Document:

EX-4.2

 Exhibit 4.2 

FIRST SUPPLEMENTAL INDENTURE 

Dated as of September 15, 2014 

among 
 J. C. PENNEY
CORPORATION, INC. 
 and 

J. C. PENNEY COMPANY, INC., 

as joint and several obligors 

and 
 WILMINGTON TRUST,
NATIONAL ASSOCIATION, 
 as Trustee 

8.125% SENIOR NOTES DUE 2019 

 CROSS-REFERENCE TABLE* 
  

			
	 Trust Indenture Act Section
	  	 Indenture Section

	 310(a)(1)
	  	7.10
	       (a)(2)
	  	7.10
	       (a)(3)
	  	N.A.
	       (a)(4)
	  	N.A.
	       (a)(5)
	  	7.10
	       (b)
	  	7.10
	       (c)
	  	N.A.
	 311(a)
	  	7.11
	       (b)
	  	7.11
	       (c)
	  	N.A.
	 312(a)
	  	2.05
	       (b)
	  	11.03
	       (c)
	  	11.03
	 313(a)
	  	7.06
	       (b)(1)
	  	N.A.
	       (b)(2)
	  	7.06; 7.07
	       (c)
	  	7.06; 11.02
	       (d)
	  	7.06
	 314(a)
	  	4.03; 11.02; 11.05
	       (b)
	  	N.A.
	       (c)(1)
	  	11.04
	       (c)(2)
	  	11.04
	       (c)(3)
	  	N.A.
	       (d)
	  	N.A.
	       (e)
	  	11.05
	       (f)
	  	N.A.
	 315(a)
	  	7.01
	       (b)
	  	7.05; 11.02
	       (c)
	  	7.01
	       (d)
	  	7.01
	       (e)
	  	6.12
	 316(a) (last sentence)
	  	2.10
	       (a)(1)(A)
	  	6.05
	       (a)(1)(B)
	  	6.04
	       (a)(2)
	  	N.A.
	       (b)
	  	6.07
	       (c)
	  	2.13
	 317(a)(1)
	  	6.08
	       (a)(2)
	  	6.09
	       (b)
	  	2.04
	 318(a)
	  	11.01
	       (b)
	  	N.A.
	       (c)
	  	11.01

 N.A. means not applicable. 
  

	*	This Cross Reference Table is not part of this Supplemental Indenture (as defined below). 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	PAGE	 
		
	ARTICLE 1 RELATION TO BASE INDENTURE; DEFINITIONS AND INCORPORATION	  	 	1	  
			
	 Section 1.01.
	  	 Relation to Base Indenture.
	  	 	1	  
	 Section 1.02.
	  	 Definitions.
	  	 	2	  
	 Section 1.03.
	  	 Other Definitions.
	  	 	9	  
	 Section 1.04.
	  	 Incorporation by Reference of Trust Indenture Act.
	  	 	9	  
	 Section 1.05.
	  	 Rules of Construction.
	  	 	9	  
		
	ARTICLE 2 THE NOTES	  	 	10	  
			
	 Section 2.01.
	  	 Form and Dating.
	  	 	10	  
	 Section 2.02.
	  	 Execution and Authentication.
	  	 	11	  
	 Section 2.03.
	  	 Registrar and Paying Agent.
	  	 	11	  
	 Section 2.04.
	  	 Paying Agent to Hold Money in Trust.
	  	 	12	  
	 Section 2.05.
	  	 Holder Lists.
	  	 	12	  
	 Section 2.06.
	  	 Transfer and Exchange.
	  	 	12	  
	 Section 2.07.
	  	 Issuance of Additional Notes.
	  	 	16	  
	 Section 2.08.
	  	 Replacement Notes.
	  	 	17	  
	 Section 2.09.
	  	 Outstanding Notes.
	  	 	17	  
	 Section 2.10.
	  	 Treasury Notes.
	  	 	17	  
	 Section 2.11.
	  	 Temporary Notes.
	  	 	18	  
	 Section 2.12.
	  	 Cancellation.
	  	 	18	  
	 Section 2.13.
	  	 Defaulted Interest.
	  	 	18	  
	 Section 2.14.
	  	 CUSIP Numbers.
	  	 	19	  
		
	 ARTICLE 3 REDEMPTION
	  	 	19	  
			
	 Section 3.01.
	  	 Notices to Trustee.
	  	 	19	  
	 Section 3.02.
	  	 Selection of Notes to Be Redeemed.
	  	 	20	  
	 Section 3.03.
	  	 Notice of Redemption.
	  	 	20	  
	 Section 3.04.
	  	 Effect of Notice of Redemption.
	  	 	21	  
	 Section 3.05.
	  	 Deposit of Redemption Price.
	  	 	21	  
	 Section 3.06.
	  	 Notes Redeemed in Part.
	  	 	21	  
	 Section 3.07.
	  	 Optional Redemption.
	  	 	21	  
	 Section 3.08.
	  	 Mandatory Redemption.
	  	 	22	  
		
	 ARTICLE 4 COVENANTS
	  	 	22	  
			
	 Section 4.01.
	  	 Payment of Notes.
	  	 	22	  
	 Section 4.02.
	  	 Maintenance of Office or Agency.
	  	 	22	  
	 Section 4.03.
	  	 Compliance Certificate.
	  	 	23	  
	 Section 4.04.
	  	 Stay, Extension and Usury Laws.
	  	 	23	  

							
	 Section 4.05.
	  	 Offer to Repurchase Upon Change of Control Triggering Event.
	  	 	23	  
	 Section 4.06.
	  	 Limitation on Liens.
	  	 	24	  
	 Section 4.07.
	  	 Limitation on Sale and Lease-Back Transactions.
	  	 	25	  
	 Section 4.08.
	  	 Waiver of Covenants.
	  	 	26	  
		
	ARTICLE 5 CONSOLIDATION, MERGER OR SALE OF ASSETS	  	 	26	  
			
	 Section 5.01.
	  	 Consolidation, Merger or Sale of Assets.
	  	 	27	  
	 Section 5.02.
	  	 Successor Corporation Substituted.
	  	 	27	  
		
	ARTICLE 6 DEFAULT AND REMEDIES	  	 	27	  
			
	 Section 6.01.
	  	 Events of Default.
	  	 	27	  
	 Section 6.02.
	  	 Acceleration.
	  	 	28	  
	 Section 6.03.
	  	 Other Remedies.
	  	 	29	  
	 Section 6.04.
	  	 Waiver of Past Defaults.
	  	 	29	  
	 Section 6.05.
	  	 Control by Majority.
	  	 	29	  
	 Section 6.06.
	  	 Limitation on Suits.
	  	 	30	  
	 Section 6.07.
	  	 Rights of Holders of Notes to Receive Payment.
	  	 	30	  
	 Section 6.08.
	  	 Collection Suit by Trustee.
	  	 	30	  
	 Section 6.09.
	  	 Trustee May File Proofs of Claim.
	  	 	30	  
	 Section 6.10.
	  	 Application of Proceeds.
	  	 	31	  
	 Section 6.11.
	  	 Restoration of Rights and Remedies.
	  	 	31	  
	 Section 6.12.
	  	 Undertaking for Costs.
	  	 	31	  
	 Section 6.13.
	  	 Rights and Remedies Cumulative.
	  	 	32	  
	 Section 6.14.
	  	 Delay or Omission not Waiver.
	  	 	32	  
		
	ARTICLE 7 TRUSTEE	  	 	32	  
			
	 Section 7.01.
	  	 Duties of Trustee.
	  	 	32	  
	 Section 7.02.
	  	 Rights of Trustee.
	  	 	33	  
	 Section 7.03.
	  	 Individual Rights of Trustee.
	  	 	35	  
	 Section 7.04.
	  	 Trustee’s Disclaimer.
	  	 	35	  
	 Section 7.05.
	  	 Notice of Defaults.
	  	 	35	  
	 Section 7.06.
	  	 Reports by Trustee to Holders.
	  	 	35	  
	 Section 7.07.
	  	 Compensation and Indemnity.
	  	 	35	  
	 Section 7.08.
	  	 Replacement of Trustee.
	  	 	36	  
	 Section 7.09.
	  	 Successor Trustee by Merger, etc.
	  	 	37	  
	 Section 7.10.
	  	 Eligibility; Disqualification.
	  	 	37	  
	 Section 7.11.
	  	 Preferential Collection of Claims Against the JCP Parties.
	  	 	38	  
		
	ARTICLE 8 DEFEASANCE AND DISCHARGE PRIOR TO MATURITY	  	 	38	  
			
	 Section 8.01.
	  	 Option to Effect Defeasance.
	  	 	38	  
	 Section 8.02.
	  	 Defeasance and Discharge.
	  	 	38	  
	 Section 8.03.
	  	 Conditions to Defeasance.
	  	 	38	  

  
 ii 

							
	 Section 8.04.
	  	 Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions.
	  	 	39	  
	 Section 8.05.
	  	 Repayment to Company.
	  	 	39	  
	 Section 8.06.
	  	 Reinstatement.
	  	 	40	  
		
	 ARTICLE 9 MODIFICATION
	  	 	40	  
			
	 Section 9.01.
	  	 Modifications Without Consent of Holders.
	  	 	40	  
	 Section 9.02.
	  	 With Consent of Holders.
	  	 	41	  
	 Section 9.03.
	  	 Compliance with Trust Indenture Act.
	  	 	42	  
	 Section 9.04.
	  	 Revocation and Effect of Consents.
	  	 	42	  
	 Section 9.05.
	  	 Notation on or Exchange of Notes.
	  	 	43	  
	 Section 9.06.
	  	 Trustee to Sign Amendments, etc.
	  	 	43	  
		
	ARTICLE 10 SATISFACTION AND DISCHARGE	  	 	43	  
			
	 Section 10.01.
	  	 Satisfaction and Discharge.
	  	 	43	  
	 Section 10.02.
	  	 Application of Trust Money.
	  	 	44	  
		
	 ARTICLE 11 MISCELLANEOUS
	  	 	45	  
			
	 Section 11.01.
	  	 Trust Indenture Act of 1939.
	  	 	45	  
	 Section 11.02.
	  	 Notices.
	  	 	45	  
	 Section 11.03.
	  	 Communications by Holders with Other Holders.
	  	 	46	  
	 Section 11.04.
	  	 Certificate and Opinion as to Conditions Precedent.
	  	 	46	  
	 Section 11.05.
	  	 Statements Required in Certificate or Opinion.
	  	 	46	  
	 Section 11.06.
	  	 Rules by Trustee and Agents.
	  	 	47	  
	 Section 11.07.
	  	 No Personal Liability of Directors, Officers, Employees and Shareholders.
	  	 	47	  
	 Section 11.08.
	  	 Governing Law; Jury Trial Waiver.
	  	 	47	  
	 Section 11.09.
	  	 No Adverse Interpretation of Other Agreements.
	  	 	47	  
	 Section 11.10.
	  	 Successors.
	  	 	48	  
	 Section 11.11.
	  	 Severability.
	  	 	48	  
	 Section 11.12.
	  	 Counterpart Originals.
	  	 	48	  
	 Section 11.13.
	  	 Table of Contents, Headings, etc.
	  	 	48	  
	 Section 11.14.
	  	 Non-Business Days.
	  	 	48	  
	 Section 11.15.
	  	 USA PATRIOT ACT.
	  	 	48	  

 EXHIBITS 
  

			
	 Exhibit A      
	  	 FORM OF NOTE

  
 iii 

 FIRST SUPPLEMENTAL INDENTURE, dated as of September 15, 2014 (this “Supplemental
Indenture”), among J. C. Penney Company, Inc., a Delaware corporation (the “Company”), J. C. Penney Corporation, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“JCP” and,
together with the Company, the “JCP Parties”), as joint and several obligors, and Wilmington Trust, National Association, a national banking association duly incorporated and existing under the laws of the United States of America,
as trustee (the “Trustee”). 
 W I T N E S S E T H: 

WHEREAS, the JCP Parties and the Trustee have heretofore executed and delivered an Indenture, dated as of September 15, 2014 (the
“Base Indenture” and, with respect only to the Notes (as defined below), together with this Supplemental Indenture and including the terms of the Notes, the “Indenture”), providing for the issuance from time to time
of one or more series of Securities (as defined in the Base Indenture) of the JCP Parties; 
 WHEREAS, pursuant to the terms of the Base
Indenture, the JCP Parties desire to provide for the establishment of a series of Securities to be designated as the “8.125% Senior Notes due 2019” (herein referred to as the “Notes”), the form and substance of the Notes
and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture; 

WHEREAS, Section 3.01 of the Base Indenture provides that various matters with respect to any series of Securities issued under the Base
Indenture may be established in an indenture supplemental to the Base Indenture; 
 WHEREAS, under Section 14.01(p) of the Base
Indenture, the JCP Parties and the Trustee may enter into an indenture supplemental to the Base Indenture to establish the form and terms of Securities of any series as permitted in Section 3.01 of the Base Indenture; and 

WHEREAS, all things necessary to make this Supplemental Indenture, when duly executed and delivered, a valid and legally binding agreement of
the JCP Parties in accordance with its terms and for the purposes herein expressed, have been done by the JCP Parties; and the execution and delivery of this Supplemental Indenture by the JCP Parties have been in all respects duly authorized by the
JCP Parties. 
 NOW, THEREFORE, the JCP Parties and the Trustee agree as follows for the benefit of each other and for the equal and
proportionate benefit of the Holders (as defined below) of the Notes: 
 ARTICLE 1 

RELATION TO BASE INDENTURE; 

DEFINITIONS AND INCORPORATION 

Article 1 hereof replaces Article I of the Base Indenture in its entirety. 

Section 1.01. Relation to Base Indenture. 

This Supplemental Indenture constitutes an integral part of the Indenture. This Supplemental Indenture supplements and, to the extent
inconsistent therewith, replaces the terms of the Base Indenture with respect only to the Notes. 

 Section 1.02. Definitions. 

For purposes of this Supplemental Indenture, the following terms shall have the respective meanings set forth in this Section. 

“Additional Notes” means any additional Notes (other than the Initial Notes) of the same series as the Initial Notes issued
under this Supplemental Indenture in accordance with Section 2.07 hereof. 
 “Affiliate” of any specified Person means
any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control”, when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. 
 “Agent” means any Registrar, Paying Agent or
Custodian. 
 “Applicable Procedures” means, with respect to any payment, tender, redemption, transfer or exchange of or
for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such payment, tender, redemption, transfer or exchange. 

“Attributable Debt” in respect of any Sale and Lease-Back Transaction means, as of the time of the determination, the lesser
of (1) the sale price of the Principal Property so leased multiplied by a fraction the numerator of which is the remaining portion of the base term of the lease included in such transaction and the denominator of which is the base term of such
lease, and (2) the total obligation (discounted to present value at the highest rate of interest specified by the terms of any series of Securities then outstanding compounded semiannually) of the lessee for rental payments (other than amounts
required to be paid on account of property taxes as well as maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the base term of the lease included in
such transaction. 
 “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of
debtors. 
 “Base Indenture” shall have the meaning set forth in the first paragraph of the Recitals hereof. 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such
“person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns,” “Beneficially
Owned” and “Beneficial Ownership” have a corresponding meaning. 
 “Board of Directors” means the board of
directors of either of the JCP Parties or any other committee of that board duly authorized to act in respect hereof. 
 “Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York or other place of payment are authorized or obligated by law or executive order to close. 

  
 2 

 “Change of Control” means the occurrence of any of the following: 

(1) any event requiring the filing of any report under or in response to Schedule 13D or 14D-1 pursuant to the Exchange Act,
disclosing beneficial ownership of either 50% or more of the common stock of the Company then outstanding or 50% or more of the voting power of the voting stock of the Company then outstanding; 

(2) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the properties or assets of the Company or JCP and their respective Subsidiaries taken as a whole to one or more Persons other than the Company or one of its Subsidiaries; or

 (3) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing
Directors. 
 “Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.

 “Company” means the Person named as the “Company” in the preamble hereof until a successor Person shall have
become such pursuant to the applicable provisions of this Supplemental Indenture, and thereafter “Company” shall mean such successor Person. 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by the Quotation Agent as having
an actual or interpolated maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable
maturity to the remaining term of the Notes. 
 “Comparable Treasury Price” means, with respect to any redemption date,
(1) the arithmetic average (as determined by the Quotation Agent) of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if the
Quotation Agent obtains only one Reference Treasury Dealer Quotation, such Reference Treasury Dealer Quotation. 
 “Continuing
Director” means, as of any date of determination, any member of the Board of Directors of the Company who (1) was a member of such Board of Directors on the date of the issuance of the Notes, or (2) was nominated for election or
elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Company’s
proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination). 

“Custodian” means the custodian with respect to any Global Note appointed by the Depositary, or any successor Person thereto,
and shall initially be the Paying Agent. 
 “Default” means any event which is, or after notice or lapse of time, or both,
would become, an Event of Default. 
 “Definitive Note” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global
Note” attached thereto. 

  
 3 

 “Depositary” means, with respect to the Notes issuable or issued in whole or in
part in the form of one of more Global Notes, each Person designated pursuant to Section 2.03 hereof until one or more successor Depositaries for the Notes shall have become such pursuant to the applicable provisions of this Supplemental
Indenture. 
 “Exchange Act” means the Securities Exchange Act of 1934, and any statute successor thereto, in each case as
amended from time to time. 
 “Fitch” means Fitch Ratings, or any successor thereto. 

“Funded Indebtedness” of a corporation means the principal of (1) all indebtedness created, incurred or assumed by such
corporation (including the Notes in the case of JCP) which by its terms is not payable on demand and which matures by its terms, or which by its terms such corporation has the right at its option to renew or extend to a date, more than one year
after the date of determination, whether outstanding on the date of execution of the Indenture or thereafter created, incurred or assumed, and which is (a) for money borrowed or (b) evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets, including securities, (2) any indebtedness of others of the kinds described in the preceding clause (1) for the payment of which such corporation is responsible or
liable as guarantor or otherwise and (3) amendments, renewals and refundings of any such indebtedness; provided, however, that such term shall not include any obligations under leases or any guarantees of obligations of others
under leases. It is understood that for the purposes of this definition the term “principal” when used at any date with respect to any indebtedness shall mean the amount of principal of such indebtedness that could be declared due and
payable on that date pursuant to the terms of such indebtedness. 
 “GAAP” means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by
such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. 

“Global Note Legend” means the legend set forth in Section 2.06(f), which is required to be placed on all Global Notes
issued under this Supplemental Indenture. 
 “Global Notes” means, individually and collectively, each of the Global Notes
substantially in the form of Exhibit A hereto issued in accordance with Section 2.01 hereof. 
 “Holder” means a
Person in whose name a Note is registered. 
 “Indenture” has the meaning set forth in the first paragraph of the Recitals
hereof. 
 “Indirect Participant” means a Person who holds beneficial interest in a Global Note through a Participant. 

“Initial Notes” means the $400 million aggregate principal amount of Notes issued under this Supplemental Indenture on the
Issue Date. 

  
 4 

 “Investment Grade” means a rating equal to or higher than BBB- (or the
equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 
 “Issue Date”
means September 15, 2014. 
 “JCP” means the Person named as “JCP” in the preamble hereof until a successor
Person shall have become such pursuant to the applicable provisions of this Supplemental Indenture, and thereafter “JCP” shall mean such successor Person. 

“JCP Parties” means the Persons named as the “JCP Parties” in the preamble hereof until successor Persons shall
have become such pursuant to the applicable provisions of this Supplemental Indenture, and thereafter “JCP Parties” shall mean such successor Persons. 

“Lien” means any mortgage, security interest, pledge or lien. 

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto. 

“Notes” has the meaning assigned to it in the second paragraph of the Recitals hereof. The Initial Notes and the Additional
Notes shall be treated as a single class for all purposes under this Supplemental Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes. 

“Officer” means, with respect to any Person, the Chairman of the Board, any Vice Chairman of the Board, the Chief Executive
Officer, the President, any Executive Vice President, any Senior Vice President, the Chief Financial Officer, the Treasurer or Corporate Treasurer, any Assistant Treasurer or Assistant Corporate Treasurer, the Controller or Corporate Controller, any
Assistant Controller or Assistant Corporate Controller, the General Counsel, any Vice President, the Secretary or Corporate Secretary or any Assistant Secretary or Assistant Corporate Secretary of such Person. 

“Officer’s Certificate” means a certificate signed by an Officer of the Company. 

“Opinion of Counsel” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the
Company, or may be other counsel reasonably satisfactory to the Trustee, that meets the requirements of Section 11.05 hereof. 

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary. 

“Person” means an individual, corporation, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, limited liability company or government or any agency or political subdivision thereof or other entity. 

