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IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

ROBERTO RAMIREZ and THOMASlHLE,

Plaintiffs,

v.

J.C. PENNEY CORPORATION INC.,MICHAEL DASTUGUE, JANETDHILLON, KENNETH HANNAH,MICHAEL KRAMER, RONALDJOHNSON, andMYRON E. ULLMAN, III,

Defendants.

§§§§§§ Civil Action No. 6:14-CV-00601 (MHS) (KNM)§§§§§§§§§

CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE

This CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE is entered intoby and between Named Plaintiffs, as defined in Section 1.21 below, on the one hand, andDefendants, as defined in Section 1.10 below, on the other. Capitalized terms and phrases havethe meanings provided in Section 1 below or as specified elsewhere in this SettlementStipulation.

1. DEFINITIONS

1.1. "Action" means Roberto Ramirez and Thomas Ihle VS. 1. C. Penney Corporation, Inc.,Michael Dastugue, Janet Dhillon, Kenneth Hannah, Michael Kramer, Ronald Johnson, andMyron E. Ullman, III, No. 14-cv-00601, an action pending in the United States District Court forthe Eastern District of Texas and any and all cases consolidated therewith.

1.2. "CAFA" means the Class Action Fairness Act of 2005.

1.3. "Case Contribution Award" means any monetary amount ordered by the Court to be paidfrom the Gross Settlement Fund in recognition of the Named Plaintiffs' assistance in theprosecution of this Action and payable pursuant to Section 13.3. Defendants shall not take anyposition with respect to a Case Contribution Award and will leave this matter to the sounddiscretion of the Court.

1.4. "Claim" means any and all manner of claims, actions, causes of actions, potential actions,suits, controversies, costs, damages, losses, obligations, liabilities, judgments, and demandswhatsoever, known or unknown, suspected or unsuspected, accrued or unaccrued, whether class,individual, or otherwise, arising under the laws, regulations, or common law of the United Statesof America, any state or political subdivision thereof, or any foreign country or jurisdiction, in

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Case 6:14-cv-00601-MHS-KNM Document 68-1 Filed 06/01/16 Page 2 of 22 PageID #: 623

May 31, 2016Class Action Settlement Agreement and Release

law, in contract, or in equity, and regardless of legal theory.

1.5. "Class Counsel" means Zamansky LLC.

1.6. "Class Notice" means the notice of (i) pendency of class action, certification of Class forSettlement purposes, and Settlement; (ii) Fairness Hearing; and (iii) motion for a CaseContribution Award and attorneys' fees and reimbmsement oflitigation expenses. Class Noticewill be drafted by Plaintiffs subject to the advice and consent of Defendants.

1.7. "Class Period" means the period from November 1, 2011, through the SettlementStipulation Execution Date, May 31, 2016.

1.8. "Complaint" means the First Amended Class Action Complaint for Violations of theEmployee Retirement Income Security Act, filed in this Action on August 25, 2014 (Dk1. 20),and any other filed complaint preceding and thus superseded by the First Amended Class ActionComplaint.

1.9. "Court" means the United States District Court for the Eastern District of Texas.

1.10. "Defendants" means J. C. Pelmey Corporation, Inc. ("J. C. Penney"), Michael Dastugue,Janet Dhillon, Kenneth Hannah, Michael Kramer, Ronald Johnson, and Myron Ullman, III.

1.11. "Defendants' Released Claims" means any and all Claims, including Unknown Claimsthat Defendants asserted, or could have asserted, against the Plaintiff Releasees that arise out ofor relate in any way to the institution, prosecution or settlement of the Action, except for claimsrelating to the enforcement of this Settlement Stipulation. Notwithstanding any other provisionto the contrary herein, Defendants' Released Claims shall not include any claims by theDefendants against the Insurer.

1.12. "Defendant Releasees" means Defendants named in the Complaint and any and all oftheir related entities, including, without limitation, any and all of their past or present parents,subsidiaries, affiliates, predecessors, or successors, Successors-In-Interest, as well as any and allof their current or former officers, directors, employees, associates, members of their immediatefamilies, agents or other persons acting on their behalf, co-fiduciaries, independent fiduciaries, orother fiduciaries who had any responsibilities with respect to the Plan, underwriters, insurers,reinsurers, attorneys, advisors, financial advisors, publicists, independent certified publicaccountants, aUditors, accountants, assigns, creditors, administrators, heirs, estates or legalrepresentatives. "Defendant Releasees" includes Evercore Trust Company.

1.13. "Effective Date of Settlement" means the date on which all of the conditions toSettlement set forth in Section 3 of this Settlement Stipulation have been fully satisfied orwaived and the Settlement shall have become Final.

1.14. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended,including all regulations promulgated thereunder.

1.15. "Fairness Hearing" means the hearing at or after which the Court will be asked to make a

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final decision"pursuant to Fed. R. Civ. P. 23(e), as to whether this Settlement Stipulation is fair,reasonable and adequate to settle the Plaintiffs' Claims against Defendants and whether theCOUlt should approve the Settlement.

1.16. "Final" when refening to the Final Approval Order or any other judgment or court ordermeans (i) if no appeal is filed, the expiration date of the time provided for filing or noticing ofany appeal under the Federal Rules of Civil Procedure, i.e., thirty (30) days after entry of thejudgment or order; or (ii) if there is an appeal from the judgment or order, the latter of (a) thedate of final dismissal of all such appeals, or the final dismissal of any proceeding on certiorarior otherwise, or (b) the date the judgment or order is finally affirmed on an appeal, the expirationof the time to file a petition for a writ ofcertiorari or other form of review, or the denial of a writofcertiorari or other form of review, and, if certiorari or other form of review is granted, the dateof final affirmance following review pursuant to that grant.

1.17. "Final Approval Order" means the order of dismissal with prejudice entered by the Courtas contemplated in Section 3.3 of this Settlement Stipulation, which order shall be drafted byPlaintiffs subject to the advice and consent of Defendants.

