs. LLY) Comp Sales FY19 FY20 FY21 FY22 FY23 FY24 Stores (6.0%) (58.8%) (15.8%) 2.7% 0.5% 1.3% eComm (4.1%) (14.3%) 4.1% 20.0% 10.0% 10.0% 1 Shown excluding discontinued businesses 2 Comp FY21 is shown in comparison to FY19 3 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 4 $59M stores and $11M eComm 5 Net of impact from closed stores on eComm sales, excluding discontinued merchandise impact displayed separately 29 Confidential – Subject to Non‐Disclosure Agreement |

1 Store sales ‐ Traffic declines are planned to moderate as growth initiatives help stores  rebound from COVID‐19 impact Disc. Merch. $ millions 4 Non Go Forward Go Forward 9,172 Decrease 59 ‐59 ‐1,173 Increase 1,615 ‐442 192  ‐399 6,745 50 Closing Closing ‐636 79 34 169 5 5 Stores Stores 7,499 FY19 Sales Discontinued  FY20 Closing  FY21 Closing  COVID‐19  FY20‐FY21  FY22 Comp  FY23 Comp  FY24 Comp  FY24 Sales 2 3 Merchandise Stores Stores decline Traffic  2.7% 0.5% 1.3% Discontinued  Momentum  1 Merchandise ‐4.3% p.a. 1 Discontinued merchandise also removed from go‐forward stores 2 Sales decline FY20 and FY21 in excess of incoming momentum, due to COVID‐19 closures and traffic impacts FY20‐FY21  3 Includes COVID‐19 recovery effect given comps are on depressed Q1‐Q3 FY21 Traffic  4  Includes discontinued merchandise 5 Reflects latest thinking on stores as of April 2020; exact number continues to evolve Momentum  30 Confidential – Subject to Non‐Disclosure Agreement     | ‐4.3% p.a.1 Store sales ‐ Traffic declines are planned to moderate as growth initiatives help stores rebound from COVID‐19 impact Disc. Merch. $ millions 4 Non Go Forward Go Forward 9,172 Decrease 59 ‐59 ‐1,173 Increase 1,615 ‐442 192 ‐399 6,745 50 Closing Closing ‐636 79 34 169 5 5 Stores Stores 7,499 FY19 Sales Discontinued FY20 Closing FY21 Closing COVID‐19 FY20‐FY21 FY22 Comp FY23 Comp FY24 Comp FY24 Sales 2 3 Merchandise Stores Stores decline Traffic 2.7% 0.5% 1.3% Discontinued Momentum 1 Merchandise ‐4.3% p.a. 1 Discontinued merchandise also removed from go‐forward stores 2 Sales decline FY20 and FY21 in excess of incoming momentum, due to COVID‐19 closures and traffic impacts FY20‐FY21 3 Includes COVID‐19 recovery effect given comps are on depressed Q1‐Q3 FY21 Traffic 4 Includes discontinued merchandise 5 Reflects latest thinking on stores as of April 2020; exact number continues to evolve Momentum 30 Confidential – Subject to Non‐Disclosure Agreement | ‐4.3% p.a.

1 Rationalizing the store portfolio ‐ Go‐forward portfolio of stores represent a more  financially productive fleet across all key financial measures Detail follows Store performance by tranche, FY19 Sales share,  Avg sales per  Sales per  Avg four‐wall  3 1 # of stores Sales , $M % store, $M SF , $ profit, $M Current fleet 846 $9,172 100% $10.8 $98  $1,377 G o forward stores are more  financially resilient Ÿ Higher average sales 4 A Leased exits 192 $1,173 13% $6.1  $74  $341 Ÿ Higher sales productivity Ÿ Higher four‐wall  4 B Owned exits 50 $442 5% $8.8  $64  $606 profitability Open ~604 $7,499 82% $12.4 $106  $1,770 (go forward fleet) 1 Sales per gross square foot 2 Labor expense per gross square foot 3 Merchandise, services, and other; current fleet inclusive of discontinued merchandise; exits and go‐forward fleet value excludes discontinued  merchandise totaling $59M (0.6% of $9,172M total sales of current fleet) 4 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 31 Confidential – Subject to Non‐Disclosure Agreement     |1 Rationalizing the store portfolio ‐ Go‐forward portfolio of stores represent a more financially productive fleet across all key financial measures Detail follows Store performance by tranche, FY19 Sales share, Avg sales per Sales per Avg four‐wall 3 1 # of stores Sales , $M % store, $M SF , $ profit, $M Current fleet 846 $9,172 100% $10.8 $98 $1,377 G o forward stores are more financially resilient Ÿ Higher average sales 4 A Leased exits 192 $1,173 13% $6.1 $74 $341 Ÿ Higher sales productivity Ÿ Higher four‐wall 4 B Owned exits 50 $442 5% $8.8 $64 $606 profitability Open ~604 $7,499 82% $12.4 $106 $1,770 (go forward fleet) 1 Sales per gross square foot 2 Labor expense per gross square foot 3 Merchandise, services, and other; current fleet inclusive of discontinued merchandise; exits and go‐forward fleet value excludes discontinued merchandise totaling $59M (0.6% of $9,172M total sales of current fleet) 4 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 31 Confidential – Subject to Non‐Disclosure Agreement |

1A Leased store exits overview Store count by years remaining on lease 1 Leased stores identified for closure (total = 192 ) 39 Ÿ Closures for close‐in  34 34 leases were previously  29 planned for phasing as  leases expired, or in  extreme cases in spite  of lease break penalties 18 Ÿ Current context creates  an opportunity for a  13 more holistic and  consolidated network  6 optimization given lease  44 33 3 timing is less of a  11 0 00 constraint 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15+ 47 145 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 32 Confidential – Subject to Non‐Disclosure Agreement     |1A Leased store exits overview Store count by years remaining on lease 1 Leased stores identified for closure (total = 192 ) 39 Ÿ Closures for close‐in 34 34 leases were previously 29 planned for phasing as leases expired, or in extreme cases in spite of lease break penalties 18 Ÿ Current context creates an opportunity for a 13 more holistic and consolidated network 6 optimization given lease 44 33 3 timing is less of a 11 0 00 constraint 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15+ 47 145 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 32 Confidential – Subject to Non‐Disclosure Agreement |

1B Owned store exits overview Encumbered vs. unencumbered Financials Malls Encumbered # of stores Average FY19 sales per store, $ M Mall grades Encumbered AB C D Unencumbered Encumbered Leased exits 6.3 Owned  Owned  22% 28% 46% 4% 32% 68% exits exits Owned exits 9.1 Go‐forward Go‐ 20% 32% 46% 2% 61% 39% forward Go‐forward 12.4 Average FY19 4‐wall profitability per store $ M Mall type Mall Off‐Mall Leased exits 0.3 Owned exits 76% 24% Owned exits 0.6 Go‐forward 74% 26% Go‐forward 1.8 1. Total sales based on total department sales in FY19 2. Off‐mall is defined as all stores not tagged as  Mall Store  by JCP internal reporting. This includes free standing stores, strip center stores, and central business district stores. 3. Reported as a percentage of on‐mall closures falling into each grade bucket. 33 Confidential – Subject to Non‐Disclosure Agreement     |1B Owned store exits overview Encumbered vs. unencumbered Financials Malls Encumbered # of stores Average FY19 sales per store, $ M Mall grades Encumbered AB C D Unencumbered Encumbered Leased exits 6.3 Owned Owned 22% 28% 46% 4% 32% 68% exits exits Owned exits 9.1 Go‐forward Go‐ 20% 32% 46% 2% 61% 39% forward Go‐forward 12.4 Average FY19 4‐wall profitability per store $ M Mall type Mall Off‐Mall Leased exits 0.3 Owned exits 76% 24% Owned exits 0.6 Go‐forward 74% 26% Go‐forward 1.8 1. Total sales based on total department sales in FY19 2. Off‐mall is defined as all stores not tagged as Mall Store by JCP internal reporting. This includes free standing stores, strip center stores, and central business district stores. 3. Reported as a percentage of on‐mall closures falling into each grade bucket. 33 Confidential – Subject to Non‐Disclosure Agreement |

1 To assess the go‐forward network, we evaluated a range of forward‐looking scenarios for  the industry, JCPenney, and individual store performance through COVID‐19 and recovery Ÿ Leveraged macroeconomic COVID‐19 scenarios for US (epidemiological and store  opening approach) applied to Apparel retail total sales projections, anchored in depth  Anchored in Apparel and length of post COVID‐19 recession and speed of recovery industry trajectory… Ÿ Built multiple scenarios to simulate multiple scenarios and projections incorporating  channel shift dynamics both through crisis and into recovery Ÿ Refined scenarios to incorporate expected additional pressure to department store  ..further refined trajectory for department store  channel impact, including historical performance relative to apparel industry pre‐crisis  channel factors… and anticipated consumer behavior shifts post COVID‐19 recovery Ÿ Simulated JCP performance in context of broader department store trajectory,  incorporating both historical performance and recent ‘Plan for Renewal’ traction  Ÿ Estimated performance at individual store level based on openings July 1 and recovery  to FY19 sales trajectory in Q4 FY21 in base scenario: … to simulate JCPenney bottom‐up scenarios at  — Store historical comp trend  store‐level based on total enterprise and store‐ specific factors — Competitive intensity in trade area — Mall grade — Trade area demographics 34 Confidential – Subject to Non‐Disclosure Agreement     |1 To assess the go‐forward network, we evaluated a range of forward‐looking scenarios for the industry, JCPenney, and individual store performance through COVID‐19 and recovery Ÿ Leveraged macroeconomic COVID‐19 scenarios for US (epidemiological and store opening approach) applied to Apparel retail total sales projections, anchored in depth Anchored in Apparel and length of post COVID‐19 recession and speed of recovery industry trajectory… Ÿ Built multiple scenarios to simulate multiple scenarios and projections incorporating channel shift dynamics both through crisis and into recovery Ÿ Refined scenarios to incorporate expected additional pressure to department store ..further refined trajectory for department store channel impact, including historical performance relative to apparel industry pre‐crisis channel factors… and anticipated consumer behavior shifts post COVID‐19 recovery Ÿ Simulated JCP performance in context of broader department store trajectory, incorporating both historical performance and recent ‘Plan for Renewal’ traction Ÿ Estimated performance at individual store level based on openings July 1 and recovery to FY19 sales trajectory in Q4 FY21 in base scenario: … to simulate JCPenney bottom‐up scenarios at — Store historical comp trend store‐level based on total enterprise and store‐ specific factors — Competitive intensity in trade area — Mall grade — Trade area demographics 34 Confidential – Subject to Non‐Disclosure Agreement |