“Principal Amount” means, when used with respect to any Note, the amount of principal thereof that could then be declared due
and payable pursuant to Section 6.02 as a result of an Event of Default with respect to such Note. 
 “Principal
Property” means all real property and tangible personal property owned by JCP or a Restricted Subsidiary constituting a part of any store, warehouse or distribution center located within one of the 50 states of the United States or the
District of Columbia, exclusive of motor vehicles, mobile materials-handling equipment and other rolling stock, cash registers and other point of sale recording 

  
 5 

 
devices and related equipment, and data processing and other office equipment; provided, however, that such term shall not include any such property constituting a part of any such
store, warehouse or distribution center unless the net book value of all real property (including leasehold improvements) and store fixtures constituting a part of such store, warehouse or distribution center exceeds 0.25% of Stockholders’
Equity. 
 “Quotation Agent” means one of the Reference Treasury Dealers appointed by the JCP Parties. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or
S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the JCP Parties’ control, a “nationally recognized statistical rating organization” within the meaning of Rule 3(a)(62)
under the Exchange Act, selected by the JCP Parties as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“Rating Event” means: 

(1) if the Notes are not rated Investment Grade by each of the Rating Agencies on the first day of the Trigger Period, the
Notes are downgraded by at least one rating category (e.g., from BB+ to BB or Ba1 to Ba2) from the applicable rating of the Notes on the first day of the Trigger Period by each of the Rating Agencies on any date during the Trigger Period;

 (2) if the Notes are rated Investment Grade by each of the Rating Agencies on the first day of the Trigger Period, the
Notes cease to be rated Investment Grade by each of the Rating Agencies on any date during the Trigger Period; 
 (3) if both
(A) the Notes are rated Investment Grade by at least one, but not each, of the Rating Agencies, and (B) the Notes are not rated Investment Grade by the other Rating Agencies, in each case, on the first day of the Trigger Period, then both
of the following occur: (i) in the case of each of the Rating Agencies referred to in clause (A), the Notes cease to be rated Investment Grade by each such Rating Agency on any date during the Trigger Period, and (ii) in the case of each
of the Rating Agencies referred to in clause (B), the Notes are downgraded by at least one rating category (e.g., from BB+ to BB or Ba1 to Ba2) from the applicable rating of the Notes on the first day of the Trigger Period by each such Rating
Agency on any date during the Trigger Period. 
 If a Rating Agency is not providing a rating for the Notes at the commencement of any Trigger Period, the
Notes will be deemed to have been downgraded by at least one rating category or have ceased to be rated Investment Grade, as applicable, by such Rating Agency during that Trigger Period. 

“Reference Treasury Dealer” means (1) J.P. Morgan Securities LLC, Barclays Capital Inc. and Goldman, Sachs &
Co. or their respective affiliates that are primary U.S. government securities dealers, and their respective successors; provided, however, that if the foregoing or their respective affiliates shall cease to be a primary U.S.
government securities dealer in The City of New York (a “Primary Treasury Dealer”), the JCP Parties shall substitute therefor another Primary Treasury Dealer, or (2) any other Primary Treasury Dealer selected by the JCP
Parties. 
 “Reference Treasury Dealer Quotations” means, with respect to the Reference Treasury Dealer and any redemption
date, the average (as determined by the Quotation Agent) of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference
Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such redemption date. 

  
 6 

 “Responsible Officer,” when used with respect to the Trustee, means any vice
president, any assistant vice president, any trust officer, any assistant trust officer or any other officer associated with the corporate trust department of the Trustee customarily performing functions similar to those performed by any of the
above designated officers, who shall have direct responsibility for the administration of this Supplemental Indenture, and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is
referred because of such person’s knowledge of and familiarity with the particular subject. 
 “Restricted Subsidiary”
means any Subsidiary of JCP or of a Restricted Subsidiary which JCP designates as a Restricted Subsidiary, which designation shall not have been canceled. Any such designation or cancellation of such designation may be made more than once with
respect to any Subsidiary; provided, however, that no Subsidiary which has previously been a Restricted Subsidiary shall be redesignated as a Restricted Subsidiary if during any period following cancellation of its previous designation
as a Restricted Subsidiary, such Subsidiary shall have entered into a Sale and Lease-Back Transaction which would have been prohibited under Section 4.07 of this Supplemental Indenture had it been a Restricted Subsidiary at the time of such
transaction. 
 “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
or any successor thereto. 
 “SEC” means the United States Securities and Exchange Commission, as constituted from time to
time. 
 “Sale and Lease-Back Transaction” of a corporation means any arrangement whereby (1) property has been or is
to be sold or transferred by such corporation to any Person with the intention on the part of such corporation of taking back a lease of such property pursuant to which the rental payments are calculated to amortize the purchase price of such
property substantially over the useful life of such property and (2) such property is in fact so leased by such corporation. 

“Senior Funded Indebtedness”: 

(1) of JCP means any Funded Indebtedness of JCP unless in any instrument or instruments evidencing or securing such Funded
Indebtedness or pursuant to which the same is outstanding, or in any amendment, renewal, extension or refunding of such Funded Indebtedness, it is provided that such Funded Indebtedness is subordinate in right of payment to the Notes (a) in the
event of any dissolution or winding-up or total or partial liquidation or reorganization of JCP, whether voluntary or involuntary, or any bankruptcy, insolvency, receivership or similar proceedings relative to JCP, (b) in the event that any
Subordinated Funded Indebtedness of JCP is declared due and payable before its expressed maturity because of the occurrence of an Event of Default with respect to such Subordinated Funded Indebtedness and (c) in the event of any Default in the
payment of principal (including any required prepayments or amortization) of or interest on any Senior Funded Indebtedness of JCP; and 

(2) of a Restricted Subsidiary means any Funded Indebtedness of such Restricted Subsidiary and the aggregate preference on
involuntary liquidation of any class of stock of such Restricted Subsidiary ranking, either as to payment of dividends or distribution of assets, prior to any other class of stock of such Restricted Subsidiary. 

  
 7 

 “Stated Maturity” when used with respect to any Note, or any installment of
principal or interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note, or such installment of principal or interest, is due and payable. 

“Stockholders’ Equity” means the sum, as at the close of a monthly accounting period (selected by JCP) ending within 65
days next preceding the date of determination, of (1) the aggregate of capital, capital stock, capital surplus, capital in excess of par value of stock, reinvested earnings, earned surplus and net income retained for use in the business
(however the foregoing may be designated), after deducting the cost of shares of capital stock of JCP held in its treasury, of JCP and consolidated Subsidiaries, determined in accordance with generally accepted accounting practices applied on the
basis used in reports from time to time to stockholders of the Company, plus (b) the amount reflected in such determination as deferred tax effects. 

“Subordinated Funded Indebtedness” of JCP means Funded Indebtedness of JCP which is not Senior Funded Indebtedness. 

“Subsidiary” means (a) any corporation of which either of the JCP Parties, directly or indirectly, owns more than 50% of
the outstanding stock, which at the time shall have by the terms thereof ordinary voting power to elect directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency, or (b) any such corporation of which such percentage of shares of outstanding stock of the character described in the foregoing clause (a) shall at the time be owned,
directly or indirectly, by either of the JCP Parties and one or more Subsidiaries as defined in the foregoing clause (a) or by one or more such Subsidiaries. 

“Supplemental Indenture” has the meaning set forth in the Preamble hereof. 

“TIA” means the Trust Indenture Act of 1939, as amended, or any successor statute or statutes thereto. 

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to
maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

 “Trigger Period” means the period commencing on the first public announcement by the JCP Parties of an arrangement that
could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by any of the Rating Agencies). 
 “Trustee” means the Person named as the
“Trustee” in the preamble hereof until a successor Person shall have become such pursuant to the applicable provisions of this Supplemental Indenture, and thereafter “Trustee” shall mean such successor Person. 

“U.S. Government Obligations” means securities which are (1) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged, or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, provided that the payment of such obligations is
unconditionally guaranteed as a full faith and credit obligation by the United States of America. The term “U.S. Government Obligations” shall also 

  
 8 

 
include depository receipts issued by a bank or trust company as custodian and evidencing ownership by the holders of such depository receipts of future payments of interest or principal, or
both, on U.S. Government Obligations, as defined above, held by such custodian, provided that except as required by law, no deduction may be made by the custodian from the amount payable to the holder of any such depository receipt from the amount
received by the custodian in respect of any such payment of interest or principal. 
 Section 1.03. Other Definitions. 

Each of the following terms is defined in the section set forth opposite such term: 

 

			
	 Term
	  	 Section

	 “Authentication Order”
	  	2.02
	 “Change of Control Payment”
	  	4.05(a)
	 “Change of Control Offer”
	  	4.05(a)
	 “Change of Control Payment Date”
	  	4.05(a)
	 “Defaulted Interest”
	  	2.13(a)
	 “Defeasance”
	  	8.02
	 “DTC”
	  	2.03
	 “indebtedness”
	  	4.06(a)
	 “Event of Default”
	  	6.01
	 “Paying Agent”
	  	2.03
	 “Registrar”
	  	2.03
	 “Satisfaction and Discharge”
	  	10.01
	 “Special Record Date”
	  	2.13(a)(i)
	 “USA PATRIOT ACT”
	  	11.15

 Section 1.04. Incorporation by Reference of Trust Indenture Act. 

Whenever this Supplemental Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this
Supplemental Indenture. The following terms used in this Supplemental Indenture that are defined by the TIA have the following meanings: 

“indenture securities” means the Notes; and 

“obligor” on the indenture securities means the Company, JCP and any other obligor on the Notes. 

All other terms used in this Supplemental Indenture that are defined by the TIA, defined by reference in the TIA to another statute or defined
by a rule of the SEC under the TIA and not otherwise defined herein have the meanings assigned to them therein. 
 Section 1.05. Rules of
Construction. 
 Unless the context otherwise requires: 

(1) a term has the meaning assigned to it; 

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; 

  
 9 

 (3) “or” is not exclusive; 

(4) words in the singular include the plural, and words in the plural include the singular; 

(5) “will” shall be interpreted to express a command; 

(6) provisions apply to successive events and transactions; 

(7) reference to sections of or rules under the Securities Act will be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time; 
 (8) “herein,” “hereof” and other words of
similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision of this Supplemental Indenture; 

(9) all references to Sections or Articles refer to Sections or Articles of this Supplemental Indenture (and not the Base
Indenture or any other document); and 
 (10) use of masculine, feminine or neuter pronouns should not be deemed a
limitation, and the use of any such pronouns should be construed to include, where appropriate, the other pronouns. 
 ARTICLE 2 

THE NOTES 
 Article 2 hereof
replaces Article II and Article III of the Base Indenture in its entirety. 
 Section 2.01. Form and Dating. 

(a) The Notes shall be issued in registered global form without interest coupons. The Notes and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall furnish any such notations, legends or endorsements to
the Trustee in writing. Each Note shall be dated the date of its authentication. The Notes shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. 

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Supplemental Indenture and the
Company, JCP and the Trustee, by their execution and delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express
provisions of the Base Indenture, the provisions of the Note shall govern and be controlling, and to the extent any provision of the Note conflicts with the express provisions of this Supplemental Indenture, the provisions of this Supplemental
Indenture shall govern and be controlling. 
 (b) Notes issued in global form shall be substantially in the form of Exhibit A attached
hereto (including the Global Note Legend thereon). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon). Each Global Note shall represent such of the
outstanding Notes as will be specified therein and each shall provide that it 

  
 10 

 
represents the aggregate principal amount of outstanding Notes from time to time as reflected in the records of the Trustee and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as appropriate, on the “Schedule of Exchanges of Interests in the Global Note” attached to such Global Note to reflect exchanges and redemptions. The Trustee’s records
and the “Schedule of Exchanges of Interests in the Global Note” attached to such Global Note shall be noted to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby, in
accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. 
 Section 2.02. Execution and Authentication.

 An Officer must sign the Notes for the JCP Parties by manual or facsimile signature. 

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be
valid. 
 A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence
that the Note has been authenticated under this Supplemental Indenture. 
 The Trustee shall, upon receipt of a written order of the JCP
Parties signed by an Officer (an “Authentication Order”), authenticate Notes for original issue under this Supplemental Indenture, including any Additional Notes issued pursuant to Section 2.07 hereof. The aggregate principal
amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the JCP Parties pursuant to one or more Authentication Orders, except as provided in Section 2.08 hereof. 

The Trustee may appoint an authenticating agent acceptable to the JCP Parties to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Supplemental Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders, the JCP Parties
or an Affiliate of the JCP Parties. 
 Section 2.03. Registrar and Paying Agent. 

The JCP Parties will maintain an office or agency where Notes may be presented for registration of transfer or for exchange
(“Registrar”) and an office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar will keep a register of the Notes and of their transfer and exchange. The JCP Parties may appoint one or
more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The JCP Parties may change any Paying Agent or
Registrar without notice to any Holder. The JCP Parties will notify the Trustee in writing of the name and address of any Agent not a party to this Supplemental Indenture. If the JCP Parties fail to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The JCP Parties or any of their respective Subsidiaries may act as Paying Agent or Registrar. 

The JCP Parties initially appoint The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

 The JCP Parties initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes. 

  
 11 

 The JCP Parties shall be responsible for making calculations called for under the Notes,
including but not limited to determination of redemption price, premium, if any, and any additional amounts or other amounts payable on the Notes. The JCP Parties will make the calculations in good faith and, absent manifest error, its calculations
will be final and binding on the Holders. The JCP Parties will provide a schedule of its calculations to the Trustee when requested by the Trustee, and the Trustee is entitled to rely conclusively on the accuracy of the JCP Parties’
calculations without independent verification. 
 Section 2.04. Paying Agent to Hold Money in Trust. 

The JCP Parties will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any Default by the JCP Parties in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The JCP Parties at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the JCP Parties or a Subsidiary thereof) will have no further liability for the money. If either of the JCP Parties or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to either of the JCP Parties, the Trustee will serve as Paying Agent for the Notes. 

Section 2.05. Holder Lists. 
 The
Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the
JCP Parties will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Holders and the JCP Parties shall otherwise comply with TIA § 312(a). 
 Section 2.06. Transfer and
Exchange. 
 (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary
to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes
shall be exchanged by the JCP Parties for Definitive Notes if: 
 (1) the JCP Parties deliver to the Trustee notice from the
Depositary that the Depositary is no longer willing or able to act as Depositary or that the Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either case, a successor Depositary is not appointed by the JCP Parties
within 90 days after the date of such notice from the Depositary or becoming aware that the Depositary is no longer registered; 

(2) the JCP Parties in their sole discretion determine that the Global Notes (in whole but not in part) should be exchanged for
Definitive Notes and deliver a written notice to such effect to the Trustee; or 
 (3) there has occurred and is continuing
an Event of Default and DTC requests the issuance of Definitive Notes. 

  
 12 

 Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Definitive
Notes shall be issued in such names and in any approved denominations as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.11 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.08 or 2.11 hereof, shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) and
(d) hereof. 
 None of the Company, JCP or the Trustee will be liable for any delay by DTC, its nominee or any direct or indirect DTC
participant in identifying the beneficial owners of the Notes. The JCP Parties and the Trustee may conclusively rely on, and will be protected in relying on, instructions from DTC or its nominee for all purposes, including with respect to the
registration and delivery, and the respective principal amounts, of the certificated Notes to be issued. 
 (b) Transfer and Exchange of
Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Supplemental Indenture and the Applicable
Procedures. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: 

(1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial interest in the same Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(1). 
 (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In
connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar both: 

(A) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and 

(B) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account
to be credited with such increase. 
 Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Supplemental Indenture and the Notes or otherwise applicable under the Securities Act or Applicable Procedures, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(g) hereof. 

  
 13 

 (c) Transfer or Exchange of Beneficial Interests in Global Notes for Definitive Notes. If any
holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, the holder or
transferor, respectively, must deliver to the Registrar both: 
 (A) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and 

(B) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange referred to in (c) above. 
 Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes contained in this Supplemental Indenture and the Notes or otherwise applicable under the Securities Act or Applicable Procedures, the Trustee shall cause the aggregate
principal amount of the applicable Global Notes to be reduced accordingly pursuant to Section 2.06(g) hereof, and the JCP Parties shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered. 
 (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in Global Notes.

 A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Global Notes. 
 If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to the previous paragraph at a time when a Global Note has not yet been issued, the JCP Parties shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. 

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. A Holder of Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of a Definitive Note. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form reasonably
satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, reasonably required
by the Registrar. 
 (f) Legends. A legend in substantially the following form will appear on all Global Notes issued under this
Supplemental Indenture unless specifically stated otherwise in the applicable provisions of this Supplemental Indenture. 

  
 14 

 “THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE JCP PARTIES, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES. 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.” 

(g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, such Global Note shall be returned to and canceled by the Trustee in accordance with Section 2.12 hereof. At any
time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on the “Schedule of Exchanges of Interests in the Global Note” attached to such Global Note and a notation will be made
in the records maintained by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on the “Schedule of Exchanges of Interests in the Global Note” attached to such Global Note and a notation
will be made in the records maintained by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. 
 (h)
General Provisions Relating to Transfers and Exchanges. 
 (1) To permit registrations of transfers and exchanges, the
JCP Parties shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order or at the Registrar’s request. 

(2) No service charge shall be made to a Holder of a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.11, 3.06, 4.05 and 9.05 hereof). 
 (3) The Registrar shall not be required
to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. 

(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the JCP Parties, evidencing the same debt, and entitled to the same benefits under this Supplemental Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or
exchange. 

  
 15 

 (5) The JCP Parties shall not be required: 

(A) to issue, to register the transfer of or to exchange any Notes (i) during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection or (ii) that have been tendered and not withdrawn in connection with a
Change of Control Offer; 
 (B) to register the transfer of or to exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part; or 
 (C) to register the transfer of or to exchange
a Note between a record date and the next succeeding interest payment date. 
 (6) Prior to due presentment for the
registration of a transfer of any Note, the Trustee, any Agent and the JCP Parties may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the JCP Parties shall be affected by notice to the contrary. 

(7) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02
hereof. Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by DTC. 
 (8) All
orders, certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or other electronic
transmission. 
 Section 2.07. Issuance of Additional Notes. 

The JCP Parties shall be entitled, without the consent of the Holders, to create and issue Additional Notes under this Supplemental Indenture
in an unlimited aggregate principal amount. Any Additional Notes would be issued under this Supplemental Indenture with substantially identical terms as the Initial Notes (except the issue date, the public offering price and, if applicable, the
initial interest accrual date and the initial interest payment date) and would be consolidated, and form a single series, with the Initial Notes, provided that if such Additional Notes are not fungible with the Initial Notes for U.S. federal
income tax purposes or to the extent required by applicable securities laws or Applicable Procedures, such Additional Notes will have a separate CUSIP number. 

With respect to any Additional Notes, the JCP Parties shall set forth in an Officer’s Certificate the following information: (1) the
aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Supplemental Indenture and (2) the issue price, the date of issuance and the CUSIP number of such Additional Notes. 

  
 16 

 Section 2.08. Replacement Notes.  

If any mutilated Note is surrendered to the Trustee or the JCP Parties and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the JCP Parties will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note, subject to the immediately following sentence. If required by the Trustee or the JCP
Parties, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of (i) the Trustee to protect the Trustee and (ii) the JCP Parties to protect the JCP Parties, the Trustee, any Agent and any authenticating agent
from any loss that any of them may suffer if a Note is replaced. The JCP Parties may charge the Holder thereof for their expenses in replacing a Note. 

In case any such mutilated Note has become or is about to become due and payable, the JCP Parties in their discretion may, instead of issuing
a new Note, pay such Note. 
 Every replacement Note is an additional obligation of the JCP Parties and will be entitled to all of the
benefits of this Supplemental Indenture equally and proportionately with all other Notes duly issued hereunder. 
 Section 2.09. Outstanding
Notes. 
 The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.09 as not outstanding. Except as set forth in
Section 2.10 hereof, a Note does not cease to be outstanding because the JCP Parties or an Affiliate of either of the JCP Parties holds the Note; however, Notes held by the JCP Parties or a Subsidiary of either of the JCP Parties shall
not be deemed to be outstanding for purposes of Section 3.07 hereof. 
 If a Note is replaced pursuant to Section 2.08 hereof, it
ceases to be outstanding unless the Trustee receives proof reasonably satisfactory to it that the replaced Note is held by a protected purchaser. 

If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue. 
 If the Paying Agent (other than the JCP Parties, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date,
repurchase date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest. 

Section 2.10. Treasury Notes. 

In determining whether the Holders of the required principal amount of Notes have concurred in any direction or consent, Notes owned by the
JCP Parties, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the JCP Parties, will be disregarded, except that for the purposes of determining whether the Trustee will be protected
in relying on any such direction or consent, only Notes that a Responsible Officer of the Trustee knows are so owned will be so disregarded. 

  
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 Section 2.11. Temporary Notes.  

Until certificates representing Notes are ready for delivery, the JCP Parties may prepare and the Trustee, upon receipt of an Authentication
Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the JCP Parties consider appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the JCP Parties will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes. 

