J.Jill, Inc. (Form: 10-Q, Received: 12/11/2020 14:13:27)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 001-38026

J.Jill, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		45-1459825
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4 Batterymarch Park, Quincy, MA 02169		02169
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 376-4300

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	JILL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(g) of the Act: None

As of December 7, 2020, the registrant had 9,619,850 shares of common stock, $0.01 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)	2
	Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)	3
	Consolidated Statement of Shareholders’ Equity (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
Exhibit Index		33
Signatures		35

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

J.Jill, Inc.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)

	October 31, 2020			February 1, 2020
Assets
Current assets:
Cash	$	9,197		$	21,527
Accounts receivable		3,728			6,568
Inventories, net		67,584			72,599
Prepaid expenses and other current assets		41,570			22,256
Total current assets		122,079			122,950
Property and equipment, net		83,337			107,645
Intangible assets, net		99,240			112,814
Goodwill		59,697			77,597
Operating lease assets, net		170,843			211,332
Other assets		2,134			1,650
Total assets	$	537,330		$	633,988
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	62,518		$	43,053
Accrued expenses and other current liabilities		57,724			42,712
Current portion of long-term debt		2,799			2,799
Current portion of operating lease liabilities		36,564			33,875
Total current liabilities		159,605			122,439
Long-term debt, net of discount and current portion		228,547			231,200
Deferred income taxes		16,824			31,034
Operating lease liabilities, net of current portion		186,258			208,800
Warrants and derivative liability		14,841			—
Other liabilities		1,735			1,950
Total liabilities		607,810			595,423
Commitments and contingencies (see Note 12)
Shareholders’ Equity
Common stock, par value $0.01 per share; 50,000,000 shares authorized; 9,619,976 and 8,857,625 shares issued and outstanding at October 31, 2020 and February 1, 2020, respectively		96			89
Additional paid-in capital		128,840			125,430
Accumulated deficit		(199,416	)		(86,954	)
Total shareholders’ equity (deficit)		(70,480	)		38,565
Total liabilities and shareholders’ equity	$	537,330		$	633,988

The accompanying notes are an integral part of these consolidated financial statements.

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J.Jill, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands, except share and per share data)

	For the Thirteen Weeks Ended					For the Thirty-Nine Weeks Ended
	October 31, 2020			November 2, 2019		October 31, 2020			November 2, 2019
Net sales	$	117,224		$	166,085	$	300,829		$	523,281
Costs of goods sold		48,225			59,137		126,645			194,736
Gross profit		68,999			106,948		174,184			328,545
Selling, general and administrative expenses		92,184			97,972		257,829			306,051
Impairment of long-lived assets		906			—		27,493			2,064
Impairment of goodwill		—			—		17,900			88,428
Impairment of intangible assets		—			—		6,620			7,000
Operating (loss) income		(24,091	)		8,976		(135,658	)		(74,998	)
Other expense		1,628			-		1,628			—
Interest expense, net		4,753			4,826		13,640			14,852
(Loss) income before provision for income taxes		(30,472	)		4,150		(150,926	)		(89,850	)
Income tax (benefit) provision		(7,313	)		1,763		(38,464	)		132
Net (loss) income and total comprehensive (loss) income	$	(23,159	)	$	2,387	$	(112,462	)	$	(89,982	)
Net (loss) income per common share attributable to common shareholders:
Basic	$	(2.52	)	$	0.27	$	(12.49	)	$	(10.31	)
Diluted	$	(2.52	)	$	0.27	$	(12.49	)	$	(10.31	)
Weighted average number of common shares outstanding:
Basic		9,177,350			8,767,733		9,004,321			8,730,636
Diluted		9,177,350			8,790,140		9,004,321			8,730,636

The accompanying notes are an integral part of these consolidated financial statements.

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J.Jill, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except common share data)

												Total
						Additional						Shareholders’
	Common Stock					Paid-in			Accumulated			Equity
	Shares			Amount		Capital			(Deficit)			(Deficit)
Balance, February 1, 2020		8,857,625		$	89	$	125,430		$	(86,954	)	$	38,565
Vesting of restricted stock units		138,202			1		(1	)		—			—
Net-share settlement of equity-based compensation		(40,987	)		—		(137	)		—			(137	)
Equity-based compensation		—			—		676			—			676
Net loss		—			—		—			(70,269	)		(70,269	)
Balance, May 2, 2020		8,954,840		$	90	$	125,968		$	(157,223	)	$	(31,165	)
Vesting of restricted stock units		7,961			—		—			—			—
Net-share settlement of equity-based compensation		(2,327	)		—		(13	)		—			(13	)
Equity-based compensation		—			—		615			—			615
Net loss		—			—		—			(19,034	)		(19,034	)
Balance, August 1, 2020		8,960,474		$	90	$	126,570		$	(176,257	)	$	(49,597	)
Vesting of restricted stock units		4,875			—		(13	)		—			(13	)
Net-share settlement of equity-based compensation		(1,428	)		—		9			—			9
Equity-based compensation		—			—		323			—			323
Forfeiture of restricted stock awards		(661	)		—		—			—			—
Participating lender equity consideration		656,717			6		1,951			—			1,957
Net loss		—			—		—			(23,159	)		(23,159	)
Balance, October 31, 2020		9,619,976		$	96	$	128,840		$	(199,416	)	$	(70,480	)

						Additional			Accumulated			Total
	Common Stock					Paid-in			Earnings			Shareholders’
	Shares			Amount		Capital			(Deficit)			Equity
Balance, February 2, 2019		8,734,484		$	88	$	121,984		$	91,723		$	213,795
Adoption of ASU 2016-02		—			—		—			59			59
Special cash dividend ($1.15 per share)		—			—		—			(50,154	)		(50,154	)
Vesting of restricted stock units		146,895			1		(1	)		—			—
Net-share settlement of equity-based compensation		(47,823	)		—		(1,268	)		—			(1,268	)
Forfeiture of restricted stock awards		(13,996	)		—		—			—			—
Equity-based compensation		—			—		1,202			—			1,202
Net income		—			—		—			4,366			4,366
Balance, May 4, 2019		8,819,559		$	89	$	121,917		$	45,994		$	168,000
Forfeitable dividend		—			—		107			—			107
Forfeiture of restricted stock awards		(18,537	)		—		—			—			—
Equity-based compensation		—			—		1,214			—			1,214
Net loss		—			—		—			(96,735	)		(96,735	)
Balance, August 3, 2019		8,801,022		$	89	$	123,238		$	(50,741	)	$	72,586
Vesting of restricted stock units		10,087			—		(0	)		—			—
Net-share settlement of equity-based compensation		(2,966	)		—		(35	)		—			(35	)
Forfeitable dividend		—			—		7			—			7
Forfeiture of restricted stock awards		(1,222	)		—		—			—			—
Equity-based compensation		—			—		1,128			—			1,128
Net income		—			—		—			2,387			2,387
Balance, November 2, 2019		8,806,922		$	89	$	124,338		$	(48,354	)	$	76,072

The accompanying notes are an integral part of these consolidated financial statements.

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J.Jill, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	For the Thirty-Nine Weeks Ended
	October 31, 2020			November 2, 2019
Net loss	$	(112,462	)	$	(89,982	)
Operating activities:
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		25,663			28,301
Impairment of goodwill and intangible assets		24,520			95,428
Impairment of long-lived assets		27,493			2,064
Adjustment for exited retail stores		(958	)		—
Loss on disposal of fixed assets		376			85
Gain from barter arrangement		—			(1,274	)
Noncash interest expense		1,350			1,250
Noncash change in fair value of warrants and derivatives		1,628			-
Equity-based compensation		1,614			3,544
Deferred rent incentives		(136	)		(133	)
Deferred income taxes		(14,210	)		(7,908	)
Changes in operating assets and liabilities:
Accounts receivable		2,840			(3,677	)
Inventories		5,015			(4,797	)
Prepaid expenses and other current assets		(19,313	)		(1,662	)
Accounts payable		19,562			(4,102	)
Accrued expenses		15,848			(60	)
Operating lease assets and liabilities		1,437			718
Other noncurrent assets and liabilities		(631	)		(108	)
Net cash (used in) provided by operating activities		(20,364	)		17,687
Investing activities:
Purchases of property and equipment		(3,037	)		(13,493	)
Net cash used in investing activities		(3,037	)		(13,493	)
Financing activities:
Borrowings under revolving credit facility		33,000			—
Repayments of revolving credit facility		(33,000	)		—
Borrowings under subordinated facility, net of issuance costs		14,560			—
Lender fees for priming loans		(1,235	)		—
Repayments on debt		(2,099	)		(2,099	)
Payments of withholding tax on net-share settlement of equity-based compensation plans		(155	)		(1,301	)
Special dividend paid to shareholders		—			(50,154	)
Forfeitable dividend		—			114
Net cash provided by (used in) financing activities		11,071			(53,440	)
Net change in cash		(12,330	)		(49,246	)
Cash:
Beginning of Period		21,527			66,204
End of Period	$	9,197		$	16,958

The accompanying notes are an integral part of these consolidated financial statements.

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J.Jill, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Description of Business

J.Jill, Inc., “J.Jill” or the “Company”, is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, thoughtful and inspired style that reflects the confidence of remarkable women who live life with joy, passion and purpose. J.Jill offers a guiding customer experience through about 275 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston.

2. Summary of Significant Accounting Policies

Basis of Presentation

Our interim consolidated financial statements are unaudited. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, in accordance with the rules of the Securities and Exchange Commission (the “SEC”) associated with reporting of interim period financial information. We consistently applied the accounting policies described in our 2019 Annual Report on Form 10-K ("2019 Form 10-K") in preparing these unaudited interim Consolidated Financial Statements. In the opinion of management, these interim consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company. The consolidated balance sheet as of February 1, 2020 is derived from the audited consolidated balance sheet as of that date. The unaudited results of operations for the thirteen and thirty-nine weeks ended October 31, 2020 are not necessarily indicative of future results or results to be expected for the full year ending January 30, 2021 (“Fiscal Year 2020”). You should read these statements in conjunction with our audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended February 1, 2020.

Certain prior year amounts have been restated to reflect the reverse stock split on November 9, 2020 including common stock par value and additional paid-in capital on the Consolidated Balance Sheets and, shares and per share amounts on the Consolidated Statements of Operations and Comprehensive Income (Loss). The prior year’s impairment of long-lived assets has been reclassified to be consistent with the current year presentation on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements - Going Concern,” the Company’s management evaluated whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date of issuance of these financial statements. Although the following matters raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements have been issued, the Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern.

In December 2019, COVID-19 pandemic (“COVID-19”) emerged and has subsequently spread worldwide. The World Health Organization declared COVID-19 a pandemic on March 11, 2020 resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. After close monitoring and taking into consideration the guidance from federal, state and local governments, in an effort to mitigate the spread of COVID-19, effective March 18, 2020, the Company closed all of its stores and its offices with employees working remotely where possible. The Company began reopening its stores in May 2020, with all stores having been reopened by late June 2020; however, operations of the stores may again be restricted by local guidelines.

As a result of COVID-19, the Company’s revenues, results of operations and cash flows were materially adversely impacted, which resulted in a failure by us to comply with the financial covenants contained in our Asset Based Revolving Credit Agreement (“ABL Facility”) and Term Loan Agreement (“Term Loan”). Additionally, the inclusion of substantial doubt about the Company’s ability to continue as a going concern in the report of our independent registered public accounting firm on our financial statements for the fiscal year ended February 1, 2020 resulted in a violation of affirmative covenants under our ABL Facility and Term Loan. During 2020, the Company entered into forbearance agreements (the “Forbearance Agreements”) with the lenders under its ABL Facility and Term Loan. Under the Forbearance Agreements, the respective lenders agreed not to exercise any rights and remedies through the period of time that allowed the Company to enter into a Transaction Support Agreement (“TSA”) on August 31, 2020 with lenders holding greater than 70% of the Company’s term loans (“Consenting Lenders”) and a majority of our shareholders on the principal terms of a financial restructuring (“Transaction”). The Transaction was consented to by the requisite term loan lenders and was

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consummated on an out-of-court basis on September 30, 2020. The Transaction resulted in a waiver of any past non-compliance with the terms of the Company’s credit facilities, provided the Company with additional liquidity and extended the maturity of certain participating debt by two years, through May 2024. Refer to Note 7, Debt for a further discussion of the Company’s debt restructuring.

The Company could experience other potential impacts as a result of COVID-19, including, but not limited to, additional charges from potential adjustments to the carrying amount of its inventory, goodwill, intangible assets, right-of-use assets and long-lived assets as well as additional store closures. Actual results may differ materially from the Company’s current estimates as considerable risk remains related to the performance of stores, the resilience of the customer in an uncertain economic climate, and the possibility of a resurgence of COVID-19 with its potential for future business disruption and the related impacts on the U.S. economy in the coming 12 months. If one or more of these risks materialize, we believe that our current liquidity and capital may not be sufficient to finance our continued operations for at least the next 12 months. These risks raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements have been issued.

In response to COVID-19, we have taken and continue to take aggressive and prudent actions to reduce expenses and manage working capital to preserve cash on-hand. These actions include, but are not limited to:

•

reduced staffing and operating hours at retail locations for a phase-in period since reopening;

•

base salary reductions for our senior leadership team for a period of time, and suspension of pay raises for corporate employees;

•

extension of payment terms for all accounts payable, including merchandising vendors, other than those necessary to support our ecommerce business;

•

negotiated with certain landlords for rent abatements and/or rent deferrals;

•

withheld rent for certain retail locations related to the period of time they were closed, while continuing to negotiate with landlords for amended lease terms;

•

eliminated approximately half of our catalogs and are considering implementing this as a permanent change; and

•

significantly reduced planned capital expenditures.

Additionally, we have filed an income tax refund for $6.9 million, of which we have received $5.9 million, with the IRS and multiple state jurisdictions related to the provision under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) enacted in March 2020 that provides numerous tax provisions and other stimulus measures, including temporary suspension of certain payment requirements for the employer-paid portion of social security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company has elected to defer the employer-paid portion of social security taxes beginning with pay dates on and after April 1, 2020. A portion of the deferral is payable in 2021 with the remainder due in 2022. We continue to evaluate the provisions of the CARES Act and the ways in which it could assist our business and improve our liquidity.