1 Go‐forward network built around a high performing and resilient set of stores based on  both store financials and strategic considerations Closures based on        Strategic add‐backs to  Tentative go‐forward  Current store portfolio pro‐forma four‐wall  Subtotal Strategic closures network network performance Leased stores 568 ‐217 351 +38 ‐13 376 Owned stores 278 ‐46 232 +6 ‐10 228 Total 846 ‐263 583 +44 ‐23 ~604 Retain stores based on primary  Critical additional factors  Critical additional include: • Go‐forward network  criteria: include: after both four wall  • Risk of performance  performance and  • Generate sufficient operating  • Potential for  deterioration strategic conside‐ cash under projected topline  performance  • Property  rations are incorpo‐ scenarios acceleration due to  considerations  rated either market or store  • Strong absolute topline and  including mall /  conditions growth trajectory, increasing  landlord outlook and  cost leverage into the future • Network considerations  required capital  including retaining  investment • Sufficient turnover relative to  presence in key markets size given size is driver of both  • Network  operating and capital  • Economic considerations  considerations  expenditures including favorable  including stores with  landlord terms not  excess burden on  captured directly in store  supply chain P&L • Other site constraints  NOTE: Reflects latest thinking on stores as of April 2020; exact number continues to evolve (e.g. mall  35 Confidential – Subject to Non‐Disclosure Agreement     | demolishment)1 Go‐forward network built around a high performing and resilient set of stores based on both store financials and strategic considerations Closures based on Strategic add‐backs to Tentative go‐forward Current store portfolio pro‐forma four‐wall Subtotal Strategic closures network network performance Leased stores 568 ‐217 351 +38 ‐13 376 Owned stores 278 ‐46 232 +6 ‐10 228 Total 846 ‐263 583 +44 ‐23 ~604 Retain stores based on primary Critical additional factors Critical additional include: • Go‐forward network criteria: include: after both four wall • Risk of performance performance and • Generate sufficient operating • Potential for deterioration strategic conside‐ cash under projected topline performance • Property rations are incorpo‐ scenarios acceleration due to considerations rated either market or store • Strong absolute topline and including mall / conditions growth trajectory, increasing landlord outlook and cost leverage into the future • Network considerations required capital including retaining investment • Sufficient turnover relative to presence in key markets size given size is driver of both • Network operating and capital • Economic considerations considerations expenditures including favorable including stores with landlord terms not excess burden on captured directly in store supply chain P&L • Other site constraints NOTE: Reflects latest thinking on stores as of April 2020; exact number continues to evolve (e.g. mall 35 Confidential – Subject to Non‐Disclosure Agreement | demolishment)

1 The store financial assessment identifies closures based on three primary filters, yielding  583 stores as a base for the preliminary go‐forward network  To be closed To retain as preliminary go-forward Store count by closure status and metric, Store count 1 Assessment Filters Operating margin dollars Full year store sales Ÿ Retain stores that generate  > $5M > $14M 15 132 sufficient operating cash under  projected topline scenarios $4M to $5M 5 Ÿ Retain stores with strong absolute  $12M to $14M 8 73 topline and growth trajectory,  increasing cost leverage into the  $3M to $4M 29 $10M to $12M 14 107 future Ÿ Retain stores with sufficient  $2M to $3M 89 $8M to $10M 23 101 turnover relative to size given size is  driver of both operating and capital  $1M to $2M 2 273 expenditures $6M to $8M 31 99 $0 to $1M 242 187 $4M to $6M 34 71 < $0M < $4M 138 0 19 1 Dollar profitability shown for context but not used explicitly in store closure decisions.  Closure thresholds based on % operating margin,  total sakes, and space  productivity NOTE: Reflects latest thinking on stores as of April 2020; exact number continues to evolve 36 Confidential – Subject to Non‐Disclosure Agreement     |1 The store financial assessment identifies closures based on three primary filters, yielding 583 stores as a base for the preliminary go‐forward network To be closed To retain as preliminary go-forward Store count by closure status and metric, Store count 1 Assessment Filters Operating margin dollars Full year store sales Ÿ Retain stores that generate > $5M > $14M 15 132 sufficient operating cash under projected topline scenarios $4M to $5M 5 Ÿ Retain stores with strong absolute $12M to $14M 8 73 topline and growth trajectory, increasing cost leverage into the $3M to $4M 29 $10M to $12M 14 107 future Ÿ Retain stores with sufficient $2M to $3M 89 $8M to $10M 23 101 turnover relative to size given size is driver of both operating and capital $1M to $2M 2 273 expenditures $6M to $8M 31 99 $0 to $1M 242 187 $4M to $6M 34 71 < $0M < $4M 138 0 19 1 Dollar profitability shown for context but not used explicitly in store closure decisions. Closure thresholds based on % operating margin, total sakes, and space productivity NOTE: Reflects latest thinking on stores as of April 2020; exact number continues to evolve 36 Confidential – Subject to Non‐Disclosure Agreement |

2 eComm sales will rebound from the negative halo of store closures and reach double digit  growth rates as improvements to site, fulfillment, and merchandise assortment takes hold Total Increase $ millions Decrease +897 ‐11 ‐99 2,331 1,544 FY19 eComm Sales eComm Performance  Discontinued  Impact from  FY24 Outlook Improvements Merchandise Closed Stores 37 Confidential – Subject to Non‐Disclosure Agreement     |2 eComm sales will rebound from the negative halo of store closures and reach double digit growth rates as improvements to site, fulfillment, and merchandise assortment takes hold Total Increase $ millions Decrease +897 ‐11 ‐99 2,331 1,544 FY19 eComm Sales eComm Performance Discontinued Impact from FY24 Outlook Improvements Merchandise Closed Stores 37 Confidential – Subject to Non‐Disclosure Agreement |

2 eComm business has experienced historical growth and is poised to return to strong  momentum 1 eComm net sales , $ billions  eComm experienced  Conscious decision in  significant growth from  Topline is poised to regain growth as eComm  FY19 to reset to  FY14‐FY18 due to expansion  penetration and growth matches peers and  improve margin rate at  of marketplace and  digital capabilities are enhanced the expense of topline appliances +10.0% +7.9% 2.3 ‐4.1% 2.1 +8.7% 1.9 1.7 1.6 1.6 1.6 1.5 1.3 1.3 1.1 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 1 Go‐forward business (excludes appliances) 38 Confidential – Subject to Non‐Disclosure Agreement     |2 eComm business has experienced historical growth and is poised to return to strong momentum 1 eComm net sales , $ billions eComm experienced Conscious decision in significant growth from Topline is poised to regain growth as eComm FY19 to reset to FY14‐FY18 due to expansion penetration and growth matches peers and improve margin rate at of marketplace and digital capabilities are enhanced the expense of topline appliances +10.0% +7.9% 2.3 ‐4.1% 2.1 +8.7% 1.9 1.7 1.6 1.6 1.6 1.5 1.3 1.3 1.1 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 1 Go‐forward business (excludes appliances) 38 Confidential – Subject to Non‐Disclosure Agreement |

2 JCPenney eComm growth reflects acceleration relative to historical performance, and is  achievable when compared to peers eComm penetration eComm net sales growth FY19 % of enterprise sales FY16 – FY19 CAGR JCPenney eComm penetration 23% 17% • FY19: 14% • FY24: 26% ‐ achievable given this is in‐line  with peers current penetration 23% 12% 26% 11% JCPenney eComm net sales growth • FY19 – FY24 CAGR of 9% achievable given  28% 15% growth is less than what peers have  achieved over recent years 32% 14% 39 Confidential – Subject to Non‐Disclosure Agreement     |2 JCPenney eComm growth reflects acceleration relative to historical performance, and is achievable when compared to peers eComm penetration eComm net sales growth FY19 % of enterprise sales FY16 – FY19 CAGR JCPenney eComm penetration 23% 17% • FY19: 14% • FY24: 26% ‐ achievable given this is in‐line with peers current penetration 23% 12% 26% 11% JCPenney eComm net sales growth • FY19 – FY24 CAGR of 9% achievable given 28% 15% growth is less than what peers have achieved over recent years 32% 14% 39 Confidential – Subject to Non‐Disclosure Agreement |

3 Gross Margin ‐ Rate increases 60bps with pricing and promotion initiatives that are  partially offset by higher eComm penetration and fulfillment costs % of net sales Total Decrease Increase +0.3% ‐1.6% +0.3% +1.9% ‐0.3% 35.2% 34.6% FY19 Pricing &  Discontinued  Shrinkage  Channel Mix Distribution FY24 Promotion Merchandise Reduction 40 Confidential – Subject to Non‐Disclosure Agreement     |3 Gross Margin ‐ Rate increases 60bps with pricing and promotion initiatives that are partially offset by higher eComm penetration and fulfillment costs % of net sales Total Decrease Increase +0.3% ‐1.6% +0.3% +1.9% ‐0.3% 35.2% 34.6% FY19 Pricing & Discontinued Shrinkage Channel Mix Distribution FY24 Promotion Merchandise Reduction 40 Confidential – Subject to Non‐Disclosure Agreement |