1.18. "Gross Settlement Fund" is defined in Section 10.

1.19. "Independent Fiduciary" means a fiduciary retained pursuant to Section 3.5 and that hasno "relationship to" or "interest in" (as those terms are used in the Class Exemption referred to inSection 3.5) any of the Pmties. Should Defendants appoint an Independent Fiduciary to reviewand approve a release by the Plan of the Defendants, those fees and expenses shall be borne by J.C. Penney.

1.20. "Insurer" means Federal Insurance Company.

1.21. "Named Plaintiffs" means Roberto Ramirez and Thomas Ilhe.

1.22. "Net Settlement Fund" means the Gross Settlement Fund less any (i) applicable Taxes;(ii) costs awarded by the Court; (iii) attorneys' fees awarded by the Court; and (iv) CaseContribution Awards.

1.23. "Notice Plan" means the issuance of the Class Notice and Summary Notice, ascontemplated in Section 3.2.2.

1.24. "Pmties" means Plaintiffs and Defendants.

1.25. "Person" means an individual, partnership, corporation or any other form of organization.

1.26. "Plaintiffs" means Named Plaintiffs and each and every Settlement Class member andtheir Successors-In-Interest.

1.27. "Plaintiffs' Released Claims" means any and all manner of Claims, including UnknownClaims that Plaintiffs asserted in the Action or could have asserted individually and/or on behalfof the Settlement Class, in any forum, that arise out of or are based upon, in whole or in part,

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directly or indirectly, any allegations, transactions, facts, matters, occurrences, representations,actions, omissions, failures to act, statements or disclosures involved, set forth or referred to inthe Complaint filed in the Action. Notwithstanding the foregoing, claims to enforce theSettlement are not included in this definition. Nothing in Plaintiffs' Released Claims is intendedto affect the Plan's ability to file a claim, or recover thereupon, in the Securities Action.

1.28. "Plaintiff Releasees" means Plaintiffs, and any and all of their related parties, including,without limitation, any and all members of their immediate families, agents or other personsacting on their behalf, attorneys, advisors, financial advisors, accountants, assigns, creditors,heirs, estates and legal representatives.

1.29. "Plan" means the J.C. Penney Corporation, Inc. Savings, Profit Sharing and StockOwnership Plan.

1.30. "Plan of Allocation" means the proposed plan of allocation of the Net Settlement Fund,proposed by Class Counsel, and approved by the Court. Subject to Section 12.5, the Plan ofAllocation will be drafted by Plaintiffs subject to the advice and consent of Defendants.

1.31. "Preliminary Approval Order" means the order to be entered by the Court(i) preliminarily approving the Settlement Stipulation; (ii) preliminarily certifying the SettlementClass solely for Settlement purposes; (iii) preliminarily detern1ining that the proposed form ofClass Notice and Summary Notice fairly and adequately describes the terms and effect of thisSettlement Stipulation, gives notice to the Settlement Class of the time and place of the hearingof the motion for final approval of the Settlement Stipulation, and describes how the recipients ofthe Class Notice may object to approval of the Settlement, the proposed maImer ofcommunicating the Class Notice and Summary Notice to the members of the Settlement Class isthe best notice practicable under the circumstances, and the proposed provision of Class Noticeand Summary Notice to potential members of the Settlement Class otherwise meets all of therequirements of Rule 23 of the Federal Rules of Civil Procedure and any other applicable law;and (iv) scheduling the Fairness Hearing. The Preliminary Approval Order shall be drafted byPlaintiffs subject to the advice and consent of Defendants.

1.32. "Securities Action" means Marcus v..1. C. Penney Company, Inc., No. 13-cv-00736(E.D. Tex.) and any and all cases consolidated therewith.

1.33. "Settlement" means the settlement to be consummated under this Settlement Stipulationpursuant to the Final Approval Order.

1.34. "Settlement Administration Expenses" means the reasonable and actually incurred fees,costs and expenses associated with retaining a Settlement Administrator, providing Class Notice,publishing Summary Notice, implementing the Notice Plan, and distributing payments toSettlement Class members without active Plan accounts at the time of distribution ofthe FinalIndividual Dollar Recovery, as defined in the Plan ofAllocation.

1.35. "Settlement Administrator" means a third party retained by Defendants, if one is retained,to implement the Notice Plan in accordance with Defendants' instructions.

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May 31,2016Class Action Settlement Agreement and Release

1.36. "Settlement Class" means all individuals, excluding Defendants, who participated in thePlan, and whose individual accounts held units of the J. C. Penney Common Stock Fund betweenNovember 1, 2011, and the Settlement Stipulation Execution Date, May 31, 2016.

1.37. "Settlement Payment" means $4,500,000.00 to be paid by J. C. Penney within forty-five(45) calendar days after the Settlement becomes Final.

1.38. "Settlement Stipulation" means this Settlement Agreement and Release betweenPlaintiffs and Defendants.

1.39. "Settlement Stipulation Execution Date" means May 31, 2016, the date the final signatureof the Parties is affixed to this Settlement Stipulation.

1.40. "Successor-In-Interest" means a Person's estate, legal representatives, heirs, successorsor assigns, and any other Person who can make a legal claim by or through such Person.

1.41. "Summary Notice" will be drafted by Plaintiffs subject to the advice and consent ofDefendants and shall be published in USA Today and PR Newswire.

1.42. "Term Sheet" means the document entitled Settlement Terms, dated March 24, 2016,based on which this Settlement Stipulation was drafted.