Holders of temporary Notes will be entitled to all of the benefits of this Supplemental Indenture. 

Section 2.12. Cancellation. 
 The
JCP Parties or one of their respective Affiliates at any time may deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the JCP Parties or one of their respective Affiliates may have acquired in any
manner whatsoever, and may deliver to the Trustee for cancellation any Notes previously authenticated hereunder which the JCP Parties have not issued and sold. The Registrar, any transfer agent and the Paying Agent shall forward to the Trustee any
Notes surrendered to them for transfer, exchange, payment or cancellation. The Trustee shall promptly cancel and dispose of in accordance with its customary procedures all Notes surrendered for transfer, exchange, payment or cancellation and upon
written request shall deliver a certificate of disposition to the JCP Parties. The JCP Parties may not issue new Notes to replace Notes that have been paid in full or delivered to the Trustee for cancellation. 

Section 2.13. Defaulted Interest.  

(a) Any interest on any Note that is payable but is not punctually paid or duly provided for on any interest payment date (this being
referred to herein as “Defaulted Interest”) shall cease to be payable to the Holder on the relevant record date by virtue of his, her or its having been such a Holder, and such Defaulted Interest may be paid by the JCP Parties, at
their election, in each case, as provided in clause (i) or (ii) below: 
 (i) The JCP Parties may elect to make
payment of any Defaulted Interest to the Persons in whose names such Notes are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “Special Record Date”), which shall be fixed
in the following manner. The JCP Parties shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Note and the date of the proposed payment, and at the same time the JCP Parties shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the JCP Parties shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 calendar days and not less than 10 calendar days prior to the
date of the proposed payment and not less than 10 calendar days after the JCP Parties give to the Trustee the notice of the proposed payment. The JCP Parties shall promptly notify the Trustee of such Special Record Date and, in the name and at the
expense of the JCP Parties, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to the Holders of such Notes not less than 10 calendar days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted 

  
 18 

 
Interest and the Special Record Date therefor having been given as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Notes are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to the following clause (ii). 
 (ii) The JCP
Parties may make payment of any Defaulted Interest on Notes in any other lawful manner (including, if the Notes are listed on a securities exchange, in a manner not inconsistent with the requirements of such securities exchange, and upon such notice
as may be required by such exchange), if, after notice given by the JCP Parties to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. 

(b) Subject to the provisions set forth herein relating to record dates, each Note delivered pursuant to any provision of the Supplemental
Indenture in exchange or substitution for, or upon registration of transfer of, any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. 

Section 2.14. CUSIP Numbers. 
 The
JCP Parties in issuing the Notes may use CUSIP, ISIN or other similar numbers, if then generally in use, and thereafter with respect to such series, the Trustee may use such numbers in any notice (including any notice of redemption, repurchase or
exchange); provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice (including any notice of redemption, repurchase or exchange)
and that reliance may be placed only on the other identification numbers printed on the Notes, and any such notice shall not be affected by any defect in or omission of such numbers. The JCP Parties will promptly notify the Trustee in writing of any
change in the CUSIP, ISIN or other similar numbers. 
 ARTICLE 3 

REDEMPTION 
 Article 3 hereof
replaces Article IV of the Base Indenture in its entirety. 
 Section 3.01. Notices to Trustee. 

If the JCP Parties elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, they must furnish to the
Trustee, within the applicable time period set forth in Section 3.03 hereof for giving notice of redemption, an Officer’s Certificate setting forth: 
  

	 	(1)	the clause of this Supplemental Indenture pursuant to which the redemption shall occur; 

  

	 	(2)	the redemption date; 

  

	 	(3)	the principal amount of the Notes to be redeemed; and 

  

	 	(4)	the redemption price. 

 If the redemption price is not known at the time such notice is to be given, the actual
redemption price shall be set forth in an Officer’s Certificate of the JCP Parties delivered to the Trustee no later than two Business Days prior to the redemption date. 

  
 19 

 Section 3.02. Selection of Notes to Be Redeemed. 

If less than all of the Notes are to be redeemed, the Notes to be redeemed will be selected by the Trustee by lot or another method in
accordance with DTC procedures. 
 The Trustee shall promptly notify the JCP Parties in writing of the Notes selected for redemption and, in
the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof; no Notes of
$2,000 or less can be redeemed in part, except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not equal to $2,000 or an integral multiple of $1,000 in excess thereof,
shall be redeemed. Except as provided in the preceding sentence, provisions of this Supplemental Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. 

Section 3.03. Notice of Redemption. 

At least 30 days but not more than 60 days before a redemption date, the JCP Parties shall mail (or, in the case of interests in Global Notes,
transmit electronically) a notice of redemption to each Holder of the Notes to be redeemed, except that redemption notices may be given more than 60 days prior to a redemption if the notice is issued in connection with a Defeasance of the Notes or a
Satisfaction and Discharge pursuant to Article 8 or 10 hereof. 
 The notice will identify the Notes to be redeemed and will state: 

(1) the redemption date; 

(2) the redemption price, or manner of calculation thereof if not then known; 

(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note; 

(4) the name and address of the Paying Agent; 

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; 

(6) that, unless the JCP Parties default in making such redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date; 
 (7) the paragraph of the Notes and/or Section of this Supplemental Indenture
pursuant to which the Notes called for redemption are being redeemed; and 
 (8) that no representation is made as to the
correctness or accuracy of the CUSIP/CINS number, if any, listed in such notice or printed on the Notes. 
 At the JCP Parties’
request, the Trustee will give the notice of redemption in the JCP Parties’ names and at their expense; provided, however, that the JCP Parties have delivered to the Trustee, at least 45 days prior to the redemption date (unless a
shorter time is agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the immediately preceding paragraph. 

  
 20 

 Section 3.04. Effect of Notice of Redemption. 

Once notice of redemption is mailed or sent in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due
and payable on the redemption date at the redemption price. Notice of redemption may, at the JCP Parties’ option and discretion, be subject to the satisfaction of any conditions precedent contained in such notice of redemption. 

Section 3.05. Deposit of Redemption Price. 

Not later than 10:00 a.m. (Eastern Time) on the redemption date, one of the JCP Parties shall deposit (or cause or direct to be deposited)
with the Trustee or with the Paying Agent money sufficient to pay the redemption price of, and accrued and unpaid interest to, but not including, the redemption date, on the Notes to be redeemed on such redemption date. The Trustee or the Paying
Agent shall promptly return to the JCP Parties any money deposited with the Trustee or the Paying Agent by the JCP Parties in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest to but not including the
redemption date on, all Notes to be redeemed. 
 If the JCP Parties comply with the provisions of the preceding paragraph, on and after the
redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption is not so paid upon surrender for redemption because of the failure of the JCP Parties to
comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided
in the Notes and in Section 4.01 hereof. 
 Section 3.06. Notes Redeemed in Part. 

Upon surrender of a Note that is redeemed in part, the JCP Parties will issue and, upon receipt of an Authentication Order, the Trustee will
authenticate for the Holder at the expense of the JCP Parties a new Note equal in principal amount to the unredeemed portion of the Note surrendered; provided that each new Note will be in a minimum principal denomination of $2,000 or an
integral multiple of $1,000 in excess thereof. 
 Section 3.07. Optional Redemption. 

The JCP Parties may redeem the Notes, in whole or in part at any time, and from time to time, prior to the maturity date of the Notes, at
their option, at a redemption price equal to the greater of: 
 (1) 100% of the principal amount of the Notes to be redeemed;
and 
 (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; 

  
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 plus, in each case, accrued and unpaid interest, if any, thereon to, but not including, the date of
redemption. Notwithstanding the foregoing, installments of interest on Notes that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the Holders as of the close of
business on the relevant record date. 
 Section 3.08. Mandatory Redemption. 

The JCP Parties are not required to make mandatory redemption or sinking fund payments with respect to the Notes. 

ARTICLE 4 
 COVENANTS 

Article 4 hereof, together with Article 5 hereof, replaces Article VI of the Base Indenture in its entirety. 

Section 4.01. Payment of Notes.  

The JCP Parties will pay or cause to be paid the principal of, premium, if any, and interest due on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest due on the Notes will be considered paid on the date due if the Paying Agent, if other than the JCP Parties or a Subsidiary thereof, holds as of 10:00 a.m. (Eastern Time) on the due
date money deposited (or caused or directed to be deposited) by one of the JCP Parties in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due on the Notes. 

The JCP Parties will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the
then applicable interest rate on the Notes to the extent lawful; the JCP Parties will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable
grace period) at the same rate to the extent lawful. 
 Section 4.02. Maintenance of Office or Agency.  

The JCP Parties will maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the JCP Parties in respect of the Notes and this Supplemental Indenture may be served; provided,
however, that nothing herein shall be construed to render the Trustee or any affiliate of the Trustee, Registrar or co-registrar as the agent of the JCP Parties for service of process. The JCP Parties will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or agency. If at any time the JCP Parties fail to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate trust office of the Trustee. 
 The JCP Parties may also from time to
time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or
rescission will in any manner relieve the JCP Parties of their obligation to maintain an office or agency for such purposes. The JCP Parties will give prompt written notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. 

  
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 The JCP Parties hereby designate the corporate trust office of the Trustee as one such office or
agency of the JCP Parties in accordance with Section 2.03 hereof. 
 Section 4.03. Compliance Certificate.  

The JCP Parties shall deliver to the Trustee, within 120 days after the end of each fiscal year of JCP ended after the Issue Date, an
Officer’s Certificate (which need not comply with Section 11.05 hereof) stating, as to the signer thereof (who must be the principal executive officer, principal financial officer or principal accounting officer of each of the JCP Parties)
that: 
 (1) a review of the activities of JCP during such year and of its performance under the Indenture has been made
under his or her supervision, and 
 (2) to the best of his or her knowledge, based on such review, JCP has fulfilled all its
obligations under the Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to him or her and the nature and status thereof. 

Section 4.04. Stay, Extension and Usury Laws.  

The JCP Parties covenant (to the extent that they may lawfully do so) that they will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Supplemental Indenture; and the JCP Parties (to
the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as though no such law has been enacted. 
 Section 4.05. Offer to Repurchase Upon
Change of Control Triggering Event. 
 (a) If a Change of Control Triggering Event occurs, unless the JCP Parties have exercised
their right to redeem the Notes in full pursuant to Section 3.07 hereof or they have exercised their right to defease the Notes or satisfy and discharge their obligations under the Notes prior to maturity as described below, the JCP Parties
will be required to make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (in minimum denominations of $2,000 and integral multiples of $1,000 principal amount in excess thereof) of such
Holder’s Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased, to, but not including, the date of repurchase (the
“Change of Control Payment”). Within 30 days following the date of any Change of Control Triggering Event, or, at the JCP Parties’ option, prior to any Change of Control Triggering Event but after the public announcement of the
Change of Control, the JCP Parties shall mail (or in the case of Holders of interests in Global Notes, transmit electronically in accordance with Applicable Procedures) a notice to Holders of Notes (and shall provide a copy of such notice to the
Trustee) describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Notes on the date specified in the notice (the “Change of Control Payment Date”), which date
shall be no earlier than 30 days and no later than 60 days from the date such notice is so mailed or transmitted, pursuant to the procedures required by this Supplemental Indenture and described in such notice. The notice shall state, if so mailed
or transmitted prior to the date of consummation of the Change of Control, that the offer to repurchase the Notes is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date specified in the
notice. 

  
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 (b) The JCP Parties shall comply with the requirements of Rule 14e-l under the Exchange Act and
any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.05, the JCP Parties shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 4.05 or the
Notes by virtue of such conflicts and compliance with law. 
 (c) On the Change of Control Payment Date, the JCP Parties shall, to the
extent lawful: 
 (1) accept for purchase all Notes or portions of Notes properly tendered (and not properly withdrawn)
pursuant to the Change of Control Offer; 
 (2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all notes or portions of Notes properly tendered (and not properly withdrawn) and accepted for purchase by the JCP Parties; and 

(3) deliver or cause to be delivered to the Trustee the Notes accepted for purchase, together with an Officer’s
Certificate stating the aggregate principal amount of Notes being purchased by the JCP Parties. 
 (d) The Paying Agent shall promptly mail
(or in the case of Holders of interests in Global Notes, transmit electronically in accordance with Applicable Procedures) to each Holder of Notes properly tendered (and not properly withdrawn) and accepted for purchase by the JCP Parties, the
Change of Control Payment for the Notes, and the Trustee shall promptly authenticate and mail to each Holder a new Note (or in the case of interests in Global Notes cause to be transferred by book-entry an interest in the applicable Global Note)
equal in principal amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in a minimum principal denomination of $2,000 or an integral multiple of $1,000 in excess thereof. 

(e) Notwithstanding anything to the contrary in this Section 4.05, the JCP Parties shall not be required to make a Change of Control
Offer to repurchase the Notes upon a Change of Control Triggering Event if a third party makes an offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.05 and such third party purchases
all Notes properly tendered (and not properly withdrawn) under its offer. 
 Section 4.06. Limitation on Liens. 

(a) JCP shall not, and shall not permit any Restricted Subsidiary to, issue, assume or guarantee any notes, bonds, debentures or similar
evidences of indebtedness for money borrowed (each, “indebtedness”) which are secured by any Lien of or upon any Principal Property, or shares of capital stock or evidences of indebtedness for borrowed money issued by any Restricted
Subsidiary and owned by JCP or any Restricted Subsidiary, whether owned on the date of this Supplemental Indenture or thereafter acquired, without making effective provision, and JCP in each case shall make or cause to be made effective provision,
whereby the Principal Amount of the Notes from time to time outstanding shall be secured by such Lien equally and ratably with any and all other indebtedness secured by such Lien, so long as such indebtedness shall be so secured; provided,
however, that the foregoing restriction shall not apply to indebtedness secured by any of the following: 

(1) Liens on any property existing at the time of its acquisition; 

  
 24 

 (2) Liens on property of a corporation existing at the time such corporation
is merged into or consolidated with JCP or a Restricted Subsidiary, or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as an entirety to JCP or a
Restricted Subsidiary, provided that such Lien as a result of such merger, consolidation, sale, lease or other disposition is not extended to property owned by JCP or such Restricted Subsidiary immediately prior thereto; 

(3) Liens on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary; 

(4) Liens securing indebtedness of a Restricted Subsidiary to JCP or to another Restricted Subsidiary; 

(5) Liens on property to secure all or part of the cost of acquiring, substantially repairing or altering, constructing,
developing or substantially improving such property, or to secure indebtedness incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, provided the commitment of the creditor to
extend the credit secured by any such Lien shall have been obtained not later than twelve months after the later of (a) the completion of the acquisition, substantial repair or alteration, construction, development or substantial improvement of
such property or (b) the placing in operation of such property or of such property as so substantially repaired or altered, constructed, developed or substantially improved; 

(6) Liens securing indebtedness payable on demand or not more than one year after the date as of which the determination
is made (excluding any indebtedness renewable or extendable at the option of the debtor for a period or periods ending more than one year after the date as of which such determination is made), which indebtedness in accordance with generally
accepted accounting practices would be included among current liabilities; or 
 (7) any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (1) to (6), inclusive, provided, however, that the principal amount of indebtedness secured thereby and
not otherwise authorized by such clauses (1) to (6), inclusive, shall not exceed the principal amount of indebtedness, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of such
extension, renewal or replacement. 
 (b) Notwithstanding the provisions of Section 4.06(a), JCP or any Restricted Subsidiary may
issue, assume or guarantee indebtedness secured by Liens which would otherwise be subject to the restrictions of the immediately preceding paragraph in any aggregate amount which, together with all Attributable Debt outstanding pursuant to
Section 4.07(b) hereof, all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary and all indebtedness outstanding pursuant to this Section 4.06(b), does not exceed 5% of Stockholders’ Equity. 

Section 4.07. Limitation on Sale and Lease-Back Transactions.  

(a) JCP shall not, and shall not permit any Restricted Subsidiaries to, enter into any Sale and Lease-Back Transaction with respect to a
Principal Property (except for a transaction providing for a lease for a term, including any renewal of such lease, of not more than three years and except for a transaction 

  
 25 

 
between JCP and a Restricted Subsidiary or between Restricted Subsidiaries), if the commitment by or on behalf of the purchaser is obtained more than 12 months after the later of (1) the
completion of the acquisition, substantial repair or alteration, construction, development or substantial improvement of such Principal Property or (2) the placing in operation of such Principal Property or of such Principal Property as so
substantially repaired or altered, constructed, developed or substantially improved, unless either: 
 (1) JCP or such
Restricted Subsidiary would be entitled pursuant to Section 4.06(a) hereof to issue, assume or guarantee debt secured by a Lien on such Principal Property; or 

(2) JCP shall apply or cause to be applied, in the case of a sale or transfer for cash, an amount equal to the net proceeds
thereof (but not in excess of the net book value of such Principal Property at the date of such sale or transfer) and, in the case of a sale or transfer otherwise than for cash, an amount equal to the fair value (as determined by the Company’s
Board of Directors) of the Principal Property so leased to the retirement, within 180 days after the effective date of such Sale and Lease-Back Transaction, of Notes or other Senior Funded Indebtedness of JCP or a Restricted Subsidiary;
provided, however, that any such retirement of the Notes shall be in accordance with the terms and provisions of this Supplemental Indenture and the Notes applicable to optional redemption; and provided, further, that the
amount to be applied to such retirement of Notes or other Senior Funded Indebtedness shall be reduced by an amount equal to the sum of (A) an amount equal to the applicable redemption price with respect to the notes delivered within 180 days
after the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (B) the principal amount, plus any premium or fee paid in connection with any redemption in accordance with the terms, of other
Senior Funded Indebtedness voluntarily retired by JCP within such 180-day period, excluding in each case retirements pursuant to mandatory sinking fund or prepayment provisions and payments at maturity. 

(b) Notwithstanding the provisions of Section 4.07(a) hereof, JCP or any Restricted Subsidiary may enter into a Sale and Lease-Back
Transaction which would otherwise be subject to the restrictions of the immediately preceding paragraph so as to create an aggregate amount of Attributable Debt which, together with all indebtedness outstanding pursuant to Section 4.06(b)
hereof, all Senior Funded Indebtedness issued, assumed or guaranteed by any Restricted Subsidiary and all Attributable Debt outstanding pursuant to this Section 4.07(b), does not exceed 5% of Stockholders’ Equity. 

Section 4.08. Waiver of Covenants.  

JCP may omit in any particular instance to comply with any covenant or condition set forth in Sections 4.06 and 4.07, inclusive, with respect
to the Notes, if before or after the time for such compliance the Holders of a majority in Principal Amount of the Notes at the time outstanding shall either waive such compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of JCP and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect. 
 ARTICLE 5 

CONSOLIDATION, MERGER OR SALE OF ASSETS 

Article 5 hereof, together with Article 4 hereof, replaces Article VI of the Base Indenture in its entirety. 

  
 26 

 Section 5.01. Consolidation, Merger or Sale of Assets.  

JCP shall not consolidate with or merge into any other corporation or convey or transfer all or substantially all of its properties or assets
to any Person, unless: 
 (1) the corporation formed by such consolidation or into which JCP is merged or the Person which
acquires by conveyance or transfer JCP’s properties or assets substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State thereof or the District of Columbia, and shall
expressly assume, by supplemental indenture executed and delivered to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest, if any, on the Notes and the performance or observance of every covenant of this
Supplemental Indenture on JCP’s part to be performed or observed; 
 (2) immediately after giving effect to such
transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and 

(3) JCP has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer complies with this Article 5 and that all conditions precedent provided for in this Supplemental Indenture relating to such transaction have been complied with. 

Section 5.02. Successor Corporation Substituted.  

Upon any consolidation or merger, or any conveyance or transfer of JCP’s properties and assets substantially as an entirety in accordance
with the provisions of Section 5.01 hereof, the successor corporation formed by such consolidation or into which JCP is merged or to which such conveyance or transfer is made will succeed to, and be substituted for, JCP with the same effect as
if the successor corporation had been named as JCP, and the predecessor shall be released from all obligations and covenants under the Indenture and the Notes. In the event of any such conveyance or transfer, JCP as the predecessor may be dissolved,
wound up and liquidated at any time thereafter. 
 ARTICLE 6 

DEFAULT AND REMEDIES 
 Article 6
hereof replaces Article VII of the Base Indenture in its entirety. 
 Section 6.01. Events of Default.  