3 Pricing and promotion is already driving margin gains and will continue  as we further optimize price strategy and markdowns Gross profit by channel BPS Improvement, FY18 to FY19 % of net sales • We have realized  FY18 FY19 FY24 tremendous potential  from markdown  42.0 opportunities and spend  38.4 37.9 36.6 36.7 in our selling margin from  34.8 FY18 to FY19 27.1 27.1 • Pricing and coupon  25.7 strategy shifts have  started to aid margin with meaningful  headroom remaining as  we continue to execute Stores eComm Total +180 +140 +190 41 Confidential – Subject to Non‐Disclosure Agreement     |3 Pricing and promotion is already driving margin gains and will continue as we further optimize price strategy and markdowns Gross profit by channel BPS Improvement, FY18 to FY19 % of net sales • We have realized FY18 FY19 FY24 tremendous potential from markdown 42.0 opportunities and spend 38.4 37.9 36.6 36.7 in our selling margin from 34.8 FY18 to FY19 27.1 27.1 • Pricing and coupon 25.7 strategy shifts have started to aid margin with meaningful headroom remaining as we continue to execute Stores eComm Total +180 +140 +190 41 Confidential – Subject to Non‐Disclosure Agreement |

3 Clearance management has contributed to margin improvement as clearance mix and  selling margin have improved Clearance volume as % of total FY18 & FY19, % of net sales Selling margin, % of net sales FY18 FY19 Clearance 17.8% ‐ 74 bps 17.1% ‐14.4% 0.4% 48.1% 48.9% Non‐clearance 82.9% 82.2% • Clearance has decreased as a portion of  net sales by ~70 bps from FY18 to FY19 • In parallel, margin on clearance items has  improved significantly FY18 FY19 1. Go‐forward business (excludes appliances) 42 Confidential – Subject to Non‐Disclosure Agreement     | SOURCE: JCP internal data and reporting3 Clearance management has contributed to margin improvement as clearance mix and selling margin have improved Clearance volume as % of total FY18 & FY19, % of net sales Selling margin, % of net sales FY18 FY19 Clearance 17.8% ‐ 74 bps 17.1% ‐14.4% 0.4% 48.1% 48.9% Non‐clearance 82.9% 82.2% • Clearance has decreased as a portion of net sales by ~70 bps from FY18 to FY19 • In parallel, margin on clearance items has improved significantly FY18 FY19 1. Go‐forward business (excludes appliances) 42 Confidential – Subject to Non‐Disclosure Agreement | SOURCE: JCP internal data and reporting

4 SG&A ‐ Closing stores and continuous improvement initiatives will drive  $1B reduction in SG&A $ millions Total 3,585 ‐467 Decrease 33.5% 242  Closing 1 Stores ‐98 ‐95 ‐115 28.3% ‐56 ‐111 ‐78 2,566 FY19 Closed Stores Stores Expenses Gross Advertising  Gross Advertising  Bonus/Equity  Administrative  Other Corp G&A FY24 (Volume) (Rate) & Benefits Expenses 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 43 Confidential – Subject to Non‐Disclosure Agreement     |4 SG&A ‐ Closing stores and continuous improvement initiatives will drive $1B reduction in SG&A $ millions Total 3,585 ‐467 Decrease 33.5% 242 Closing 1 Stores ‐98 ‐95 ‐115 28.3% ‐56 ‐111 ‐78 2,566 FY19 Closed Stores Stores Expenses Gross Advertising Gross Advertising Bonus/Equity Administrative Other Corp G&A FY24 (Volume) (Rate) & Benefits Expenses 1 Reflects latest thinking on stores as of April 2020; exact number continues to evolve 43 Confidential – Subject to Non‐Disclosure Agreement |

4 Cost reductions across major line items drive EBITDA (A) improvement of  ~500 bps by FY24 $M % net sales FY23 FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY24 Total net sales 10,716  5,085  8,288  8,558  8,784  9,076  ‐‐‐ ‐ ‐ ‐ Enterprise GP 3,691  1,434  2,779  3,097  3,158  3,249  36.7% 30.1% 35.7% 38.5% 38.2%  37.9%  External gross margin (GAAP) 3,703  1,340  2,705  3,048  3,109  3,199  34.6%  26.4%  32.6%  35.6%  35.4%  35.2%  Store payroll 1088  485  787  783  773  771  10.2%  9.5%  9.5%  9.2%  8.8%  8.5%  Net advertising 599  318  440  380  385  389  5.6%  6.2%  5.3%  4.4%  4.4%  4.3%  lT expense 155  94  129  130  133  138  1.4%  1.9%  1.6%  1.5%  1.5%  1.5%  .com technology expense 40  46  48  40  41  43  0.4%  0.9%  0.6%  0.5%  0.5%  0.5%  Admin. (Total + Benefits) 548  425  429  386  389  392  5.1%  8.4%  5.2%  4.5%  4.4%  4.3%  Bonus 102  0  66  45  46  47  1.0%  0.0%  0.8%  0.5%  0.5%  0.5%  Occupancy, Utilities, and Facilities 642  510 462  492  492  492  6.0%  10.0%  5.6% 5.7%  5.6%  5.4%  Other 373  281 294  250  255  260  3.5%  5.5%  2.9%  2.9%  2.9%  2.9%  Total external SG&A 3,585  2,189  2,685  2,537  2,546  2,566  33.5%  43.0%  32.4%  29.6%  29.0%  28.3%  Depreciation 544  508  476  469  481  488  5.1%  10.0%  5.7%  5.5%  5.5%  5.4%  Operating profit (8) (1,612) (177) 337  380  447  (0.1%) (30.9%) (2.1%) 3.6%  4.0%  4.5%  EBITDA (A) 583 (638) 279  806  861  935  5.3%  (12.5%) 3.4%  9.4%  9.8%  10.3%  % of net sales 5.3%  (12.5%) 3.4%  9.4%  9.8%  10.3%  44 Confidential – Subject to Non‐Disclosure Agreement     |4 Cost reductions across major line items drive EBITDA (A) improvement of ~500 bps by FY24 $M % net sales FY23 FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY24 Total net sales 10,716 5,085 8,288 8,558 8,784 9,076 ‐‐‐ ‐ ‐ ‐ Enterprise GP 3,691 1,434 2,779 3,097 3,158 3,249 36.7% 30.1% 35.7% 38.5% 38.2% 37.9% External gross margin (GAAP) 3,703 1,340 2,705 3,048 3,109 3,199 34.6% 26.4% 32.6% 35.6% 35.4% 35.2% Store payroll 1088 485 787 783 773 771 10.2% 9.5% 9.5% 9.2% 8.8% 8.5% Net advertising 599 318 440 380 385 389 5.6% 6.2% 5.3% 4.4% 4.4% 4.3% lT expense 155 94 129 130 133 138 1.4% 1.9% 1.6% 1.5% 1.5% 1.5% .com technology expense 40 46 48 40 41 43 0.4% 0.9% 0.6% 0.5% 0.5% 0.5% Admin. (Total + Benefits) 548 425 429 386 389 392 5.1% 8.4% 5.2% 4.5% 4.4% 4.3% Bonus 102 0 66 45 46 47 1.0% 0.0% 0.8% 0.5% 0.5% 0.5% Occupancy, Utilities, and Facilities 642 510 462 492 492 492 6.0% 10.0% 5.6% 5.7% 5.6% 5.4% Other 373 281 294 250 255 260 3.5% 5.5% 2.9% 2.9% 2.9% 2.9% Total external SG&A 3,585 2,189 2,685 2,537 2,546 2,566 33.5% 43.0% 32.4% 29.6% 29.0% 28.3% Depreciation 544 508 476 469 481 488 5.1% 10.0% 5.7% 5.5% 5.5% 5.4% Operating profit (8) (1,612) (177) 337 380 447 (0.1%) (30.9%) (2.1%) 3.6% 4.0% 4.5% EBITDA (A) 583 (638) 279 806 861 935 5.3% (12.5%) 3.4% 9.4% 9.8% 10.3% % of net sales 5.3% (12.5%) 3.4% 9.4% 9.8% 10.3% 44 Confidential – Subject to Non‐Disclosure Agreement |

4 EBITDA (A) rate improvement is driven by three key line items Stores payroll down ~150 bps to 8.5% of total net sales in FY24 as lower  A productivity stores closed and go‐forward store labor reduced Advertising down 120 bps to 4.4% of net sales by FY22 and leveraged further to  B 4.3% by FY24, with heavy channel mix shift to digital to support eComm growth Admin, benefits & bonus down 110 bps to 5.0% of net sales by FY22 with  C further leverage down to 4.8% by FY24 Largely driven by the above, the SG&A rate is down ~390 bps to be 29.6% of net sales by  FY22 with further leverage gains (‐65 bps per year) through FY24 45 Confidential – Subject to Non‐Disclosure Agreement     |4 EBITDA (A) rate improvement is driven by three key line items Stores payroll down ~150 bps to 8.5% of total net sales in FY24 as lower A productivity stores closed and go‐forward store labor reduced Advertising down 120 bps to 4.4% of net sales by FY22 and leveraged further to B 4.3% by FY24, with heavy channel mix shift to digital to support eComm growth Admin, benefits & bonus down 110 bps to 5.0% of net sales by FY22 with C further leverage down to 4.8% by FY24 Largely driven by the above, the SG&A rate is down ~390 bps to be 29.6% of net sales by FY22 with further leverage gains (‐65 bps per year) through FY24 45 Confidential – Subject to Non‐Disclosure Agreement |