1.43. "Unknown Claims" means (i) any and all Plaintiffs' Released Claims which any Plaintiffor any other Settlement Class member, or each of their agents or attorneys does not know orsuspect to exist in his, her or its favor at the time of the release of such claims, and (ii) anyDefendants' Released Claims which any Defendant or each of their agents or attorneys, or theircurrent or former officers, directors or employees, does not know or suspect to exist in his, her orits favor at the time of the release of such claims, which in the case of both (i) and (ii) if knownby him, her or it, might have affected his, her or its decision(s) with respect to this Settlement.The Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs andDefendants shall expressly waive, and each of the other Settlement Class members shall bedeemed to have waived, and by operation of the Final Order, shall have waived expressly, anyand all provisions, rights, and benefits conferred by any law of any state or territory of the UnitedStates, or principle of common law or foreign law, which is similar, comparable or equivalent toCalifornia Civil Code § 1542, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS ORHER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICHIF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTEDHIS OR HER SETTLEMENT WITH THE DEBTOR.

Plaintiffs acknowledge, and shall be deemed by operation of law to have acknowledged, thatthey may hereafter discover facts in addition to, or different from, those facts which they knowor believe to be true with respect to the subject matter of this Settlement, but that it is theirintention to release and settle fully, finally, and forever any and all of the Plaintiffs' Released

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Claims, subject to the terms and conditions provided herein, and in furtherance of such intention,the releases shall be and remain in effect notwithstanding the discovery or existence ofany suchadditional or different facts. Plaintiffs and Defendants acknowledge, and each of the otherSettlement Class members shall be deemed by operation of law to have acknowledged, that theforegoing waiver was separately bargained for and a key element of the Settlement.

2. RECITALS

2.1. Class Counsel has conducted an extensive investigation into the facts, circumstances andlegal issues associated with the allegations made in the Action. This investigation has included,inter alia: (a) inspecting, reviewing and analyzing documents produced by or otherwise relatingto J. C. Penney, the J. C. Penney Common Stock Fund, Defendants and the Plan, includingdocuments produced informally and numerous public documents, including press releases andregulatory filings; (b) researching the applicable law with respect to the claims asserted in theAction and the defenses and potential defenses thereto; and (c) inspecting, reviewing andanalyzing documents concerning the Plan and administration of the Plan, particularly as suchdocuments pertain to the investment by the Plan in the J. C. Penney Common Stock Fund.

2.2. Plaintiffs allege that Defendants breached their fiduciary duties under ERISA by failing:(a) to prudently and loyally manage the Plan's assets, i.e" Defendants allegedly knew or shouldhave known that the J. C. Penney Common Stock Fund was an imprudent investment underERISA, and (b) to adequately monitor the independent fiduciary and provide the independentfiduciary with accurate infonnation.

2.3. Defendants deny any and all liability to Plaintiffs and the Plan, and deny any and allallegations ofwrongdoing made in the Action. Defcndants deny that some or all of them werefiduciaries under ERISA, or were acting as ERISA fiduciaries at the time of the eventscomplained of, or to the extent that any of them were acting as fiduciaries, that any breach offiduciary duty OCCUlTed in connection with the investment, acquisition, or retention ofthe J. C.Penney Common Stock Fund in the Plan. Defendants fmiher contend that they acted prudentlyand loyally at all times and in all respects with regard to the Plan.

2.4. On November 7,2014, Defendants filed a motion to dismiss the Complaint in its entiretywith prejudice. (Dkts.25-26.) On September 11,2015, Magistrate Judge Mitchell issued aReport and Recommendation recommending that Defendants' Motion to Dismiss be denied as toCount I (Failure to Prudently and Loyally Manage the Plan's Assets) and granted withoutprejudice as to Count II (Failure to Adequately Monitor the Independent Fiduciary and Providethe Independent Fiduciary with Accurate Information). (Dkt. 32.) On September 25,2015,Defendants filed Objections to the Report and Recommendation. (Dkt. 33.) On September 29,2015, the Court issued an Order Adopting the Report and Recommendation. (Dkt. 34.) OnFebruary 10, 2016, the Court issued an order (Dkt. 62) amending the Docket Control Orderentered on December 16, 2015 (Dkt. 51), to extend the class certification deadlines by 90 days toallow the Parties to pursue settlement through mediation. On February 22, 2016, Defendants

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filed a Motion to Reconsider Order Denying in Part Motion to Dismiss in light of the U.S.Supreme Court decision in Amgen Inc. v. Harris, 136 S. Ct. 758, 2016 WL 280866 (Jan. 25,2016). (Dkt. 63.)

2.5. The Parties and their counsel participated in one in-person mediation session on March24,2016, which session ultimately resulted in the Settlement set forth in this SettlementStipulation.

2.6. Class Counsel believe that the Settlement will provide a benefit to the Settlement Class,and that, when that benefit is weighed against the attendant risks of continuing the prosecution ofthe Action, the Settlement represents a fair, reasonable and adequate resolution of the claims ofthe Settlement Class against Defendants. In reaching this conclusion, Class Counsel haveconsidered, among other things, the risks of litigation, the time necessary to achieve a finalresolution through litigation, the complexity of the claims set forth in the Complaint and thebenefit accruing to the Settlement Class under the Settlement.

2.7. Defendants desire to resolve fully and settle with finality the Action and all of Plaintiffs'Released Claims tor themselves and the Plan, thereby avoiding the risk, expense, inconvenience,burden, distraction and diversion of their persolli1el and resources, and tfficertainty of outcomethat is inherent in any litigation, associated with the Action.

2.8. Plaintiffs and Defendants have thus reached this Settlement by and through theirrespective counsel on the terms and conditions set forth herein.

3. CONDITIONS TO EFFECTIVENESS OF THE SETTLEMENT

3.1. Effectiveness of Settlement. The Settlement provided for in this Settlement Stipulationand the Defendants' obligations hereunder shall not become binding unless and until each andeveryone of the following conditions in Sections 3.2 through 3.8 shall have been satisfied orexpressly waived pursuant to Section 15.5.