Recently Adopted Accounting Standards

In November 2018, the FASB issued ASU 2018-18 – Collaborative Arrangements (“Topic 808”), which clarifies the interaction between Topic 808 and Topic 606, Revenue from Contracts with Customers. The provisions of ASU 2018-18 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. ASU 2018-18 had no impact on the consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12 – Income Tax Accounting (“Topic 740”), which simplifies the accounting for income taxes. The provisions of ASU 2019-12 are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company will be required to adopt this standard in the first quarter of Fiscal Year 2021. This standard is not expected to have a material impact on our consolidated financial statements and related disclosures.

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3. Revenues

Disaggregation of Revenue

The Company sells its apparel and accessory merchandise through retail stores (“Retail”) and through its website and catalog orders (“Direct”). The following table presents disaggregated revenues by source (in thousands):

	For the Thirteen Weeks Ended				For the Thirty-Nine Weeks Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Retail	$	42,991	$	94,748	$	104,388	$	301,008
Direct		74,233		71,337		196,441		222,273
Net revenues	$	117,224	$	166,085	$	300,829	$	523,281

Contract Liabilities

The Company recognizes a contract liability when it has received consideration from the customer and has a future obligation to the customer. Total contract liabilities consisted of the following (in thousands):

	October 31, 2020		February 1, 2020
Contract liabilities:
Signing bonus	$	400	$	506
Unredeemed gift cards		5,444		7,264
Total contract liabilities⁽¹⁾	$	5,845	$	7,770

(1)	Included in accrued expenses and other current liabilities on the Company's consolidated balance sheet. The short-term portion of the signing bonus is included in accrued expenses on the consolidated balance sheet as of October 31, 2020.

For the thirteen and thirty-nine weeks ended October 31, 2020, the Company recognized approximately $1.7 million and $5.7 million, respectively, of revenue related to gift card redemptions and breakage. For the thirteen and thirty-nine weeks ended November 2, 2019, the Company recognized approximately $2.0 million and $8.5 million, respectively, of revenue related to gift card redemptions and breakage. Revenue recognized consists of gift cards that were part of the unredeemed gift card balance at the beginning of the period as well as gift cards that were issued during the period.

Performance Obligations

The Company has a remaining performance obligation of $0.4 million for a signing bonus related to the private label credit card agreement that is being amortized to revenue evenly through the third quarter of Fiscal Year 2023.

Unredeemed gift cards also require a performance obligation for revenue to be recognized, but substantially all gift cards are redeemed in the first year of issuance.

4. Other Income

The Company filed an insurance claim as a result of a cargo vessel fire on or about January 8, 2019, where contents of two containers carried J.Jill inventory. In July 2019, it was determined that the inventory onboard the cargo vessel was nonsalable, and the insurance claim was settled for $3.3 million. The Company recorded a gain of $2.4 million on insurance proceeds in selling, general and administrative expenses in the consolidated statement of operations and comprehensive income (loss) for the thirty-nine weeks ended November 2, 2019.

5. Asset Impairments

Long-lived Asset Impairments

In the first quarter and third quarter of Fiscal Year 2020, the Company reduced the net carrying value of certain long-lived assets to their estimated fair value, which was determined using a discounted cash flows method. These impairment charges arose from the material adverse effect that COVID-19 had on our results of operations, particularly with our store fleet. The Company incurred non-cash impairment charges of $0.7 million and $7.3 million, respectively, on leasehold improvements for the thirteen and thirty-nine weeks ended October 31, 2020 and $0.2 million and $20.2 million, respectively, on the right-of-use assets for the thirteen and thirty-nine weeks ended October 31, 2020.

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In the second quarter of Fiscal Year 2019, the Company reduced the net carrying value of certain long-lived assets to their estimated fair value, determined using a discounted cash flows method. These impairment charges arose from the Company’s decision to vacate and sublease one floor of the corporate headquarters located in Quincy, Massachusetts. The Company incurred non-cash impairment charges of $0.3 million on leasehold improvements and $1.8 million on the right-of-use asset, which were recorded as impairment of long-lived assets in the consolidated statement of operations and comprehensive income (loss).

Goodwill and Other Intangible Asset Impairments

In the first quarter of Fiscal Year 2020, the Company temporarily closed its retail locations due to COVID-19, which had a material adverse effect on our results of operations, financial position and liquidity and led to a significant decline in our net sales for the first quarter of Fiscal Year 2020, as well as an expected decline for the full Fiscal Year 2020. The Company concluded that these factors, as well as the decrease in stock price represented indicators of impairment and required the Company to test goodwill and indefinite-lived and definite-lived intangible assets for impairment during the first quarter of Fiscal Year 2020 (the “Q1 Impairment Test”).

The Company performed the Q1 Impairment Test using a quantitative approach. The Q1 Impairment Test was performed using the income approach (or discounted cash flows method) for goodwill, the relief-from-royalty method for indefinite-lived intangible assets and a recoverability analysis for definite-lived intangible assets. The estimated fair values of goodwill and indefinite-lived and definite-lived intangible assets were below their carrying values resulting in a $17.9 million impairment of goodwill, a $4.0 million impairment of the Company’s tradename (indefinite-lived intangible asset) and a $2.6 million impairment of the Company’s customer list (definite-lived intangible asset).

During the third quarter of Fiscal Year 2020, the Company reduced its long-term estimates, and the Company concluded this represented an indicator of impairment and required the Company to test goodwill and indefinite-lived and definite-lived intangible assets for impairment during the third quarter of Fiscal Year 2020 (the “Q3 Impairment Test”).

The Company performed the Q3 Impairment Test using a quantitative approach. The Q3 Impairment Test was performed using the income approach (or discounted cash flows method) for goodwill, the relief-from-royalty method for indefinite-lived intangible assets and a recoverability analysis for definite-lived intangible assets. The estimated fair values of goodwill and indefinite-lived and definite-lived intangible assets were above their carrying values resulting in no further impairment. The Company will perform its annual impairment assessment during the fourth quarter of Fiscal Year 2020 and may incur further impairments based on the results of that assessment which may be material.

The most significant estimates and assumptions inherent in this approach are the preparation of revenue forecasts, selection of royalty and discount rates and a terminal year multiple. These assumptions are classified as Level 3 inputs. The methodology utilized for the Q1 Impairment Test and the Q3 Impairment Test has not changed materially from the prior year. The key assumptions used under the income approach and relief-from-royalty method include the following:

•

Future cash flow assumptions - The Company's projections for its reporting units were from historical experience and assumptions regarding future revenue growth and profitability trends. The Company's analyses incorporated an assumed period of cash flows of 5-10 years with a terminal value.

•

Discount rate - The discount rate was based on an estimated weighted average cost of capital ("WACC") for each reporting unit. The components of WACC are the cost of equity and the cost of debt, each of which requires judgment by management to estimate. The Company developed its cost of equity estimate based on perceived risks and predictability of future cash flows. The WACC used to estimate the fair values of the Company's reporting units was within a range of 20.5% to 22.5%. A 1% change in this discount rate would not result in an additional goodwill impairment charge.

•

Royalty rate - The royalty rates utilized consider external market evidence and internal financial metrics including a review of available returns after the consideration of property, plant and equipment, working capital and other intangible assets. The royalty rate used to estimate the available returns for the reporting units was within a range of 1% to 4%.

The Company is at risk of future impairments in Fiscal Year 2020 if actual results differ from forecasted results or there are changes to these key assumptions used in estimating the fair value.

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The following table displays a rollforward of the carrying amount of goodwill from February 2, 2019 to October 31, 2020 (in thousands):

Goodwill at February 2, 2019	$	197,026
Impairment losses		(119,429	)
Balance, February 1, 2020		77,597
Impairment losses		(17,900	)
Balance, October 31, 2020	$	59,697

The accumulated goodwill impairment losses as of October 31, 2020 are $137.3 million.

The following table reflects the gross carrying amount and accumulated amortization and impairment for each major intangible asset:

		October 31, 2020						February 1, 2020
		(in thousands)
	Weighted Average Useful Life (Years)	Gross		Accumulated Amortization/ Impairment		Carrying Amount			Gross		Accumulated Amortization/ Impairment		Carrying Amount
Trade name	Indefinite	$	58,100	$	16,100	$	42,000		$	58,100	$	12,100	$	46,000
Customer relationships	13.2		134,200		76,960		57,240			134,200		67,386		66,814
Total intangible assets		$	192,300	$	93,060	$	99,240		$	192,300	$	79,486	$	112,814

The accumulated customer relationship impairment loss as of October 31, 2020 is $2.6 million.

In the second quarter of Fiscal Year 2019, the Company reduced comparable sales outlook for the second quarter that led to a reduced full year forecast of earnings for Fiscal Year 2019. The Company concluded that these factors, as well as the decrease in stock price represented indicators of impairment and required the Company to test goodwill and indefinite-lived intangible assets for impairment during the second quarter of Fiscal Year 2019 (the “Q2 FY19 Impairment Test”).

The Company performed the Q2 FY19 Impairment Test using a quantitative approach with the assistance of an independent valuation firm. The Q2 FY19 Impairment Test was performed using the income approach (or discounted cash flows method) for goodwill and the relief-from-royalty method for indefinite-lived intangible assets. The estimated fair values of goodwill and indefinite-lived intangible assets were below carrying values resulting in an $88.4 million impairment of goodwill and a $7.0 million impairment of the Company’s tradename (indefinite-lived intangible asset).

6. Restructuring Costs

In July 2019, the Company implemented a restructuring plan (the “2019 Restructuring Plan”) focused on cost reduction initiatives designed to execute against long-term strategies. The 2019 Restructuring Plan included headcount reductions primarily at the Company’s corporate headquarters in Quincy, Massachusetts and at the facility in Tilton, New Hampshire.

As a result of the 2019 Restructuring Plan, the Company recorded $1.6 million of restructuring costs in selling, general and administrative expenses in the consolidated statements of operations and comprehensive income. All restructuring costs were recognized in the second quarter of Fiscal Year 2019 and payments were completed in the third quarter of Fiscal Year 2020, ending on October 31, 2020.

The following table summarizes the activity of the restructuring costs discussed above and related accruals recorded in accrued other and other current liabilities on the consolidated balance sheet (in thousands):

	February 1, 2020		Cash Payments		Adjustments		October 31, 2020		Program Costs to Date October 31, 2020
Employee separation costs	$	216	$	131	$	85	$	—	$	1,402
Other		39		1		38		—		195
Total restructuring costs	$	255	$	132	$	123	$	—	$	1,597

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7. Debt

The components of the Company’s outstanding debt were as follows (in thousands):

	Carrying value of debt
	October 31, 2020			February 1, 2020
Term Loan (principal of $5,022 and $237,579, respectively)	$	4,911		$	233,999
Priming Loan (principal of $230,457)		223,525			-
Subordinated Facility (principal and paid-in kind interest of $15,168)		2,910			-
Less: Current portion		(2,799	)		(2,799	)
Net long-term debt	$	228,547		$	231,200

As a result of COVID-19 related store closures, the Company was unable to maintain compliance with certain of its non-financial and financial covenants for the period ended May 2, 2020. Additionally, the inclusion of substantial doubt about the Company’s ability to continue as a going concern in the report of our independent registered public accounting firm on our financial statements for the fiscal year ended February 1, 2020 resulted in a violation of affirmative covenants under our ABL Facility and Term Loan.

On August 31, 2020, the Company entered into the TSA with the Consenting Lenders and the Subordinated Lenders to support the Transaction. Subsequently, on September 11, 2020, the Company received the consent of the term loan lenders representing more than 95.0% of the aggregate outstanding principal amount of the term loan claims under the Company’s previously existing term loan facility (the “Existing Term Facility”) to proceed with the documentation and consummation of the Transaction on an out-of-court basis, pursuant to the terms and conditions set forth in the out-of-court term sheet under the TSA. Under the TSA, the Company implemented the following series of transactions:

an amendment of the Company’s Existing Term Loan Facility (the lenders thereunder, the “Existing Term Lenders”) to, among other things, waive any non-compliance with the terms of the Existing Term Facility;

entry into a new senior secured priming term loan facility (the “Priming Credit Agreement” and, the lenders thereunder, the “Priming Lenders”), the proceeds of which have been used to repurchase the term loans under the Existing Term Facility (the “Existing Term Loans”) from the Consenting Lenders;

an amendment of the Company’s existing ABL Facility, to, among other things, waive any non-compliance with the terms of the ABL Facility; and

the provision by TowerBrook and certain other investors of new capital pursuant to a subordinated term loan facility (the “Subordinated Facility” and, the lenders thereunder, the “Subordinated Lenders”)

Term Loan

On September 30, 2020, in accordance with the TSA, the Company entered into an Amendment to the Term Loan (the “Amendment”). In connection with the Amendment, the Existing Term Lenders:

(i)

consented to the entry by the Company into the Priming Facility, the Subordinated Facility and the other transactions contemplated by the TSA; and

(ii)

permanently waived any defaults or events of default under the Existing Term Loan Agreement existing on or prior to September 30, 2020.

The Amendment also eliminated substantially all of the covenants and events of default in the Existing Term Facility and provided that no guarantors of, or collateral securing, the Existing Term Loan Agreement were released. The maturity date of the Amended Existing Term Loan Agreement continues to be May 8, 2022. Loans under the Amended Existing Term Loan Agreement continue to accrue interest at LIBOR plus 5.00%, with a minimum LIBOR per annum of 1.00%, with the interest payable on a quarterly basis. The Company may alternatively elect to accrue interest at a Base Rate (as defined in the Amended Existing Term Loan Agreement) plus 4.00%.

Additionally, in connection with the Amendment, the Company made an offer to all Existing Term Lenders to repurchase 100% of such Existing Term Lenders’ Existing Term Loans, and 97.9% of the Existing Term Lenders accepted the offer.