Adjusted EBITDA Adjusted EBITDA to exceed $900M and reach 10% of net sales in FY24 as we return the business to topline growth and expand  operating  margin ($ in millions) FY19 FY20 FY21 FY22 FY23 FY24 LY EBITDA (A) $583  ($638) $279  $806  $861  Credit Income ($257) $64  $36  $3  $4  Gross Margin (Volume) ($1,946) $844  $88  $80  $103  Gross Margin (Rate) ($417) $521  $255  ($20) ($13) SG&A $1,396  ($496) $148  ($9) ($20) Gain/Loss on Asset Sales and Other $2  ($17) $0  $0  $0  TY EBITDA (A) $583  ($638) $279  $806  $861  $935  % of Net Sales  5.4% (12.5%) 3.4% 9.4% 9.8% 10.3% 46 Confidential – Subject to Non‐Disclosure Agreement     |Adjusted EBITDA Adjusted EBITDA to exceed $900M and reach 10% of net sales in FY24 as we return the business to topline growth and expand operating margin ($ in millions) FY19 FY20 FY21 FY22 FY23 FY24 LY EBITDA (A) $583 ($638) $279 $806 $861 Credit Income ($257) $64 $36 $3 $4 Gross Margin (Volume) ($1,946) $844 $88 $80 $103 Gross Margin (Rate) ($417) $521 $255 ($20) ($13) SG&A $1,396 ($496) $148 ($9) ($20) Gain/Loss on Asset Sales and Other $2 ($17) $0 $0 $0 TY EBITDA (A) $583 ($638) $279 $806 $861 $935 % of Net Sales 5.4% (12.5%) 3.4% 9.4% 9.8% 10.3% 46 Confidential – Subject to Non‐Disclosure Agreement |

Unlevered Free Cash Flow ($ in Millions) FY19 FY20 FY21 FY22 FY23 FY24 EBTIDA (A) $583 ($638) $279 $806 $861 $935 % of Net Sales 5.4%  (12.5%) 3.4%  9.4%  9.8%  10.3%  (+/‐) Chang e in Inventory 271 445 ‐49 ‐41 55 ‐1 (+/‐) Chang e in Payables ‐61 ‐156 17 14 ‐19 1 (+/‐) Chang e in Other NWC ‐25 ‐20 ‐20 ‐5 ‐5 ‐5 1 (+/‐) Change in Tax Income / (Expense) ‐9 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ (‐) CapEx ‐309 ‐73 ‐230 ‐240 ‐250 ‐250 (+) Asset Sale Proceeds 27 25 305 ‐‐ ‐‐ (+/‐) Other** ‐48 ‐182 ‐49 ‐‐ ‐‐ ‐‐ Unlevered Free Cash Flow $429 ($598) $253 $534 $642 $679 1. Assumes maintaining NOLs post bankruptcy emergence 2.  “Other” includes reorganization and restructuring cash costs Note:  CAPEX assumed at approximately 2.8% of sales (store refreshes, technology, supply chain) Note:  Asset sale proceeds assumed between lit and dark value of the appraisal 47 Confidential – Subject to Non‐Disclosure Agreement     |Unlevered Free Cash Flow ($ in Millions) FY19 FY20 FY21 FY22 FY23 FY24 EBTIDA (A) $583 ($638) $279 $806 $861 $935 % of Net Sales 5.4% (12.5%) 3.4% 9.4% 9.8% 10.3% (+/‐) Chang e in Inventory 271 445 ‐49 ‐41 55 ‐1 (+/‐) Chang e in Payables ‐61 ‐156 17 14 ‐19 1 (+/‐) Chang e in Other NWC ‐25 ‐20 ‐20 ‐5 ‐5 ‐5 1 (+/‐) Change in Tax Income / (Expense) ‐9 ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ (‐) CapEx ‐309 ‐73 ‐230 ‐240 ‐250 ‐250 (+) Asset Sale Proceeds 27 25 305 ‐‐ ‐‐ (+/‐) Other** ‐48 ‐182 ‐49 ‐‐ ‐‐ ‐‐ Unlevered Free Cash Flow $429 ($598) $253 $534 $642 $679 1. Assumes maintaining NOLs post bankruptcy emergence 2. “Other” includes reorganization and restructuring cash costs Note: CAPEX assumed at approximately 2.8% of sales (store refreshes, technology, supply chain) Note: Asset sale proceeds assumed between lit and dark value of the appraisal 47 Confidential – Subject to Non‐Disclosure Agreement |

Letters of Credit as of April 4, 2020 Purpose Expiry Date Amount ($mm) Workers Comp June 12 $38.3 Workers Comp February 1 $47.9 Workers Comp May 13 $23.0 Merchandise October 31 $20.0 Merchandise  January 15, 2021 $10.0 Merchandise January 15, 2021 $7.5 Merchandise January 15, 2021 $7.5 Workers Comp May 14 $4.4 Utilities October 16, 2020 $0.8 General Liability Claims February 1 $0.7 Merchandise March 1, 2021 $0.8 Utilities February 3, 2021 $0.7 Utilities May 13 $0.1 Misc. April 6 $0.0 Surety Bond August 28, 2018 $51.5 Total $213.1 As of April 4, 2020, none of these standby letters of credit have been drawn. 48 Confidential – Subject to Non‐Disclosure Agreement     |Letters of Credit as of April 4, 2020 Purpose Expiry Date Amount ($mm) Workers Comp June 12 $38.3 Workers Comp February 1 $47.9 Workers Comp May 13 $23.0 Merchandise October 31 $20.0 Merchandise January 15, 2021 $10.0 Merchandise January 15, 2021 $7.5 Merchandise January 15, 2021 $7.5 Workers Comp May 14 $4.4 Utilities October 16, 2020 $0.8 General Liability Claims February 1 $0.7 Merchandise March 1, 2021 $0.8 Utilities February 3, 2021 $0.7 Utilities May 13 $0.1 Misc. April 6 $0.0 Surety Bond August 28, 2018 $51.5 Total $213.1 As of April 4, 2020, none of these standby letters of credit have been drawn. 48 Confidential – Subject to Non‐Disclosure Agreement |

JCPenney Co., Inc. Cash Flow Forecast US$ Millions 2020-Q1 FEB FEB FEB FEB FEB MAR MAR MAR MAR 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr 1 2345 6789 (1) SALES 132 163 150 147 168 134 50 19 19 TOTAL COLLECTIONS 134 163 169 162 172 176 95 33 42 DISBURSEMENTS Total Operating Disbursements (183) (193) (235) (198) (159) (194) (270) (147) (140) Net Cash Flow (49) (34) (67) (62) (9) (19) 1,056 (128) (112)JCPenney Co., Inc. Cash Flow Forecast US$ Millions 2020-Q1 FEB FEB FEB FEB FEB MAR MAR MAR MAR 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr 1 2345 6789 (1) SALES 132 163 150 147 168 134 50 19 19 TOTAL COLLECTIONS 134 163 169 162 172 176 95 33 42 DISBURSEMENTS Total Operating Disbursements (183) (193) (235) (198) (159) (194) (270) (147) (140) Net Cash Flow (49) (34) (67) (62) (9) (19) 1,056 (128) (112)