3.2. COUli Approval. The Settlement contemplated under this Settlement Stipulation shallhave been preliminarily and finally approved by the Court, as provided for in this Section 3.2.The Parties agree jointly to recommend to the Court that it approve the terms of this SettlementStipulation and the Settlement contemplated hereunder. The Parties agree to undertake their bestefforts, including all steps and efforts contemplated by this Settlement Stipulation, and any othersteps or effOlis which may become necessary by order ofthe COUli (unless such order modifiesthe terms of this Settlement Stipulation) or otherwise, to carry out this Settlement Stipulation,including the following:

3.2.1. Motion for Preliminary Approval of Settlement and ofNotices. The Court shallhave approved the Motion for entry of the Preliminary Approval Order that Plaintiffs fileby issuing the Preliminary Approval Order.

3.2.2. Issuance of Class Notice and Summary Notice. On the date and in the manner setby the COUli in its Preliminary Approval Order, Defendants shall have implemented the

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Notice Plan at their expense. The Parties shall confer in good faith with regard to theform of the Class Notice and Summary Notice in an effort to utilize cost effective formsof notice.

3.2.3. Settlement Class Certification.

(a) The Patties shall stipulate to a celtification of the Action as a class actionfor settlement purposes pursuant to Rule 23(b)(l) and/or (b)(2) of the FederalRules of Civil Procedure. If the Settlement does not become Final, then noSettlement Class will be deemed to have been certified by or as a result of thisSettlement Stipulation, and the Action will for all purposes revert to its status asof March 23, 2016, the day immediately prior to the date on which the TermSheet was executed.

(b) The Court shall have certified the Action as a non-opt-out class action(preliminarily and finally) for settlement purposes pursuant to Rule 23(b)(1)and/or (b)(2) of the Federal Rules of Civil Procedure, with the Settlement Class asdefined in Section 1.36, appointing Named Plaintiffs (or any member of theSettlement Class) as the Settlement Class representatives, and appointing ClassCounsel.

3.2.4. Motion for Final Approval of Class Action Settlement. On or before the date setby the COUlt in its Preliminary Approval Order, or such adjourned date set by the Court,Plaintiffs shall have moved for a Final Approval Order.

3.2.5. Fairness Hearing. On the date set by the Court in its Preliminary Approval Order,or such adjourned date set by the COUlt, the Parties shall participate in the FairnessHearing during or after which the Court will determine by Final Approval Order whether:(i) the Settlement on the terms and conditions provided for in this Settlement Stipulationis fair, reasonable and adequate and should be approved by the COUlt; (ii) the FinalApproval Order should be entered; (iii) the Class should be certified as a non-opt-outclass meeting the applicable requirements for a settlement class imposed by Federal Ruleof Civil Procedure 23; (iv) the requirements of Federal Rule of Civil Procedure 23 anddue process have been satisfied in connection with the distribution of the Class Noticeand Summary Notice to Settlement Class members; (v) the requirements of CAFA havebeen satisfied; (vi) the Plan of Allocation consistent with Section 12.5 shall be approved;(vii) to approve a Case Contribution Award to be paid from the Gross Settlement Fundand, if so, the amount; and (viii) to award attorneys' fees and fUlther expenses to be paidfrom the Gross Settlement Fund to Class Counsel and, if so, the amounts. The Partiescovenant and agree that they will reasonably cooperate with one another in obtaining anacceptable Final Approval Order at the Fairness Hearing and will not do anythinginconsistent with obtaining such a Final Approval Order.

3.3. Finality of Final Approval Order. The Final Approval Order shall have become Final.

3.4. Compliance with CAFA. The COUlt shall have determined that Defendants complied

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with CAFA and its notice obligations by providing appropriate federal and state officials withinformation about the Settlement.

3.5. Approval by Independent Fiduciary.

3.5.1. Defendants may, in their sole discretion, make approval of the provisions of theSettlement Stipulation by an Independent Fiduciary a condition to the Settlement. ShouldDefendants elect to exercise this right, at least ten (10) days prior to the Fairness Hearing,the Independent Fiduciary shall have approved and authorized in writing the Settlementin accordance with Prohibited Transaction Exemption 2003-39, "Release of Claims andExtensions of Credit in Connection with Litigation," issued December 31, 2003, by theUnited States Department of Labor, 68 Fed. Reg. 75,632 (the "Class Exemption") andproposed amendment to Prohibited Transaction Exemption 2003-39, issued November21,2007, by the United States Department of Labor, 72 Fed. Reg. 65,597. If theIndependent Fiduciary disapproves or otherwise does not authorize the Settlement, thenthe Settlement Stipulation shall terminate and become null and void and the provisions ofSection 14.2 shall apply; provided, however, that the Settlement Stipulation shall notterminate and become null and void and the provisions of Section 14.2 shall not apply ifthe Parties, through their counsel, agree in writing prior to the Fairness Hearing to modifythe Settlement to satisfy objections by the Independent Fiduciary to the Settlement, or, atthe sole election of Defendants, Defendants agree that Section 3.5 shall not be a conditionprecedent to the Settlement becoming Final.

3.5.2. The Independent Fiduciary's fees and expenses shall be paid by Defendantsseparate and apart from the Gross Settlement Fund. The Independent Fiduciary shallacknowledge in writing that it is a fiduciary with respect to the Settlement of this Actionon behalf of the Plan. Defendants and Class Counsel will comply with reasonablerequests for non-privileged infOlmation made by the Independent Fiduciary that are forthe purpose of reviewing and evaluating the Settlement Stipulation. Under nocircumstances shall Plaintiffs have any responsibility to pay the Independent Fiduciary'sfees or expenses.

3.6. Dismissal of Action. The Action shall have been dismissed with prejudice as againstDefendants.

3.7. No Termination. The Settlement shall not have terminated pursuant to Section 14.

3.8. Materiality of Settlement Conditions. The Parties expressly acknowledge that theSettlement is specifically conditioned upon the occurrence of each and everyone of theforegoing conditions precedent prior to the Effective Date of Settlement, and that a failure of anycondition set forth in Sections 3.2 through 3.8 at any time prior to the Effective Date ofSettlement shall make this Settlement Stipulation, and any obligation to pay the SettlementPayment, or any portion thereof, null, void and of no force and effect.