Priming Loan

On September 30, 2020, in accordance with the TSA, the Company entered into the Priming Term Loan Credit Agreement, which provides for a secured term loan facility in an aggregate principal amount equal to $231.1 million. The proceeds of the Priming Credit Agreement were solely used to repurchase Existing Term Loans from the 97.9% of the Existing Term Loan Lenders that

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accepted the Company’s offer to purchase Existing Term Loans under the Amendment discussed above. The maturity date of the Priming Credit Agreement is May 8, 2024, and the loans under the Priming Credit Agreement will bear interest at the Company’s election at: (1) Base Rate (as defined in the Priming Credit Agreement) plus 4.00% or (2) LIBOR plus 5.00%, with a minimum LIBOR per annum of 1.00%, with the interest payable on a quarterly basis. The Priming Term Loan Credit Agreement requires a principal paydown of at least $25.0 million by August 30, 2021; otherwise, there will be a Paid-in-Kind (“PIK”) interest rate increase and a PIK fee as follows:

•

If the principal paydown is less than $15.0 million, the PIK interest rate increase will be 5.00%, and the PIK fee will be 7.50%;

•

If the principal paydown is greater than $15.0 million, but less than $20.0 million, the PIK interest rate increase will be 2.00% and the PIK fee will be 5.00%; or

•

If the principal paydown is greater than $20.0 million, but less than $25.0 million, the PIK interest rate increase will be 1.00% and the PIK fee will be 2.00%.

The Company’s obligations under the Priming Credit Agreement are secured by substantially all of the real and personal property of the Company and certain of its subsidiaries, subject to certain customary exceptions. The Priming Credit Agreement includes customary negative covenants, including covenants limiting the ability of the Company to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness. The Priming Credit Agreement also has certain financial covenants, including (1) a minimum liquidity covenant that generally requires minimum liquidity on a weekly basis of $15 million, (2) a first lien net leverage ratio that requires compliance beginning in the fourth quarter of Fiscal Year 2021 with a net leverage ratio of 5:1, which reduces over time, and (3) limits on capital spending of $20 million annually.

In accordance with the Priming Credit Agreement, the Company issued to the Priming Lenders 656,717 shares (after giving effect to the 1-for-5 stock split described herein) of the Company’s Common Stock (the “Equity Consideration”). We recorded the issuance of shares valued at $2.0 million as equity with the offset as a reduction of the carrying value of the debt. On May 31, 2021, the Company will have the choice (the “May 31, 2021 Option”) to either (i) repay $4.9 million in aggregate principal amount of the loans under the Priming Credit Agreement, together with accrued and unpaid interest thereon or (ii) issue additional shares of Common Stock to the Priming Lenders in an amount equal to the greater of (I) 9.79% of the fully diluted shares of Common Stock as of October 1, 2020 less 656,717 shares and (II) a number of shares of Common Stock with an aggregate value of $0.5 million at the time of such issuance; provided, that the Priming Lenders shall not receive on such date shares of Common Stock having a value greater than $4.75 million at the time of such issuance. The May 31, 2021 Option was considered an embedded derivative within the Priming Loan. The Company determined the fair value of the May 31, 2021 Option was $1.4 million at the date of the Transaction, which was recorded within Warrants and derivative liabilities with the offset as a reduction in the carrying value of the debt. The fair value of the May 31, 2021 Option was determined using an option pricing model with a Monte Carlo simulation. The difference between the carrying value of the Priming Loan and the principal amount will be accreted over the term of the debt using the effective interest method. The May 31, 2021 Option was remeasured to its fair value as of the end of the third quarter of Fiscal 2020, with the adjustment of $0.3 million being recorded within Other expense in the Consolidated Statement of Operations.

Subordinated Facility

On September 30, 2020, in accordance with the TSA, the Company entered into a Subordinated Facility, with the Subordinated Lenders, that provides for a secured term loan facility in an aggregate principal amount equal to $15.0 million with an additional incremental capacity subject to certain customary conditions. The proceeds of the Subordinated Facility have been used for general corporate purposes.

The maturity date of the Subordinated Facility is November 8, 2024. Loans under the Subordinated Facility will bear interest at the Borrower’s election at (1) Base Rate (as defined in the Subordinated Facility) plus 11.00% or (2) LIBOR plus 12.00%, with a minimum LIBOR per annum of 1.00%. The Subordinated Facility is secured by substantially all of the real and personal property of the Company. The Subordinated Facility includes customary negative covenants for subordinated term loan agreements of this type, including covenants limiting the ability of the Company to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and purchases, pay dividends and distributions, enter into transactions with affiliates, and make payments in respect of junior indebtedness. The Subordinated Facility also has certain financial covenants, including (1) a minimum liquidity covenant that generally requires minimum liquidity on a weekly basis of $12.75 million, (2) a first lien net leverage ratio that requires compliance beginning in the fourth quarter of Fiscal Year 2021 with a net leverage ratio of 5.75:1, which reduces over time, and (3) limits on capital spending of $23 million annually.

In accordance with the Subordinated Facility, the Company issued Penny Warrants to the Subordinated Lenders, which, upon exercise, would grant the Subordinated Lenders 3,720,109 shares (after giving effect to the 1-for-5 stock split described herein) of

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common stock of the Company. The terms of the warrants include antidilution provisions, including a change to the conversion ratio if the Company chooses to issue additional shares to the Priming Lenders on May 31, 2021 rather than making a principal payment of $4.9 million. We recorded a reduction to the carrying value of the subordinated debt of $11.8 million due to the issuance of the Penny Warrants As a result of the antidilution provisions, the Penny Warrants have been recognized as a liability within Warrants and derivative liabilities, rather than equity, on the Balance Sheet and were remeasured to their fair value as of the end of the third quarter of Fiscal 2020, with the adjustment of $1.3 million being recorded within Other expense in the Consolidated Statements of Operations. The difference between the carrying value of the Subordinated Facility and the principal amount will be accreted over the term of the debt using the effective interest method.

Asset-Based Revolving Credit Agreement

The Company is party to a secured $40.0 million asset-based revolving credit facility agreement with a maturity date of May 8, 2023. On September 30, 2020, in accordance with the TSA, the Company entered into an amendment to the ABL Facility, whereby the ABL lenders (i) consented to the Company’s entry into the Priming Facility, the Subordinated Facility and other transactions contemplated by the TSA and (ii) permanently waived any defaults or events of default under the ABL Facility on or prior to September 30, 2020. As of October 31, 2020, there was no outstanding balance under the ABL Facility, and $2.7 million letters of credit outstanding. The undrawn borrowing availability under the ABL Facility was $37.3 million.

8. Income Taxes

The Company recorded an income tax benefit of $7.3 million and $38.5 million for the thirteen and thirty-nine weeks ended October 31, 2020, respectively and an income tax expense of $1.8 million and $0.1 million during the thirteen and thirty-nine weeks ended November 2, 2019, respectively. The effective tax rate was 24.0% and 25.5% for the thirteen and thirty-nine weeks ended October 31, 2020, respectively, and 42.5% and (0.1)% for the thirteen and thirty-nine weeks ended November 2, 2019, respectively.

The effective tax rate for the thirteen and thirty-nine weeks ended October 31, 2020 differs from the federal statutory rate of 21% primarily due to the impact of an anticipated benefit from the CARES Act, as well as the impact of state income taxes. These benefits were partially offset by the impact on the effective tax rate from the officer compensation limitation under Section 162 (m) of the Internal Revenue Code (“§162(m)”), goodwill impairment, which has no associated tax benefit, and change in valuation allowance on the thirteen and thirty-nine weeks ended October 31, 2020. The CARES Act provides for net operating losses in Fiscal Year 2020 to be carried back to earlier tax years with higher tax rates than the current year. The effective tax rate for the thirteen and thirty-nine weeks ended November 2, 2019 differs from the federal statutory rate of 21% primarily due to goodwill impairment of $88.4 million as well as recurring items including §162(m) officer compensation limitation, stock compensation and state income taxes.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under the applicable accounting standards, management has considered future reversals of existing taxable temporary differences to conclude there is sufficient positive evidence that it is more likely than not that the Company will not recognize part of the benefits of state net operating losses. Accordingly, a valuation allowance has been established against the Company’s state deferred tax assets.

Among the changes to the U.S. federal income tax rules, the CARES Act modified net operating loss carryback rules that were eliminated by the 2017 Tax Cuts and Jobs Act, restored 100% bonus depreciation for qualified improvement property, increased the limit on the deduction for net interest expense and accelerated the time frame for refunds of alternative minimum tax (“AMT”) credits. The Company’s ability to elect bonus depreciation for the 2018 and 2019 tax years, carryback net operating losses to earlier years, and immediately refund AMT credits due to the enactment of the CARES Act resulted in an estimated tax refund of $6.9 million of which the Company has received $5.9 million. The Company has elected to defer the employer-paid portion of social security taxes beginning with pay dates on and after April 1, 2020. The Company will continue to evaluate the effects of the CARES Act as additional legislative guidance becomes available.

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9. Earnings Per Share

The following table summarizes the computation of basic and diluted net income per share attributable to common shareholders (in thousands, except share and per share data):

	For the Thirteen Weeks Ended					For the Thirty-Nine Weeks Ended
	October 31, 2020			November 2, 2019		October 31, 2020			November 2, 2019
Numerator
Net (loss) income attributable to common shareholders:	$	(23,159	)	$	2,387	$	(112,462	)	$	(89,982	)
Denominator
Weighted average number of common shares outstanding, basic:		9,177,350			8,767,733		9,004,321			8,730,636
Dilutive effect of stock options and restricted shares:		—			22,407		—			—
Weighted average number of common shares outstanding, diluted:		9,177,350			8,790,140		9,004,321			8,730,636
Net (loss) income per common share attributable to common shareholders, basic:	$	(2.52	)	$	0.27	$	(12.49	)	$	(10.31	)
Net (loss) income per common share attributable to common shareholders, diluted:	$	(2.52	)	$	0.27	$	(12.49	)	$	(10.31	)

The weighted average common shares for the diluted earnings per share calculation exclude the impact of outstanding equity awards if the assumed proceeds per share of the award is in excess of the related fiscal period’s average price of the Company’s common stock. Equity compensation awards have been excluded when they have an antidilutive effect, such as when the Company has a net loss for the reporting period, which is the case for the thirteen and thirty-nine weeks ended October 31, 2020 and the thirty-nine weeks ended November 2, 2019. There were 416,363 antidilutive shares for the thirteen weeks ended October 31, 2020, and 800,003 antidilutive shares for the thirteen weeks ended November 2, 2019, of such awards excluded. There were 476,541 antidilutive shares for the thirty-nine weeks ended October 31, 2020, and 636,752 antidilutive shares for the thirty-nine weeks ended November 2, 2019, of such awards excluded. The 3,720,109 Penny Warrants that were issued during the third quarter of Fiscal Year 2020 were excluded from the calculation of earnings per share for both the thirteen and thirty-nine week periods ended October 31, 2020 because the effect of including them would have been antidilutive.

On November 4, 2020, the Company announced a 1-for-5 reverse stock split effective November 9, 2020. The Company’s shareholders received one share for every five shares held prior to the effective date. The Company adjusted the computations of basic and diluted EPS retroactively for all periods presented to reflect the change in capital structure.

10. Equity-Based Compensation

Equity-based compensation expense was $0.3 million for the thirteen weeks ended October 31, 2020, and $1.1 million for the thirteen weeks ended November 2, 2019. Equity-based compensation expense was $1.6 million for the thirty-nine weeks ended October 31, 2020, and $3.5 million for the thirty-nine weeks ended November 2, 2019.

Special Dividend

On March 6, 2019, the Company’s Board of Directors declared a special cash dividend (the “Special Dividend”) of $1.15 per share payable to shareholders of record as of March 19, 2019, of which $50.2 million was paid on April 1, 2019.

In connection with the Special Dividend, pursuant to anti-dilution provisions in the 2017 Omnibus Equity Incentive Plan (the “2017 Plan”), the Company adjusted outstanding equity awards in order to prevent dilution of such awards. Accordingly, the Company adjusted the number of outstanding unvested restricted stock units (“RSUs”) as of the payment date of the dividend with an additional number of RSUs (“Dividend Equivalent Units” or “DEUs”) equal to the quotient obtained by dividing (x) the product of the number of unvested RSUs as of the record date by the amount of the dividend per share, by (y) the fair market value of share on the payment date of the Special Dividend. The DEUs will follow the same vesting pattern as the RSUs. For holders of outstanding options as of March 19, 2019, the option strike price on such options was reduced by the per share amount of the Special Dividend. Holders of unvested Restricted Stock Awards (“RSAs”) received a forfeitable $1.15 per share dividend on unvested RSAs as of March 19, 2019.

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11. Related Party Transactions

On September 30, 2020, the Company entered into the Subordinated Facility, with TowerBrook Capital Partners L.P. as the primary lender; and the Company issued Penny Warrants to the Subordinated Lenders. See Note 7, Debt, for a further discussion of the Subordinated Facility and Penny Warrants.

The Company incurred $3.3 million of costs incurred for professional fees for advisors to TowerBrook Capital Partners L.P. for services associated with the Transaction.

For the thirteen and thirty-nine weeks ended October 31, 2020 and the thirteen and thirty-nine weeks ended November 2, 2019, the Company incurred an immaterial amount of other related party transactions.

12. Commitments and Contingencies

Legal Proceedings

The Company is subject to various legal proceedings that arise in the ordinary course of business. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that the Company is presently party to any legal proceedings the resolution of which management believes would have a material adverse effect on the Company’s business, financial condition, operating results or cash flows. The Company establishes reserves for specific legal matters when the Company determines that the likelihood of an unfavorable outcome is probable, and the loss is reasonably estimable.

13. Operating Leases

As of October 31, 2020, the Company leased certain retail stores, a distribution center, and office space. As of that same date, the Company did not have any finance leases and no operating leases containing material residual value guarantees or material restrictive covenants. Certain of the Company’s retail operating leases include variable rental payments based on a percentage of retail sales over contractual levels.

Some retail leases include one or more options to renew, with renewal terms that can extend the lease term from one to fifteen years. The Company’s distribution center has renewal terms that can extend the lease term up to twenty years. The exercise of lease renewal options is at the Company’s sole discretion. As of October 31, 2020, the Company included options to renew that are reasonably certain to be exercised in the operating lease assets and liabilities.