J.C. Penney Company, Inc. Weekly Cash Flow As of May 15, 2020 (US $ MMs) Actual / Forecast F F F F F F F F F F F F F F F F F F F F Fiscal Month May May May Jun Jun Jun Jun Jul Jul Jul Jul Aug Aug Aug Aug Aug Sep Sep Sep Sep Year FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 Week Ending 23-May 30-May 6-Jun 13-Jun 20-Jun 27-Jun 4-Jul 11-Jul 18-Jul 25-Jul 1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 5-Sep 12-Sep 19-Sep 26-Sep 3-Oct Net Sales $ 35 $ 41 $ 45 $ 48 $ 44 $ 47 $ 64 $ 91 $ 87 $ 100 $ 111 $ 177 $ 164 $ 138 $ 119 $ 124 $ 112 $ 104 $ 105 $ 97 Collections & Disbursements Cash Receipts 1 Sales Receipts $ 36 $ 41 $ 47 $ 50 $ 48 $ 49 $ 63 $ 87 $ 93 $ 102 $ 114 $ 166 $ 178 $ 155 $ 133 $ 130 $ 123 $ 113 $ 110 $ 106 2 Other Receipts 3 3 3 3 3 4 3 3 3 22 3 4 4 4 4 4 4 4 22 4 Total Collections 39 44 50 53 51 53 66 90 96 124 117 170 182 159 137 134 127 117 132 110 Operating Disbursements 3 Domestic Merchandise Vendor (21) ( 18) (17) (34) (24) ( 18) (21) (55) (35) ( 28) ( 38) ( 73) (47) (44) (36) (46) ( 15) ( 73) (66) ( 63) 4 Import Merchandise Vendor ( 6) ( 5) ( 5) ( 10) ( 7) ( 5) ( 6) ( 22) ( 14) (11) (16) ( 28) ( 18) ( 17) ( 14) ( 17) ( 26) ( 24) (21) (27) 5 Sales Tax - ( 7) - - - (11) - - - ( 12) - - - - (23) - - - ( 42) - 6 Freight, Duty, and Broker (13) ( 2) ( 2) ( 4) ( 3) ( 7) ( 2) ( 7) ( 4) ( 12) ( 5) ( 9) ( 6) ( 5) ( 18) ( 5) ( 9) ( 8) ( 20) ( 9) 7 Payroll and Benefits ( 6) (26) ( 8) (24) ( 7) (24) ( 6) ( 33) ( 10) (23) (26) ( 24) (32) (47) (35) (25) ( 35) ( 23) ( 38) ( 23) 8 Occupancy ( 8) ( 8) ( 27) (18) ( 8) ( 5) ( 20) ( 25) ( 8) ( 3) (24) ( 8) (22) ( 4) ( 6) ( 22) ( 19) ( 8) ( 4) ( 21) 9 Non-Marketing Operating (NFR) ( 9) ( 8) ( 7) (16) ( 10) ( 7) ( 7) ( 11) (13) (10) ( 17) ( 16) (21) (11) ( 12) ( 30) ( 10) ( 14) ( 19) ( 12) 10 Marketing ( 6) (11) ( 6) ( 9) ( 9) ( 9) (10) ( 13) (13) (13) ( 13) ( 9) ( 9) ( 8) ( 8) ( 8) ( 7) ( 8) ( 8) ( 7) 11 Other ( 3) ( 3) ( 3) ( 3) ( 3) ( 3) ( 7) ( 3) ( 5) ( 3) ( 6) ( 3) ( 7) ( 3) ( 8) ( 3) ( 9) ( 3) ( 8) ( 31) Total Operating Disbursements (71) (88) (74) (116) (70) (88) (79) (169) (102) (114) (143) (170) (161) (139) (160) (155) (129) (160) (226) (193) Non-Operating Disbursements 12 Debt Service and Fees ( 1) ( 1) ( 7) ( 1) ( 1) ( 1) (12) (10) ( 1) ( 1) ( 1) ( 22) ( 19) ( 1) ( 1) (15) ( 1) ( 1) ( 4) (15) 13 Restructuring Professionals - - - ( 1) - - - ( 1) (13) - ( 1) ( 1) (11) - - - ( 1) ( 12) ( 6) - 14 Other Non-Operating ( 1) ( 1) ( 1) ( 2) ( 2) ( 2) ( 2) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) Total Non-Operating Disbursements (1) (1) (7) (4) (3) (3) (14) (13) (15) (2) (3) (25) (30) (2) (2) (16) (2) (14) (12) (17) Net Cash Flow $ (34) $ (45) $ (32) $ (67) $ (21) $ (38) $ (27) $ (91) $ (21) $ 8 $ (28) $ (25) $ (9) $ 19 $ (25) $ (38) $ (5) $ (57) $ (105) $ (100) Liquidity Book Cash Position 15 Book Cash - Beginning 475 441 396 589 522 501 463 435 344 548 556 527 503 494 512 488 450 445 388 283 16 Plus: Net Cash Flow ( 34) ( 45) ( 32) (67) (21) (38) (27) ( 91) ( 21) 8 ( 28) ( 25) ( 9) 19 (25) ( 38) ( 5) (57) (105) (100) 17 Plus: Revolver Draw/(Paydown) - - - - - - - - - - - - - - - - - - - - 18 Plus: DIP Draw/(Paydown) - - 225 - - - - - 225 - - - - - - - - - - - Book Cash - Ending 441 396 589 522 501 463 435 344 548 556 527 503 494 512 488 450 445 388 283 183 19 Prof Fee Carevout Escrow - - (16) (16) ( 16) (16) (38) (37) (27) (27) ( 27) ( 40) ( 31) ( 31) ( 31) (47) (47) ( 37) ( 30) (17) 20 Posted ABL Cash Collateral / Cash Collateral L/C - - - - - - - - - - - - - - - (17) - - - - Unrestricted Book Cash - Ending $ 441 $ 396 $ 573 $ 506 $ 485 $ 447 $ 398 $ 307 $ 521 $ 529 $ 500 $ 463 $ 462 $ 481 $ 456 $ 386 $ 398 $ 351 $ 252 $ 166 Intra-Month Minimum 396 396 396 398 398 398 398 307 307 307 307 386 386 386 386 386 166 166 166 166 Pre-Petition ABL Borrowing Base and Availability 21 Effective Borrowing Base 1,620 1,627 1,629 1,623 1,637 1,640 1,638 1,635 1,655 1,644 1,622 1,606 1,606 1,560 1,522 1,488 1,593 1,611 1,628 1,636 22 Less: Outstanding ABL Draws (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) 23 Less: Letters of Credit (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) Subtotal 227 234 236 229 243 247 245 242 261 251 228 212 212 166 128 95 200 217 234 242 24 Less: Pre-Petition Minimum Excess Availability (122) (122) (122) (122) (123) (123) (123) (123) (124) (123) (122) (120) (120) (117) (114) (112) (120) (121) (122) (123) 25 Plus: Posted ABL Cash Collateral - - - - - - - - - - - - - - - 17 - - - - Total 105 112 113 108 121 124 122 119 137 127 107 92 92 49 14 0 80 96 112 119 J.C. Penney Company, Inc. Weekly Cash Flow As of May 15, 2020 (US $ MMs) Actual / Forecast F F F F F F F F F F F F F F F F F F F F Fiscal Month May May May Jun Jun Jun Jun Jul Jul Jul Jul Aug Aug Aug Aug Aug Sep Sep Sep Sep Year FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 FY20 Week Ending 23-May 30-May 6-Jun 13-Jun 20-Jun 27-Jun 4-Jul 11-Jul 18-Jul 25-Jul 1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 5-Sep 12-Sep 19-Sep 26-Sep 3-Oct Net Sales $ 35 $ 41 $ 45 $ 48 $ 44 $ 47 $ 64 $ 91 $ 87 $ 100 $ 111 $ 177 $ 164 $ 138 $ 119 $ 124 $ 112 $ 104 $ 105 $ 97 Collections & Disbursements Cash Receipts 1 Sales Receipts $ 36 $ 41 $ 47 $ 50 $ 48 $ 49 $ 63 $ 87 $ 93 $ 102 $ 114 $ 166 $ 178 $ 155 $ 133 $ 130 $ 123 $ 113 $ 110 $ 106 2 Other Receipts 3 3 3 3 3 4 3 3 3 22 3 4 4 4 4 4 4 4 22 4 Total Collections 39 44 50 53 51 53 66 90 96 124 117 170 182 159 137 134 127 117 132 110 Operating Disbursements 3 Domestic Merchandise Vendor (21) ( 18) (17) (34) (24) ( 18) (21) (55) (35) ( 28) ( 38) ( 73) (47) (44) (36) (46) ( 15) ( 73) (66) ( 63) 4 Import Merchandise Vendor ( 6) ( 5) ( 5) ( 10) ( 7) ( 5) ( 6) ( 22) ( 14) (11) (16) ( 28) ( 18) ( 17) ( 14) ( 17) ( 26) ( 24) (21) (27) 5 Sales Tax - ( 7) - - - (11) - - - ( 12) - - - - (23) - - - ( 42) - 6 Freight, Duty, and Broker (13) ( 2) ( 2) ( 4) ( 3) ( 7) ( 2) ( 7) ( 4) ( 12) ( 5) ( 9) ( 6) ( 5) ( 18) ( 5) ( 9) ( 8) ( 20) ( 9) 7 Payroll and Benefits ( 6) (26) ( 8) (24) ( 7) (24) ( 6) ( 33) ( 10) (23) (26) ( 24) (32) (47) (35) (25) ( 35) ( 23) ( 38) ( 23) 8 Occupancy ( 8) ( 8) ( 27) (18) ( 8) ( 5) ( 20) ( 25) ( 8) ( 3) (24) ( 8) (22) ( 4) ( 6) ( 22) ( 19) ( 8) ( 4) ( 21) 9 Non-Marketing Operating (NFR) ( 9) ( 8) ( 7) (16) ( 10) ( 7) ( 7) ( 11) (13) (10) ( 17) ( 16) (21) (11) ( 12) ( 30) ( 10) ( 14) ( 19) ( 12) 10 Marketing ( 6) (11) ( 6) ( 9) ( 9) ( 9) (10) ( 13) (13) (13) ( 13) ( 9) ( 9) ( 8) ( 8) ( 8) ( 7) ( 8) ( 8) ( 7) 11 Other ( 3) ( 3) ( 3) ( 3) ( 3) ( 3) ( 7) ( 3) ( 5) ( 3) ( 6) ( 3) ( 7) ( 3) ( 8) ( 3) ( 9) ( 3) ( 8) ( 31) Total Operating Disbursements (71) (88) (74) (116) (70) (88) (79) (169) (102) (114) (143) (170) (161) (139) (160) (155) (129) (160) (226) (193) Non-Operating Disbursements 12 Debt Service and Fees ( 1) ( 1) ( 7) ( 1) ( 1) ( 1) (12) (10) ( 1) ( 1) ( 1) ( 22) ( 19) ( 1) ( 1) (15) ( 1) ( 1) ( 4) (15) 13 Restructuring Professionals - - - ( 1) - - - ( 1) (13) - ( 1) ( 1) (11) - - - ( 1) ( 12) ( 6) - 14 Other Non-Operating ( 1) ( 1) ( 1) ( 2) ( 2) ( 2) ( 2) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) ( 1) Total Non-Operating Disbursements (1) (1) (7) (4) (3) (3) (14) (13) (15) (2) (3) (25) (30) (2) (2) (16) (2) (14) (12) (17) Net Cash Flow $ (34) $ (45) $ (32) $ (67) $ (21) $ (38) $ (27) $ (91) $ (21) $ 8 $ (28) $ (25) $ (9) $ 19 $ (25) $ (38) $ (5) $ (57) $ (105) $ (100) Liquidity Book Cash Position 15 Book Cash - Beginning 475 441 396 589 522 501 463 435 344 548 556 527 503 494 512 488 450 445 388 283 16 Plus: Net Cash Flow ( 34) ( 45) ( 32) (67) (21) (38) (27) ( 91) ( 21) 8 ( 28) ( 25) ( 9) 19 (25) ( 38) ( 5) (57) (105) (100) 17 Plus: Revolver Draw/(Paydown) - - - - - - - - - - - - - - - - - - - - 18 Plus: DIP Draw/(Paydown) - - 225 - - - - - 225 - - - - - - - - - - - Book Cash - Ending 441 396 589 522 501 463 435 344 548 556 527 503 494 512 488 450 445 388 283 183 19 Prof Fee Carevout Escrow - - (16) (16) ( 16) (16) (38) (37) (27) (27) ( 27) ( 40) ( 31) ( 31) ( 31) (47) (47) ( 37) ( 30) (17) 20 Posted ABL Cash Collateral / Cash Collateral L/C - - - - - - - - - - - - - - - (17) - - - - Unrestricted Book Cash - Ending $ 441 $ 396 $ 573 $ 506 $ 485 $ 447 $ 398 $ 307 $ 521 $ 529 $ 500 $ 463 $ 462 $ 481 $ 456 $ 386 $ 398 $ 351 $ 252 $ 166 Intra-Month Minimum 396 396 396 398 398 398 398 307 307 307 307 386 386 386 386 386 166 166 166 166 Pre-Petition ABL Borrowing Base and Availability 21 Effective Borrowing Base 1,620 1,627 1,629 1,623 1,637 1,640 1,638 1,635 1,655 1,644 1,622 1,606 1,606 1,560 1,522 1,488 1,593 1,611 1,628 1,636 22 Less: Outstanding ABL Draws (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) (1,180) 23 Less: Letters of Credit (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) (213) Subtotal 227 234 236 229 243 247 245 242 261 251 228 212 212 166 128 95 200 217 234 242 24 Less: Pre-Petition Minimum Excess Availability (122) (122) (122) (122) (123) (123) (123) (123) (124) (123) (122) (120) (120) (117) (114) (112) (120) (121) (122) (123) 25 Plus: Posted ABL Cash Collateral - - - - - - - - - - - - - - - 17 - - - - Total 105 112 113 108 121 124 122 119 137 127 107 92 92 49 14 0 80 96 112 119