Each of the following is an “Event of Default”: 

(1) default in the payment of any interest upon the Notes when the same becomes due and payable, and continuance of such
default for a period of 30 days; 
 (2) default in payment of principal of (or premium, if any, on) the Notes at maturity,
except any maturity occurring by reason of a call for redemption; 
 (3) default in the performance, or breach, of any other
covenant contained in this Supplemental Indenture for the benefit of the Holders and the continuance of such default or 

  
 27 

 
breach for a period of 90 days after there has been given, by registered or certified mail, to the JCP Parties by the Trustee or to the JCP Parties and the Trustee by Holders of at least 25% in
Principal Amount of the Notes then outstanding, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default”; 

(4) the entry of an order for relief in respect of any petition filed against JCP under any Bankruptcy Law, or the entry of a
decree or order by a court having competent jurisdiction in the premises in respect of any petition filed or action taken against JCP looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under
any other present or future Federal or State statute, law or regulation, resulting in the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of JCP or of any substantial part of its property,
or resulting in the winding-up or liquidation of its affairs, all without the consent or acquiescence of JCP, and the continuance of any such decree or order is unstayed and in effect for a period of 60 consecutive days; or 

(5) the filing of a petition for relief under any Bankruptcy Law by JCP, or the consent, acquiescence or taking of any action
by JCP in support of a petition filed by or against it looking to reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future Federal or State statute, law or regulation, or
the appointment, with the consent of JCP, of any receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of JCP or of any substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by JCP in furtherance of any such action. 

Section 6.02. Acceleration. 
 If an
Event of Default (other than an Event of Default specified in clause (4) or (5) in Section 6.01 hereof) occurs and is continuing then, and in every such case, the Trustee or the Holders of not less than 25% in Principal Amount of the
outstanding Notes may declare the principal of and all accrued and unpaid interest, if any, on the outstanding notes to be immediately due and payable, by a notice in writing to the JCP Parties (and to the Trustee if given by Holders of Notes), and
upon any such declaration such principal, together with accrued and unpaid interest, if any, thereon, shall become immediately due and payable. If an Event of Default specified in clause (4) or (5) in Section 6.01 hereof occurs and is
continuing then, and in every such case, the principal of and all accrued and unpaid interest, if any, on the outstanding Notes shall automatically, and without declaration or other action on the part of the Trustee or any Holder of Notes, become
immediately due and payable. 
 At any time after a declaration of acceleration has been made and before a judgment or decree for payment of
the money due has been obtained by the trustee, the Holders of a majority in Principal Amount of the Notes, by written notice to the JCP Parties and the Trustee, may rescind and annul, as to the Notes, such declaration and its consequences if:
(1) the JCP Parties have paid or deposited with the trustee a sum sufficient to pay all overdue installments of interest on all of the notes, the principal of (and premium, if any, on) the Notes which has become due otherwise than by such
declaration of acceleration, and interest thereon after the date such principal became due at the rate or rates specified by the terms of this Supplemental Indenture or the Notes, to the extent that payment of such interest is legally enforceable,
interest upon overdue interest at the rate or rates specified by the terms of this Supplemental Indenture or the Notes, and all sums paid or advanced by the Trustee under this Supplemental Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of the Notes which has become due solely by such acceleration, have been cured or waived. 

  
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 Section 6.03. Other Remedies. 

If an Event of Default with respect to the Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or
in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 
 Section 6.04. Waiver of Past Defaults. 

The Holders of a majority in Principal Amount of the outstanding Notes may on behalf of the Holders of all of the Notes waive, as to the
Notes, any past Default and its consequences, except a Default not theretofore cured (1) in the payment of the principal of (or premium, if any, on) or interest, if any, on the Notes, or (2) in respect of a covenant or provision of this
Supplemental Indenture which as described under Article 9 cannot be modified or amended without the consent of each Holder of outstanding Notes. 

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. 

Section 6.05. Control by Majority. 

The Holders of a majority in outstanding Principal Amount of the Notes have the right, on behalf of the Holders, to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided that: 

(1) such direction shall not be in conflict with any rule of law or with the Indenture, 

(2) subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if
the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal
liability, and 
 (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such
direction. 
 Upon receipt by the Trustee of any such direction, a record date shall automatically and without any other action by any
Person be set for determining the Holders of outstanding Notes entitled to join in such direction, which record date shall be the close of business on the day the Trustee receives such direction. The Holders of outstanding Notes on such record date
(or their duly appointed agents), and only such Persons, shall be entitled to join in such direction, whether or not such Holders remain Holders after such record date; provided that, unless such direction shall have become effective by
virtue of Holders of the requisite Principal Amount of outstanding Notes of such series on such record date (or their duly appointed agents) having joined therein on or prior to the 90th day after such record date, such direction shall automatically
and without any action by any Person be canceled and of no further effect. 

  
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 Section 6.06. Limitation on Suits. 

No holder of Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to this Supplemental Indenture, or
for the appointment of a receiver or trustee, or for any other remedy under this Supplemental Indenture, unless: 
 (1) such
Holder has previously given written notice to the Trustee of a continuing Event of Default; 
 (2) the Holders of not less
than 25% in Principal Amount of the outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee under this Supplemental Indenture; 

(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request; 
 (4) the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity has failed to institute any such proceeding; and 
 (5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority in Principal Amount of the outstanding Notes. 
 A Holder
may not use this Supplemental Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. 

Section 6.07. Rights of Holders of Notes to Receive Payment. 

Notwithstanding any other provision of this Supplemental Indenture, the right of any Holder of a Note to receive payment of principal,
premium, if any, and interest on such Note, on or after the respective due dates expressed in such Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder. 
 Section 6.08. Collection Suit by Trustee. 

If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as Trustee of an express trust against the JCP Parties for the whole amount of principal of, premium, if any, and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 

Section 6.09. Trustee May File Proofs of Claim. 

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the JCP Parties (or any other
obligor upon the Notes), their creditors or their property and shall be entitled and empowered to collect, receive and 

  
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distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding. The Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee. 

Section 6.10. Application of Proceeds. 

If the Trustee collects any money or property pursuant to this Article 6, or after an Event of Default any moneys or properties distributable
in respect of the JCP Parties’ obligations under this Supplemental Indenture, it shall pay out the money or property in the following order: 

First: to the Trustee, its agents and attorneys and any predecessor Trustee for amounts due under Section 7.07
hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; 

Second: to Holders for amounts due and unpaid on such Notes for principal, premium, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and 

Third: to the JCP Parties or to such party as a court of competent jurisdiction shall direct. 

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. 

Section 6.11. Restoration of Rights and Remedies. 

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Supplemental Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the JCP Parties, the Trustee and the
Holders shall be restored to their former positions hereunder and thereafter all rights and remedies of the JCP Parties, the Trustee and the Holders shall continue as though no such proceeding had been instituted. 

Section 6.12. Undertaking for Costs. 

In any suit for the enforcement of any right or remedy under this Supplemental Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may 

  
 31 

 
require any party litigant in such suit to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys’ fees, against any
party litigant in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.12 does not apply to a suit by a Holder pursuant to Section 6.07 hereof, a suit instituted by
the Trustee or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. 
 Section 6.13. Rights and Remedies
Cumulative. 
 Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken
Notes in Section 2.08 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy. 
 Section 6.14. Delay or Omission not Waiver. 

No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Subject to Section 6.06 hereof, every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 
 ARTICLE 7 

TRUSTEE 
 Article 7 hereof
replaces Article XI of the Base Indenture in its entirety. 
 Section 7.01. Duties of Trustee. 

(a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this
Supplemental Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. 

(b) Except during the continuance of an Event of Default: 

(1) the duties of the Trustee will be determined solely by the express provisions of this Supplemental Indenture and the
Trustee need perform only those duties that are specifically set forth in this Supplemental Indenture and no others, and no implied covenants or obligations shall be read into this Supplemental Indenture against the Trustee; and 

(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Supplemental Indenture (but need not confirm or investigate the accuracy of any mathematical
calculations or other facts stated therein). However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Supplemental Indenture. 

  
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 (c) The Trustee may not be relieved from liabilities for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that: 
 (1) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01; 
 (2) the Trustee will not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and 

(3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof. 
 (d) Whether or not therein expressly so provided, every provision of this
Supplemental Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. 

(e) No provision of this Supplemental Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee
will be under no obligation to exercise any of its rights and powers under this Supplemental Indenture at the request or direction of any Holders of Notes, unless such Holders have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee shall not be required to give any bond or surety in respect of the performance of its powers or duties
hereunder. The permissive right of the Trustee to do things enumerated in this Supplemental Indenture shall not be construed as a duty of the Trustee. 

(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the JCP Parties.
Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 
 Section 7.02. Rights of
Trustee. 
 (a) The Trustee may conclusively rely upon any document (whether in original or facsimile form) believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. 

(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The
Trustee will not be liable for any action it takes or omits to take in good faith in reliance on any Officer’s Certificate, Opinion of Counsel, resolution of the Board of Directors of the Company or JCP, or other request, notice or direction
delivered to it pursuant to the terms of this Supplemental Indenture. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. 
 (c) The Trustee may act through
its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care. 
 (d) The
Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Supplemental Indenture. 

  
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 (e) Unless otherwise specifically provided in this Supplemental Indenture, any demand, request,
direction or notice from the JCP Parties will be sufficient if signed by an Officer of the JCP Parties. 
 (f) The Trustee will be under no
obligation to exercise any of the rights or powers vested in it by this Supplemental Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee an indemnity or security reasonably satisfactory to it
against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction. 
 (g) Subject to
Section 7.01 hereof, the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its
capacities hereunder and each Agent and Custodian. 
 (h) Subject to Section 7.01 hereof, the Trustee shall not be deemed to have
knowledge or notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless the JCP Parties or Holders of not less than 25% in aggregate principal amount of the Notes then outstanding
notify the Trustee thereof by written notice of such event sent to the Trustee in accordance with Section 11.02, and such notice references the Notes and this Supplemental Indenture. 

(i) Subject to Section 7.01(a) hereof, the Trustee shall not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of Indebtedness or other paper or document, but the Trustee, may, but shall not be required to, make
further inquiry or investigation into such facts or matters as it may see fit. 
 (j) In no event shall the Trustee be responsible or liable
for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism,
civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 

(k) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture. 
 (l) The Trustee may request that the JCP Parties deliver an Officer’s
Certificate setting forth the names of individuals and/or titles of officers authorized at such time to furnish the Trustee with Officer’s Certificates, directions, requests, and any other matters or directions pursuant to this Supplemental
Indenture. 
 (m) In no event shall the Trustee be responsible or liable for any special, indirect, punitive or consequential loss or damage
of any kind whatsoever (including, but not limited to, loss of profit), irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 

  
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 Section 7.03. Individual Rights of Trustee. 

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the JCP Parties or
any respective Affiliate of the JCP Parties with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as defined in the TIA) it must eliminate such conflict within 90 days,
apply to the SEC for permission to continue as Trustee or resign as provided in the TIA. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. 

Section 7.04. Trustee’s Disclaimer. 

The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Supplemental Indenture or the
Notes, it shall not be accountable for the JCP Parties’ use of the proceeds from the Notes or any money paid to the JCP Parties or upon the JCP Parties’ direction under any provision of this Supplemental Indenture, it will not be
responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the
sale of the Notes or pursuant to this Supplemental Indenture other than its certificate of authentication. 
 Section 7.05. Notice of
Defaults. 
 If a Default or Event of Default occurs and is continuing and if it is known to a Responsible Officer of the
Trustee, the Trustee will mail to Holders a notice of the Default or Event of Default within 90 days after the occurrence of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of (or
premium, if any, on) or interest, if any, on the Notes, the Trustee may withhold such notice if a committee of its Responsible Officers in good faith determines that the withholding of such notice is in the interests of the Holders. 

Section 7.06. Reports by Trustee to Holders. 

(a) Within 60 days after each September 1 beginning with September 1, 2015, and for so long as Notes remain outstanding, the Trustee
will mail to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the 12 months preceding the reporting date, no report need be
transmitted). The Trustee also will comply with TIA § 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA § 313(c). 

(b) A copy of each report at the time of its mailing to the Holders will be mailed by the Trustee to the JCP Parties and filed by the Trustee
with the SEC and each stock exchange on which the Notes are listed in accordance with TIA § 313(d). The JCP Parties will promptly notify the Trustee when the Notes are listed on any stock exchange. 

Section 7.07. Compensation and Indemnity. 

(a) The JCP Parties will pay to the Trustee from time to time reasonable compensation for its acceptance of this Supplemental Indenture and
services hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The JCP Parties will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its services. All amounts set forth in the separate fee letter entered into prior to the date hereof are deemed reasonable. Such expenses will include the reasonable compensation,
disbursements and expenses of the Trustee’s agents and counsel. 

  
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 (b) The JCP Parties will, jointly and severally, indemnify the Trustee against any and all
losses, damages, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Supplemental Indenture, including the costs and expenses of enforcing this Supplemental Indenture
against the JCP Parties (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, JCP, any Holder or any other Person) or liability in connection with the exercise or performance of any of its
rights, powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee will notify the JCP Parties promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the JCP Parties will not relieve the JCP Parties of their obligations hereunder. The JCP Parties will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the JCP
Parties will pay the reasonable fees and expenses of such counsel. The JCP Parties need not pay for any settlement made without their consent, which consent will not be unreasonably withheld. 

(c) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(a)(6) or (7) hereof
occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. 

(d) The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent applicable. 

Section 7.08. Replacement of Trustee. 

(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor
Trustee’s acceptance of appointment as provided in this Section 7.08. 
 (b) The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the JCP Parties. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the JCP Parties in writing. The
JCP Parties may remove the Trustee if: 
 (1) the Trustee fails to comply with Section 7.10 hereof; 

(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any
Bankruptcy Law; 
 (3) a custodian or public officer takes charge of the Trustee or its property; or 

(4) the Trustee becomes incapable of acting. 

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the JCP Parties will promptly appoint
a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the
JCP Parties. 
 (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the JCP Parties, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. 

  
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 (e) If the Trustee, after written request by any Holder who has been a Holder for at least six
months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 

(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the JCP Parties. Thereupon, the
resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Supplemental Indenture. The successor Trustee will mail a notice of its succession
to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the JCP Parties’ obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee. 

Section 7.09. Successor Trustee by Merger, etc. 

Any Person into which the Trustee or any successor to it in the trusts created by the Indenture shall be merged or converted, or any Person
with which it or any successor to it shall be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee or any such successor to it shall be a party, or any Person to which the Trustee or any successor
to it shall sell or otherwise transfer all or substantially all of the corporate trust business of the Trustee, shall be the successor Trustee under the Indenture without the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such Person shall be otherwise qualified and eligible under this Article. In case at the time such successor to the Trustee shall succeed to the trusts created by the Indenture, any Notes shall have been
authenticated but not delivered by the Trustee then in office, any successor to such Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in the Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate
Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. 

Section 7.10. Eligibility; Disqualification. 

There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition. 
 This Supplemental Indenture will always have a Trustee who
satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b). There shall be excluded from the operation of TIA § 310(b)(1) any other series of Securities (as defined in the
Base Indenture) under the Base Indenture or any other indenture or indentures under which other securities or certificates of interest or participation in other securities of the JCP Parties are outstanding if the requirements for such exclusion set
forth in TIA § 310(b)(1) are met. 

  
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 Section 7.11. Preferential Collection of Claims Against the JCP Parties. 

The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has
resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein. 
 ARTICLE 8 

DEFEASANCE AND DISCHARGE PRIOR TO MATURITY 

Article 8 hereof, together with Article 10 hereof, replaces Article XII of the Base Indenture in its entirety. 

Section 8.01. Option to Effect Defeasance. 

The JCP Parties may at any time elect to have Section 8.02 hereof be applied to all outstanding Notes upon compliance with the conditions
set forth in Section 8.03. 
 Section 8.02. Defeasance and Discharge. 

The JCP Parties may elect, at any time, to fully discharge all or any specified portion of their obligations, and they will be deemed to have
paid and discharged the entire indebtedness represented by the Notes or, at their option, any specified payment obligation and to have satisfied all other obligations under the Notes and the Indenture insofar as the Notes are concerned (and the
Trustee, at the expense of JCP, shall execute instruments as reasonably requested by JCP acknowledging the same) (“Defeasance”), subject to the following which will survive until otherwise terminated or discharged under this
Supplemental Indenture: 
 (1) the rights of Holders of outstanding Notes to receive, solely from the trust fund referred to
in Section 8.03, payments in respect of all or any defeased portion of the principal of and any premium and/or interest on the Notes when payments are due; 

(2) the JCP Parties’ obligations under Sections 2.03, 2.04, 2.05, 2.06, 2.08, 2.09, 2.10, 2.11 and 4.02 hereof; 

(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder; and 

(4) this Article 8. 

Section 8.03. Conditions to Defeasance. 

In order to exercise Defeasance under Section 8.02 hereof: 

(1) JCP shall have deposited or caused or directed to be deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient to pay and discharge, and which shall
be applied by the Trustee to pay and discharge, all or any specific portion of the principal of and any premium and interest on the Notes on the respective interest payment date and/or stated maturities, in accordance with the terms of this
Supplemental Indenture and the Notes; 

  
 38 

 (2) JCP shall have advised the Trustee in writing of the payment or payments of
the Notes to which such deposit is to be applied; 
 (3) such Defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the TIA (assuming all Notes are in default within the meaning of the TIA); and 
 (4) such
Defeasance shall not result in the trust arising from any such deposit constituting an investment company within the meaning of the Investment Company Act of 1940 unless such trust shall be registered under the Investment Company Act of 1940 or
exempt from registration thereunder. 
 Upon compliance with the foregoing, the Trustee shall execute instrument(s) as reasonably requested
by JCP acknowledging the Defeasance of all of the JCP Parties’ obligations under the Notes. Such Defeasance shall be effective on and after the date that the conditions set forth in clauses (1) through (4) above are satisfied. 

Section 8.04. Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions. 

The Trustee shall, subject to the provisions of the Indenture, hold in trust any money and U.S. Government Obligations deposited with the
Trustee pursuant to Section 8.03 hereof, and any money received by the Trustee as payment of principal or interest in respect of such U.S. Government Obligations, and shall apply all money, in accordance with the provisions of the Notes and the
Indenture, to the payment, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such deposit (including any money to be received by the Trustee as principal or interest in respect of such U.S.
Government Obligations) was made with the Trustee; provided, however, that, if the Trustee shall at any time hold in trust pursuant to this Section 8.04, as a result of a deposit made pursuant to this Article 8, any money in
excess of the amount required to make the payments to which such deposit (including any money to be received by the Trustee as principal or interest in respect of any U.S. Government Obligations included within such deposit) was to be applied, the
Trustee shall, upon the JCP Parties’ request, pay to the JCP Parties such excess money. 
 The JCP Parties shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.03 hereof or the principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of outstanding Notes. 
 Section 8.05. Repayment to Company. 

Any money deposited with the Trustee or any Paying Agent, or then held by the JCP Parties, in trust for the payment of the principal of (and
premium, if any) or interest on any Note and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the JCP Parties, or (if then held by the JCP Parties) shall be
discharged from such trust; and the Holder of such Note will thereafter, as an unsecured general creditor, be permitted to look only to the JCP Parties for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the JCP Parties as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such

  
 39 

 
repayment, may at the expense of the JCP Parties cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and
that, after a date specified therein, which will not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the JCP Parties. 

Section 8.06. Reinstatement. 
 If
the Trustee or Paying Agent is unable to apply any money in accordance with this Article 8 with respect to any Notes by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the JCP Parties’ obligations under the Indenture and the Notes from which the JCP Parties have been discharged or released pursuant to Section 8.02 hereof shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 8 with respect to such Notes, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 8.04 with respect to such Notes in accordance with this Article 8;
provided, however, that if the JCP Parties make any payment of principal of, or any premium or interest on, any such Note following the reinstatement of its obligations, the JCP Parties shall be subrogated to the rights (if any) of the
Holders of such Notes to receive such payment from the money so held in trust by the Trustee or Paying Agent. 
 ARTICLE 9 

MODIFICATION 
 Article 9 hereof
replaces Article XIV of the Base Indenture in its entirety. 
 Section 9.01. Modifications Without Consent of Holders.  

Without the consent of the Holders, the JCP Parties and the Trustee, at any time and from time to time, may enter into one or more amended or
supplemental indentures for any of the following purposes: 
 (1) to evidence the succession of another Person to the Company
or JCP, and the assumption by any such successor of the covenants and obligations of the Company or JCP in the Indenture and in the Notes; 

(2) to add to the covenants of JCP, for the benefit of the Holders or to surrender any right or power conferred upon JCP in the
Indenture; 
 (3) to cure any ambiguity, to correct or supplement any provision in the Indenture or the Notes which may be
inconsistent with any other provision in the Indenture or the Notes, or to make any other provisions with respect to matters or questions arising under the Indenture or the Notes which shall not be inconsistent with the provisions of the Indenture
or the Notes, provided that such action shall not adversely affect the interest of any of the Holders in any material respect; 

(4) to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect
or maintain the qualification of the Indenture under the TIA, or under any similar Federal statute enacted, and to add to the Indenture such other provisions as may be expressly permitted by the TIA, excluding, however, the provisions referred to in
Section 316(a)(2) of the TIA or any corresponding provision in any similar Federal statute enacted in the future; 

  
 40 

 (5) to provide for the issuance under the Indenture of Securities in the form
only of an entry or entries in the securities register (including all appropriate notification and publication and other provisions), and to provide for exchangeability of such Securities with the Securities of the same series issued under the
Indenture; 
 (6) to set forth the forms or terms (including, without limitation, additional covenants and changes in or
eliminations of covenants previously set forth in the Indenture) of any one or more series of Securities not previously issued; 

(7) to change or eliminate any of the covenants or other provisions of the Indenture in respect of one or more series of
Securities, other than the Notes; 
 (8) to evidence and provide for the acceptance of appointment by a successor trustee and
to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one trustee; or 

(9) to comply with the rules of any applicable securities depository. 