The components of lease expense were as follows (in thousands):

Lease Cost	Classification	For the Thirteen Weeks Ended October 31, 2020		For the Thirteen Weeks Ended November 2, 2019		For the Thirty-Nine Weeks Ended October 31, 2020		For the Thirty-Nine Weeks Ended November 2, 2019
Operating lease cost	SG&A Expenses	$	10,803	$	12,054	$	33,545	$	35,426
Variable lease cost	SG&A Expenses		366		976		1,262		2,516
Total lease cost		$	11,169	$	13,030	$	34,807	$	37,942

Additionally, during the thirteen and thirty-nine weeks ended October 31, 2020, the Company recognized a non-cash impairment charge of $0.2 million and $20.2 million, respectively, associated with right of use assets.

As a result of COVID-19 related temporary store closures, the Company withheld rent payments for all of its retail locations in April and May 2020 and for some of its retail locations in June 2020. The Company successfully negotiated commercially reasonable lease concessions with the landlords of approximately half of our leases during the third quarter of Fiscal Year 2020, which include combinations of abated and deferred rent payments as well as term extensions. The Company is actively negotiating with the landlords of its other leases, and the withheld rent payments for such leases amounted to approximately $11.2 million as of October 31, 2020, which we have included in accrued expenses and other current liabilities on the consolidated balance sheet. The Company does not anticipate any significant late payment penalties; therefore, we have not accrued any related expenses as of October 31, 2020.

The Company has elected to apply the guidance provided by the FASB pertaining to lease concessions that are a result of COVID-19 and accordingly does not evaluate the rights and obligations pertaining to concessions in each lease but rather accounts for them assuming that such provisions exist. For each lease that contains concessions that do not significantly increase our obligations, the Company has remeasured the lease consistent with resolving a contingency and therefore adjusted the timing and amount of the lease payments without changing our assumptions (i.e. discount rate and lease classification). The concessions within the qualifying agreements vary and may include combinations of abated and deferred rent payments as well as term extensions ranging from one to six months. During the thirteen weeks ended October 31, 2020, the Company’s qualifying agreements provided abated rent payments

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of $3.7 million and deferred rent payments of $1.4 million that are payable over no more than 18 months beginning as early as August 2020.

For the thirteen and thirty-nine weeks ended October 31, 2020, total common area maintenance expense was $3.6 million and $11.0 million, respectively. For the thirteen and thirty-nine weeks ended October 31, 2020, operating lease liabilities increased $3.1 million and $4.2 million, respectively, due to the COVID related lease modifications noted above. For the thirteen and thirty-nine weeks ended November 2, 2019, total common area maintenance expense was $3.6 million and $10.7 million, respectively, while operating lease liabilities arising from obtaining operating lease assets were $9.6 million and $19.2 million, respectively.

For the thirteen and thirty-nine weeks ended October 31, 2020 total cash paid for amounts included in the measurement of operating lease liabilities was $13.9 million and $26.4 million, respectively. For the thirteen and thirty-nine weeks ended November 2, 2019, the total cash paid for amounts included in the measurement of operating lease liabilities was $12.1 million, and $35.8 million, respectively.

Lease Term and Discount Rate	October 31, 2020
Weighted-average remaining lease term (in years)
Operating leases		6.7
Weighted-average discount rate
Operating leases		6.6	%

Maturities of lease liabilities as of October 31, 2020 were as follows (in thousands):

Fiscal Year	Operating Leases⁽¹⁾
2020	$	8,396
2021		50,312
2022		43,772
2023		40,603
2024		34,957
Thereafter		99,522
Subtotal		277,562
Less: Imputed interest		54,740
Present value of lease liabilities	$	222,822

(1)	There were no operating leases with legally binding minimum lease payments for leases signed but for which the Company has not taken possession.

14. Barter Arrangement

The Company entered into a bartering arrangement with Evergreen Trading, a vendor, where the Company provided inventory in exchange for media credits. During Q3 of Fiscal Year 2019, the Company exchanged inventory with a recorded value of $0.7 million for certain media credits valued at $2.0 million resulting in a gain of $1.3 million. The value of media credits was recognized as revenue, with the corresponding asset included in “Prepaid and other current assets” and “Other assets” on the accompanying consolidated balance sheet. The Company may use the media credits over seven years. The Company has used a minimal amount of the credits during the thirty-nine weeks ended October 31, 2020.

The Company accounted for this barter transaction under ASC Topic No. 606 “Revenue from Contracts with Customers.” Barter transactions with commercial substance are recorded at the estimated fair value of the products exchanged unless the products received have a more readily determinable estimated fair value. Revenue associated with a barter transaction is recorded at the time of the exchange of the related assets.

15. Subsequent Event

On November 4, 2020, the Company announced a 1-for-5 reverse stock split effective November 9, 2020. The Company’s shareholders received one share for every five shares held prior to the effective date. All share and per share amounts have been adjusted retroactively to reflect the reverse stock split. In connection with the reverse stock split, the Company’s Certificate of Incorporation was amended to reduce the number of authorized shares of Common Stock to 50,000,000, and proportional adjustments were made to the Company’s 2017 Omnibus Equity Incentive Plan and Employee Stock Purchase Plan, including the number of shares of Common Stock available for issuance under such plans and the number of shares of Common Stock underlying outstanding awards granted pursuant to

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such plans. In accordance with the terms of the Penny Warrants issued to the Subordinated Lenders, the number of shares of Common Stock issuable upon exercise of each Warrant was also proportionately adjusted to give effect to the reverse stock split.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that reflect our plans, estimates and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements”.

We operate on a 52- or 53-week fiscal year that ends on the Saturday that is closest to January 31. Each fiscal year generally is comprised of four 13-week fiscal quarters, although in the years with 53 weeks, the fourth quarter represents a 14-week period. The fiscal years ending January 30, 2021 (“Fiscal Year 2020”) and fiscal year ended February 1, 2020 (“Fiscal Year 2019”) are both comprised of 52 weeks.

Overview

J.Jill is a premier omnichannel retailer and nationally recognized women’s apparel brand committed to delighting customers with great wear-now product. The brand represents an easy, thoughtful and inspired style that reflects the confidence of remarkable women who live life with joy, passion and purpose. J.Jill offers a guiding customer experience through about 275 stores nationwide and a robust ecommerce platform. J.Jill is headquartered outside Boston.

Our year-to-date financial results of Fiscal Year 2020 were significantly impacted by the COVID-19 pandemic (“COVID-19”) as our stores were temporarily closed beginning in mid-March 2020 with most of our stores being reopened by late June 2020, but with enhanced health and safety protocols. In response to the pandemic, we acted during the period to leverage our Direct channel, while focusing on cost management and improving our liquidity. After approaching our vendor community, we implemented extended payment terms for nearly all goods and services, and we withheld store rent payments beginning in April of 2020. These extensions and withholdings provided time for us to work on more longer-term solutions to help us through the pandemic. These solutions included cost reductions, including pay reductions for employees in our headquarters, furlough of store and some headquarter and distribution center staff, reductions in Marketing, reductions in Board of Directors fees, and reductions in other general expenses. Additionally, we have eliminated approximately half of our catalogs, which we are considering implementing as a permanent change. We have also been limiting investments in our ecommerce business to necessary website and supporting functions, and we have significantly reduced planned capital expenditures.

The COVID-19 global pandemic and resulting temporary store closures have had a material adverse effect on our operations, cash flows and liquidity. We have made significant progress reducing cash expenditures and maximizing cash receipts from our direct to consumer business channel such that our current base forecast projects sufficient liquidity over the coming 12 months; however, considerable risk remains related to the performance of stores, the resilience of the customer in an uncertain economic climate, and the possibility of a resurgence of COVID-19 related market impacts in the coming 12 months. If one or more of these risks materialize, we believe that our current sources of liquidity and capital may not be sufficient to finance our continued operations for at least the next 12 months.

We entered into a Transaction Support Agreement (“TSA”) on August 31, 2020 with lenders holding greater than 70% of the Company’s term loans (“Consenting Lenders”) and a majority of our shareholders on the principal terms of a financial restructuring (“Transaction”). The Transaction was consented to by the requisite term loan lenders and was consummated on an out-of-court basis on September 30, 2020. The Transaction resulted in a waiver of any past non-compliance with the terms of the Company’s credit facilities. It also provided the Company with additional liquidity and extended the maturity of substantially all of the previously existing debt by two years, through May 2024.

We have also filed an income tax refund for $6.9 million, of which we have received $5.9 million, with the IRS and multiple state jurisdictions related to the provision under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) enacted in March 2020 that provides numerous tax provisions and other stimulus measures, including temporary suspension of certain payment requirements for the employer-paid portion of social security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company has elected to defer the employer-paid portion of social security taxes beginning with pay dates on and after April 1, 2020. We continue to evaluate the provisions of the CARES Act and the ways in which it could assist our business and improve our liquidity.

Factors Affecting Our Operating Results

Various factors are expected to continue to affect our results of operations going forward, including the following:

Overall Economic Trends. Consumer purchases of clothing and other merchandise generally decline during recessionary periods and other periods when disposable income is adversely affected, and consequently our results of operations may be affected by general

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economic conditions. For example, reduced consumer confidence and lower availability and higher cost of consumer credit may reduce demand for our merchandise and may limit our ability to increase or sustain prices. The growth rate of the market could be affected by macroeconomic conditions in the United States.

Consumer Preferences and Fashion Trends. Our ability to maintain our appeal to existing customers and attract new customers depends on our ability to anticipate fashion trends. During periods in which we have successfully anticipated fashion trends, we have generally had more favorable results.

Competition. The retail industry is highly competitive and retailers compete based on a variety of factors, including design, quality, price and customer service. Levels of competition and the ability of our competitors to more accurately predict fashion trends and otherwise attract customers through competitive pricing or other factors may impact our results of operations.

Our Strategic Initiatives. The ongoing implementation of strategic initiatives will continue to have an impact on our results of operations. These initiatives include our ecommerce site, which was re-platformed in Fiscal Year 2017, and our initiative to upgrade and enhance our information systems. Although initiatives of this nature are designed to create growth in our business and continuing improvement in our operating results, the timing of expenditures related to these initiatives, as well as our ability to successfully achieve the expected benefits of these initiatives, may affect our results of operations in future periods.

Pricing and Changes in Our Merchandise Mix. Our product offering changes from period to period, as do the prices at which goods are sold and the margins we are able to earn from the sales of those goods. The levels at which we are able to price our merchandise are influenced by a variety of factors, including the quality of our products, cost of production, prices at which our competitors are selling similar products and the willingness of our customers to pay for products.

Potential Changes in Tax Laws and/or Regulations. Changes in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate, could adversely affect our business, financial condition and operating results. Additionally, any potential changes with respect to tax and trade policies, tariffs and government regulations affecting trade between the U.S. and other countries could adversely affect our business, as we source the majority of our merchandise from manufacturers located outside of the U.S.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of financial and operating metrics, including GAAP and non-GAAP measures, including the following:

Net sales consist primarily of revenues, net of merchandise returns and discounts, generated from the sale of apparel and accessory merchandise through our Retail channel and Direct channel. Net sales also include shipping and handling fees collected from customers and royalty revenues and marketing reimbursements related to our private label credit card agreement. Revenue from our Retail channel is recognized at the time of sale and revenue from our Direct channel is recognized upon shipment of merchandise to the customer.

Net sales are impacted by the size of our active customer base, product assortment and availability, marketing and promotional activities and the spending habits of our customers. Net sales are also impacted by the migration of single-channel customers to omnichannel customers who, on average, spend nearly three times more than single-channel customers.

Number of stores reflects all stores open at the end of a reporting period. In connection with opening new stores, we incur pre-opening costs. Pre-opening costs include expenses incurred prior to opening a new store and primarily consist of payroll, travel, training, marketing, initial opening supplies and costs of transporting initial inventory and fixtures to store locations, as well as occupancy costs incurred from the time of possession of a store site to the opening of that store. These pre-opening costs are included in selling, general and administrative expenses and are generally incurred and expensed within 30 days of opening a new store.

Gross profit is equal to our net sales less costs of goods sold. Gross profit as a percentage of our net sales is referred to as gross margin.

Costs of goods sold includes the direct costs of sold merchandise, inventory shrinkage, and adjustments and reserves for excess, aged and obsolete inventory. We review our inventory levels on an ongoing basis to identify slow-moving merchandise and use product markdowns to liquidate these products. Changes in the assortment of our products may also impact our gross profit. The timing and level of markdowns are driven by customer acceptance of our merchandise. As a result, the reporting of our gross profit and gross margin may not be comparable to other companies.

The primary drivers of the costs of goods sold are raw materials, which fluctuate based on certain factors beyond our control, including labor conditions, transportation or freight costs, energy prices, currency fluctuations and commodity prices. We place orders with merchandise suppliers in United States dollars and, as a result, are not exposed to significant foreign currency exchange risk.

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Selling, general and administrative expenses include all operating costs not included in costs of goods sold. These expenses include all payroll and related expenses, occupancy costs, information systems costs and other operating expenses related to our stores and to our operations at our headquarters, including utilities, depreciation and amortization. These expenses also include marketing expense, including catalog production and mailing costs, warehousing, distribution and shipping costs, customer service operations, consulting and software services, professional services and other administrative costs.

Our historical revenue growth has been accompanied by increased selling, general and administrative expenses. The most significant increases were in occupancy costs associated with retail store expansion, and in marketing and payroll investments.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA represents net income plus net interest expense, provision (benefit) for income taxes, depreciation and amortization, sponsor fees, equity-based compensation expense, goodwill and indefinite-lived intangible assets impairment, write-off of property and equipment and other non-recurring expenses, primarily consisting of outside legal and professional fees associated with certain non-recurring transactions and events. We present Adjusted EBITDA on a consolidated basis because management uses it as a supplemental measure in assessing our operating performance, and we believe that it is helpful to investors, securities analysts and other interested parties as a measure of our comparative operating performance from period to period. We also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance of our business and for evaluating on a quarterly and annual basis actual results against such expectations. Further, we recognize Adjusted EBITDA as a commonly used measure in determining business value and as such, use it internally to report results. Adjusted EBITDA margin represents, for any period, Adjusted EBITDA as a percentage of net sales.