As of May 13, 2020* Monthly forecast (October 2020 – January 2021) J.C. Penney Company, Inc. 4 5 4 4 Monthly Cash Flow Oct Nov Dec Jan (US $ MMs) FY20 FY20 FY20 FY20 31-Oct 5-Dec 2-Jan 30-Jan Sales $429 $1,034 $882 $338 Collections & Disbursements Total Collections $467 $1,063 $998 $420 Total Operating Disbursements ($623) ($654) ($493) ($468) Total Non-operating Disbursements ($64) ($5) ($5) ($14) Borrowing Base Credit Card Receivables $26 $109 $62 $22 Eligible Inventory $2,030 $1,861 $1,399 $1,359 * The above forecast does not reflect critical information and assumptions subsequent to May 13, 2020, including those related to the Company’s newly expected DIP facility, as described in the Company's commitment letter with certain lenders, dated May 15, 2020, and associated cash payments, and therefore should not be relied upon. Deutscank Investment Bank 81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGq q q qz z z zk k k kS S S SD D D DM M M MpD pD pD pDAs of May 13, 2020* Monthly forecast (October 2020 – January 2021) J.C. Penney Company, Inc. 4 5 4 4 Monthly Cash Flow Oct Nov Dec Jan (US $ MMs) FY20 FY20 FY20 FY20 31-Oct 5-Dec 2-Jan 30-Jan Sales $429 $1,034 $882 $338 Collections & Disbursements Total Collections $467 $1,063 $998 $420 Total Operating Disbursements ($623) ($654) ($493) ($468) Total Non-operating Disbursements ($64) ($5) ($5) ($14) Borrowing Base Credit Card Receivables $26 $109 $62 $22 Eligible Inventory $2,030 $1,861 $1,399 $1,359 * The above forecast does not reflect critical information and assumptions subsequent to May 13, 2020, including those related to the Company’s newly expected DIP facility, as described in the Company's commitment letter with certain lenders, dated May 15, 2020, and associated cash payments, and therefore should not be relied upon. Deutscank Investment Bank 81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGq q q qz z z zk k k kS S S SD D D DM M M MpD pD pD pD

HIGHLY CONFIDENTIAL J.C. Penney Company, Inc. Weekly Cash Flow (US $ MMs) Fiscal Month Apr Apr Apr Apr Fiscal Week 10 11 12 13 Year FY20 FY20 FY20 FY20 Week Ending 11-Apr 18-Apr 25-Apr 2-May Net Sales $ 23 $ 33 $ 36 $ 26 Collections & Disbursements Total Collections 24 31 31 27 Total Operating Disbursements (71) (70) (65) (89) Total Non-Operating Disbursements (3) (0) (0) (9) Net Cash Flow $ (50) $ (39) $ (34) $ (71) 1 of 1 # ConfidentialHIGHLY CONFIDENTIAL J.C. Penney Company, Inc. Weekly Cash Flow (US $ MMs) Fiscal Month Apr Apr Apr Apr Fiscal Week 10 11 12 13 Year FY20 FY20 FY20 FY20 Week Ending 11-Apr 18-Apr 25-Apr 2-May Net Sales $ 23 $ 33 $ 36 $ 26 Collections & Disbursements Total Collections 24 31 31 27 Total Operating Disbursements (71) (70) (65) (89) Total Non-Operating Disbursements (3) (0) (0) (9) Net Cash Flow $ (50) $ (39) $ (34) $ (71) 1 of 1 # Confidential

HIGHLY CONFIDENTIAL J.C. Penney Company, Inc. Borrowing Base Roll Forward (US $ MMs) Fiscal Month Apr Apr Fiscal Week 10 13 Year FY20 FY20 Week Ending 11-Apr 2-May Borrowing Base Credit Card Receivables $ 4 $ 15 Eligible External Inventory 2,061 2,052 Total Reserves (153) (153) # Confidential 1 of 1HIGHLY CONFIDENTIAL J.C. Penney Company, Inc. Borrowing Base Roll Forward (US $ MMs) Fiscal Month Apr Apr Fiscal Week 10 13 Year FY20 FY20 Week Ending 11-Apr 2-May Borrowing Base Credit Card Receivables $ 4 $ 15 Eligible External Inventory 2,061 2,052 Total Reserves (153) (153) # Confidential 1 of 1

JCPenney Co., Inc. US$ Millions 2020-Q1 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr Total Payroll & Benefits (32) (58) (33) (45) (35) (38) (107) (40) (31)JCPenney Co., Inc. US$ Millions 2020-Q1 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr Total Payroll & Benefits (32) (58) (33) (45) (35) (38) (107) (40) (31)

JCPenney Co. Inc. PRO-FORMA BORROWING BASE ($ in millions) FY 2020 Feb Available Inventory $1,850 Available Cc Receivables 35 Total Reserves (158) Borrowing Base 1,727 Revolving Commitment 2,350 Lower of Borrowing Base or Revolving Commitment 1,727 Minimum excess availability - Bank Borrowings 0 Letters of Credit (204) Availability 1,523JCPenney Co. Inc. PRO-FORMA BORROWING BASE ($ in millions) FY 2020 Feb Available Inventory $1,850 Available Cc Receivables 35 Total Reserves (158) Borrowing Base 1,727 Revolving Commitment 2,350 Lower of Borrowing Base or Revolving Commitment 1,727 Minimum excess availability - Bank Borrowings 0 Letters of Credit (204) Availability 1,523

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2018 Sales by Store # of stores >=30mm $225 5 29-30mm $59 2 28-29mm $57 2 27-28mm $111 4 26-27mm $159 6 25-26mm $230 9 24-25mm $97 4 23-24mm $141 6 22-23mm $247 11 21-22mm $257 12 20-21mm $448 22 19-20mm $507 26 18-19mm $351 19 17-18mm $456 26 16-17mm $509 31 15-16mm $514 33 14-15mm $751 52 13-14mm $593 44 12-13mm $662 53 11-12mm $623 54 10-11mm $589 56 9-10mm $388 41 8-9mm $434 51 7-8mm $413 55 6-7mm $365 56 5-6mm $143 26 4-5mm $194 44 3-4mm $248 71 2-3mm $66 24 1-2mm $0 0 >0 -1mm $0 1 <0 $0 0 - 100 200 300 400 500 600 700 800 Deutsche Bank Aggregate Store Group FY 2018 Sales ($ in mm) Investment Bank Note: Sales includes Merchandise and Service Sales. Stores Grouped by FY 2018 Sales81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2018 Sales by Store # of stores >=30mm $225 5 29-30mm $59 2 28-29mm $57 2 27-28mm $111 4 26-27mm $159 6 25-26mm $230 9 24-25mm $97 4 23-24mm $141 6 22-23mm $247 11 21-22mm $257 12 20-21mm $448 22 19-20mm $507 26 18-19mm $351 19 17-18mm $456 26 16-17mm $509 31 15-16mm $514 33 14-15mm $751 52 13-14mm $593 44 12-13mm $662 53 11-12mm $623 54 10-11mm $589 56 9-10mm $388 41 8-9mm $434 51 7-8mm $413 55 6-7mm $365 56 5-6mm $143 26 4-5mm $194 44 3-4mm $248 71 2-3mm $66 24 1-2mm $0 0 >0 -1mm $0 1 <0 $0 0 - 100 200 300 400 500 600 700 800 Deutsche Bank Aggregate Store Group FY 2018 Sales ($ in mm) Investment Bank Note: Sales includes Merchandise and Service Sales. Stores Grouped by FY 2018 Sales