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4. RELEASES AND COVENANTS NOT TO SUE

4.1. Releases of Defendant Releasees by Plaintiffs. Subject to Sections 4.6 and 14, upon theEffective Date of Settlement, Named Plaintiffs on behalf of themselves and on behalf of the,Settlement Class, and all Settlement Class members, absolutely and unconditionally release andforever discharge the Defendant Releasees from any and all of Plaintiffs' Released Claims thatPlaintiffs directly, indirectly, derivatively or in any other capacity ever had, now have orhereafter may have.

4.2. Releases of the Plaintiff Releasees by Defendants. Subject to Sections 4.6 and 14, uponthe Effective Date of Settlement, Defendants absolutely and unconditionally release and foreverdischarge Plaintiff Releasees from any and all of Defendants' Released Claims.

4.3. Covenant Not to Sue Defendant Releasees. Subject to Sections 4.6 and 14, upon theEffective Date of Settlement, Named Plaintiffs on behalf of themselves and on behalf of theSettlement Class, covenant and agree (a) not to file against any Defendant Releasees any Claimreleased under Section 4.1; and (b) that the foregoing covenant and agreement shall be acomplete defense to any such Claims against any of Defendant Releasees.

4.4. Covenant Not to Sue Plaintiff Releasees. Subject to Sections 4.6 and 14, upon theEffective Date of Settlement, Defendants covenant and agree (a) not to file against any PlaintiffReleasees any Claim released under Section 4.2; and (b) that the foregoing covenant andagreement shall be a complete defense to any such claims against any of the Plaintiff Releasees.

4.5. Plan's Release. Subject to Sections 4.6 and 14, upon the Effective Date of Settlement,the Independent Fiduciary's approval of the Settlement shall constitute a release of Plaintiffs'Released Claims that the Plan may have against Defendant Releasees.

4.6. Claims Not Released. This Settlement Stipulation does not in any way bar, limit, waiveor release any right by Plaintiffs to asseli andlor recover any moneys resulting from anyindividual claim to vested benefits that are otherwise due under the terms of the Plan. ThisSettlement Stipulation does not in any way bar, limit, waive or release any right by, or obligationof, the Plan to recover under the Securities Action.

5. COOPERATION

Defendants shall use their best efforts to provide the Settlement Administrator, if one isretained, with the names and last known addresses of Settlement Class members in electronicspreadsheet format (to the extent Defendants have such information) as soon as reasonablypossible upon entry of the Preliminary Approval Order. No charge against the Gross SettlementFund shall be made by Defendants for the gathering or the provision of such information. Suchinformation shall be held in strict confidence by the Settlement Administrator and used to deliverthe Class Notice and for no other purpose.

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6. NON-DISPARAGEMENT

The PaIties agree to take no action in connection with the Settlement that is intended to,or that would reasonably be expected to, harm the reputation of any other Party (including aPatty's officers, directors, employees, agents or attorneys), or that would reasonably be expectedto lead to unfavorable publicity for any other Party.

7. STATEMENTS TO THE PUBLIC

The Parties agree that there will be no public announcements regarding the Settlementuntil 1. C. Penney has announced or disclosed it. Once disclosure has been made by 1. C.Penney, the Parties agree that any public comments from the Patties and their counsel regardingthis resolution, other than 1. C. Penney's disclosures and any other disclosures required by law,will not substantially deviate from words to the effect that the Parties have reached a mutuallyacceptable resolution by way of a mediated settlement and both sides are satisfied with thisresolution.

8. REPRESENTATIONS AND WARRANTIES

8.1 No Assignment. Plaintiffs represent and warrant that they have not assigned or otherwisetransferred any interest in any of Plaintiffs' Released Claims against any of the Defendants, andfurther covenant that they will not assign or otherwise transfer any interest in any of Plaintiffs'Released Claims.

8.2 No Surviving Claims. Plaintiffs represent and warrant that they shall have no survivingClaim or cause of action against any of the Defendant Releasees with respect to the Plaintiffs'Released Claims.

8.3 Voluntariness.

8.3.1 The Parties each represent and warrant that they are voluntarily entering into thisSettlement Stipulation as a result of arm's-length negotiations among their counsel; inexecuting this Settlement Stipulation they are relying solely upon their own judgment,belief and knowledge, and the advice and recommendations of their own independentlyselected counsel, concerning the nature, extent and duration of their rights and claimshereunder and regarding all matters that relate in any way to the subject matter hereof;they are not relying upon and have not been influenced to any extent whatsoever inexecuting this Settlement Stipulation by any representations, statements or omissionspertaining to any of the foregoing matters by any other Patty or its representatives; theyknowingly waive any claim that this Settlement Stipulation was induced by anymisrepresentation or nondisclosure; and each Party assumes the risk of mistake as to factsor law.

8.3.2 The Parties each represent and warrant that they have carefully read the contentsof this Settlement Stipulation; they have made such investigation of the facts pertainingto the Settlement, this Settlement Stipulation and all of the matters pertaining thereto as

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they deem necessary; and this Settlement Stipulation is signed freely by each Personexecuting this Settlement Stipulation on behalf of each of the Parties.

8.4 Signatories' Authority. Each individual executing this Settlement Stipulation on behalfof any other Person does hereby personally represent and warrant to the other Parties that he orshe has the authority to execute this Settlement Stipulation on behalf of, and fully bind, eachprincipal which such individual represents or purports to represent.

9. NO ADMISSION OF LIABILITY

The Parties understand and agree that this Settlement Stipulation embodies a compromiseand settlement of disputed claims, and that nothing in this Settlement Stipulation, including thefurnishing of consideration for this Settlement Stipulation, shall be deemed to constitute anyfinding of fiduciary status under ERISA or wrongdoing by any of the Defendants, or give rise toany inference of fiduciary status under ERISA or wrongdoing or admission of wrongdoing orliability in this or any other proceeding. This Settlement Stipulation and the payment madehereunder are made in compromise of disputed claims and are not admissions of any liability ofany kind, whether legal or factual. Moreover, Defendants specifically deny any and all suchliability or wrongdoing. Neither the fact nor the terms of this Settlement Stipulation shall beoffered or received in evidence in any action or proceeding for any purpose, except in an actionor proceeding to enforce this Settlement Stipulation or arising out of or relating to the FinalApproval Order.