While we believe that Adjusted EBITDA is useful in evaluating our business, Adjusted EBITDA is a non-GAAP financial measure that has limitations as an analytical tool. Adjusted EBITDA should not be considered an alternative to, or substitute for, net income (loss), which is calculated in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces the usefulness of Adjusted EBITDA as a tool for comparison. We recommend that you review the reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, and the calculation of the resultant Adjusted EBITDA margin below and not rely solely on Adjusted EBITDA or any single financial measure to evaluate our business.

Reconciliation of Net Income to Adjusted EBITDA and Calculation of Adjusted EBITDA Margin

The following table provides a reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA margin for the periods presented.

	For the Thirteen Weeks Ended						For the Thirty-Nine Weeks Ended
(in thousands)	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
Statements of Operations Data:
Net (loss) income	$	(23,159	)	$	2,387		$	(112,462	)	$	(89,982	)
Other expense		1,628			—			1,628			-
Interest expense, net		4,753			4,826			13,640			14,852
Income tax (benefit) provision		(7,313	)		1,763			(38,464	)		132
Depreciation and amortization		8,359			9,458			25,672			28,307
Equity-based compensation expense ^(a)		323			1,128			1,614			3,544
Write-off of property and equipment ^(b)		121			71			376			85
Impairment of goodwill and other intangible assets		—			—			24,520			95,428
Adjustment for exited retail stores ^(c)		(556	)		—			(958	)		—
Impairment of long-lived assets ^(d)		906			—			27,493			2,064
Transaction costs ^(e)		12,912			—			20,636			—
Other non-recurring items ^(f)		410			—			2,393			(740	)
Adjusted EBITDA	$	(1,617	)	$	19,633		$	(33,912	)	$	53,690
Net sales	$	117,224		$	166,085		$	300,829		$	523,281
Adjusted EBITDA margin		(1.4	)%		11.8	%		(11.3	)%		10.3	%

(a)	Represents expenses associated with equity incentive instruments granted to our management and board of directors. Incentive instruments are accounted for as equity-classified awards with the related compensation expense recognized based on fair value at the date of the grants.

(b)	Represents net gain or loss on the disposal of fixed assets.

(c)	Represents non-cash gains associated with exiting store leases earlier than anticipated.

(d)	Represents impairment of long-lived assets related to the right-of-use asset and leasehold improvements.

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(e)	Represents items management believes are not indicative of ongoing operating performance. For the thirteen and thirty-nine weeks ended October 31, 2020, these expenses are primarily composed of legal and advisory costs.

(f)

Represents other items management believes are not indicative of ongoing operating performance. For the thirteen and thirty-nine weeks ended October 31, 2020, these expenses are primarily composed of incremental one-time costs related to COVID-19, including supplies and cleaning expenses as well as hazard pay and benefits, as well as retention expenses. For the thirty-nine weeks ended November 2, 2019, the amount includes a gain from insurance proceeds partially offset by restructuring costs.

Items Affecting Comparability of Financial Results

Impairment losses. Our thirteen weeks and thirty-nine weeks Fiscal Year 2020 year-to-date results include impairment charges of $0.9 million and $52.0 million, respectively, for long-lived assets (operating lease right-of-use asset and leasehold improvements), goodwill and intangible assets. We had $97.5 million of impairment charges in Fiscal Year 2019 year-to-date results for long-lived assets, goodwill and intangible assets. See Note 5, Asset Impairments, in Item I, Financial Statements, for additional information on these impairment losses.

COVID-19 impact. Our year-to-date Fiscal Year 2020 financial results were significantly impacted by COVID-19 as our stores were temporarily closed beginning in mid-March and reopened beginning in mid-May, with all stores reopened by end of June, in efforts to stop the spread of the virus. Although the stores were temporarily closed and the Company lost revenues as a result, we continued to incur certain expenses, such as payroll and rent; therefore, ratios and other items may not be comparable to prior periods.

Results of Operations

Thirteen weeks ended October 31, 2020 Compared to Thirteen weeks ended November 2, 2019

The following table summarizes our consolidated results of operations for the periods indicated:

	For the Thirteen Weeks Ended											Change from the Thirteen Weeks Ended November 2, 2019 to the Thirteen Weeks
	October 31, 2020						November 2, 2019					Ended October 31, 2020
(in thousands)	Dollars			% of Net Sales			Dollars		% of Net Sales			$ Change			% Change
Net sales	$	117,224			100.0	%	$	166,085		100.0	%	$	(48,861	)		(29.4	)%
Costs of goods sold		48,225			41.1	%		59,137		35.6	%		(10,912	)		(18.5	)%
Gross profit		68,999			58.9	%		106,948		64.4	%		(37,949	)		(35.5	)%
Selling, general and administrative expenses		92,184			78.6	%		97,972		59.0	%		(5,788	)		(5.9	)%
Impairment of long-lived assets		906			0.8	%		—		0.0	%		906
Operating (loss) income		(24,091	)		(20.6	)%		8,976		5.4	%		(33,067	)		(368.4	)%
Other expense		1,628			1.4	%		-		-			1,628
Interest expense, net		4,753			4.1	%		4,826		2.9	%		(73	)		(1.5	)%
(Loss) income before provision for income taxes		(30,472	)		(26.0	)%		4,150		2.5	%		(34,622	)		(834.3	)%
Income tax (benefit) provision		(7,313	)		(6.2	)%		1,763		1.1	%		(9,076	)		(514.8	)%
Net (loss) income	$	(23,159	)		(19.8	)%	$	2,387		1.4	%	$	(25,546	)		(1070.2	)%

Net Sales

Net sales for the thirteen weeks ended October 31, 2020 decreased $48.9 million, or 29.4%, to $117.2 million from $166.1 million for the thirteen weeks ended November 2, 2019. At the end of those same periods, we operated 276 and 290 retail stores, respectively. The decrease in total net sales versus the prior year was primarily driven by the impact of COVID-19 on consumer spending on fashion apparel.

Our Retail channel contributed 36.7% of our net sales in the thirteen weeks ended October 31, 2020 and 57.0% in the thirteen weeks ended November 2, 2019. Our Direct channel contributed 63.3% of our net sales in the thirteen weeks ended October 31, 2020 and 43.0% in the thirteen weeks ended November 2, 2019.

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Gross Profit and Costs of Goods Sold

Gross profit for the thirteen weeks ended October 31, 2020 decreased $37.9 million, or 35.5%, to $69.0 million from $106.9 million for the thirteen weeks ended November 2, 2019. The gross margin for the thirteen weeks ended October 31, 2020 was 58.9% compared to 64.4% for the thirteen weeks ended November 2, 2019. The year over year gross margin decline was primarily driven by actions taken in the third quarter to clear excess inventory.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the thirteen weeks ended October 31, 2020 decreased $5.8 million, or 5.9%, to $92.2 million from $98.0 million for the thirteen weeks ended November 2, 2019. Selling, general and administrative expenses for the thirteen weeks ended October 31, 2020 included $13.3 million of non-recurring expenses, primarily legal and advisory costs related to the debt restructuring and costs directly incurred in response to the COVID-19 pandemic.

As a percentage of net sales, selling, general and administrative expenses were 78.6% for the thirteen weeks ended October 31, 2020 compared to 59.0% for the thirteen weeks ended November 2, 2019. Excluding the nonrecurring items mentioned previously, selling, general and administrative expenses as a percentage of total net sales were 67.7% compared to 59.0% in the third quarter of fiscal 2019.

Other Expense

Other expense consists of the mark-to-market adjustment on warrants and derivative liabilities related to the debt restructuring consummated on September 30, 2020.

Interest Expense, Net

Interest expense, net, consists of interest expense on the Term Loan, ABL Facility, Priming Loan and Subordinated Facility partially offset by interest earned on cash. Interest expense, net for the thirteen weeks ended October 31, 2020 was flat as compared to the thirteen weeks ended November 2, 2019.

Income Tax Benefit

The income tax benefit was $7.3 million for the thirteen weeks ended October 31, 2020 compared to an income tax expense of $1.8 million for the thirteen weeks ended November 2, 2019, while our effective tax rates for the same periods were 24.0% and 42.5%, respectively. The effective tax rate in the current period differs from the 21% statutory rate and was driven by the anticipated benefit from the CARES Act and change in valuation allowance, partially offset by the impact of state income taxes. The CARES Act provides for net operating losses in Fiscal Year 2020 to be carried back to earlier tax years with higher tax rates than the current year The effective tax rate for the thirteen weeks ended November 2, 2019 differs from the federal statutory rate primarily due to recurring items such as state income taxes.

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Thirty-nine weeks ended October 31, 2020 Compared to Thirty-nine weeks ended November 2, 2019

The following table summarizes our consolidated results of operations for the periods indicated:

	For the Thirty-Nine Weeks Ended												Change from the Thirty-Nine Weeks Ended November 2, 2019 to the Thirty-Nine Weeks
(in thousands)	October 31, 2020						November 2, 2019						Ended October 31, 2020
	Dollars			% of Net Sales			Dollars			% of Net Sales			$ Change			% Change
Net sales	$	300,829			100.0	%	$	523,281			100.0	%	$	(222,452	)		(42.5	)%
Costs of goods sold		126,645			42.1	%		194,736			37.2	%		(68,091	)		(35.0	)%
Gross profit		174,184			57.9	%		328,545			62.8	%		(154,361	)		(47.0	)%
Selling, general and administrative expenses		257,829			85.7	%		306,051			58.5	%		(48,222	)		(15.8	)%
Impairment of long-lived assets		27,493			9.1	%		2,064			0.4	%		25,429			1232.0	%
Impairment of goodwill		17,900			6.0	%		88,428			16.9	%		(70,528	)		(79.8	)%
Impairment of other intangible assets		6,620			2.2	%		7,000			1.3	%		(380	)		(5.4	)%
Operating loss		(135,658	)		(45.1	)%		(74,998	)		(14.3	)%		(60,660	)		80.9	%
Other expense		1,628			0.5	%		-			-			1,628
Interest expense, net		13,640			4.5	%		14,852			2.8	%		(1,212	)		(8.2	)%
Loss before provision for income taxes		(150,926	)		(50.2	)%		(89,850	)		(17.2	)%		(61,076	)		68.0	%
Income tax (benefit) provision		(38,464	)		(12.8	)%		132			-			(38,596	)		(29239.4	)%
Net loss	$	(112,462	)		(37.4	)%	$	(89,982	)		(17.2	)%	$	(22,480	)		25.0	%

Net Sales

Net sales for the thirty-nine weeks ended October 31, 2020 decreased $222.5 million, or 42.5%, to $300.8 million from $523.3 million for the thirty-nine weeks ended November 2, 2019. At the end of both of those same periods, we operated 276 and 290 retail stores, respectively. The decrease in total net sales versus the prior year was primarily driven by the economic impacts caused by COVID-19, including the temporary closure of our stores for two to three months during the first and second quarters of Fiscal Year 2020, as well as the impact on customer spending. Essentially all of our stores were reopened midway through the second quarter, following local mandates with reduced hours and enhanced health and safety protocols.

Our Retail channel contributed 34.7% of our net sales in the thirty-nine weeks ended October 31, 2020 and 57.5% in the thirty-nine weeks ended November 2, 2019. Our Direct channel contributed 65.3% of our net sales in the thirty-nine weeks ended October 31, 2020 and 42.5% in the thirty-nine weeks ended November 2, 2019.

Gross Profit and Costs of Goods Sold

Gross profit for the thirty-nine weeks ended October 31, 2020 decreased $154.4 million, or 47.0%, to $174.2 million from $328.5 million for the thirty-nine weeks ended November 2, 2019. The gross margin for the thirty-nine weeks ended October 31, 2020 was 57.9% compared to 62.8% for the thirty-nine weeks ended November 2, 2019, inclusive of actions taken in both periods to clear excess inventory. While there were actions taken in both periods to liquidate inventories, the thirty-nine weeks ended October 31, 2020 was more negatively impacted than in the prior year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the thirty-nine weeks ended October 31, 2020 decreased $48.2 million, or 15.8%, to $257.8 million from $306.1 million for the thirty-nine weeks ended November 2, 2019. In the thirty-nine weeks ended October 31, 2020, selling, general and administrative expenses included $23.0 million of nonrecurring expenses, primarily legal and advisory costs related to the debt restructuring and costs directly incurred in response to the COVID-19 pandemic.

As a percentage of net sales, selling, general and administrative expenses were 85.7% for the thirty-nine weeks ended October 31, 2020 compared to 58.5% for the thirty-nine weeks ended November 2, 2019. Excluding the nonrecurring items mentioned previously, selling, general and administrative expenses as a percentage of total net sales were 78.4% for the thirty-nine weeks ended October 31, 2020 compared to 58.6% for the thirty-nine weeks ended November 2, 2019.

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Other Expense

Other expense consists of the mark-to-market adjustment on warrants and derivative liabilities related to the debt restructuring consummated on September 30, 2020.

Interest Expense, Net

Interest expense, net, consists of interest expense on the Term Loan, ABL Facility, Priming Loan and Subordinated Facility, partially offset by interest earned on cash. Interest expense for the thirty-nine weeks ended October 31, 2020 was flat as compared to the thirty-nine weeks ended November 2, 2019.

Income Tax Benefit

The income tax benefit was $38.5 million for the thirty-nine weeks ended October 31, 2020 compared to an income tax expense of $0.1 million for the thirty-nine weeks ended November 2, 2019. Our effective tax rates for the same periods were 25.5% and (0.1)%, respectively. The higher effective tax rate in the current period was driven by the anticipated benefit from the CARES Act as well as the impact of state income taxes, partially offset by the impact on the effective tax rate from §162(m) officer compensation limitation, change in valuation allowance as well as the goodwill impairment charge, which has no associated tax benefit. The CARES Act provides for net operating losses in Fiscal Year 2020 to be carried back to earlier tax years with higher tax rates than the current year. The difference in the effective tax rates is primarily due to goodwill impairment as well as well as recurring items including §162(m) officer compensation limitation, stock compensation and state income taxes.