Subject to Section 9.06 hereof, upon the request of the JCP Parties, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee will join with the JCP Parties in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Supplemental Indenture. 

Section 9.02. With Consent of Holders. 

Except as provided in this Section 9.02, the JCP Parties and the Trustee, with the consent of the Holders of at least 66  2⁄3% in Principal Amount of the outstanding Notes, may enter into one or more amended or supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders. 

Subject to Section 9.06 hereof, upon the request of the JCP Parties, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee will join with the JCP Parties in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained. It is not necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplement, but it is sufficient if such consent approves the
substance thereof. 
 After an amendment or supplement under this Section 9.02 becomes effective, the JCP Parties will mail or
electronically transmit to the Holders a notice briefly describing the amendment or supplement. Any failure of the JCP Parties to mail or electronically transmit such notice, or any defect therein, will not, however, in any way impair or affect the
validity of any such amended or supplemental indenture. This Section 9.02 shall not apply to waivers under Section 4.08 or Section 6.04 hereof. 

Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the JCP Parties with any provision of the Indenture or such Notes. 

  
 41 

 However, without the consent of each Holder affected, an amendment or supplement under this
Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): 
 (1) change the Stated Maturity of
the principal of, or any installment of principal of or interest, if any, on, any Note, or reduce the principal thereof payable at Stated Maturity, or change any redemption price, or reduce the amount of principal of any Note that may at any time be
declared to be due and payable pursuant to Section 3.07 hereof; 
 (2) reduce the rate of interest payable on the Notes;

 (3) reduce the percentage in Principal Amount of the outstanding Notes, the consent of whose Holders is required for any
supplemental indenture or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Supplemental Indenture or certain Defaults under this Supplemental Indenture and their consequences provided in this
Supplemental Indenture; 
 (4) change any place of payment where, or the coin or currency in which, any Note or any premium
or interest thereon is payable; 
 (5) impair the right to institute suit for the enforcement of any payment on or with
respect to any note on or after the Stated Maturity thereof (or, in the case of Section 3.07 hereof, on or after the redemption date), or alter adversely the terms and provisions, if any, applicable to conversion or exchange of any Notes; or

 (6) modify any of the provisions of this Section 9.02, Section 4.08 or Section 6.04, except to increase any
such percentage or to provide that certain other provisions of this Supplemental Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected thereby; provided, however, that this clause
(6) shall not be deemed to require the consent of any Holder with respect to changes in references to the Trustee and concomitant changes in this Section 9.02 or the deletion of this proviso, in accordance with the requirements of
Section 7.08. 
 Section 9.03. Compliance with Trust Indenture Act. 

Every amendment or supplement to this Supplemental Indenture or the Notes will be set forth in a supplemental indenture that complies with the
TIA as then in effect. 
 Section 9.04. Revocation and Effect of Consents. 

Until an amendment, supplement or waiver becomes effective with respect to any Note, a consent to it by a Holder of such Note is a continuing
consent by the Holder of such Note and every subsequent Holder of such Note or portion of such Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any such Note. However, any such
Holder or subsequent Holder of such Note may revoke the consent as to such Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder. 

  
 42 

 Section 9.05. Notation on or Exchange of Notes. 

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The JCP Parties
in exchange for the affected Note may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate a new Note that reflects the amendment, supplement or waiver. 

Failure to make the appropriate notation or issue new Note will not affect the validity and effect of such amendment, supplement or waiver.

 Section 9.06. Trustee to Sign Amendments, etc. 

The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the Trustee. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in
relying upon the documents required by Section 11.04 hereof. 
 ARTICLE 10 

SATISFACTION AND DISCHARGE 

Article 10 hereof, together with Article 8 hereof, replaces Article XII of the Base Indenture in its entirety. 

Section 10.01. Satisfaction and Discharge. 

The Indenture will cease to be of further effect as to the Notes (this being referred to herein as “Satisfaction and
Discharge”) (except as to any surviving rights of registration of transfer of Notes expressly provided for in this Supplemental Indenture and any rights to receive payments of interest on the Notes), and the Trustee, on demand of and at the
JCP Parties’ expense, will execute instruments as reasonably requested by JCP acknowledging Satisfaction and Discharge, when: 
 (a)
either: 
 (1) all Notes that have been authenticated and delivered (other than (A) Notes which have been destroyed,
lost or stolen and which have been replaced or paid and (B) Notes for whose payment money has been either deposited in trust or segregated and held in trust by the JCP Parties and thereafter repaid to the JCP Parties or discharged from such
trust or paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws) have been delivered to the Trustee for cancellation; or 

(2) all Notes that have not been so delivered to the Trustee for cancellation (A) have become due and payable,
(B) will become due and payable at their Stated Maturity within one year or (C) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of the notice of redemption by the
Trustee in the name, and at the expense, of the JCP Parties, and the JCP Parties have deposited or caused or directed to be deposited with the Trustee, as trust funds in trust for this purpose, (i) money in an amount, or (ii) U.S.
Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a
combination thereof, in each case sufficient to pay and discharge, and which shall be applied by the Trustee to pay and discharge, the entire indebtedness on the Notes not delivered to the Trustee for cancellation, for principal, premium, if any,
and accrued and unpaid interest, if any, to, but not including, the date of such 

  
 43 

 
deposit (in the case of notes that have become due and payable) or maturity or redemption, as the case may be; provided that, with respect to any redemption pursuant to Section 3.07
hereof the amount deposited shall be sufficient for purposes of this Section 10.01 to the extent that an amount is so deposited with the Trustee equal to the redemption amount computed using the Treasury Rate as of the third Business Day
preceding the date of such deposit with the Trustee; 
 (b) the JCP Parties have paid or caused to be paid all other sums payable by the JCP
Parties under this Supplemental Indenture; and 
 (c) the JCP Parties have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel each stating that all conditions precedent in this Supplemental Indenture relating to the Satisfaction and Discharge have been complied with. 

Upon compliance with the foregoing, the Trustee shall execute such instrument(s) as reasonably requested by JCP acknowledging the Satisfaction
and Discharge of all of the JCP Parties’ obligations under the Notes, subject to such provisions that shall survive pursuant to the terms of the Indenture. 

Upon the Satisfaction and Discharge, the Base Indenture shall be deemed to be automatically discharged and shall be deemed to have ceased to
be of further effect as to the Notes to the same extent as the Supplemental Indenture; provided, however, that the effectiveness of the Base Indenture as to any securities other than the Notes shall not be affected. Notwithstanding the
Satisfaction and Discharge, the obligations of the JCP Parties to the Trustee under Section 7.07 and, if money has been deposited with the Trustee pursuant to Section 10.01(a)(2), the obligations of the Trustee under Section 8.05,
this Section 10.01 and Section 10.02 shall survive. 
 Section 10.02. Application of Trust Money. 

Subject to the provisions of Section 8.05 hereof, all money deposited with the Trustee pursuant to Section 10.01 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes and this Supplemental Indenture, to the payment, either directly or through any Paying Agent (including the JCP Parties acting as their own Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest for the payment of which such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent
required by law. 
 If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with
Section 10.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the JCP Parties’ obligations under this
Supplemental Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.01 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 10.01 hereof; provided that if the JCP Parties have made any payment of principal of, premium, if any, or interest on, any Notes because of the reinstatement of its obligations, the JCP Parties
shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 

  
 44 

 ARTICLE 11 

MISCELLANEOUS 
 Article 11 hereof
replaces Article XVI of the Base Indenture in its entirety. 
 Section 11.01. Trust Indenture Act of 1939.  

This Supplemental Indenture shall incorporate and be governed by the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. 
 Section 11.02. Notices. 

Any notice or communication to the JCP Parties or the Trustee shall be sufficiently given if written and (a) delivered in person or
(b) mailed by first class mail (certified or registered, return receipt requested) or (c) sent by facsimile transmission or (d) sent by overnight air courier guaranteeing next-day delivery, or (e) sent by electronic transmission,
in each case addressed as follows: 
 if to the JCP Parties: 

J. C. Penney Corporation, Inc. 

6501 Legacy Drive 
 Plano, Texas
75024 
 Attention: Treasurer 

Facsimile No.: (972) 431-2044 

Email: mporter@jcp.com 
 with a
copy to: 
 Skadden, Arps, Slate, Meagher & Flom LLP 

300 South Grand Avenue 
 Suite
3400 
 Los Angeles, California 90024 

Attention: Gregg Noel 
 Facsimile
No.: (213) 621-5234 
 Email: gregg.noel@skadden.com 

if to the Trustee: 
 Wilmington
Trust, National Association 
 50 South 6th Street 

Suite 1290 
 Minneapolis,
Minnesota 55402 
 Attention: J. C. Penney Administrator 

Facsimile No.: (612) 217-5651 

Email: hfield@wilmingtontrust.com 

The JCP Parties or the Trustee, by notice to the others, may designate additional or different addresses and/or facsimile numbers for
subsequent notices or communications. 
 All notices and communications (other than those sent to Holders) will be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed by first class mail (certified or registered, return receipt requested); upon acknowledgment of receipt,
if transmitted by facsimile; the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next-day delivery; and at the time delivered if sent by electronic transmission. 

  
 45 

 Any notice or communication to a Holder shall be mailed by first class mail, certified or
registered, return receipt requested, or sent by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar or, with respect to Global Notes, to the extent permitted or required by Applicable
Procedures, sent electronically. Any notice or communication will also be so mailed or sent to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to deliver, mail, transmit or send a notice or communication to
a Holder or any defect in it will not affect its sufficiency with respect to other Holders. 
 If a notice or communication is delivered,
mailed, transmitted or sent in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. 

If the JCP Parties mail or send a notice or communication to Holders, they will mail or send a copy to the Trustee and each Agent at the same
time. 
 Where this Supplemental Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any
action taken in reliance on such waiver. 
 In case it shall be impracticable to give notice in the manner provided above, including by
reason of a suspension of regular mail service, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 

Section 11.03. Communications by Holders with Other Holders. 

Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Supplemental Indenture
or the Notes. The JCP Parties, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c). 
 Section 11.04.
Certificate and Opinion as to Conditions Precedent.  
 Upon any request or application by the JCP Parties to the Trustee to take any
action under this Supplemental Indenture, the JCP Parties shall furnish to the Trustee: 
 (1) an Officer’s Certificate
in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signatory thereto, all conditions precedent and covenants, if any, provided
for in this Supplemental Indenture relating to the proposed action have been satisfied or complied with, as applicable; and 

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied or complied with, as applicable. 

Section 11.05. Statements Required in Certificate or Opinion.  

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Supplemental Indenture (other than
the certificate required by Section 4.03(a)) shall include: 
 (1) a statement that each person signing such certificate
or opinion has read such covenant or condition and the definitions herein relating thereto; 

  
 46 

 (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statement or opinion contained in such certificate or opinion is based; 
 (3) a statement that,
in the opinion of each such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied or complied with, as
applicable; and 
 (4) a statement as to whether or not, in the opinion of each such person, such condition or covenant has
been satisfied or complied with, as applicable. 
 Section 11.06. Rules by Trustee and Agents. 

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rule and set
reasonable requirements for its functions. 
 Section 11.07. No Personal Liability of Directors, Officers, Employees and Shareholders. 

No director, officer, manager, employee, incorporator or direct or indirect partner, member or stockholder, past, present or future, of the
JCP Parties or any successor entity, as such, will have any liability for any of the JCP Parties’ obligations under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 

Section 11.08. Governing Law; Jury Trial Waiver. 

THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE CONTRACTS MADE UNDER THE LAW OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF SAID STATE. 
 EACH PARTY HERETO, AND EACH HOLDER OF A NOTE BY
ACCEPTANCE THEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SUPPLEMENTAL
INDENTURE. 
 Section 11.09. No Adverse Interpretation of Other Agreements. 

This Supplemental Indenture may not be used to interpret any other indenture, loan or debt agreement of the JCP Parties or their respective
Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Supplemental Indenture. 

  
 47 

 Section 11.10. Successors. 

All agreements of the JCP Parties in this Supplemental Indenture and the Notes will bind its successors. All agreements of the Trustee in this
Supplemental Indenture will bind their respective successors. 
 Section 11.11. Severability. 

In case any provision in this Supplemental Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or impaired thereby, and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability. 

Section 11.12. Counterpart Originals. 

The parties may sign any number of copies of this Supplemental Indenture. Each signed copy will be an original, but all of them together
represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties
hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronic transmission shall be deemed to be their original signatures for all purposes. 

Section 11.13. Table of Contents, Headings, etc. 

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Supplemental Indenture have been inserted for
convenience of reference only, are not to be considered a part of this Supplemental Indenture and will in no way modify or restrict any of the terms or provisions of the Indenture. 

Section 11.14. Non-Business Days. 
 If a
payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period on any amount that would otherwise have been payable on such payment date if it were
a Business Day. If a regular record date is not a Business Day, the record date shall not be affected. 
 Section 11.15. USA PATRIOT ACT 

The JCP Parties acknowledge that, in accordance with Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (the “USA PATRIOT ACT”), the Trustee, like all other financial institutions and in order to help fight the funding of terrorism and money laundering, is
required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Supplemental Indenture agree that they will provide the Trustee
with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT ACT. 
 [Remainder of page
intentionally left blank.] 

  
 48 

 SIGNATURES 

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

  

			
	J. C. PENNEY CORPORATION, INC.
		
	By:	 	 /s/ Michael Porter

	Name:	 	Michael Porter
	Title:	 	Vice President, Treasurer
	
	J. C. PENNEY COMPANY, INC.
		
	By:	 	 /s/ Edward Record

	Name:	 	Edward Record
	Title:	 	 Executive Vice President and
 Chief Financial
Officer

 
			
	WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
		
	By:	 	 /s/ Hallie E. Field

	Name:	 	Hallie E. Field
	Title:	 	 Banking Officer

 EXHIBIT A 

FORM OF NOTE 
 [Face of Note] 

 
  

CUSIP/CINS No.                  

ISIN                  

8.125% Senior Notes due 2019 
  

			
	No.            	  	$            

 J. C. PENNEY CORPORATION, INC. 

J. C. PENNEY COMPANY, INC. 
 promises to pay to
                    , or registered assigns, 

the principal sum of
                                     DOLLARS [(or, in the
event of adjustment in accordance with the within-mentioned Supplemental Indenture, such other amount as may be stated from time to time on the “Schedule of Exchanges of Interests in the Global Note” attached hereto)]* on October 1,
2019. 
 Interest Payment Dates: April 1 and October 1 

Record Dates: March 15 and September 15 
 Dated:
            , 20     
  

 
  

	*	The bracketed language should be included only if the Note is issued in global form. 

 
			
	J. C. PENNEY CORPORATION, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	J. C. PENNEY COMPANY, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 A-2 

 This is one of the Notes referred to 

in the within-mentioned Supplemental Indenture: 
  

	
	WILMINGTON TRUST, NATIONAL ASSOCIATION,
	as Trustee

  

									
	By:	 	  
	 		 	Dated:	 	  

		 	Authorized Signatory	 		 		 	

  
 A-3 

 [Back of Note] 

8.125% Senior Notes due 2019 
 [Insert the
Global Note Legend, if applicable pursuant to the provisions of the Supplemental Indenture (as defined below).] 
 Capitalized terms
used herein have the meanings assigned to them in the Supplemental Indenture referred to below unless otherwise indicated. 

(1) INTEREST. J. C. Penney Corporation, Inc., a corporation organized under the laws of
Delaware (the “Corporation”), and J. C. Penney Company, Inc., a corporation organized under the laws of Delaware (the “Company” and, together with JCP, the “JCP Parties”), promises to pay interest
on the principal amount of this Note at 8.125% per annum from September 15, 2014. The JCP Parties will pay interest, if any, semi-annually in arrears on April 1 and October 1 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be April 1, 2015. The JCP Parties will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at the rate equal to the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. 
 (2) METHOD OF PAYMENT. The JCP Parties will pay
interest on the Notes (except defaulted interest), to the Persons who are registered Holders of Notes at the close of business on the March 15 or September 15 next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Supplemental Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the
office or agency of the JCP Parties maintained for such purpose or, at the option of the JCP Parties, payment of interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided
that payment by wire transfer of immediately available funds will be required with respect to principal of and interest and premium on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the
JCP Parties or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. If a payment date is not a Business Day, payment shall
be made on the next succeeding day that is a Business Day, and no interest shall accrue for the intervening period on any amount that would otherwise have been payable on such payment date if it were a Business Day. If a regular record date is not a
Business Day, the record date shall not be affected. 

  
 A-4 

 (3) PAYING AGENT AND
REGISTRAR. Initially, Wilmington Trust, National Association, the Trustee, will act as Paying Agent and Registrar. The JCP Parties may change any Paying Agent or Registrar without notice to any Holder. The JCP
Parties or any of their respective Subsidiaries may act in any such capacity. 
 (4)
INDENTURE. The JCP Parties issued the Notes under an indenture, dated as of September 15, 2014 (the “Base Indenture” and, with respect only to the Notes, together with a supplemental
indenture, dated as of September 15, 2014 (the “Supplemental Indenture”), and including the terms of the Notes, the “Indenture”), among the JCP Parties and the Trustee. The terms of the Notes include those
stated in the Supplemental Indenture and those made part of the Supplemental Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Supplemental Indenture and the TIA for a statement of such
terms. To the extent any provision of this Note conflicts with the express provisions of the Base Indenture, the provisions of this Note shall govern and be controlling, and to the extent any provision of this Note conflicts with the express
provisions of the Supplemental Indenture, the provisions of the Supplemental Indenture shall govern and be controlling. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder. 

(5) OPTIONAL REDEMPTION. The JCP Parties may redeem the Notes, in whole or in part at any
time, and from time to time, prior to the maturity date of the Notes, at their option, at a redemption price equal to the greater of: 

(a) 100% of the principal amount of the Notes to be redeemed; and 

(b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest
accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; 

plus, in each case, accrued and unpaid interest, if any, thereon to, but not including, the date of redemption. Notwithstanding the
foregoing, installments of interest on Notes that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the Holders as of the close of business on the relevant record
date. 
 (6) MANDATORY REDEMPTION. The JCP Parties are not required to make mandatory
redemption or sinking fund payments with respect to the Notes. 
 (7) OFFER TO
REPURCHASE UPON CHANGE OF CONTROL TRIGGERING EVENT. If a Change of Control Triggering Event occurs, unless the JCP Parties have exercised
their right to redeem the Notes in full pursuant to Section 3.07 hereof or they have exercised their right to defease the Notes or satisfy and discharge their obligations under the Notes prior to maturity as described below, the JCP Parties
will be required to make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (in minimum denominations of $2,000 and integral multiples of $1,000 principal amount in excess thereof) of such
Holder’s Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased, to, but not including, the date of repurchase (the
“Change of Control Payment”). Within 30 days following the date of any Change of Control Triggering Event, or, at the JCP Parties’ option, prior to any Change of Control Triggering Event but after the public announcement of the
Change of Control, the JCP Parties shall mail (or in the case of Holders of interests in Global Notes, transmit electronically in accordance with 

  
 A-5 

 
Applicable Procedures) a notice to Holders of Notes (and shall provide a copy of such notice to the Trustee) describing the transaction or transactions that constitute the Change of Control
Triggering Event and offering to repurchase the Notes on the date specified in the notice (the “Change of Control Payment Date”), which date shall be no earlier than 30 days and no later than 60 days from the date such notice is so
mailed or transmitted, pursuant to the procedures required by the Supplemental Indenture and described in such notice. The notice shall state, if so mailed or transmitted prior to the date of consummation of the Change of Control, that the offer to
repurchase the Notes is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date specified in the notice. 

(8) NOTICE OF REDEMPTION. Notice of any redemption will be mailed (or, in
the case of interests in Global Notes, transmitted electronically) at least 30 days but not more than 60 days before the redemption date to each Holder of the Notes to be redeemed, except that redemption notices may be given more than 60 days prior
to a redemption if the notice is issued in connection with a Defeasance of the Notes pursuant to Section 8.02 of the Supplemental Indenture or a Satisfaction or Discharge pursuant to Section 10.01 of the Supplemental Indenture. Subject to
JCP Parties’ compliance with the first paragraph of Section 3.05 of the Supplemental Indenture, interest on the Notes or the portions of Notes called for redemption ceases to accrue on and after the redemption date. 