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Sales by Store # of stores >=30mm 5 $202 0 29-30mm $0 28-29mm 0 $0 2 27-28mm $55 26-27mm $79 3 25-26mm 2 $51 24-25mm $147 6 23-24mm 4 $94 22-23mm $158 7 21-22mm $193 9 20-21mm 12 $245 19-20mm $310 16 18-19mm 16 $295 17-18mm $562 32 16-17mm $348 21 15-16mm $385 25 14-15mm $565 39 13-14mm $553 41 12-13mm $776 62 11-12mm $612 53 10-11mm $632 60 9-10mm $538 56 8-9mm $485 57 7-8mm $476 64 6-7mm $355 55 5-6mm $267 48 4-5mm $169 38 3-4mm $251 72 2-3mm $109 40 1-2mm $0 0 >0 -1mm $0 1 <0 $0 0 - 100 200 300 400 500 600 700 800 900 Aggregate Store Group FY 2019 Sales ($ in mm) Deutsche Bank Investment Bank Note: Sales includes Merchandise and Service Sales. Stores Grouped by FY 2019 Sales81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Sales by Store # of stores >=30mm 5 $202 0 29-30mm $0 28-29mm 0 $0 2 27-28mm $55 26-27mm $79 3 25-26mm 2 $51 24-25mm $147 6 23-24mm 4 $94 22-23mm $158 7 21-22mm $193 9 20-21mm 12 $245 19-20mm $310 16 18-19mm 16 $295 17-18mm $562 32 16-17mm $348 21 15-16mm $385 25 14-15mm $565 39 13-14mm $553 41 12-13mm $776 62 11-12mm $612 53 10-11mm $632 60 9-10mm $538 56 8-9mm $485 57 7-8mm $476 64 6-7mm $355 55 5-6mm $267 48 4-5mm $169 38 3-4mm $251 72 2-3mm $109 40 1-2mm $0 0 >0 -1mm $0 1 <0 $0 0 - 100 200 300 400 500 600 700 800 900 Aggregate Store Group FY 2019 Sales ($ in mm) Deutsche Bank Investment Bank Note: Sales includes Merchandise and Service Sales. Stores Grouped by FY 2019 Sales

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2018 4‐Wall Operating Profit by Store # of stores 2 >=7mm $21 3 6-7mm $20 10 5-6mm $53 33 4-5mm $145 80 3-4mm $274 180 2-3mm $437 304 1-2mm $457 >0 -1mm $143 228 <0 ($14) 6 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2018 4-Wall Operating Profit ($ in mm) (1) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Deutsche Bank costs. Investment Bank costs. Stores Grouped by FY 2018 4-Wall Operating Profit81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2018 4‐Wall Operating Profit by Store # of stores 2 >=7mm $21 3 6-7mm $20 10 5-6mm $53 33 4-5mm $145 80 3-4mm $274 180 2-3mm $437 304 1-2mm $457 >0 -1mm $143 228 <0 ($14) 6 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2018 4-Wall Operating Profit ($ in mm) (1) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Deutsche Bank costs. Investment Bank costs. Stores Grouped by FY 2018 4-Wall Operating Profit

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2019 4‐Wall Operating Profit by Store # of stores 7-8mm $0 0 6-7mm $13 2 5-6mm $10 2 4-5mm $63 14 3-4mm $183 53 2-3mm $295 125 1-2mm $423 292 >0 -1mm $194 347 <0 ($16) 11 (50) 50 150 250 350 450 Aggregate Store Group FY 2019 4-Wall Operating Profit ($ in mm) Deutsche Bank (1) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Investment Bank Stores Grouped by FY 2019 4-Wall Operating Profit81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2019 4‐Wall Operating Profit by Store # of stores 7-8mm $0 0 6-7mm $13 2 5-6mm $10 2 4-5mm $63 14 3-4mm $183 53 2-3mm $295 125 1-2mm $423 292 >0 -1mm $194 347 <0 ($16) 11 (50) 50 150 250 350 450 Aggregate Store Group FY 2019 4-Wall Operating Profit ($ in mm) Deutsche Bank (1) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. Investment Bank Stores Grouped by FY 2019 4-Wall Operating Profit

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2018 4‐Wall EBITDA by Store # of stores >=7mm $12 1 6-7mm 1 $7 5-6mm $11 2 4-5mm $70 16 3-4mm $152 45 2-3mm $283 116 1-2mm $478 329 >0 -1mm $195 324 <0 ($17) 12 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2018 4-Wall EBITDA ($ in mm) Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 1 Investment Bank Stores Grouped by FY 2018 4-Wall EBITDA81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2018 4‐Wall EBITDA by Store # of stores >=7mm $12 1 6-7mm 1 $7 5-6mm $11 2 4-5mm $70 16 3-4mm $152 45 2-3mm $283 116 1-2mm $478 329 >0 -1mm $195 324 <0 ($17) 12 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2018 4-Wall EBITDA ($ in mm) Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 1 Investment Bank Stores Grouped by FY 2018 4-Wall EBITDA

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2019 4‐Wall EBITDA by Store # of stores 1 8-9mm $9 2 7-8mm $15 6-7mm 4 $26 5-6mm $61 11 4-5mm $165 37 3-4mm $265 77 2-3mm $435 177 1-2mm $436 293 >0 -1mm $159 239 <0 ($14) 5 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2019 4-Wall EBITDA ($ in mm) (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above Deutsche Bank reflect the Company’s in-progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 2 Investment Bank Stores Grouped by FY 2019 4-Wall EBITDA81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) FY 2019 4‐Wall EBITDA by Store # of stores 1 8-9mm $9 2 7-8mm $15 6-7mm 4 $26 5-6mm $61 11 4-5mm $165 37 3-4mm $265 77 2-3mm $435 177 1-2mm $436 293 >0 -1mm $159 239 <0 ($14) 5 (50) 50 150 250 350 450 550 Aggregate Store Group FY 2019 4-Wall EBITDA ($ in mm) (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above Deutsche Bank reflect the Company’s in-progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 2 Investment Bank Stores Grouped by FY 2019 4-Wall EBITDA

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) Store Closure Summary 2019 4-Wall (3) 2019 4-Wall Operating profit (2) Proposed closure status Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Open – Owned 228 30 $3,055 $599 $468 Closed – Owned 49 7 432 48 29 Open – Ground Leased 90 11 1,222 218 165 Closed – Ground Leased 19 2 177 17 10 Open – Leased 286 29 3,012 567 436 Closed – Leased 174 14 1,016 109 57 Total 846 93 $8,914 $1,558 $1,165 (1) Reflects latest thinking on stores as of April 2020, exact number continues to evolve. Deutsche Bank (2) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 3 Investment Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. (3) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD (1) Store Closure Summary 2019 4-Wall (3) 2019 4-Wall Operating profit (2) Proposed closure status Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Open – Owned 228 30 $3,055 $599 $468 Closed – Owned 49 7 432 48 29 Open – Ground Leased 90 11 1,222 218 165 Closed – Ground Leased 19 2 177 17 10 Open – Leased 286 29 3,012 567 436 Closed – Leased 174 14 1,016 109 57 Total 846 93 $8,914 $1,558 $1,165 (1) Reflects latest thinking on stores as of April 2020, exact number continues to evolve. Deutsche Bank (2) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 3 Investment Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. (3) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Lease Term Remaining 2019 4-Wall (2) Operating Lease 2019 4-Wall Operating profit (1) Term Remaining Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) >= 50 years 12 1 $126 $20 $15 >= 30 years <50 years 47 6 532 81 57 >=10 years <30 years 350 33 3,079 523 386 < 10 Years 51 3 291 51 34 Total 460 43 $4,028 $675 $492 2019 4-Wall (2) Ground Lease 2019 4-Wall Operating profit (1) Term Remaining Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) >= 50 years 46 5 $594 $100 $75 >= 30 years <50 years 30 4 365 60 45 >=10 years <30 years 32 5 431 74 54 < 10 Years 1 0 10 2 1 Total 109 14 $1,399 $235 $175 Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 4 analysis as of InA vest pril 30, ment2020, Bankand therefore, the above 4-wall EBITDA values should not be relied upon. (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Lease Term Remaining 2019 4-Wall (2) Operating Lease 2019 4-Wall Operating profit (1) Term Remaining Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) >= 50 years 12 1 $126 $20 $15 >= 30 years <50 years 47 6 532 81 57 >=10 years <30 years 350 33 3,079 523 386 < 10 Years 51 3 291 51 34 Total 460 43 $4,028 $675 $492 2019 4-Wall (2) Ground Lease 2019 4-Wall Operating profit (1) Term Remaining Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) >= 50 years 46 5 $594 $100 $75 >= 30 years <50 years 30 4 365 60 45 >=10 years <30 years 32 5 431 74 54 < 10 Years 1 0 10 2 1 Total 109 14 $1,399 $235 $175 Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 4 analysis as of InA vest pril 30, ment2020, Bankand therefore, the above 4-wall EBITDA values should not be relied upon. (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Rent Expense 2019 4-Wall (2) Operating Lease 2019 4-Wall Operating profit (1) Rent expense PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 64 9 $715 $120 $89 >$2.00, <$3,00 PSF 83 9 860 154 116 >$3.00, <$4.00 PSF 94 10 925 163 125 >=$4.00 PSF 80 8 882 115 78 Total 321 36 $3,382 $551 $407 2019 4-Wall (2) Ground Lease 2019 4-Wall Operating profit (1) Rent expense PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 60 9 $807 $139 $103 >$2.00, <$3,00 PSF 15 2 218 43 34 >$3.00, <$4.00 PSF 20 2 209 34 26 >=$4.00 PSF 14 1 164 18 13 Total 109 14 $1,399 $235 $175 Note: From Third Party Advisor August 2019 analysis. This only includes rent expense from the 430 operating leased and ground leased properties that the Third Party Advisor included in their analysis. Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 5 Investment Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Rent Expense 2019 4-Wall (2) Operating Lease 2019 4-Wall Operating profit (1) Rent expense PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 64 9 $715 $120 $89 >$2.00, <$3,00 PSF 83 9 860 154 116 >$3.00, <$4.00 PSF 94 10 925 163 125 >=$4.00 PSF 80 8 882 115 78 Total 321 36 $3,382 $551 $407 2019 4-Wall (2) Ground Lease 2019 4-Wall Operating profit (1) Rent expense PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 60 9 $807 $139 $103 >$2.00, <$3,00 PSF 15 2 218 43 34 >$3.00, <$4.00 PSF 20 2 209 34 26 >=$4.00 PSF 14 1 164 18 13 Total 109 14 $1,399 $235 $175 Note: From Third Party Advisor August 2019 analysis. This only includes rent expense from the 430 operating leased and ground leased properties that the Third Party Advisor included in their analysis. Deutsche Bank (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress 5 Investment Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2018 Occupancy Costs (Owned, Ground Leased and Operating Leased) 2019 4-Wall (2) 2019 4-Wall Operating profit (1) Occupancy cost PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 210 26 $2,348 $443 $349 >$2.00, <$3,00 PSF 158 20 1,796 324 239 >$3.00, <$4.00 PSF 149 15 1,431 269 205 >=$4.00 PSF 329 32 3,340 521 372 Total 846 93 $8,914 $1,558 $1,165 (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress Deutsche Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 6 Investment Bank (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2018 Occupancy Costs (Owned, Ground Leased and Operating Leased) 2019 4-Wall (2) 2019 4-Wall Operating profit (1) Occupancy cost PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 210 26 $2,348 $443 $349 >$2.00, <$3,00 PSF 158 20 1,796 324 239 >$3.00, <$4.00 PSF 149 15 1,431 269 205 >=$4.00 PSF 329 32 3,340 521 372 Total 846 93 $8,914 $1,558 $1,165 (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress Deutsche Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 6 Investment Bank (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Occupancy Costs (Owned, Ground Leased and Operating Leased) 2019 4-Wall (2) 2019 4-Wall Operating profit (1) Occupancy cost PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 211 27 $2,404 $456 $357 >$2.00, <$3,00 PSF 145 19 1,690 308 229 >$3.00, <$4.00 PSF 156 16 1,439 263 198 >=$4.00 PSF 334 32 3,382 531 381 Total 846 93 $8,914 $1,558 $1,165 (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress Deutsche Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 7 Investment Bank (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD FY 2019 Occupancy Costs (Owned, Ground Leased and Operating Leased) 2019 4-Wall (2) 2019 4-Wall Operating profit (1) Occupancy cost PSF Stores SF (millions) 2019 Sales (millions) EBITDA (millions) (millions) Up to $2.00 PSF 211 27 $2,404 $456 $357 >$2.00, <$3,00 PSF 145 19 1,690 308 229 >$3.00, <$4.00 PSF 156 16 1,439 263 198 >=$4.00 PSF 334 32 3,382 531 381 Total 846 93 $8,914 $1,558 $1,165 (1) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in-progress Deutsche Bank analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. 7 Investment Bank (2) 4-Wall operating profit is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs.