10. SETTLEMENT CONSIDERATION - THE GROSS SETTLEMENT FUND

10.1. The Gross Settlement Fund in the amount of $4,500,000.00 will be paid by J. C. Pelmeyas described in Sections 10.2 and 10.3. Subtracted from the Gross Settlement Fund will bepayments for Plaintiffs' attorneys' fees and costs, and any Case Contribution Award, in amountsapproved by and subject to the discretion of the United States District Court.

10.2. The Parties agree that the Gross Settlement Fund shall be used to pay any and all: (a)applicable Taxes, (b) Case Contribution Awards awarded by the Court, and (b) attorneys' feesand expenses awarded by the COUli. The balance remaining in the Gross Settlement Fund, theNet Settlement Fund, shall be distributed to Settlement Class members pursuant to the Plan ofAllocation.

10.3. Ninety (90) calendar days after the Settlement becomes Final, 1. C. Penney will cause tobe deposited in the Plan accounts of Settlement Class members, the Net Settlement Fund, basedupon an allocation formula created by Plaintiffs' Counsel and approved by the United StatesDistrict Court for the Eastern District of Texas. For those class members who no longer havePlan accounts, at its sole discretion, 1. C. Penney reserves the right to distribute separate checksor re-open these Settlement Class member Plan accounts. For class members who no longerhave Plan accounts, whether J. C. Penney distributes to such class members separate checks orre-opens these Settlement Class member Plan accounts, 1. C. Penney will report the taxconsequences of the distributions, if necessary, to the IRS and these class members will besubject to all tax consequences for the receipt of these amounts.

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10.4. Sole Monetary Contribution. The Settlement Payment shall be the full and sole monetarycontribution and consideration made by or on behalf of Defendants in connection with the Actionand Settlement. The Settlement Payment specifically satisfies any and all claims for costs andattol11eys' fees by Class Counsel, Case Contribution Awards to Named Plaintiffs, in addition toany amounts to be distributed to Settlement Class members pursuant to this SettlementStipulation. Except as set forth in Section 12, as otherwise specified in this SettlementStipulation, or as provided for in any applicable contract of insurance, the Parties shall bear theirown costs and expenses (including attorneys' fees) in connection with effectuating theSettlement and securing all necessary COUli orders and approvals with respect to same.

11. RESOLUTION OF DISPUTES

If Plaintiffs and Defendants disagree as to whether each and every condition set forth inSection 3 has been satisfied or waived, they shall promptly confer in good faith and, if unable toresolve their differences within five (5) business days thereafter, shall present their disputes formediation to the independent mediator, Robeli Meyer. No pOliion of the Settlement Paymentshall be distributed (unless already paid) in the event of such a dispute until it is resolved.

12. SETTLEMENT ADMINISTRATOR; PAYMENT OF CLASS NOTICE,SUMMARY NOTICE AND SETTLEMENT ADMINISTRATION EXPENSES; PLAN OF

ALLOCATION

12.1 J.C. Penney will be responsible for the costs of Class Notice and SettlementAdministration Expenses.

12.2 The Settlement Administrator, if one is retained, shall discharge its duties underDefendants' supervision and subject to the jurisdiction of the Court. Defendants shall cause theSettlement Administrator to implement the Notice Plan.

12.3 Following entry of the Preliminary Approval Order, Defendants may pay, without furtherapproval from Class Counselor further order of the Court, all Settlement AdministrationExpenses actually and reasonably incurred.

12.4 Except as provided in Section 13, no distribution of any part, or all, of the GrossSettlement Fund shall be made until J. C. Penney has received a Court Order, directing that theGross Settlement Fund be disbursed.

12.5 Plan of Allocation. The distribution ofthe Net Settlement Fund to the Settlement Classmembers shall be made in accordance with the Plan of Allocation to be proposed by ClassCounsel and approved by the Court.

12.5.1 Prior to submission to the Court along with a motion for entry of the PreliminmyApproval Order, Plaintiffs shall provide a copy of the Plan of Allocation to Defendantsfor review and comment. Defendants shall have no responsibility or liability forcalculating the amounts payable to the Settlement Class members.

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12.5.2 Any and all expenses of the implementation of the Settlement and of the Plan ofAllocation shall be paid by l C. Penney.

12.5.3 Notwithstanding anything in this Settlement Stipulation to the contrary, the Planof Allocation is a matter separate and apart from the Settlement between the Parties, andno decision by the Court concerning the Plan of Allocation shall affect the validity oftheSettlement Stipulation or finality of the proposed Settlement in any manner.

12.5.4 The Defendants shall implement the Plan of Allocation as approved by the Court.Upon the calculations being completed and reviewed by Class Counsel Defendants shalldisburse the Net Settlement Fund applicable to Participants With Active Plan Accountsand Participants Without Active Plan Accounts at the time of distribution of the FinalIndividual Dollar Recovery, as defined in this Settlement Stipulation and the Plan ofAllocation.

12.5.5 In the event that Defendants or Class Counsel determine that it is necessary tomodify the Plan of Allocation, Class Counsel and Defendants shall discuss jointly suchmodification and determine whether the modification is reasonable and appropriate underthe circumstances. The Parties will jointly petition the Court for approval of any materialmodHication.

12.5.6 All inquiries by the Settlement Class members concerning the amount distributedto a particular Settlement Class member shall be handled in the first instance by ClassCounsel. Class Counsel and Defendants shall work cooperatively to resolve any suchinquiries.