(9) PERSONS DEEMED OWNERS. The registered Holder of a Note
may be treated as its owner for all purposes. 
 (10) MODIFICATION. The Indenture may be
amended or supplemented as provided in the Supplemental Indenture. 
 (11) DEFAULTS AND
REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Supplemental Indenture. If an Event of Default (other than an Event of Default specified in clause (4) or
(5) in Section 6.01 of the Supplemental Indenture) occurs and is continuing then, and in every such case, the Trustee or the Holders of not less than 25% in Principal Amount of the outstanding Notes may declare the principal of and all
accrued and unpaid interest, if any, on the outstanding notes to be immediately due and payable, by a notice in writing to the JCP Parties (and to the Trustee if given by Holders of Notes), and upon any such declaration such principal, together with
accrued and unpaid interest, if any, thereon, shall become immediately due and payable. If an Event of Default specified in clause (4) or (5) in Section 6.01 of the Supplemental Indenture occurs and is continuing then, and in every
such case, the principal of and all accrued and unpaid interest, if any, on the outstanding Notes shall automatically, and without declaration or other action on the part of the Trustee or any Holder of Notes, become immediately due and payable.
Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may, by written notice to the Trustee, direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium or interest, if any) if it determines in good faith that withholding notice
is in the interests of the Holders in accordance with Section 7.05 of the Supplemental Indenture. 
 (12)
TRUSTEE DEALINGS WITH THE JCP PARTIES. The Trustee, in its individual capacity or any other capacity, may make loans to, accept deposits from, and
perform service for the JCP Parties or their respective Affiliates, and may otherwise deal with the JCP Parties or their respective Affiliates, as if they were not the Trustee. However, in the event that the Trustee

  
 A-6 

 
acquires any conflicting interest, as defined under the TIA, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign as provided in the
TIA. Any Agent may do the same with like rights and duties. The Trustee is also subject to and entitled to the benefits of Article 7 of the Supplemental Indenture with respect to the Notes. 

(13) NO RECOURSE AGAINST OTHERS. No director,
officer, manager, employee, incorporator or direct or indirect partner, member or stockholder, past, present or future, of the JCP Parties or any successor entity, as such, will have any liability for any of the JCP Parties’ obligations under
the Notes or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws. 

(14) AUTHENTICATION. This Note will not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent. 
 (15) CUSIP/CINS NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the JCP Parties have caused CUSIP/CINS numbers to be printed on the Notes, and the Trustee may use CUSIP/CINS numbers in notices (including any
notice of redemption or exchange) as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice, and reliance may be placed only on the other identification
numbers placed thereon. 
 (16) GOVERNING LAW. THE SUPPLEMENTAL INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE
CONTRACTS MADE UNDER THE LAW OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF SAID STATE. 

The JCP Parties will furnish to any Holder upon written request and without charge a copy of the Base Indenture and the Supplemental
Indenture. Requests may be made to: 
 J. C. Penney Corporation, Inc. 

J. C. Penney Company, Inc. 
 6501
Legacy Drive 
 Plano, Texas 75024 

Attention: Treasurer 
 Facsimile
No.: (972) 431-2044 
 Email: mporter@jcp.com 

  
 A-7 

 ASSIGNMENT FORM 

To assign this Note, fill in the form below: 
  

			
	(I) or (we) assign and transfer this Note to:	  	  

		  	(Insert assignee’s legal name)

  

 
 (Insert assignee’s soc. sec. or
tax I.D. no.) 
  
  

 
  
  

 
  

 
 (Print or type assignee’s name,
address and zip code) 
 and irrevocably appoint
                                         
                                         
                                         
                                         
             to transfer this Note on the books of the JCP Parties. The agent may substitute another to act for him. 

 

			
	Date:	 	  

  

			
	Your Signature:	 	  

	    (Sign exactly as your name appears on the face of this Note)

  

			
	Signature Guarantee*:	 	  

  

	*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

  
 A-8 

 Option of Holder to Elect Purchase 

If you want to elect to have this Note purchased by the JCP Parties pursuant to Section 4.08 of the Supplemental Indenture, check the box
below: 
  ̈ Section 4.08 

If you want to elect to have only part of the Note purchased by the JCP Parties pursuant to Section 4.08 of the Supplemental Indenture,
state the amount you elect to have purchased: 

$                       
          
  

			
	Date:	 	  

  

			
	Your Signature:	 	  

	    (Sign exactly as your name appears on the face of this Note)

			
		
	    Tax Identification No.:	 	  

  

			
	Signature Guarantee*:	 	  

  

	*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 

  
 A-9 

 SCHEDULE OF EXCHANGES OF
INTERESTS IN THE GLOBAL NOTE * 
 The following exchanges of a
part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made: 

 

									
	 Date of Exchange
	  	Amount of
decrease in
Principal Amount
of this Global Note	  	Amount of
increase in
Principal Amount
of
this Global Note	  	Principal Amount
of this Global Note
following such
decrease
(or increase)	  	Signature of
authorized officer
of Trustee or
Custodian
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	

  

	*	This schedule should be included only if the Note is issued in global form. 

  
 A-10Exhibit 10.1

 

MASTER EXCHANGE AGREEMENT

 

MASTER EXCHANGE
AGREEMENT (this “Agreement”), dated as of September 15, 2014, by and among Net Element, Inc., a Delaware
corporation, with headquarters located at 3363 NE 163rd Street, Suite 705, North Miami Beach, Florida (the “Company”)
and Crede CG III, Ltd., an exempted company incorporated under the laws of Bermuda (the “Creditor”).

 

WHEREAS:

 

A. The Company
and the Creditor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 144(d)(3)(ii) of
the Securities Act, as promulgated by the United States Securities and Exchange Commission (the “SEC”) under
the Securities Act.

 

B. As
of the date hereof, the Creditor holds $15,876,860 in principal amount and interest of promissory notes of the Company or its direct
or indirect subsidiaries (the “Existing Debt”, and the amount owing pursuant thereto, the “Debt Amount”),
which Existing Debt the Creditor purchased from Capital Sources of New York, a New York corporation ($2,343,500 principal amount
plus interest), and Georgia Notes 18, LLC, a Florida limited liability company and $13,533,360
principal amount plus interest) (the “Original Creditors”), pursuant to a Note Purchase Agreement, dated as
of September 12, 2014, between the Creditor and the Original Creditors.

 

C. The Company
and the Creditor desire to enter into this Agreement, pursuant to which, among other things, the Creditor shall exchange, as set
forth herein, in whole or in part, the Existing Debt for shares of the Company’s common stock, $0.001 par value per share
(the “Common Stock”), as provided hereunder in reliance on the exemption from registration provided by Section
3(a)(9) of the Securities Act.

 

NOW, THEREFORE,
in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Company and the Creditor hereby agree
as follows:

 

1. EXCHANGES OF
EXISTING DEBT.  At any time during the period commencing on the date hereof and ending on the date no Existing Debt remains
outstanding (the “Exchange Period”), the Company and the Creditor agree, subject to Section 1(e) below, to exchange
(each, an “Exchange”) all (reduced only as set forth in Section 1(e) below) of the Existing Debt into validly
issued, fully paid and non-assessable shares of Common Stock (as defined below) (collectively, the “Exchange Shares”),
on the terms and conditions set forth in this Section 1.  Certain capitalized terms used herein are defined in Section
1(h).

 

(a) Exchange
Right and Obligation. Subject to the provisions of Section 1(e), (i) at any time or times from the date hereof up to December
12, 2014 (the “Outside Date”), the Creditor shall be entitled to exchange any portion of the outstanding and
unpaid Existing Debt into validly issued, fully paid and non-assessable shares of Common Stock and (ii) on the Outside Date, the
Creditor shall be obligated to exchange all (reduced only as set forth in Section 1(e) below) of the then still outstanding and
unpaid Existing Debt into validly issued, fully paid and non-assessable shares of Common Stock, in each case in accordance with
Section 1(d), at the Exchange Rate (as defined below), subject to adjustment as described in Section 1(c) below to reflect the
intention of the parties that the total number of Exchange Shares issued be based upon an average trading price of the Common Stock
for a specified period of time subsequent to an Exchange.  The Company shall not issue any fraction of a share of Common
Stock upon any Exchange.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the
Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer,
stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon Exchange of
Existing Debt.

 

    	1

    	 

    

 

(b) Exchange
Rate. The number of shares of Common Stock issuable upon exchange of any Existing Debt pursuant to Section 1(a) shall be determined
by dividing (x) the Debt Exchange Amount (as defined below) with respect to such Existing Debt by (y) the Exchange Price (the “Exchange
Rate”), subject to adjustment as described in Section 1(c) below.

 

(i) “Exchange
Amount” means, with respect to such Existing Debt to be exchanged hereunder, the aggregate of the Debt Amount of the
Existing Debt to be exchanged hereunder, the Interest Amount with respect thereto and any other amounts owed by the Company to
the Creditor thereunder.

 

(ii) “Debt
Exchange Amount” means 125% of the Exchange Amount.

 

(iii) ”Exchange
Price” means, for any date of determination, the Closing Bid Price on the Exchange Date.  The Exchange Price
for the Initial Exchange shall be $5.70. All such determinations will be appropriately adjusted for any stock split, stock dividend,
stock combination or other similar transaction during any such measuring period.

 

(iv) ”Interest
Amount” means, with respect to any portion of Existing Debt as of any Exchange Date, the greater of (I) any accrued and
unpaid interest with respect to the such Existing Debt outstanding as of such Exchange Date under the terms of such Existing Debt;
and (II) the difference of (x) the sum of (A) any accrued and unpaid interest outstanding with respect to the such Existing Debt
as of the date the Creditor acquired such Existing Debt and (B) such aggregate amount of interest that would have accrued under
such Existing Debt during the period commencing on the date the Creditor acquired the such Existing Debt through such Exchange
Date (as defined below), less (y) any interest paid to the Creditor in cash with respect to such Existing Debt prior to such Exchange
Date.

 

(c) Adjustment
to Number of Exchange Shares.

 

(i)          Subject
to the limitations set forth in Section 1(e) below, the total number of shares of Common Stock to be issued to Creditor in connection
with this Exchange shall be adjusted on the 91st day following any Exchange Date (as defined below) or earlier if Creditor notifies
the Company in writing that such date shall be earlier (the ninety (90) trading day period or shorter period following an Exchange
Date, the “True-Up Period,” and the 91st day or day following the shorter period following the Exchange Date,
the “True-Up Date”), as follows: (i) if the number of “VWAP Shares” (as defined below) exceeds the
number of Exchange Shares initially issued pursuant to the applicable Exchange, then the Company will issue and deliver to Creditor
in the same manner as described in Section 1(d) below additional shares of Common Stock equal to the difference between (x) the
total number of VWAP Shares and (y) the number of Exchange Shares initially issued, and (ii) if the number of VWAP Shares is less
than the number of Exchange Shares initially issued pursuant to an Exchange, then Creditor will return to the Company for cancellation
that number of shares of Common Stock equal to the difference between (x) the number of Exchange Shares issued pursuant to the
Exchange and (y) the total number of VWAP Shares.

 

(ii)         The
number of VWAP Shares shall be equal to the Exchange Amount divided by 80% of the VWAP of the Common Stock over the True-Up Period.

 

    	2

    	 

    

 

(iii)        
Subject to the limitations set forth in Section 1(e) below, at any time during the True-Up Period, Creditor may, based on its reasonable
discretion (including because of a decline in the trading price of the Common Stock), deliver a written notice to the Company by
facsimile or email requesting that a specified number of additional shares of Common Stock be delivered and the reason for such
additional delivery of shares. Creditor may in its sole discretion deliver one or more such notices during the True-Up Period.
Within one trading day following delivery of each such notice, the Company shall deliver to Creditor, in compliance with the procedure
set forth in paragraph 1(d) below (including, without limitation, issuance of the legal opinion to the transfer agent at the Company's
sole cost and expense), the number of additional shares of Common Stock requested in the notice. Any additional shares of Common
Stock issued or issuable pursuant to this Section 1(c) will be considered Exchange Shares for purposes of any calculation of the
total number of shares to be issued by, or returned to, the Company pursuant to Section 1(c)(i) above.

 

(d) Mechanics of
Exchange.

 

(i) Exchange.
To exchange any Exchange Debt into shares of Common Stock on any date during the Exchange Period (a “Exchange Date”),
the Creditor shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such
date, a copy of an executed notice of exchange in the form attached hereto as Exhibit I (the “Exchange Notice”)
to the Company.  On the Outside Date, the Creditor shall deliver (whether via facsimile or otherwise), for receipt on
or prior to 11:59 p.m., New York time, on such date, the Exchange Notice to the Company for all (reduced only as set forth in Section
1(e) below) of the then still outstanding and unpaid Existing Debt. On or before the first (1st) Trading Day following the date
of receipt of an Exchange Notice, the Company shall transmit by facsimile or otherwise an acknowledgment of confirmation, in the
form attached hereto as Exhibit II, of receipt of such Exchange Notice to the Creditor and the Company’s transfer agent (the
“Transfer Agent”). On or before the second (2nd) Trading Day following the date of receipt of an Exchange Notice,
the Company shall, (1) provided that the Transfer Agent is participating in The Depository Trust Company’s (the “DTC”)
Fast Automated Securities Transfer (FAST) Program, credit such aggregate number of shares of Common Stock to which the Creditor
shall be entitled to the Creditor’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if
the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer (FAST) Program, issue and send (via reputable
overnight courier) to the address as specified in the Exchange Notice, a certificate, registered in the name of the Creditor, for
the number of shares of Common Stock to which the Creditor shall be entitled. The Person or Persons entitled to receive the shares
of Common Stock issuable upon an Exchange of the Existing Debt shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Exchange Date.  

 

    	3

    	 

    

 

(ii) Company’s
Failure to Timely Exchange. If the Company shall fail, for any reason or for no reason, to issue to the Creditor within three
(3) Trading Days after the Company’s receipt of an Exchange Notice (whether via facsimile or otherwise) (the “Share
Delivery Deadline”), a certificate for the number of shares of Common Stock to which the Creditor is entitled and register
such shares of Common Stock on the Company’s share register or to credit the Creditor’s balance account with DTC for
such number of shares of Common Stock to which the Creditor is entitled upon the Creditor’s exchange of any Existing Debt
(as the case may be) (a “Exchange Failure”), then, as the sole and exclusive remedy available to the Creditor,
(1) the Company shall pay in cash to the Creditor on each day after such Share Delivery Deadline that the issuance of such shares
of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock
not issued to the Creditor on a timely basis and to which the Creditor is entitled multiplied by (B) the Closing Sale Price of
the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares
of Common Stock to the Creditor without violating Section 1(d)(i) and (2) the Creditor, upon written notice to the Company, may
void its Exchange Notice with respect to, and retain or have returned (as the case may be) any portion of the Existing Debt that
has not been exchanged pursuant to such Exchange Notice, provided that the voiding of an Exchange Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1(d)(ii) or otherwise.
In addition to the foregoing, if on or prior to the Share Delivery Deadline, the Company shall fail to issue and deliver a certificate
to the Creditor and register such shares of Common Stock on the Company’s share register or credit the Creditor’s or
its designee’s balance account with DTC for the number of shares of Common Stock to which the Creditor is entitled upon the
Creditor’s Exchange hereunder (as the case may be), and if on or after such Share Delivery Deadline the Creditor purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Creditor or its
designee of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to
all or any portion of the number of shares of Common Stock, issuable upon such Exchange that the Creditor or its designee so anticipated
receiving from the Company, then, in addition to all other remedies available to the Creditor or its designee, the Company shall,
within three (3) Business Days after receipt of the Creditor’s or its designee’s written request, pay cash to the Creditor
or its designee, as applicable, in an amount equal to the Creditor’s or its designee’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without
limitation, by any other Person in respect, or on behalf, of the Creditor) (the “Buy-In Price”), at which point
the Company’s obligation to so issue and deliver such certificate or credit the Creditor’s or its designee’s
balance account with DTC for the number of shares of Common Stock to which the Creditor is entitled upon the Creditor’s exchange
hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate.

 

(iii) Book-Entry.  Notwithstanding
anything to the contrary set forth in this Section 1, following Exchange of any portion of the Existing Debt in accordance with
the terms hereof, the Creditor shall not be required to physically surrender any certificate evidencing the Existing Debt to the
Company unless (A) the full Exchange Amount represented by the Existing Debt is being exchanged (in which event the Existing Debt
shall be delivered to the Company following exchange thereof as contemplated by Section 1(d)(i)) or (B) the Creditor has provided
the Company with prior written notice (which notice may be included in an Exchange Notice) requesting reissuance of a certificate
with respect to the Existing Debt upon physical surrender of a certificate with respect to the Existing Debt. The Creditor shall
provide the Company with written partial releases relating to all Exchanges of the Existing Debt. The Creditor and the Company
shall maintain records showing the amount of the Existing Debt exchanged and/or paid and/or adjusted (as the case may be) and the
dates of such exchanges and/or payments and/or adjustments (as the case may be) or shall use such other method, reasonably satisfactory
to the Creditor and the Company, so as not to require physical surrender of any certificate with respect to the Existing Debt upon
any Exchange until the Existing Debt being Exchanged has been fully satisfied.

 

(iv) 
Pro Rata Exchange; Disputes. In the event of a dispute as to the number of shares of Common Stock issuable to the Creditor
in connection with an Exchange of the Existing Debt of an adjustment to the number of Exchange Shares to be delivered following
the True-Up Period, the Company shall issue to the Creditor the number of shares of Common Stock not in dispute and resolve such
dispute in accordance with Section 1(e).

 

    	4

    	 

    

 

(e) Limitations
on Exchanges.  Notwithstanding anything to the contrary contained in the Existing Debt, the Existing Debt shall not
be exchangeable by the Creditor hereof, and the Company shall not effect any exchange of the Existing Debt or otherwise issue any
shares of Common Stock pursuant hereto, to the extent (but only to the extent) that after giving effect to such exchange or other
share issuance hereunder the Creditor (together with its Affiliates) would beneficially own in excess of 9.99% (the “Maximum
Percentage”) of the Common Stock.  To the extent the above limitation applies, the determination of whether
the Existing Debt shall be exchangeable (vis-à-vis other convertible, exercisable or exchangeable securities owned by the
Creditor or any of its Affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all
such securities owned by the Creditor and its Affiliates) shall, subject to such Maximum Percentage limitation, be determined on
the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability
to exchange the Existing Debt, or to issue shares of Common Stock, pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of exchangeability. For purposes of this paragraph,
beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage
ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the “Exchange Act”).  The provisions of this paragraph shall
be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation.
For any reason at any time until the Existing Debt has been exchanged, upon the written or oral request of the Creditor, the Company
shall within one (1) Business Day confirm orally and in writing to the Creditor the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion, exchange or exercise of convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to the Existing Debt or securities issued pursuant to this Exchange Agreement. In addition, under
no circumstances whatsoever may the aggregate number shares of Common Stock issued to Creditor in connection with the exchange
of the Existing Debt at any time exceed 19.99% of the total number of shares of Common Stock outstanding or of the voting power
unless the Company has obtained either (i) its stockholders’' approval of the issuance of more than such number of shares
of Common Stock pursuant to NASDAQ Marketplace Rule 5635(d) or (ii) a waiver from The NASDAQ Stock Market of the Company’s
compliance with Rule 5635(d).

 

(e) DISPUTE RESOLUTION.
In the case of a dispute as to the determination of any Exchange Price, the Closing Bid Price, the Closing Sale Price or fair market
value (as the case may be) or any adjustment to the Exchange Shares, the Company or the Creditor (as the case may be) shall submit
the disputed determinations or arithmetic calculations (as the case may be) via facsimile or e-mail (i) within two (2) Business
Days after receipt of the applicable notice giving rise to such dispute to the Company or the Creditor (as the case may be) or
(ii) if no notice gave rise to such dispute, at any time after the Company or the Creditor learned of the circumstances giving
rise to such dispute. If the Creditor and the Company are unable to agree upon such determination or calculation within two (2)
Business Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Company or the
Creditor (as the case may be), then the Company shall, within two (2) Business Days, submit via facsimile or e-mail the disputed
determination of any Exchange Price, the Closing Bid Price, the Closing Sale Price or fair market value (as the case may be) or
any adjustment to the Exchange Shares to an independent, reputable investment bank selected by the Company and reasonably approved
by the Creditor. The Company and the Creditor shall cause the investment bank to perform the determinations or calculations (as
the case may be) and notify the Company and the Creditor of the results no later than ten (10) Business Days from the time it receives
such disputed determinations or calculations (as the case may be). Such investment bank’s determination or calculation (as
the case may be) shall be binding upon all parties absent demonstrable error. The party whose determinations are furthest from
such investment bank’s determination shall pay the expenses of such investment bank.