Liquidity and Capital Resources

General

The COVID-19 global pandemic and resulting store closures have had a material adverse effect on our operations, cash flows and liquidity. We have made significant progress reducing cash expenditures and maximizing cash receipts from our direct to consumer business channel such that our current base forecast projects sufficient liquidity over the coming 12 months. However, considerable risk remains related to the performance of stores, the resilience of the customer in an uncertain economic climate, and the possibility of a resurgence of COVID-19 related market impacts in the coming 12 months. If one or more of these risks materialize, we believe that our current sources of liquidity and capital will not be sufficient to finance our continued operations for at least the next 12 months. These risks raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements have been issued.

The material adverse effect caused by COVID-19 and inclusion of substantial doubt about the Company’s ability to continue as a going concern in the report of our independent registered public accounting firm on our accompanying financial statements for the fiscal year ended February 1, 2020 resulted in a failure by us to comply with the financial covenants contained in our ABL Facility and Term Loan agreements. As part of the TSA that was consummated on September 30, 2020 any non-compliance with the terms of the Existing Term Facility and ABL Facility were waived. Refer to Note 7, Debt, in the Notes to the Consolidated Financial Statements for further details regarding the debt facilities and the Transaction.

As of October 31, 2020, our total liquidity was $53.0 million, which represents our available cash and availability under our ABL Facility. Our primary sources of liquidity and capital resources are cash generated from operating activities and availability under our ABL Facility has a maturity of May 8, 2023 so long as certain conditions related to the maturity of the term loan are met. Our primary requirements for liquidity and capital are working capital and general corporate needs, including merchandise inventories, marketing, including catalog production and distribution, payroll, store occupancy costs and capital expenditures associated with opening new stores, remodeling existing stores and upgrading information systems and the costs of operating as a public company.

We have filed an income tax refund for $6.9 million, of which we have received $5.9 million, with the IRS related to the provision under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) enacted in March 2020 that provides numerous tax provisions and other stimulus measures, including temporary suspension of certain payment requirements for the employer-paid portion of social security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company has elected to defer the employer-paid portion of social security taxes beginning with pay dates on and after April 1, 2020. We continue to evaluate the provisions of the CARES Act and the ways in which it could assist our business and improve our liquidity.

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Cash Flow Analysis

The following table shows our cash flows information for the periods presented:

	For the Thirty-Nine Weeks Ended
(in thousands)	October 31, 2020			November 2, 2019
Net cash (used in) provided by operating activities	$	(20,364	)	$	17,687
Net cash used in investing activities		(3,037	)		(13,493	)
Net cash provided by (used in) financing activities		11,071			(53,440	)

Net Cash (used in) provided by Operating Activities

Net cash (used in) provided by operating activities declined by $38.1 million as compared to the prior year as cash-related income was a use of cash in the current year due to the impact of temporarily closing the stores in response to the COVID-19 pandemic, which included the temporary closure of our retail stores as compared to a source of cash in the prior year. The use of cash caused by the current year loss was offset in part by working capital improvements due to extending payment terms with our vendors and management of our inventory balances, as well as negotiating rent deferrals with certain landlords and withholding rent payments for certain retail locations that were closed while we continue to negotiate amendments for those locations, totaling approximately $11.2 million.

Net cash used in operating activities during the thirty-nine weeks ended October 31, 2020 was $20.4 million. Key elements of cash used in operating activities were (i) net loss of $112.5 million, (ii) adjustments to reconcile net income to net cash provided by operating activities of $67.3 million, primarily driven by impairment of goodwill and indefinite-lived intangible assets, depreciation and amortization, partially offset by deferred income taxes, and (iii) a source of cash from net operating assets and liabilities of $24.8 million, primarily driven by increases in accounts payable and accrued liabilities.

Net cash provided by operating activities during the thirty-nine weeks ended November 2, 2019 was $17.7 million. Key elements of cash provided by operating activities were (i) net loss of $90.0 million, and (ii) adjustments to reconcile net income to net cash provided by operating activities of $121.4 million, primarily driven by depreciation and amortization and equity based compensation and noncash amortization of deferred financing and debt discount costs, partially offset by deferred income taxes, and (iii) use of cash from net operating assets and liabilities of $13.7 million, primarily driven by higher inventory, accounts receivable and prepaid expense and other current assets levels, partially offset by higher accrued expense levels.

Net Cash used in Investing Activities

Net cash used in investing activities during the thirty-nine weeks ended October 31, 2020 decreased $10.5 million to $3.0 million compared to the thirty-nine weeks ended November 2, 2019, representing efforts to reduce capital expenditures in order to preserve cash in response to COVID-19.

Net Cash provided by (used in) Financing Activities

Net cash provided by financing activities during the thirty-nine weeks ended October 31, 2020 was $11.1 million, which was driven by the borrowing under the Subordinated Facility, partially offset by principal payments on the Term Loan and Priming Loan.

Net cash used in financing activities during the thirty-nine weeks ended November 2, 2019 was $53.4 million, which was driven primarily by the special dividend paid to shareholders.

Dividends

On April 1, 2019 the Company paid a special cash dividend of $50.2 million to the shareholders of J.Jill, Inc.

The payment of cash dividends in the future, if any, will be at the discretion of our board of directors and will depend upon such factors as earnings levels, capital requirements, restrictions imposed by applicable law, our overall financial condition, restrictions in our debt agreements, including our Term Loan and ABL Facility, and any other factors deemed relevant by our board of directors. As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of restrictions on their ability to pay dividends to us under our Term Loan, our ABL Facility and under future indebtedness that we or they may incur.

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Credit Facilities

At October 31, 2020 and at February 1, 2020 there were no loan amounts outstanding under the ABL Facility. At October 31, 2020 and February 1, 2020, the Company had outstanding letters of credit in the amount of $2.7 million and $1.7 million, respectively, and maximum additional borrowing capacity of $37.3 million and $38.3 million, respectively.

Contractual Obligations

The Company’s contractual obligations consist primarily of debt obligations, interest payments, operating leases and purchase orders for merchandise inventory. These contractual obligations impact the Company’s short-term and long-term liquidity and capital resource needs. During the thirty-nine weeks ended October 31, 2020, as a result of COVID-19 related temporary store closures, the Company was unable to maintain compliance with certain of its non-financial and financial covenants.

Contingencies

We are subject to various legal proceedings that arise in the ordinary course of business. Although the outcome of such proceedings cannot be predicted with certainty, management does not believe that we are presently party to any legal proceedings the resolution of which management believes would have a material adverse effect on our business, financial condition, operating results or cash flows. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements.

Critical Accounting Policies and Significant Estimates

The most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our consolidated financial statements and to the understanding of our reported financial results include those made in connection with revenue recognition, including accounting for gift card breakage and estimated merchandise returns; estimating the value of inventory; impairment assessments for goodwill and other indefinite-lived intangible assets, and long-lived assets; and estimating equity-based compensation expense. Management evaluates its policies and assumptions on an ongoing basis.

Our significant accounting policies related to these accounts in the preparation of our consolidated financial statements are described under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates” in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020. As of the date of this filing, there were no significant changes to any of the critical accounting policies and estimates previously described in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

Refer to Note 2 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, for recently adopted accounting standards, including the dates of adoption and estimated effects on our results of operations, financial position or cash flows.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements.

These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from

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those in the forward-looking statements include, but are not limited to, the Company’s ability to comply with the terms of the TSA, including completing various stages of the restructuring within the dates specified therein; the effects of disruption from the proposed financial restructuring making it more difficult to maintain business, financing and operational relationships; the Company’s ability to achieve the potential benefits of the proposed financial restructuring; the impact of the COVID-19 epidemic on the Company and the economy as a whole; the Company’s ability to take actions that are sufficient to eliminate the substantial doubt about its ability to continue as a going concern; the Company’s ability to develop a plan to regain compliance with the continued listing criteria of the NYSE; the NYSE’s acceptance of such plan; the Company’s ability to execute such plan and to continue to comply with applicable listing standards within the available cure period; risks arising from the potential suspension of trading of the Company’s common stock on the NYSE; regional, national or global political, economic, business, competitive, market and regulatory conditions, including risks regarding our ability to manage inventory or anticipate consumer demand; changes in consumer confidence and spending; our competitive environment; our failure to open new profitable stores or successfully enter new markets and other factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020. All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Risk Factors set forth in our Annual Report on Form 10-K for the year ended February 1, 2020 and other cautionary statements included therein and herein.

These forward-looking statements reflect our views with respect to future events as of the date of this Quarterly Report on Form 10-Q and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. We qualify all of our forward-looking statements by these cautionary statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are subject to interest rate risk in connection with borrowings under the Term Loan, ABL Facility, Priming Loan and Subordinated Facility, which bear interest at variable rates equal to LIBOR plus a margin as defined in the respective agreements described above. As of October 31, 2020, there was no outstanding balance under the ABL Facility, and $2.7 million letters of credit outstanding. The undrawn borrowing availability under the ABL Facility was $37.3 million and the amount outstanding under the Term Loan had decreased to $4.9 million ($5.0 million principal) as $223.5 million ($230.5 million principal) of Priming Loans were exchanged for 97.9% of the Term Loan as a result of the debt restructuring. Additionally, as part of the debt restructuring, we borrowed $15.0 million of principal ($2.9 million carrying value) under the Subordinated Facility. We currently do not engage in any interest rate hedging activity. Based on the schedule of outstanding borrowings as of October 31, 2020, a 10% change in our current interest rate would affect net income by an estimated $1.2 million during Fiscal Year 2020.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our results of operations and financial condition have been immaterial. We cannot assure you our business will not be affected in the future by inflation.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form-10-Q and concluded that, as of October 31, 2020, our disclosure controls and procedures were effective.

Remediation of Previously Reported Material Weakness

As previously disclosed in Item 9A of our Annual Report on Form 10-K for the Fiscal Year ended February 1, 2020, management identified a material weakness in the control activities environment component of internal control as the Company did not appropriately design and maintain controls related to the accounting for goodwill and tradename impairment. Specifically, control activities were not designed and maintained over the review of the allocation of the carrying value of net assets to the reporting units used in the goodwill and tradename impairment analysis.

Due to the actions taken by the Company to enhance existing controls and procedures, management has concluded that this material weakness has been remediated as of October 31, 2020. During the quarter ended October 31, 2020 to remediate this material weakness, we enhanced the level of review of the allocation of the carrying value of the Company’s net assets to its reporting units by clearly defining the review steps to be performed and adding a secondary review.

We tested the operating effectiveness of the review procedures performed and found the procedures to be operating effectively. Based on our testing, we concluded that the enhanced controls and procedures implemented directly address the risk of material misstatement due to a misallocation of the carrying value of net assets to the reporting units used in the goodwill and tradename impairment analysis.

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Changes to Internal Control over Financial Reporting

As described above under “Remediation of Previously Reported Material Weakness”, there were changes in our internal control over financial reporting, (as defined in Rules 13a-15(e) and 15d-15(e) under the Act) during the fiscal quarter ended October 31, 2020.

Limitations on the Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and our management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

The updated risk factors below arose primarily due to COVID-19. Additional factors that could cause our actual results to differ materially from those in this report are described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. As of the date of this Quarterly Report on Form 10-Q, there have been no other material changes to the risk factors previously disclosed in our Annual Report on Form 10-K. However, additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations and we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

The novel coronavirus (COVID-19) pandemic has disrupted and may further disrupt our business, which has and could further materially adversely affect our operations and business and financial results.

The novel coronavirus (COVID-19) pandemic has had a material adverse effect on our business. The extent to which COVID-19 and other epidemics, disease outbreaks, or public health emergencies will impact our business, liquidity, financial condition, and results of operations, depends on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic, epidemic, disease outbreak, or public health emergency; the negative impact on the economy; the short and longer-term impacts on the demand for retail and levels of consumer confidence; our ability to successfully navigate the impacts; government action, including restrictions on congregating in heavily populated areas, such as malls and shopping centers; and increased unemployment and reductions in consumer discretionary spending. Even if a virus or other disease does not spread significantly, the perceived risk of infection or health risk may damage our reputation and adversely affect our business, liquidity, financial condition, and results of operations.

The sustained current outbreak and continued spread of COVID-19 has caused economic disruption, including wide scale unemployment, and it is possible that it could cause a global recession. There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession.

The spread of COVID-19 has also caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our business, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions. We cannot predict when our business will return to normalized levels. This is especially due to the fact that as certain markets have reopened, some of them have since experienced a resurgence of COVID-19 cases. In the event of additional waves of COVID-19 spread, it is unclear whether the same mitigation or containment measures taken by various governments (including at the federal, state and local level) or private enterprises will be continued or re-implemented, or if different measures will be implemented and what impact such measures will have on the national or global economy. In addition, it is possible that despite additional waves of COVID-19, an increasing number of Americans who have emerged from the initial waves of COVID-19 will be less willing to return to such conditions, which could exacerbate the course of the pandemic.

The degree to which the COVID-19 pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the possibility of a “second wave” of COVID-19, the actions to contain the virus or treat its impact, other actions taken by governments, businesses, and individuals in response to the virus and resulting economic disruption, and how quickly and to what extent normal economic and operating conditions can resume. We are similarly unable to predict the degree to which the pandemic will impact our customers, suppliers and other partners, and their financial conditions, but a material effect on these parties could also adversely affect us.

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We recently completed a financial restructuring of the Company’s capital structure and indebtedness on an out-of-court basis.

As previously reported, on August 31, 2020, the Company, the Borrower and each of their direct and indirect subsidiaries entered into the TSA with the Consenting Lenders and the Subordinated Lenders to support the Transaction on the terms set forth in the TSA. Subsequently, on September 11, 2020, the Company received the consent of the term loan lenders representing more than 95.0% of the aggregate outstanding principal amount of the term loan claims under the Company’s existing term loan facility (the “Existing Term Facility”) to proceed with the documentation and consummation of the Transaction on an out-of-court basis, pursuant to the terms and conditions set forth in the out-of-court term sheet attached as Exhibit A to the TSA (the “Out-of-Court Term Sheet”).