13. ATTORNEYS' FEES AND EXPENSES; CASE CONTRIBUTION AWARD

13.1 Application for Fees, Expenses, and Case Contribution Award. Class Counsel shallpetition the Court no later than thirty-one (31) days prior to the Fairness Hearing for an award ofattorneys' fees and approval of a Case Contribution Award, and for reimbursement of expenses,to be paid from the Gross Settlement Fund. The Case Contribution Award and attorneys' fees, ifany amounts are awarded by the COUlt, shall be paid from the Gross Settlement Fund. TheParties expressly agree that the Court's disposition of the application for a Case ContributionAward and attorneys' fees and expenses will not be a reason to terminate the Settlement.

13.2 Disbursement of Fees and Expenses. Within thirty (30) calendar days after the later of (i)the date the Settlement becomes Final; or (ii) the date on which Defendants' counsel receiveswire instructions with Plaintiffs' Counsel's taxpayer identification number and a completed IRSForm W-9, lC. Penney will cause court approved attorneys' fees and costs to be paid toPlaintiffs' Counsel.

13.3 Disbursement of Case Contribution Award. The Case Contribution Award, if any, shallbe paid within thirty (30) calendar days after the later of (i) the date the Settlement becomesFinal; or (ii) the date on which Defendants' counsel receives wire instructions with Plaintiffs'taxpayer identification numbers.

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14. TERMINATION OF THE SETTLEMENT STIPULATION

14.1 Termination by Defendants. Defendants may terminate this Settlement Stipulation in thefollowing circumstances:

14.1.1 Before the issuance of the Final Approval Order, the U.S. Department of Labor("DOL") commences an investigation as to the issues described in the Complaint, theDOL files any objection to the Settlement Stipulation or Settlement in any cornt, brings aclaim related to Plaintiffs' Released Claims against any of the Defendant Releasees, ornotifies any of the Defendant Re1easees that it intends to initiate a claim or action relatedto any of Plaintiffs' Released Claim.

14.1.2 Before the issuance of the Final Approval Order, a Settlement Class memberbrings a Plaintiffs' Released Claim against any of the Defendant Releasees, or notifiesany of the Defendant Releasees that it intends to file such a Plaintiffs' Released Claim,and the Parties are unable to consolidate such action with the Action and bring it withinthe scope of this Settlement Stipulation.

14.2 Automatic Termination. This Settlement Stipulation shall automatically terminate, andthereupon become null and void, in the following circumstances:

14.2.1 If the Court declines to approve the Settlement, and if such order decliningapproval has become Final, then this Settlement Stipulation shall automatically terminate,and thereupon become null and void, on the date that any such order becomes Final,provided, however, that if the Court declines to approve the Settlement for any reason,the Parties shall negotiate in good faith to cure any deficiency identified by the Court, andfurther provided that if necessary to cure any such deficiency, Class Counsel shall resubmit within a reasonable time the Preliminary or Final Approval Motion with anadditional or substitute Settlement Class member as a named Class representative. Anysuch cure of any deficiency must be agreed to expressly in writing by the Parties.

14.2.2 If the Court issues an order in the Action modifying the Settlement Stipulation,and if within thirty-one (31) days after the date of any such ruling the Parties have notagreed in writing to proceed with all or part of the Settlement Stipulation as modified bythe Court or by the Parties, then, provided that no appeal is then pending from suchruling, this Settlement Stipulation shall automatically terminate, and thereupon becomenull and void, on the thirty-first day after issuance of the order referenced in this Section.

14.2.3 If the United States Court of Appeals for the Fifth Circuit reverses the Court'sorder approving the Settlement, and if within ninety-one (91) days after the date of anysuch ruling the Parties have not agreed in writing to proceed with all or part of theSettlement Stipulation as modified by the Fifth Circuit or by the Parties, then, providedthat no appeal or petition for review is then pending from such ruling, this SettlementStipulation shall automatically terminate, and thereupon become null and void, on theninety-first day after issuance of the Fifth Circuit order referenced in this Section.

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14.2.4 If the Supreme Court of the United States reverses or remands a Fifth Circuitorder approving the Settlement, and if within thilty-one (31) days after the date of anysuch ruling the Parties have not agreed in writing to proceed with all or patt of theSettlement Stipulation as modified by the Supreme Court or by the Patties, then thisSettlement Stipulation shall automatically terminate, and thereupon become null andvoid, on the thirty-first day after issuance of the U.S. Supreme COUlt order referenced inthis Section.

14.2.5 If an appeal is pending of an order declining to approve the Settlement Stipulationor modifying this Settlement Stipulation, this Settlement Stipulation shall not beterminated until final resolution or dismissal of any such appeal, except by writtenagreement of the Patties.

14.3 Consequences of Termination of the Settlement Stipulation. If the Settlement Stipulationis terminated and rendered null and void for any reason, the following shall occur:

14.3.1 The Action shall for all purposes with respect to the Parties revert to its status asof Mat'ch 23,2016, the day immediately prior to the execution of the Term Sheet. TheParties will cooperate in trying to return the Action to the Court for decision on thematters pending before the COUli at the time of execution of the Term Sheet.

14.3.2 All Releases given or executed pursuant to the Settlement Stipulation shall be nulland void; none of the terms of the Settlement Stipulation shall be effective orenforceable; neither the fact nor the telms of the Settlement Stipulation shall be offered orreceived in evidence in this Action or in any other action or proceeding for any purpose,except in an action or proceeding arising under this Settlement Stipulation.

15. MISCELLANEOUS PROVISIONS

15.1 Jurisdiction. The Court shall retain jurisdiction over all Parties to resolve any dispute thatmay arise regarding this Settlement Stipulation or the orders and Class Notice referenced inSection 3, including any dispute regarding validity, perfOrmatlCe, interpretation, administration,enforcement, enforceability or termination of the Settlement Stipulation or of the Plan ofAllocation. The Final Approval Order shall expressly retain jurisdiction as set forth in thisSection.