 

(f) INITIAL EXCHANGE.  As
of the date hereof (the “Initial Exchange Date”), the Creditor shall be deemed to have delivered an Exchange
Notice to effect an Exchange with respect to such aggregate initial Debt Exchange Amount and such initial Exchange Price as set
forth on the signature page of the Creditor.  If the Company fails to deliver the Common Stock with respect to such initial
Exchange on or prior to the Share Delivery Deadline with respect thereto, the Creditor shall have the option, by delivery of written
notice to the Company, to terminate this Agreement, with no liability to the Company or the Creditor.  

 

(g) CERTAIN DEFINITIONS.  For
purposes of this Agreement, the following terms shall have the following meanings:

 

    	5

    	 

    

 

(i) “Affiliate”
means any person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified
person. For the purposes of this definition, “control,” when used with respect to any specified person, means the power
to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms “controlling” and “controlled” have correlative meanings.

 

(ii) “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to
or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be
issued to any employee, officer, consultant or director for services provided to the Company in their capacity as such.

 

(iii) “Bloomberg”
means Bloomberg, L.P.

 

(iv) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(v) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time,
as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security,
the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).

 

(vi) “Convertible
Securities” means any capital stock, warrants, notes, rights, options or other security of the Company or any of its
Subsidiaries that is at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable
for, or which otherwise entitles the holder thereof to acquire, any capital stock or other security of the Company (including,
without limitation, Common Stock) or any of its Subsidiaries.

 

(vii) “Common
Stock” means (i) the Company’s common stock, $0.001 par value per share, and (ii) any capital stock into which
such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

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(viii) “Excluded
Securities” means (A) shares of Common Stock or standard options to purchase Common Stock to directors, officers, consultants
or employees of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that (1)
all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the date hereof
pursuant to this clause (A) do not, in the aggregate, exceed more than 20% of the Common Stock issued and outstanding immediately
prior to the date hereof and (2) the exercise price of any such options is not lowered, none of such options are amended after
the date hereof to increase the number of shares issuable thereunder and none of the terms or conditions of any such options are
otherwise materially changed in any manner that adversely affects the Creditor; (B) shares of Common Stock issued upon the conversion
or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (A) above) issued prior to the date hereof, provided that the conversion price of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (A) above) is not after the date hereof lowered, none of such Convertible Securities (other than standard options to purchase
Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above) are amended after the date hereof
to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above)
are otherwise materially changed after the date hereof in any manner that adversely affects the Creditor; and (C) the Exchange
Shares.

 

(ix) ”Person”
means any individual, partnership, firm, corporation, limited liability company, joint venture, corporation, association trust,
unincorporated organization, government or any department or agency thereof, or any other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d) of the Exchange Act.

 

(x) ”SEC”
means the United States Securities and Exchange Commission or the successor thereto.

 

(xi) ”Subsequent
Placement” means any, direct or indirect, issuance, offer, sale, grant of any option or right to purchase, or otherwise
disposition of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition of)
any equity security or any equity-linked or related security (including, without limitation, any “equity security”
(as that term is defined under Rule 405 promulgated under the Securities Act), any Convertible Securities, any debt, any preferred
stock or any purchase rights) of the Company or any of its Subsidiaries, in each case agreed or committed to by the Company or
its subsidiaries after to the date hereof. Any direct or indirect, issuance, offer, sale, grant of any option or right to purchase,
or otherwise disposition of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition
of) any equity security or any equity-linked or related security (including, without limitation, any “equity security”
(as that term is defined under Rule 405 promulgated under the Securities Act), any Convertible Securities, any debt, any preferred
stock or any purchase rights) of the Company or any of its Subsidiaries, in each case agreed or committed to by the Company or
its subsidiaries prior to the date hereof shall not constitute Subsequent Placements.

 

(xii) ”Trading
Day” means any day on which the Common Stock is traded on the principal securities exchange or securities market on which
the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock
is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading
during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Creditor.

 

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(xiii) ”VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the principal securities
exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time,
and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the
foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such
hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security
as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).  If the VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the
fair market value as mutually determined by the Company and the Creditor. If the Company and the Creditor are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 1(e).
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.

 

2. REPRESENTATIONS AND WARRANTIES

 

(a) Company's
Representations.  The Company hereby represents and warrants and covenants to the Creditor, as of the date hereof
and each other date in which the Company issues Exchange Shares to the Creditor, as follows:

 

(i) Each
of the Company and its subsidiaries are entities duly organized and validly existing and in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their
business as now being conducted and as presently proposed to be conducted.  Each of the Company and each of its subsidiaries
is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.  As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects of the Company and its subsidiaries taken as a whole, or (ii)
the authority or ability of the Company  to perform any of its obligations under any of the Exchange Documents (as defined
below). Other than its subsidiaries, there is no Person in which the Company, directly or indirectly, owns share capital or holds
an equity or similar interest.

 

(ii) The
Company has the requisite power and authority to enter into and perform its obligations under this Agreement and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively,
the “Exchange Documents”) and to issue the Exchange Shares in accordance with the terms hereof and thereof.  The
execution and delivery of the Exchange Documents by the Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the Exchange Shares have been duly authorized by the Company's
Board of Directors and no further filing (other than Form 8-K), consent, or authorization is required by the Company, its Board
of Directors or its stockholders.  This Agreement and the other Exchange Documents have been duly executed and delivered
by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities
laws.

 

    	8

    	 

    

 

(iii) The
execution, delivery and performance of the Exchange Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, each Exchange and the reservation and issuance of the Exchange
Shares) will not (A) result in a violation of the Certificate of Incorporation (as defined below) or other organizational documents
of the Company or any of its subsidiaries, any share capital of the Company or any of its subsidiaries or Bylaws (as defined below)
of the Company or any of its subsidiaries, (B) conflict with, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or (C) result in a violation
of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and
the rules and regulations of The NASDAQ Capital Market (the “Principal Market”) applicable to the Company or
any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected except,
in the case of clause (B) or (C) above, to the extent such violations that could not reasonably be expected to have a Material
Adverse Effect.

 

(iv) Neither
the Company nor any subsidiary is required to obtain any consent from, authorization or order of, or make any filing (other than
Form 8-K) or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents,
in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings (other than Form 8-K)
and registrations which the Company or any subsidiary is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the applicable Closing Date, and neither the Company nor any of its subsidiaries are aware of any facts
or circumstances which might prevent the Company or any of its subsidiaries from obtaining or effecting any of the registration,
application or filings contemplated by the Exchange Documents.  The Company is not in violation of the requirements of
the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension
of the Common Stock in the foreseeable future.

 

(v) On
each date the Company issues Exchange Shares to the Creditor, all share transfer or other taxes (other than income or similar taxes)
which are required to be paid in connection with the issuance of the Exchange Shares to be exchanged with the Creditor hereunder
on such date will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or
will have been complied with.

 

(vi) The
Company filed current Form 10 information with the SEC over 12 months ago and has filed all reports and other materials required
to be filed by Section 13 or 15(d) of the Securities Exchange Act, as applicable, during the preceding 12 months (other than certain
Form 8-K reports) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared
in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements,
to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either
individually or in the aggregate). No other information provided by or on behalf of the Company to the Creditor which is not included
in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to
make the statements therein not misleading, in the light of the circumstance under which they are or were made.

 

    	9

    	 

    

 

(vii) As
of the date hereof, the authorized share capital of the Company consists of (A) 100,000,000 shares of Common Stock, of which, 39,844,498
are issued and outstanding and 16,008,287 shares are reserved for issuance pursuant to securities (other than the Exchange
Shares) exercisable or exchangeable for, or convertible into, shares of Common Stock and (B) 1,000,000 preferred shares, of which
no shares are issued and outstanding.  As of the date hereof, the Company has reserved from its duly authorized capital
stock 7,968,899 shares of Common Stock for issuance as Exchange Shares.  All of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and nonassessable.  Except as disclosed in
SEC Documents and/or in Schedule 2(a)(vii) hereof: (A) none of the Company’s or any subsidiary’s share capital is subject
to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company or any subsidiary;
(B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any share capital of the Company or
any of its subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional share capital of the Company or any of its subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any share capital of the Company or any of its subsidiaries; (C) except for the Existing Debt
and all other debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments disclosed
in the SEC Documents, there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness of the Company or any of its subsidiaries or by which the Company or any of its
subsidiaries is or may become bound; (D) other than with respect of the current indebtedness of the Company or any of its subsidiaries,
there are no financing statements securing obligations in any amounts filed in connection with the Company or any of its subsidiaries;
(E) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale
of any of their securities under the Securities Act; (F) there are no outstanding securities or instruments of the Company or any
of its subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any
of its subsidiaries; (G) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered
by the issuance of the Exchange Shares; (H) neither the Company nor any subsidiary has any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement; and (I) neither the Company nor any of its subsidiaries have
any liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company’s or its subsidiaries’ respective businesses and which, individually
or in the aggregate, do not or could not have a Material Adverse Effect. The Company will furnish to the Creditor upon Creditor’s
written request true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect
on the date hereof (the “Certificate of Incorporation”), and the Company’s bylaws, as amended and as in
effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or
exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto that have not been disclosed
in the SEC Documents.

 

    	10

    	 

    

 

(viii) The
Company confirms that neither it nor any other Person acting on its behalf has provided the Creditor or its agents or counsel with
any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the
Company or any of its subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Agreements.
The Company understands and confirms that the Creditor will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Creditor regarding the Company and its subsidiaries, their businesses
and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or
any of its subsidiaries is true and correct in all material respects and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.

 

(ix) The
issuance of the Exchange Shares are duly authorized and upon issuance in accordance with the terms hereof shall be validly issued
and outstanding, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of refusal of any kind.  Upon
issuance in accordance herewith and subject to the representations and warranties and covenants of the Creditor set forth in Section
2(b) have been and remain at such issuance true and correct, the Exchange Shares will be exempt from the registration requirements
of the Securities Act under Section 3(a)(9) of the Securities Act and all of such Exchange Shares, even though initially issuable
subject to restrictions on trading, will be caused by the Company to be freely transferable and freely tradable by the Creditor
without restriction pursuant to Rule 144, including, without limitation Rule 144(d)(3)(ii), of the Securities Act by requesting
the Transfer Agent to remove restrictive legends from the Exchange Shares.  After such restrictive legends removal, neither
any Exchange Shares issuable hereunder nor any certificates evidencing any of such Exchange Shares (if a certificate therefor is
requested in writing by the Creditor) shall bear any restrictive or other legends or notations.  The Company shall not,
and the Company shall cause all other persons to not, issue any stop-transfer order, instruction or other restriction with respect
to any such Exchange Shares. The Company shall cause its legal counsel to deliver an opinion to its Transfer Agent, if requested,
to the effect of the foregoing. The Creditor shall cooperate with the Company in timely providing the Company and its counsel with
customary non-affiliate seller opinion reliance certificates for the issuance of such opinions.

 

(x) 
The Company represents that it has not paid, and shall not pay, any commissions or other remuneration, directly or indirectly,
to any third party for the solicitation of any Exchange pursuant to this Agreement. Other than the applicable Exchange of Existing
Debt, the Company has not received and will not receive any consideration from the Creditor for the Exchange Shares to be issued
in an Exchange.

 

(xi) To
the Company’s knowledge, neither the Creditor nor the Original Creditors, nor any of their respective Affiliates, (i) is
or was an officer, director, 10% shareholder, control person, or Affiliate of the Company within the last 90 days or (ii) has or
will, directly or indirectly, provide any consideration to or invest in any manner in the Company in exchange or consideration
for, or otherwise in connection with, the sale or satisfaction of the Existing Debt, other than pursuant to this Agreement.

 

(xii) The
Company acknowledges and agrees that (A) the issuance of Exchange Shares pursuant to this Agreement may have a dilutive effect,
which may be substantial, (B) neither the Company nor any of the Company’s Affiliates has or will provide the Creditor with
any material non-public information regarding the Company or its securities, (C) the Creditor has no obligation of confidentiality
to the Company and may sell any of its Exchange Shares issued pursuant to this Agreement at any time but subject to compliance
with applicable laws and regulations.

 

    	11

    	 

    

 

(xiii) The
Company acknowledges and agrees that with respect to this Agreement and the transactions contemplated hereby, (A) the Creditor
is acting solely in an arm’s length capacity, (B) the Creditor does not make and has not made any representations or warranties,
other than those specifically set forth in this Agreement, (C) except as set forth in this Agreement, the Company’s obligations
hereunder are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of any claim the Company may have against the Creditor, (D) the Creditor has not and is not acting as a legal, financial, accounting
or tax advisor to the Company, or agent or fiduciary of the Company, or in any similar capacity, and (E) any statement made by
the Creditor or any of the Creditor’s representatives, agents or attorneys is not advice or a recommendation to the Company.

 

(xiv) The
Company is an issuer identified in, or subject to, Rule 144(i) under the Securities Act.

 

(xv) The
Company has not, in the 12 months preceding the date of this Agreement, received notice from any national securities exchange or
automated quotation system on which the shares of Common Stock are listed or designated for quotation to the effect that the Company
is not in compliance with the listing or maintenance requirements of such national securities exchange or automated quotation system.  As
of the date of this Agreement, to the Company’s actual knowledge based solely on absence of, as of the date hereof, any notice
from any such securities exchange or automated quotation system that the Company is not in compliance with the listing or maintenance
requirements of such national securities exchange or automated quotation system, the Company is in compliance with all such listing
and maintenance requirements.

 

(xvi) The
Company, through its Transfer Agent, currently participates in the DTC Fast Automated Securities Transfer (FAST) Program of DTC’s
Deposit/Withdrawal At Custodian (DWAC) system, and the shares of Common Stock may be issued and transferred electronically to third
parties via the DTC Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal At Custodian (DWAC) system.
The Company has not, in the 12 months preceding the date of this Agreement, received any notice from DTC to the effect that a suspension
of, or restriction on, accepting additional deposits of the shares of Common Stock, or electronic trading or settlement services
with respect to the shares of Common Stock are being imposed or are contemplated by DTC.

 

(xvii) The
Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition,
interested stockholder, business combination, or other similar antitakeover provision under the certificate of incorporation, bylaws
or other organizational documents of the Company, as currently in effect, or the laws of the jurisdiction of its incorporation
or otherwise which is or could become applicable as a result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of Exchange Shares hereunder and the Creditor’s ownership of such Exchange Shares,
together with all other securities now or hereafter owned or acquired by the Creditor.  The Company and its board of
directors have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Exchange Shares or a change in control of the Company or any of its subsidiaries.

 

(xviii) The
Company shall take such action as the Creditor shall reasonably determine is necessary in order to qualify the Exchange Shares
issuable to the Creditor hereunder under applicable securities or “blue sky” laws of the states of the United States
for the issuance to the Creditor hereunder and for resale by the Creditor to the public (or to obtain an exemption from such qualification).  Without
limiting any other obligation of the Company hereunder, the Company shall timely make all filings and reports relating to
the offer and issuance of such Exchange Shares required under all applicable securities laws (including, without limitation, all
applicable federal securities laws and all applicable state securities or “blue sky” laws), and the Company shall
comply with all applicable federal, state, local and foreign laws, statutes, rules, regulations and the like relating to the offering
and issuance of such Exchange Shares to the Creditor.

 

    	12

    	 

    

 

(xix) The
Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Exchange Shares to be
issued to the Creditor pursuant to this Agreement on each national securities exchange and automated quotation system, if any,
on which the shares of Common Stock are listed or designated for quotation (as the case may be) and shall use its reasonable best
efforts to maintain such listing or designation for quotation (as the case may be) of all such Exchange Shares on such national
securities exchange or automated quotation system for so long as the Creditor or any of its Affiliates holds any Exchange Shares.
the Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 2(a)(xix).

 

(b) Creditor
Representations. The Creditor hereby makes the following representations, warranties and covenants, as of the date hereof and
each other date in which the Creditor exchanges all or any portion of the Existing Debt into the Exchange Shares or transfers or
disposes the Exchange Shares, to the Company:

 

(i) The
Creditor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization
with the requisite power and authority to enter into and to consummate the transactions contemplated hereby to which it is a party
and otherwise to carry out its obligations hereunder and thereunder.

 

(ii) The
Creditor understands that the Exchange Shares are being offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy
of, and the Creditor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of
the Creditor set forth herein in order to determine the availability of such exemptions and the eligibility of the Creditor to
acquire the Exchange Shares.

 

(iii) This
Agreement has been duly and validly authorized, executed and delivered on behalf of the Creditor and constitute the legal, valid
and binding obligations of the Creditor enforceable against the Creditor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(iv) The
execution, delivery and performance by the Creditor of this Agreement and the consummation by the Creditor of the transactions
contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Creditor or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the
Creditor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment  or decree (including
federal and state securities laws) applicable to the Creditor, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of the Creditor to perform its obligations hereunder.

 

(v) As
of the date of this Agreement and during the 90 calendar days prior to the date of this Agreement, neither the Creditor nor any
Affiliate thereof is or was an officer, director, or 10% or more shareholder of the Company.

 

    	13

    	 

    

 

 

(vi) For
so long as the Creditor or any of its Affiliates holds any Exchange Shares, neither the Creditor nor any of its Affiliates will:
(i) vote any shares of Common Stock owned or controlled by it, or solicit any proxies or seek to advise or influence any person
with respect to any voting securities of the Company; or (ii) engage or participate in any actions, plans or proposals that relate
to or would result in (a) the Creditor or any of its Affiliates acquiring additional securities of the Company, alone or together
with any other person, which would result in the Creditor and its Affiliates collectively beneficially owning, or being deemed
to beneficially own, more than 9.99% of the shares of Common Stock or other voting securities of the Company (as calculated pursuant
to Section 13(d) of the Exchange Act and the rules and regulations thereunder), (b) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (c) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries, (d) any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board,
(e) any material change in the present capitalization or dividend policy of the Company, (f) any other material change in the Company’s
business or corporate structure, (g) changes in the Company’s charter, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Company by any person, (h) causing a class of securities of the Company
to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system
of a registered national securities association, (i) causing a class of equity securities of the Company to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act or (j) taking any action, intention, plan or arrangement
similar to any of those enumerated above.

 

(vii) 
Creditor represents that it has not paid, and shall not pay, any commissions or other remuneration, directly or indirectly, to
any third party for the solicitation of any Exchange pursuant to this Agreement and no additional consideration from the Creditor
was received or will be received by the Company for the Exchange Shares. 

 

(viii) Creditor
understands and acknowledges that the issuance and transfer to it of the shares of Common Stock (the "Shares")
has not been reviewed by the United States Securities and Exchange Commission or any state securities regulatory authority because
such transaction is intended to be exempt from the registration requirements of the Securities Act, and applicable state securities
laws. Creditor understands that the Company is relying upon the truth and accuracy of, and Creditor’s compliance with, the
representations, warranties, acknowledgments and understandings of Creditor set forth herein in order to determine the availability
of such exemptions and the eligibility of Creditor to acquire the Shares.

 

(ix) Creditor
has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of Creditor’s
investment in the Company through Creditor’s acquisition of the Shares. Creditor is able to bear the economic risk of its
investment in the Company through Creditor’s acquisition of the Shares for an indefinite period of time. At the present time,
Creditor can afford a complete loss of such investment and has no need for liquidity in such investment.

 

    	14

    	 

    

 

(x) Creditor
recognizes that its acquisition of the Shares involves a high degree of risk in that: (a) an investment in the Company is highly
speculative and only Creditor who can afford the loss of their entire investment should consider investing in the Company and securities
of the Company; (b) transferability of the Shares is limited; (c) the Company has experienced recurring losses and it must raise
substantial additional capital in order to continue operating its business; (d) subsequent equity financings will dilute the ownership
and voting interests of Creditor and equity securities issued by the Company to other persons or entities may have rights, preferences
or privileges senior to the rights of Creditor; (e) any debt financing that may be obtained by the Company must be repaid regardless
of whether the Company generates revenues or cash flows from operations and may be secured by substantially all of the Company’s
assets; (f) there is absolutely no assurance that any type of financing on terms acceptable to the Company will be available to
the Company or otherwise obtained by the Company; and (g) if the Company is unable to obtain additional financing or is unable
to obtain additional financing on terms acceptable to it, then the Company may be unable to implement its business plans or take
advantage of business opportunities, which could have a material adverse effect on the Company’s business prospects, financial
condition and results of operations and may ultimately require the Company to suspend or cease operations.

 

(xi) Creditor
acknowledges that it has prior investment experience and that it recognizes and fully understands the highly speculative nature
of Creditor’s investment in the Company pursuant to its acquisition of the Shares. Creditor acknowledges that it, either
alone or together with its professional advisors, has the capacity to protect its own interests in connection with this transaction.