Pursuant to the Out-of-Court Term Sheet, the Company has implemented the following series of transactions (a) an amendment of the Company’s Existing Term Loan Facility to, among other things, waive any non-compliance with the terms of the Existing Term Facility, (b) entry into the Priming Credit Agreement, the proceeds of which have been used to repurchase the term loans under the Existing Term Loans from the Consenting Lenders, (c) an amendment of the ABL Facility, to, among other things, waive any noncompliance with the terms of the ABL Facility, and (d) the provision by the Subordinated Lenders of new capital pursuant to the Subordinated Facility.

It is possible that our recent financial restructuring could adversely affect our business and relationships with customers, employees, suppliers and government authorities. Due to uncertainties, many risks may exist, including the following:

•

key suppliers could terminate their relationships or require financial assurances or enhanced performance,

•

the ability to renew existing contracts and compete for new business may be adversely affected;

•

the ability to attract, motivate and/or retain key executives and employees may be adversely affected;

•

employees may be distracted from performance of their duties or more easily attracted to other employment opportunities;

•

competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted; and

•

may be subject to additional financial assurance or other conditions that may not be feasible.

The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation. We cannot assure you that having been subject to a financial restructuring will not adversely affect our operations in the future.

If we cannot regain compliance with the NYSE’s continuing listing requirements and rules, the NYSE may delist our common stock, which could negatively affect our company, the price of our common stock and your ability to sell our common stock.

On March 6, 2020, we received notice from the NYSE informing us that we were no longer in compliance with the NYSE continued listing standards set forth in Section 802.01B of the NYSE’s Listed Company Manual due to the fact that our average global market capitalization over a consecutive 30 trading-day period was less than $50 million and, at the same time, our shareholders’ equity was less than $50 million.

In accordance with the NYSE listing requirements, we have submitted a plan that demonstrates how we expect to return to compliance with Section 802.01B. We received notification on June 5, 2020 that our submitted plan was accepted by the NYSE. There can be no assurances that the Company will maintain compliance with the plan. If we are unable to comply with the plan or we are unable to meet the continued listing standards by November 15, 2021, we will be subject to the prompt initiation of NYSE suspension and delisting procedures.

On March 24, 2020, we received notice from the NYSE informing us that we were no longer in compliance with the NYSE continued listing standards set forth in Section 802.01C of the NYSE’s Listed Company Manual due to the fact that our average closing share price over a consecutive 30 trading-day period was less than $1. On November 9, 2020, the Company filed a Certificate of Amendment to the Certificate of Incorporation of the Company with the Secretary of State of Delaware to effect a 1-for-5 reverse split of the shares of the Company’s common stock. As a result of the 1-for-5 reverse split, the Company has regained compliance with Section 802.01C.

If we are unable to satisfy the NYSE criteria for continued listing, our common stock would be subject to delisting. A delisting of our common stock could negatively impact us by, among other things, reducing the liquidity and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news and analyst coverage of us; and limiting our ability to issue additional securities or obtain additional financing in the future. In addition, delisting from the NYSE may negatively impact our reputation and, consequently, our business.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Pursuant to the Priming Credit Agreement, the Company issued 656,717 shares of common stock to the Priming Lenders, and pursuant to the Subordinated Facility, the Company issued 3,720,109 Warrants to purchase 3,720,109 shares of common stock to the Subordinated Lenders (after giving effect to the 1-for-5 stock split described herein). The common stock issuance and the Warrant issuance were undertaken in reliance upon the exemptions from registration provided by Regulation D and Section 4(a)(2) of the Securities Act, respectively.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed on the Exhibit Index are filed or furnished as part of this Quarterly Report on Form 10-Q.

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Exhibit Index

Exhibit Number		Description
3.1		Certificate of Incorporation of J.Jill, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Form 10-K, filed on April 28, 2017 (File No. 0001-38026)).

3.2		Certificate of Amendment to the Certificate of Incorporation of J.Jill, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s 8-K filed on November 9, 2020 (File No. 001-38026)).

3.3		Bylaws of J.Jill, Inc. (incorporated by reference from Exhibit 3.2 to the Company’s 10-K, filed on April 28, 2017 (File No.001-38026)).

10.1		Amendment No. 2 to Term Loan Credit Agreement, Consent and Waiver, dated as of September 30, 2020, by and among J.Jill, Inc. (as successor to Jill Holdings LLC), as holdings, Jill Acquisition LLC, as the borrower, the Required Lenders (as defined therein) and Wilmington Trust, National Association, as administrative agent and collateral agent (incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K, filed on October 2, 2020 (File No. 001-38026)).

10.2		Priming Credit Agreement, dated as of September 30, 2020, by and among J.Jill. Inc., J.Jill Acquisition LLC, as the borrower, the lenders party thereto from time to time and Wilmington Trust, National Association, as administrative agent and collateral agent (incorporated by reference from Exhibit 10.2 to the Company’s Form 8-K, filed on October 2, 2020 (File No. 001-38026)).

10.3		Subordinated Credit Agreement, dated as of September 30, 2020, by and among J.Jill, Inc., Jill Acquisition LLC, as the borrower, the lenders party thereto from time to time and Wilmington Trust, National Association, as administrative agent and collateral agent (incorporated by reference from Exhibit 10.3 to the Company’s Form 8-K, filed on October 2, 2020 (File No. 001-38026)).

10.4*		Amendment No. 3 to ABL Credit Agreement and Waiver, dated as of October 16, 2020, effective as of September 30, 2020 by and among Jill Acquisition LLC (File No. 001-38026).

10.5		Amendment No. 4 to ABL Credit Agreement and Waiver, dated as of September 30, 2020 by and among Jill Acquisition LLC (incorporated by reference from Exhibit 10.4 to the Company’s Form 8-K, filed on October 2, 2020 (File No. 001-38026)).

10.6		Warrant Agreement, dated as of October 2, 2020, by and among J.Jill, Inc. and American Stock Transfer & Trust Company, LLC (incorporated by reference from Exhibit 10.5 to the Company’s Form 8-K, filed on October 2, 2020 (File No. 001-38026)).

10.7*		Amendment to Warrant Agreement, amended as of December 4, 2020, by and among J.Jill, Inc. and American Stock Transfer & Trust Company, LLC (File No. 001-38026).

31.1		Certification of Principal Executive Officer required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

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101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Furnished herewith.

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SIGNATURES

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

	J.Jill, Inc.

Date: December 11, 2020	By:	/s/ James Scully
		James Scully
		Interim Chief Executive Officer

Date: December 11, 2020	By:	/s/ Mark Webb
		Mark Webb
		Executive Vice President and Chief Financial Officer

Exhibit 10.4

Execution Version

AMENDMENT NO. 3 TO TERM LOAN CREDIT AGREEMENT AMENDMENT NO. 3 TO TERM LOAN CREDIT AGREEMENT, dated as of

October 16, 2020 (this “Amendment”) and effective as of September 30, 2020 (the “Effective Date”), is entered into by and between Jill Acquisition LLC, a Delaware limited liability company (the “Borrower”), and Wilmington Trust, National Association (“WTNA”), as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement (as defined below).

PRELIMINARY STATEMENTS

WHEREAS, reference is made to that certain Term Loan Credit Agreement, dated as of May 8, 2015 (as amended by that certain Amendment No. 1 to Term Loan Credit Agreement, dated as of May 27, 2016, and that certain Amendment No. 2 to Term Loan Credit Agreement, Consent and Waiver, dated as of September 30, 2020 (the “Second Amendment”), and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”; as amended by this Amendment, the “Credit Agreement”), by and among the Borrower, J. Jill, Inc., a Delaware corporation (“Holdings”), the Lenders party from time to time thereto, the Administrative Agent and WTNA, as Collateral Agent.

WHEREAS, pursuant to Section 12.12(f) of the Existing Credit Agreement, the Administrative Agent and the Borrower are permitted to amend any provision of the Existing Credit Agreement to correct any obvious error or any error or omission of a typographical, technical or immaterial nature.

WHEREAS, as part of the Second Amendment, Section 12.12(a) of the Credit Agreement (as in effect immediately prior to the Second Amendment) was purported to be amended in a manner that was not permitted by the terms of the Credit Agreement as in effect at such time.

WHEREAS, the Administrative Agent and the Borrower have (x) jointly identified such obvious error in Section 12.12(a) of the Existing Credit Agreement and desire to amend such provision to correct such obvious error and (y) notified the Lenders of such proposed amendment on the date hereof.

WHEREAS, in accordance with Section 12.12(f) of the Existing Credit Agreement, the Borrower and the Administrative Agent have agreed to make such amendment to the Existing Credit Agreement on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Amendment to Existing Credit Agreement. Section 12.12(a) of the Existing Credit Agreement is hereby amended to delete the words “in right of payment” contained therein.

Conditions to Effectiveness. In accordance with Section 12.12(f) of the Existing Credit Agreement, this Amendment shall become effective, as of the Effective Date, immediately and automatically upon the passage of five (5) Business Days after the date hereof, so long as this Amendment is not objected to in writing by the Required Lenders during such five (5) Business Day period.

Miscellaneous.

Except as modified hereby, all terms and conditions of the Existing Credit Agreement and the other Credit Documents remain in full force and effect.

This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart hereof by facsimile or electronic transmission shall be as effective as delivery of any original executed counterpart hereof.

The provisions of Section 12.08 (Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial) of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

[Signature Pages Follow]

-2-

IN WI1NESS WHEREOF, the parties hereto have caused this Amendment to be

executed as of the date first above written.

JILL ACQUISITION LLC,

a Delaware limited liability company, as

Borrower

By:

Name:Mark Webb

Title:Chief Financial Officer\ .

•;

[Signature page to Amendment No. 3 t0 Term Loan Credit AgreementJ

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent

Name: Title:

By:

[Signature page to Amendment No. 3 to Term Loan Credit Agreement]

Exhibit 10.7

J.JILL, INC.

(as Issuer) and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

(as Warrant Agent) Warrant

Agreement

Dated as of October 2, 2020,

as amended on December 4, 2020

Warrants Exercisable for

Shares of Common Stock

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		Page
ARTICLE I DEFINITIONS

Section 1.01	Definitions.	1
Section 1.02	Rules of Construction	5

ARTICLE II APPOINTMENT OF WARRANT AGENT

Section 2.01	Appointment of Warrant Agent	5

ARTICLE III THE WARRANTS

Section 3.01	Form and Dating; Legends.	6
Section 3.02	Outstanding Warrants	6
Section 3.03	Cancellation	6
Section 3.04	CUSIP Numbers.	6
Section 3.05	Registration and Transfer	7
Section 3.06	Restrictions on Transfer	7

ARTICLE IV
SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS

Section 4.01	Terms of Warrants; Exercise of Warrants	8
Section 4.02	Conditional Exercise	11
Section 4.03	Cost Basis Information	11

ARTICLE V COVENANTS OF THE COMPANY

Section 5.01	Maintenance of Office or Agency	11
Section 5.02	Payment of Taxes	11
Section 5.03	Rule 144A(d)(4) Information	12
Section 5.04	Reservation of Warrant Shares	12
Section 5.05	Listing	12
Section 5.06	HSR Act	12

ARTICLE VI
ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE

Section 6.01	Adjustment to Number of Warrant Shares	13
Section 6.02	Fractional Interests	19
Section 6.03	Notices to Warrant Holders	19
Section 6.04	No Rights as Stockholders; Limitations of Liability	20

ARTICLE VII WARRANT AGENT

Section 7.01	Warrant Agent	21
Section 7.02	Compensation; Indemnity; Limitation on Liability	23

Section 7.03	Individual Rights of Warrant Agent	23
Section 7.04	Replacement of Warrant Agent	24
Section 7.05	Successor Warrant Agent by Merger	25
Section 7.06	Holder Lists	25

ARTICLE VIII MISCELLANEOUS

Section 8.01	Holder Actions	25
Section 8.02	Notices and Communications	25
Section 8.03	Entire Agreement	26
Section 8.04	Amendments, Supplements and Waivers	27
Section 8.05	Benefits of This Agreement	28
Section 8.06	Successors and Assigns	28
Section 8.07	Governing Law; Jurisdiction and Venue; Waiver of Jury Trial	28
Section 8.08	Severability	29
Section 8.09	Counterparts	29
Section 8.10	Table of Contents and Headings	30
Section 8.11	No Adverse Interpretation of Other Agreements	30
Section 8.12	No Presumption	30
Section 8.13	Obligations Limited to Parties to This Agreement and Holders	30
Section 8.14	Bank Accounts	30
Section 8.15	Further Assurances.	31
Section 8.16	Confidentiality	31
Section 8.17	United States Federal Income Tax Treatment	31

EXHIBITS

Exhibit A Form of Common Stock Warrant

Exhibit B Restricted Legend

Exhibit C Rule 144A Certificate

Exhibit D Accredited Investor Certificate

WARRANT AGREEMENT, dated as of October 2, 2020, among J.Jill, Inc., a Delaware corporation (as further defined below, the “Company”), and American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (the “Warrant Agent”).

WHEREAS, the Company proposes to issue warrants (the “Warrants”), that upon exercise may be settled solely for shares of Common Stock (as defined herein) (the Common Stock issuable on exercise of the Warrants being referred to herein as the “Warrant Shares”) or, at the option of the Company, via net share settlement, to certain third-party purchasers;

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act in connection with the issuance of the Warrants and other matters as provided herein; and

WHEREAS, each Warrant shall entitle the registered owner thereof to purchase one share of Common Stock, subject to adjustment as provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, the following terms shall have the following respective meanings.

“act” has the meaning set forth in Section 8.01.

“Accredited Investor Certificate” means a certificate substantially in the form of Exhibit D hereto.

“Affiliate” has the meaning assigned to such term, as of the date hereof, in Rule 405 under the Securities Act.

“Agreement” means this Warrant Agreement, as amended or supplemented from time to time.

“Average VWAP” per share over any specified period means the arithmetic average of the VWAP per share for each Trading Day in such period.

“Board of Directors” means the Board of Directors of the Company or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action.

“Business Combination” means a merger, consolidation, business combination or similar transaction of the Company with another Person.