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Lit” Value Total Store Base (1) Real Estate Lit Value Appraisal Summary ($ in millions except number of stores) $3,392 $1,995 $1,676 $1,397 $649 $488 $319 $259 -- Owned Ground Lease Operating Total Owned Ground Lease Operating Total Grand Total Lease Unencumbered Lease Encumbered Stores Stores Unencumbered Encumbered Stores Total Total Ground Operating Total UE Ground Operating Owned Owned Encumbered Grand Total Lease Lease Stores Lease Lease Stores (2) # of stores 65 49 460 574 212 60 -- 272 846 FY'19 4-Wall $166 $97 $675 $938 $482 $139 -- $620 $1,558 (3) EBITDA (1) The Company has not yet appraised 5 encumbered stores and 105 unencumbered stores based on a variety of factors, namely lease term, square footage and / or mall grade. Value does not include that of unappraised stores. (2) Reflects current store count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 8 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Lit” Value Total Store Base (1) Real Estate Lit Value Appraisal Summary ($ in millions except number of stores) $3,392 $1,995 $1,676 $1,397 $649 $488 $319 $259 -- Owned Ground Lease Operating Total Owned Ground Lease Operating Total Grand Total Lease Unencumbered Lease Encumbered Stores Stores Unencumbered Encumbered Stores Total Total Ground Operating Total UE Ground Operating Owned Owned Encumbered Grand Total Lease Lease Stores Lease Lease Stores (2) # of stores 65 49 460 574 212 60 -- 272 846 FY'19 4-Wall $166 $97 $675 $938 $482 $139 -- $620 $1,558 (3) EBITDA (1) The Company has not yet appraised 5 encumbered stores and 105 unencumbered stores based on a variety of factors, namely lease term, square footage and / or mall grade. Value does not include that of unappraised stores. (2) Reflects current store count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 8 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Dark” Value Total Store Base (1) Real Estate Dark Value Appraisal Summary ($ in millions except number of stores) $1,820 $1,124 $979 $696 $404 $151 $141 $146 -- Owned Ground Lease Operating Total Owned Ground Lease Operating Total Grand Total Lease Unencumbered Lease Encumbered Stores Stores Unencumbered Encumbered Stores Total Total Ground Operating Total UE Ground Operating Owned Owned Encumbered Grand Total Lease Lease Stores Lease Lease Stores (2) # of stores 65 49 460 574 212 60 -- 272 846 FY'19 4-Wall $166 $97 $675 $938 $482 $139 -- $620 $1,558 (3) EBITDA (1) The Company has not yet appraised 5 encumbered stores and 105 unencumbered stores based on a variety of factors, namely lease term, square footage and / or mall grade. Value does not include that of unappraised stores. (2) Reflects current store count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 9 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Dark” Value Total Store Base (1) Real Estate Dark Value Appraisal Summary ($ in millions except number of stores) $1,820 $1,124 $979 $696 $404 $151 $141 $146 -- Owned Ground Lease Operating Total Owned Ground Lease Operating Total Grand Total Lease Unencumbered Lease Encumbered Stores Stores Unencumbered Encumbered Stores Total Total Ground Operating Total UE Ground Operating Owned Owned Encumbered Grand Total Lease Lease Stores Lease Lease Stores (2) # of stores 65 49 460 574 212 60 -- 272 846 FY'19 4-Wall $166 $97 $675 $938 $482 $139 -- $620 $1,558 (3) EBITDA (1) The Company has not yet appraised 5 encumbered stores and 105 unencumbered stores based on a variety of factors, namely lease term, square footage and / or mall grade. Value does not include that of unappraised stores. (2) Reflects current store count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 9 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal

81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Lit” and “Dark” Value Total Warehouse Base Real Estate Lit Value Appraisal Summary ($ in millions except number of Real Estate Dark Value Appraisal Summary ($ in millions except number of (1) (1) warehouses) warehouses) $356 $356 $218 $218 -- -- Unemcumbered Encumbered WH Grand Total Unemcumbered Encumbered WH Grand Total Operating Lease Owned Operating Lease Owned Unemcumbered Operating Unemcumbered Operating Encumbered Stores Encumbered Stores Owned Grand Total Grand Total Lease Lease Owned (2) # of WH 56 11 56 11 FY’19 4-Wall -- -- -- -- -- -- (3) EBITDA (1) The Company has not yet appraised 5 unencumbered lease distribution centers based on a variety of factors, namely lease term and / or square footage. Value does not include that of unappraised distribution centers. (2) Reflects current count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 10 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal81ni 81ni 81ni 81nidZ dZ dZ dZpG pG pG pGqzkS qzkS qzkS qzkSD D D DM M M MpD pD pD pD Real Estate Appraisal Summary — “Lit” and “Dark” Value Total Warehouse Base Real Estate Lit Value Appraisal Summary ($ in millions except number of Real Estate Dark Value Appraisal Summary ($ in millions except number of (1) (1) warehouses) warehouses) $356 $356 $218 $218 -- -- Unemcumbered Encumbered WH Grand Total Unemcumbered Encumbered WH Grand Total Operating Lease Owned Operating Lease Owned Unemcumbered Operating Unemcumbered Operating Encumbered Stores Encumbered Stores Owned Grand Total Grand Total Lease Lease Owned (2) # of WH 56 11 56 11 FY’19 4-Wall -- -- -- -- -- -- (3) EBITDA (1) The Company has not yet appraised 5 unencumbered lease distribution centers based on a variety of factors, namely lease term and / or square footage. Value does not include that of unappraised distribution centers. (2) Reflects current count, not adjusted for any contemplated closures. Deutsche Bank (3) 4-Wall EBITDA is an internal store performance metric, which excludes most corporate overhead and other fixed allocated costs. 4-wall EBITDA values presented above reflect the Company’s in- 10 Investment Bank progress analysis as of April 30, 2020, and therefore, the above 4-wall EBITDA values should not be relied upon. Source: Company, Third Party appraisal

XML

Document and Entity Information	May 15, 2020
Document And Entity Information [Line Items]
Entity Registrant Name	J C PENNEY CO INC
Amendment Flag	false
Entity Central Index Key	0001166126
Document Type	8-K
Document Period End Date	May 15, 2020
Entity Incorporation State Country Code	DE
Entity File Number	1-15274
Entity Tax Identification Number	26-0037077
Entity Address, Address Line One	6501 Legacy Drive
Entity Address, City or Town	Plano
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75024-3698
City Area Code	(972)
Local Phone Number	431-1000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document And Entity Information [Line Items]
Security 12b Title	Common Stock of 50 cents par value
Trading Symbol	JCP
Security Exchange Name	NYSE
Preferred Stock [Member]
Document And Entity Information [Line Items]
Security 12b Title	Preferred Stock Purchase Rights
Trading Symbol	JCP
Security Exchange Name	NYSE