 

(xii) Creditor
acknowledges that it has carefully reviewed the this Agreement and the Company’s filings with the United States Securities
and Exchange Commission, which are available on the Internet at www.sec.gov, all of which documents and filings Creditor acknowledges
have been made available to it. Creditor has been given the opportunity to ask questions of, and receive answers from, the Company
concerning this Agreement, the issuance to it of the Shares, and the Company’s business, operations, financial condition
and prospects, and Creditor has been given the opportunity to obtain such additional information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of same as Creditor
reasonably desires in order to evaluate its investment in the Company pursuant its acquisition of the Shares. Creditor fully understands
all of such documents and filings and has had the opportunity to discuss any questions regarding any of such documents or filings
with its legal counsel and tax, investment and other advisors. Creditor acknowledges that it does not desire to receive any further
information from the Company or any other person or entity in order to make a fully informed decision of whether or not to execute
this Agreement and accept the Shares.

 

(xiii) Creditor
acknowledges that the issuance to it of the Shares may involve tax consequences to Creditor. Creditor acknowledges and understands
that Creditor must retain its own professional advisors to evaluate the tax and other consequences of Creditor’s receipt
of the Shares.

 

(xiv) Creditor
understands and acknowledges that the Company is under no obligation to register the resale of the Shares under the Securities
Act or any state securities laws.

 

(xv) Creditor
understands that, subject to delivery to the Transfer Agent of acceptable to the Transfer Agent legal opinion of counsel with respect
to removal of restrictive legends in compliance with Rule 144 in connection with impending disposition of such Shares by the Creditor,
and the removal of such restrictive legends, the certificate(s) representing the Shares shall initially, (upon exchange under Rule
3(a)(9) of the Securities Act) bear a restrictive legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the Shares):

 

    	15

    	 

    

  

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN
A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

(xvi) The
legend set forth above will be removed, and the Company will issue and deliver the Shares without such legend to Creditor in the
manner set forth in Section 1(d) of this Agreement.

 

(xvii)
Creditor represents and warrants that it was not induced to invest in the Company (pursuant to the issuance to it of the Shares)
by any form of general solicitation or general advertising, including, but not limited to, the following: (a) any advertisement,
article, notice or other communication published in any newspaper, magazine or similar media (including via the Internet) or broadcast
over the news or radio; and (b) any seminar or meeting whose attendees were invited by any general solicitation or advertising.

 

	 3.  	RESTRICTION ON SUBSEQUENT PLACEMENTS

 

(a) At any time
during the ninety (90) day period commencing on the date hereof, neither the Company nor any of its Subsidiaries shall, directly
or indirectly, effect any Subsequent Placement.

 

(b) The restrictions
contained in this Section 3 shall not apply in connection with the issuance of any Excluded Securities.  

 

	4.  	EXCLUSIVITY

 

During the period commencing
on the date hereof and ending 180 calendar days thereafter, the Company shall not, without the prior written consent of the Creditor,
(a) enter into, effect, alter, announce or recommend to its shareholders any transaction whereby the Company directly or indirectly
issues equity or debt securities of the Company to a party in exchange for outstanding equity or debt securities (other than ordinary
exercise of Convertible Securities), claims or property interests, or partly in such exchange and partly for cash, in one or more
transactions carried out pursuant to Section 3(a)(9) or Section 3(a)(10) of the Securities Act (any such transaction, an “Exchange
Transaction”), or (b) otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or
attempt by any Person (other than the Creditor) to seek an Exchange Transaction involving the Company or any of its Subsidiaries.  The
Company, its Affiliates and subsidiaries, and each of its and their respective officers, employees, directors, agents or other
representatives shall immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other
communications with any Persons (other than the Creditor) with respect to any of the foregoing.  

 

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	5.  	DISCLOSURE

 

(a) Prior to
the earlier of (i) the opening time for trading stocks on public securities exchanges located in New York City on the first trading
day immediately following the date of this Agreement and (ii) the initial Share Delivery Deadline, time being of the essence, the
Company shall file a Current Report on Form 8-K with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act disclosing
all of the material terms of this Agreement, including, without limitation, the issuance of shares of Common Stock to the Creditor
pursuant to this Agreement approving this Agreement, and disclosing all other material, nonpublic information delivered to the
Creditor (or the Creditor’s representatives or agents) by the Company or any of its officers, directors, employees, agents
or representatives, if any, in connection with the Existing Debt, any Exchange, the Original Creditors or the transactions contemplated
by this Agreement, and attaching a copy of this Agreement and this Agreement as exhibits thereto (the “8-K Filing”).  From
and after the 8-K Filing, neither the Company nor any of its officers, directors, employees, agents or representatives shall disclose
any material non-public information about the Company to the Creditor (or the Creditor’s representatives or agents), unless
prior thereto the Company shall have filed a Current Report on Form 8-K with the SEC pursuant to Section 13 or Section 15(d) of
the Exchange Act disclosing all such material non-public information. 

 

(b) Neither the
Company, its subsidiaries nor the Creditor shall issue any press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of the Creditor, to issue any
press release or make other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that the Creditor shall be
consulted by the Company in connection with any such press release or other public disclosure prior to its release).

 

(c) Without the
prior written consent of the Creditor, the Company shall not (and shall cause each of its subsidiaries and Affiliates to not) disclose
the name of the Creditor in any filing (other than the 8-K Filing), announcement, release or otherwise.

 

	6.  	INDEMNIFICATION

 

(a) In consideration
of the Creditor’s execution and delivery of the Exchange Documents to which it is a party and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Exchange Documents, the Company shall defend, protect
and indemnify the Creditor and all of their shareholders, partners, members, officers, directors, employees (collectively, the
“Creditor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Creditor Indemnitee
is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”) incurred by any Creditor Indemnitee as a result of, or arising out of,
or relating to (a) any material misrepresentation or breach of any representation or warranty made by the Company in any of the
Exchange Documents or (b) any material and uncured within 30 days breach of any covenant, agreement or obligation of the Company
contained in any of the Exchange.

 

(b) In consideration
of the Company’s execution and delivery of the Exchange Documents to which it is a party and agreeing to issue (subject to
the terms hereof) the Securities thereunder and in addition to all of the Creditor’s other obligations under the Exchange
Documents, the Creditor shall defend, protect and indemnify the Company and all of their shareholders, partners, members, officers,
directors, employees and counsel (collectively, the “Company Indemnitees”) from and against any and all Indemnified
Liabilities incurred by any Company Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by the Creditor in any of the Exchange Documents, (b) any material and uncured
within 30 days breach of any covenant, agreement or obligation of the Creditor contained in any of the Exchange.  

 

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(c) Promptly
after receipt by a Company Indemnitee or Creditor Indemnity (as applicable) under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Company
Indemnitee or Creditor Indemnity (as applicable) shall, (i) if an Indemnified Liability in respect thereof is to be made against
the Company under this Section 6, deliver to the Company a written notice of the commencement thereof, and the Company shall have
the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel mutually
satisfactory to the Company and the Creditor Indemnitee; provided, however, that a Creditor Indemnitee shall have the right to
retain its own counsel at its own expense, if, in the reasonable opinion of counsel retained by the Company, the representation
by such counsel of the Indemnitee and the Company would be inappropriate due to actual or potential differing interests between
such Creditor Indemnitee and any other party represented by such counsel in such proceeding. In the case of a Creditor Indemnitee,
legal counsel referred to in the immediately preceding sentence shall be selected by the Creditor. The Creditor Indemnitee shall
cooperate fully with the Company in connection with any negotiation or defense of any such Indemnified Liability by the Company
and shall furnish to the Company all information reasonably available to the Creditor Indemnitee which relates to such Indemnified
Liability.  The Company shall keep the Creditor Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  The Company shall not be liable for any settlement of any action,
claim or proceeding effected without its prior written consent, provided, however, that the Company shall not unreasonably withhold,
delay or condition its consent.  The Company shall not, without the prior written consent of the Creditor Indemnitee,
consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Creditor Indemnitee of a release from all liability in respect to such
Indemnified Liability. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of the
Creditor Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has
been made. The failure to deliver written notice to the Company within a reasonable time of the commencement of any such action
shall not relieve the Company of any liability to the Indemnitee under this Section 6, except to the extent that the Company is
prejudiced in its ability to defend such action; and (ii) if an Indemnified Liability in respect thereof is to be made against
the Creditor under this Section 6, deliver to the Creditor a written notice of the commencement thereof, and the Creditor shall
have the right to participate in, and, to the extent the Creditor so desires, to assume control of the defense thereof with counsel
mutually satisfactory to the Creditor and the Indemnitee; provided, however, that a Company Indemnitee shall have the right to
retain its own counsel at its expense, if, in the reasonable opinion of counsel retained by the Company, the representation by
such counsel of the Company Indemnitee and the Company would be inappropriate due to actual or potential differing interests between
such Company Indemnitee and any other party represented by such counsel in such proceeding. In the case of a Company Indemnitee,
legal counsel referred to in the immediately preceding sentence shall be selected by the Company. The Company Indemnitee shall
cooperate fully with the Creditor in connection with any negotiation or defense of any such Indemnified Liability by the Creditor
and shall furnish to the Creditor all information reasonably available to the Company Indemnitee which relates to such Indemnified
Liability.  The Creditor shall keep the Company Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  The Creditor shall not be liable for any settlement of any action,
claim or proceeding effected without its prior written consent, provided, however, that the Creditor shall not unreasonably withhold,
delay or condition its consent.  The Creditor shall not, without the prior written consent of the Company Indemnitee,
consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Company Indemnitee of a release from all liability in respect to such Indemnified
Liability. Following indemnification as provided for hereunder, the Creditor shall be subrogated to all rights of the Company Indemnitee
with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure
to deliver written notice to the Creditor within a reasonable time of the commencement of any such action shall not relieve the
Creditor of any liability to the Indemnitee under this Section 6, except to the extent that the Creditor is prejudiced in its ability
to defend such action.

 

(d) The indemnification
required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense,
as and when bills are received or Indemnified Liabilities are incurred. Notwithstanding any other provisions of this Agreement,
the Company shall not be obligated to indemnify any person or entity to the extent that the aggregate of all Indemnified Liabilities
subject to the indemnification by the Company exceeds the Debt Amount.

 

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(d) The indemnification
required by this Section 6 shall be the sole and exclusive remedy of the Company Indemnitees and the Creditor Indemnitees.

   

	7.  	RESERVATION OF SHARES

 

(a) Reservation.
The Company shall initially reserve 7,968,899 shares of its authorized and unissued Common Stock, solely for the purpose of effecting
Exchanges of the Existing Debt.  So long as any of the Existing Debt remains outstanding and is held by the Creditor,
the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely
for the purpose of effecting Exchanges of such Existing Debt, a number of authorized and unissued shares of Common Stock, as of
any date of determination, of at least 150% of the number of authorized and unissued shares of Common Stock as shall from time
to time be necessary to effect the exchange of all of the Existing Debt then outstanding and held by the Creditor (without regard
to any limitations on exchanges) (the “Required Reserve Amount”).  

 

(b) Insufficient
Authorized Shares. If, notwithstanding Section 7(a), and not in limitation thereof, at any time while the Existing Debt remains
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon exchange of the Existing Debt held by the Creditor of at least a number of shares of Common Stock
equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take
all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company
to reserve the Required Reserve Amount for such Existing Debt. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after
the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholder for the approval of an increase
in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase
in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such
proposal.  At any time after the Stockholder Meeting Deadline (as defined below), in the event that the Company is prohibited
from issuing shares of Common Stock upon any exchange due to the failure by the Company to have sufficient shares of Common Stock
available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “Authorization
Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Creditor, the Company shall pay cash
in exchange for the redemption of such portion of the Debt Amount exchangeable into such Authorized Failure Shares at a price equal
to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date the Creditor delivers the applicable Exchange Notice with
respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section
7(b) and (ii) to the extent the Creditor purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Creditor of Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses,
if any, of the Creditor incurred in connection therewith.  Nothing contained in Section 7(a) or this Section 7(b)
shall limit any obligations of the Company under any other provision hereunder or in the Existing Debt.

 

	8.  	MISCELLANEOUS.

 

(a) Holding
Period.  For the purposes of Rule 144 of the Securities Act, the Company acknowledges and agrees that the holding
period of the Exchange Shares may be tacked on the holding period of the Existing Debt, and the Company agrees not to take a position
contrary to this Section 8(a).  The Company shall be responsible for the delivery of any legal opinion required by the
transfer agent in connection with the issuance of the Exchange Shares without any restricted legend and the fees and expenses of
counsel with respect to any such legal opinion.

 

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(b) Further
Assurances; Additional Documents.  The parties shall take any actions and execute any other documents that may be
necessary or desirable to the implementation and consummation of this Agreement upon the reasonable request of the other party.

 

(c) No Oral
Modification.  This Agreement may only be amended in writing signed by the Company and by the Creditor.  All
waivers relating to any provision of this Agreement must be in writing and signed by the waiving party.

 

(d) Expenses.  The
Company shall reimburse Creditor or its designee(s) up to $25,000 for all legal fees, costs and expenses incurred by it or its
Affiliates in connection with the transactions contemplated by the Exchange Documents, including in connection with post-Closing
filings with the SEC, which amount was previously advanced by the Company to Creditor. Except as otherwise set forth in this Agreement,
each party to this Agreement shall bear its own expenses in connection with transactions contemplated hereby.  The Company
shall be responsible for the payment of any financial advisory fees, legal expenses of counsel to the Company (including, without
limitation, with respect to any legal opinion issued in connection herewith or any Exchange), DTC fees, or transfer agent fees
relating to or arising out of the transactions contemplated hereby.  

 

(e) Governing
Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to
it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(f) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.

 

(g) Remedies.  The
Creditor and each Affiliate of the Creditor that holds any Securities shall have all rights and remedies set forth in the Exchange
Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall
be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights granted by law.  Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under any of the Exchange
Documents, any remedy at law may prove to be inadequate relief to the Creditor.  The Company therefore agrees that the
Creditor shall be entitled to seek specific performance and/or temporary, preliminary and permanent injunctive or other equitable
relief from any court of competent jurisdiction in any such case without the necessity of proving damages and without posting a
bond or other security.

 

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(h) Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Exchange
Documents, whenever the Creditor exercises a right, election, demand or option under an Exchange Document and the Company does
not timely perform its related obligations within the periods therein provided, then the Creditor may rescind or withdraw, in its
sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

 

(i) Payment
Set Aside. To the extent that the Company makes a payment or payments to the Creditor hereunder or the Creditor enforces or
exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or
are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then
to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless otherwise
expressly indicated, all dollar amounts referred to in this Agreement and the other Exchange Documents are in United States Dollars
(“US Dollars”), and all amounts owing under this Agreement and all other Exchange Documents shall be paid in
US Dollars. All amounts denominated in other currencies shall be converted in the US Dollar equivalent amount in accordance with
the Dollar Exchange Rate on the date of calculation. “Dollar Exchange Rate” means, in relation to any amount
of currency to be converted into US Dollars pursuant to this Agreement, the US Dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.

 

(j) Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.

 

(k) Survival.  The
representations, warranties, agreements and covenants in this Agreement shall survive the execution and delivery hereof and the
consummation of the transactions contemplated hereby.

 

(l) Headings.  The
headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

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(m) Severability;
Usury.  If any term or provision of this Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party.  Upon determination that any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to attempt
to agree on a modification of this Agreement so as to effect the original intent of the parties as closely as possible to the fullest
extent permitted by law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest
extent possible. Notwithstanding anything to the contrary contained in this Agreement or any other Exchange Document (and without
implication that the following is required or applicable), it is the intention of the parties that in no event shall amounts and
value paid by the Company, or payable to or received by the Creditor, under the Exchange Documents, including without limitation,
any amounts that would be characterized as “interest” under applicable law, exceed amounts permitted under any such
applicable law. Accordingly, if any obligation to pay, payment made to the Creditor, or collection by the Creditor pursuant the
Exchange Documents is finally judicially determined to be contrary to any such applicable law, such obligation to pay, payment
or collection shall be deemed to have been made by mutual mistake of the Creditor and the Company and such amount shall be deemed
to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so
prohibited by the applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the
option of the Creditor, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid
or actually paid to the Creditor under the Exchange Documents. For greater certainty, to the extent that any interest, charges,
fees, expenses or other amounts required to be paid to or received by the Creditor under any of the Exchange Documents or related
thereto are held to be within the meaning of “interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they relate.

 

(n) No Third
Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(o) Further
Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

(p) No Strict
Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

(q) Successors
and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns.

 

(r) Notices.  Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the
party to receive the same.  The addresses and facsimile numbers for such communications shall be (x) if to the Company,
at the address set forth on its signature page attached hereto or (y) if to the Creditor, at the address set forth on its signature
page attached hereto, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

    	22

    	 

    

  

[Signature Page Follows] 

 

    	23

    	 

    

  

IN WITNESS WHEREOF,
the Creditor and the Company have caused their respective signature page to this Exchange Agreement to be duly executed as of the
date first written above.

 

	 	COMPANY:	 
	 	 	 
	 	NET ELEMENT, INC.	 
	 	 	 	 
	 	By:	/s/ Oleg Firer	 
	 	 	Name: Oleg Firer	 
	 	 	Title:  Chief Executive Officer	 
	 	 	 	 
	 	Address:	3363 NE 163rd Street, Suite 705, North Miami Beach, Florida	 

 

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IN WITNESS WHEREOF,
the Creditor and the Company have caused their respective signature page to this Exchange Agreement to be duly executed as of the
date first written above.

  

	 	CREDITOR:	 
	 	 	 
	 	CREDE CG III, LTD.	 
	 	 	 	 
	 	By:	/s/ Terren Peizer	 
	 	 	Name:  Terren Peizer	 
	 	 	Title:    Managing Director	 
	 	 	 	 

	Existing Debt:	 	Address:
	$15,876,860	 	 
	 	 	 	CREDE CG III, LTD.
	 	 	11601 Wilshire Blvd.
	Debt Exchange Amount:	 	Suite 950
	$19,846,075	 	Los Angeles, CA 90025
	 	 	 	(310) 444-4346 Office
	 	 	(310) 444-4359 fax
	Initial Exchange Price (with respect to initial Debt Exchange Amount):	 	E-mail: michael@credecg.com
	 	 	 
	$5.70	 	with a copy (for information purposes only) to:
	 	 	 	 
	 	 	Mintz Levin Cohn Ferris Glovsky and Popeo, PC
	 	 	666 Third Avenue
	Number of Shares to be Issued in the Initial Exchange:	 	New York, NY 10017
	 	 	Attention: Kenneth R. Koch, Esq.
	3,481,768	 	Telephone: (212) 935-3000
	 	 	 	Facsimile: (212) 983-3115
	 	 	E-Mail: krkoch@mintz.com

 

    	25

    	 

    

  

EXHIBIT I

 

NET ELEMENT, INC.

EXCHANGE NOTICE

 

Reference is made
to (a) that certain Master Exchange Agreement, dated as of September15, 2014 (the “Exchange Agreement”), by
and between the undersigned and Net Element, Inc., a Delaware corporation (the “Company”) and (b) certain Existing
Debt (as defined in the Exchange Agreement) held by the undersigned as of the date hereof.  In accordance with and pursuant
to the Exchange Agreement, the undersigned hereby elects to exchange the Debt Exchange Amount (as defined in the Exchange Agreement)
indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”), of the Company,
at the Exchange Rate (as defined in the Exchange Agreement, as of the date specified below).  Capitalized terms not defined
herein shall have the meaning as set forth in the Exchange Agreement.

 

	Date of Exchange:	September 15, 2014

 

	Aggregate Debt Exchange Amount:	$19,846,075

 

	Please confirm the following information:

 

	Exchange Price for Debt Exchange Amount:	$5.70

 

	Aggregate number of shares of Common Stock to be issued to undersigned in the Exchange:	3,481,768

 

 

	
        Please issue such shares of Common Stock
        in the Exchange to Creditor, or for its benefit, as follows:

         ̈
        Check here if requesting delivery as a certificate to the following name and to the following address:

	Issue to:	 
	 	 
	 	 

 

	 ̈    Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
	DTC Participant:	Alberl Fried
	DTC Number:	# 0284
	Account Number:	412004291

 

	
        Date: September 15, 2014                                               

         

        Crede CG III, Ltd.                         

        Name of Registered Holder 

 

    	26

    	 

    

 

	By: ______________________
	Name:
	Title:
	 
	Tax ID:_____________________
	Facsimile:___________________

 

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this Exchange Notice and hereby directs [TRANSFER AGENT] to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _________, 2014 from the Company and acknowledged and agreed to by ___________.

 

	 	NET ELEMENT, INC.	 
	 	 	 	 
	 	By:	 	 
	 	 	Name: 	 
	 	 	Title: 	 

 

    	27

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