15.2 Governing Law. This Settlement Stipulation shall be governed by the laws of the UnitedStates, including federal common law, except to the extent that, as a matter of federal law, statelaw controls, in which case Texas State Law will apply without regard to conflict of lawprinciples.

15.3 Severability. The provisions of this Settlement Stipulation are not severable.

15.4 Amendment. Before entry of a Final Approval Order, this Settlement Stipulation may bemodified or amended only by written agreement signed by or on behalf of all Parties. Followingentry of a Final Approval Order, this Settlement Stipulation may be modified or amended only

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by written agreement signed on behalf of all Parties and approved by the Court.

15.5 Waiver. The provisions of this Settlement Stipulation may be waived only by aninstrument in writing executed by the waiving palty. The waiver by any Party of any breach ofthis Settlement Stipulation shall not be deemed to be or construed as a waiver of any otherbreach, whether prior, subsequent or contemporaneous, of this Settlement Stipulation.

15.6 Construction. None of the Parties hereto shall be considered to be the drafter of thisSettlement Stipulation or any provision hereof for the purpose of any statute, case law or rule ofinterpretation or construction that would or might cause any provision to be construed against thedrafter hereof.

15.7 Principles of Interpretation. The following principles of interpretation apply to thisStipulation:

15.7.1 Headings. The headings of this Settlement Stipulation are for reference purposesonly and do not affect in any way the meaning or interpretation of this SettlementStipulation.

15.7.2 Singular and Plural. Definitions apply to the singular and plural forms of eachterm defined.

15.7.3 Gender. Definitions apply to the masculine, feminine and neuter genders of eachteml defined.

15.7.4 References to a Person. References to a Person are also to the Person's permittedsuccessors and assigns.

15.7.5 Terms ofInclusion. Whenever the words "include," "includes" or "including" areused in this Settlement Stipulation, they shall not be limiting but rather shall be deemedto be followed by the words "without limitation."

15.8 CAFA Notices. J. C. Penney will provide notices pursuant to CAFA at its own expense.

15.9 Further Assurances. Each ofthc Parties agrees, without further consideration, and as partof finalizing the Settlement hereunder, that it will in good faith execute and deliver such otherdocuments and take such other actions as may be necessary to consummate and effectuate thesubject matter and purpose of this Settlement Stipulation.

15.10 Survival. All representations, warranties and covenants set forth in this SettlementStipulation shall be deemed continuing and shall survive the Effective Date of Settlement.

15.11 Notices. Any notice, demand or other communication under this Settlement Stipulation(other than notices to Settlement Class members) shall be in writing and shall be deemed dulygiven upon receipt if it is addressed to each of the intended recipients as set f01th below andpersonally delivered, sent by registered or certified mail (postage prepaid), sent by confirmedfacsimile, delivered by reputable express ovemight courier, or sent by email transmission, with

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May 31,2016Class Action Settlement Agreement and Release

confim1ation of receipt:

IF TO NAMED PLAINTIFFS:

Jacob H. ZamanskySamuel BonderoffZAMANSKY LLC50 Broadway, 32nd FloorNew York, NY 10004Telephone: (212) 742-1414Facsimile: (212) [email protected]@zamansky.com

IF TO DEFENDANTS:Howard ShapiroRobert RachalStacey CerronePROSKAUER ROSE LLP650 Poydms Street, Suite 1800New Orleans, LA 70130Telephone: (504) 310-4085Facsimile: (504) [email protected]@[email protected]

With a copy to:

J. C. PENNEY CORPORATION, INC.Attn: C. Glen Morris, Esq.6501 Legacy DrivePlano, Texas 75024Telephone: (972) 431-3222Facsimile: (972) 531-3222cgmorri [email protected]

J. C. PENNEY CORPORATION, INC.Attn: Randy Fickel, Esq.6501 Legacy DrivePlano, Texas 75024Telephone: (972) 431-1235Facsimile: (972) [email protected]

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Any Party may change the address at which it is to receive notice by written notice delivered tothe other Parties in the manner described above.

15.12 Entire Agreement. This Settlement Stipulation contains the entire agreement among theParties relating to this Settlement. It specifically supersedes any settlement terms or settlementagreements relating to the subject matter hereof that were previously agreed upon orally or inwriting by any of the Parties, including the Term Sheet. No representations, agreements,understandings, or inducements (whether written, unwritten, verbal or otherwise) shall affect theconstruction or enforcement of this Settlement Stipulation (including all Claims released herein),it being agreed that the rights of the Parties hereto against any opposing party hereto shall begoverned exclusively by this Settlement Stipulation.

15.13 Counterparts. This Settlement Stipulation may be executed by exchange of faxed orscanned executed signature pages, and any signature transmitted by facsimile or by emailattachment for the purpose of executing this Settlement Stipulation shall be deemed an originalsignature for purposes of this Settlement Stipulation. This Settlement Stipulation may beexecuted in two or more counterparts, each of which shall be deemed to be an original, but all ofwhich, taken together, shall constitute one and the same instrument.

15.14 Binding Effect. This Settlement Stipulation binds and inures to the benefit of the Partieshereto, their assigns, heirs, administrators, executors and Successors-in-Interest.

IN WITNESS WHEREOF, the Parties have executed this Settlement Stipulation on thedates set forth below.

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FOR NAMED PLAINTIFFS AND THE SETTLEMENT CLASS

Dated this 31 st day of May, 2016.

By: -+--¥=-_----j'--__

Samuel BondJacob H. ZamanskyZAMANSKY LLC50 Broadway, 32nd FloorNew York, NY 10004Telephone: (212) 742-1414Facsimile: (212) [email protected]@zamansky.com

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FOR DEFENDANTS

Dated this 31st day of May, 2016.

By:±kI~MYHoward ShapiroRobert RachalStacey CenonePROSKAUER ROSE LLP650 Poydras Street, Suite 1800New Orleans, LA 70130Telephone: (504) 310-4085Facsimile: (504) [email protected]@[email protected]

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