“Business Day” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Capital Stock” means:

(1)

in the case of a corporation, corporate stock;

(2)

in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3)

in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests, respectively; and

(4)

any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Closing Sale Price” per share of the Common Stock means, as of any date, the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported (1) on the principal National Securities Exchange on which the Common Stock is traded, (2) if the Common Stock is not listed on a National Securities Exchange, on the principal regional securities exchange, or (3) if the Common Stock is not listed on a National Securities Exchange or regional securities exchange, in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. In the absence of such a quotation, the Closing Sale Price shall be an amount determined by the Board of Directors to be the fair market value of a share of Common Stock.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.01 per share, of the Company or any other Capital Stock of the Company into which such common stock shall be reclassified or changed.

“Company” means J.Jill, Inc., a Delaware corporation, or any successor to the Company.

“Corporate Trust Office” means the office of the Warrant Agent designated for the purposes contemplated hereunder, which at the Issue Date is located at 6201 15^th Avenue, Brooklyn, New York 11219.

“Ex-Date” means, when used with respect to any issuance of or distribution in respect of the Common Stock or any other securities, the first date on which the Common Stock or such other securities trade without the right to receive such issuance or distribution.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Exercise Notice” has the meaning assigned to such term in Section 4.01(b).

“Exercise Price” means the exercise price for the Warrants as set forth on Exhibit A.

“Exercise Ratio” has the meaning assigned to such term in Section 6.01.

“Expiration Time” has the meaning assigned to such term in Section 4.01(a).

“Form Certificate” has the meaning assigned to such term in Section 3.01.

“Full Share Settlement” has the meaning assigned to such term in Section 4.01(b).

“Full Share Settlement Election” has the meaning assigned to such term in Section 4.01(b).

“Funds” has the meaning assigned to such term in Section 8.14.

“GAAP” means accounting principles generally accepted in the United States. “Holder” means the registered holder of any Warrant.

“HSR Act” has the meaning assigned to such term in Section 5.06.

“Issue Date” means the date on which the Warrants are originally issued under this Agreement.

“Market Value” means, the Average VWAP during a five consecutive Trading Day period ending on the Trading Day immediately prior to the date of determination, as reported (1) on the principal National Securities Exchange on which the Common Stock is traded, (2) if the Common Stock is not listed on a National Securities Exchange, on the principal regional securities exchange, or (3) if the Common Stock is not listed on a National Securities Exchange or regional securities exchange, in the over-the-counter market as reported by OTC Markets Group Inc. or a similar organization. In the absence of such a listing or reporting, the Market Value shall be an amount determined by the Board of Directors.

“National Securities Exchange” means an exchange registered with the Commission under Section 6(a) of the Exchange Act.

“Net Share Settlement” has the meaning assigned to such term in Section 4.01(b).

“Net Share Settlement Election” has the meaning assigned to such term in Section 4.01(b).

“Officer” means any of the Chief Executive Officer, the Chief Financial Officer the General Counsel, any Senior Vice President, any Vice President or any Assistant Vice President of the Company or any correlative position.

“Opinion of Counsel” means a written opinion of counsel who shall be reasonably acceptable to the Warrant Agent that meets the requirements set forth herein.

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

“Pro Rata Repurchases” means any purchase of shares of Common Stock by the Company or any Affiliate thereof pursuant to (i) any tender offer or exchange offer directed to all of the holders of Common Stock subject to Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (ii) any other tender offer available to substantially all holders of Common Stock, in the case of both (i) and (ii), whether for cash, shares of Capital Stock of the Company, other securities of the Company, evidences of indebtedness of the Company or any other Person or any other property (including shares of Capital Stock, other securities or evidences of indebtedness of a subsidiary), or any combination thereof, effected while the Warrants are outstanding. The “effective date” of a Pro Rata Repurchase shall mean the date of purchase with respect to any Pro Rata Repurchase.

“Register” means the register established by the Warrant Agent pursuant to Section 3.05.

“Restricted Legend” means the legend set forth in Exhibit B.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A under the Securities Act.

“Rule 144A Certificate” means a certificate substantially in the form of Exhibit C hereto.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Trading Day” means a day during which trading in securities generally occurs on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other National Securities Exchange or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a National Securities Exchange or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, “Trading Day” shall mean a Business Day.

“Transfer Agent” has the meaning assigned to such term in Section 5.04(b).

“Trigger Event” has the meaning assigned to such term in Section 6.01(a)(ix).

“VWAP” per share of Common Stock on any Trading Day means the per share volume- weighted average price as displayed on Bloomberg page “JILL US <equity>” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day; or, if such price is not available, “VWAP” means the market value per share of Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Company for this purpose.

“Warrant Agent” means the party named as such in the first paragraph of this Agreement or any successor warrant agent under this Agreement pursuant to Article VII.

“Warrant Shares” has the meaning assigned to such term in the recitals to this Agreement.

“Warrants” has the meaning assigned to such term in the recitals to this Agreement.

Section 1.02Rules of Construction. Unless the context otherwise requires, as used in this Agreement:

(a)a defined term has the meaning assigned to it for all purposes of this Agreement, regardless of where it is defined herein;

(b)all accounting terms not otherwise defined shall have the respective meanings assigned to them under GAAP;

(c)“or” is not exclusive but shall be used in the inclusive sense of “and/or”;

(d)defined terms and other words used in the singular shall be deemed to include the plural, and vice versa;

(e)the terms “herein,” “hereof” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision of this Agreement;

(f)when the words “include,” “includes” or “including” are used herein, they shall be deemed to be followed by the phrase “without limitation”;

(g)unless expressly qualified otherwise (e.g., by “Business” or “Trading”), all references to “days” are deemed to be references to calendar days;

(h)all references to Sections or Articles or Exhibits refer to Sections or Articles or Exhibits of or to this Agreement unless otherwise indicated; and

(i)references to agreements or instruments, or to statutes or regulations, are to such agreements or instruments, or statutes or regulations, as amended, supplemented or modified from time to time (or to successor statutes and regulations).

ARTICLE II

APPOINTMENT OF WARRANT AGENT

Section 2.01 Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the Warrants in accordance with the express terms and conditions set forth hereinafter in this Agreement (and no implied terms and conditions) and the Warrant Agent hereby accepts such appointment and shall perform the same in accordance with the express terms and conditions set forth in this Agreement.

ARTICLE III

THE WARRANTS

Section 3.01 Form and Dating; Legends. The Warrants will be categorized as Common Stock Warrants and will be issuable only in book-entry form with terms and provisions contained in the form of the Warrants attached as Exhibit A (the “Form Certificate”), which terms and provisions are hereby expressly made a part of this Agreement. The Warrants may have electronic notations, legends or endorsements required by law, rules of or agreements with National Securities Exchanges to which the Company is subject, or usage.

(a)Except as otherwise provided in Section 3.01(b) or Section 3.06, each Warrant will bear the Restricted Legend.

(b)If the Company determines (upon the advice of counsel and such other certifications and evidence as the Company may reasonably require) that a Warrant is eligible for resale pursuant to Rule 144 under the Securities Act (or a successor provision) without the need to satisfy current information or other requirements therein and that the Restricted Legend is no longer necessary or appropriate in order to ensure that subsequent transfers of the Warrant are effected in compliance with the Securities Act, the Company may deliver an instruction (together with an opinion of counsel as the Warrant Agent may reasonably require) to the Warrant Agent in writing to remove the Restricted Legend from such Warrant, and the Warrant Agent will comply with such instruction.

(c)By its acceptance of any Warrant bearing the Restricted Legend, each Holder thereof and each owner of a beneficial interest therein acknowledges the restrictions on transfer of such Warrant set forth in this Agreement and in the Restricted Legend and agrees that it will transfer such Warrant only in accordance with this Agreement and such legend.

Section 3.02 Outstanding Warrants. The Register shall show at any time the number of Warrants outstanding, which shall be all Warrants that have not been canceled by the Warrant Agent or the Company or instructed to the Warrant Agent for cancellation, exercised by the Holder thereof or terminated or expired in accordance with the terms thereof or by operation of law.

Section 3.03 Cancellation. Notwithstanding any Warrants cancelled in accordance with Section 4.01, the Company will promptly instruct the Warrant Agent for cancellation any Warrants which the Company may have acquired in any manner whatsoever. Certification of the cancellation of all canceled Warrants shall be delivered to the Company upon written request. The Warrant Agent will cancel all Warrants surrendered for transfer, exchange or cancellation and dispose of them in accordance with its normal procedures, and subject to its document management policies. The Company may not issue new Warrants to replace Warrants that have been exercised or delivered to the Warrant Agent for cancellation (provided that this shall not preclude the Company from issuing warrants in the future).

Section 3.04 CUSIP Numbers. The Company in issuing the Warrants may use “CUSIP” numbers for the Warrants and the Warrant Agent will use such CUSIP numbers in notices as a convenience to Holders, with any such notice stating that no representation is made as to the correctness of such numbers either as printed on the Warrants or as contained in any notice to any

Holder. The Company will promptly notify the Warrant Agent and Holders in writing of any change in such CUSIP numbers.

Section 3.05 Registration and Transfer. The Company shall cause the Warrant Agent to maintain a register (the “Register”) for registering original issuance and transfer of the Warrants. Upon the initial issuance of the Warrants in book entry form, the Warrant Agent shall issue and register the Warrants in the names of the respective Holders thereof in such denomination and otherwise in accordance with instructions delivered to the Warrant Agent by the Company.

(a)Subject to Section 3.06 hereof, a Holder may transfer a Warrant to another Person by presenting to the Warrant Agent a written request therefor stating the name of the proposed transferee, accompanied by any certification, opinion or other document required by this Agreement. The Warrant Agent will promptly register any transfer that meets the requirements of this Section 3.05 by noting the same in the Register maintained by the Warrant Agent for such purpose; provided that no transfer will be effective until it is registered in the Register. Prior to the registration of any transfer, the Company, the Warrant Agent and their agents will treat the Person in whose name the Warrant is registered as the owner and Holder thereof for all purposes, and will not be affected by notice to the contrary.

All Warrants issued upon transfer shall be duly authorized and entitled to the benefits of this Agreement.

No service charge will be imposed solely in connection with any transfer of any Warrant, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

A party requesting transfer of Warrants or other securities must provide any evidence of authority or other documentation that may be required by the Warrant Agent, including a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association.

(b)Subject to compliance with Section 3.06(b), if a Warrant is transferred, the transfer of such ownership shall be effected through the Register maintained by the Warrant Agent.

Section 3.06 Restrictions on Transfer. The transfer of any Warrant may only be made in accordance with this Section 3.06 and Section 3.05. The Warrant Agent shall refuse to register any requested transfer that does not comply with the immediately preceding sentence. Subject to Section 3.06(a), the Person requesting the transfer must deliver or cause to be delivered to the Warrant Agent a duly completed Rule 144A Certificate or Accredited Investor Certificate and such other certifications and evidence as the Company may reasonably require in order to determine that the proposed transfer or exchange is being made in compliance with this Section 3.06 and the applicable provisions of the Securities Act and any applicable securities laws of any state of the United States.

(a)No Rule 144A Certificate, Accredited Investor Certificate or other certification and evidence is required in connection with any transfer of any Warrant (or a

beneficial interest therein) after such Warrant is eligible for resale pursuant to Rule 144 under the Securities Act (or a successor provision) without the need to satisfy current information or other requirements therein; provided that the Company and the Warrant Agent may require from any Person requesting a transfer in reliance upon this paragraph any other reasonable certifications, opinions of counsel and evidence in connection with such resale. Any Warrant transferred in reliance upon this paragraph will not bear the Restricted Legend.

(b)The Warrant Agent will retain electronic copies of all certificates and other documents received in connection with the transfer of a Warrant, and the Company will have the right to inspect and make copies thereof at any reasonable time upon written notice to the Warrant Agent.

(c)Notwithstanding anything to the contrary contained in this Agreement, the aggregate number of shares of Common Stock that may be issued under the Warrants for any reason shall not exceed (i) the maximum number of shares approved for listing by the New York Stock Exchange pursuant to a supplemental listing application to be submitted by the Company to the New York Stock Exchange as soon as reasonably practicable following the date hereof if not completed prior or (ii) the maximum number of shares of Common Stock which the Company may issue without stockholder approval under the stockholder approval rules of the New York Stock Exchange or any other National Securities Exchange on which the shares of Common Stock are then listed, including New York Stock Exchange Listing Rule 312.03 (assuming the prior issuance of the “Equity Consideration” and the “Additional Shares”, each as defined in the Priming Term Loan Credit Agreement among the Company, Jill Acquisition LLC, the various lenders party thereto from time to time (the “Lenders”) and Wilmington Trust, National Association, as administrative agent and as collateral agent, dated as of September 30, 2020 (the “Term Loan Agreement”)), unless, in the case of this clause (ii), the requisite stockholder approval has been obtained, and, if obtained by written consent of the Company’s stockholders, at least 20 calendar days has elapsed since the filing and mailing of a definitive information statement to the Company’s stockholders in accordance with Rule 14c-2 promulgated under the Exchange Act. The foregoing restriction shall continue notwithstanding any failure of the Common Stock to continue to be listed on the New York Stock Exchange or any other National Securities Exchange on which the shares of Common Stock are then listed.

ARTICLE IV

SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS

Section 4.01Terms of Warrants; Exercise of Warrants.

(a)Subject to the terms of this Agreement, including Section 3.06(c), a Warrant shall be exercisable, at the election of the Holder thereof, either in full or from time to time in part during the period commencing 9:00 a.m., New York City time, on October 3, 2020 and until 5:00 p.m., New York City time, on October 2, 2025 (the “Expiration Time”), and shall entitle the Holder thereof to receive Warrant Shares from the Company. No adjustments as to dividends will be made upon exercise of the Warrants. Each Warrant not

exercised prior to the Expiration Time shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time.

(b)In order to exercise all or any of the Warrants, the Holder thereof must deliver to the Company notice substantially in the form of the election to exercise set forth on the reverse of the Form Certificate duly filled in and signed (the “Exercise Notice”). Following its receipt of any Exercise Notice, the Company shall promptly (and in any event, within three (3) Business Days) provide written notice to the Warrant Agent whether (A) the Company elects (a “Net Share Settlement Election”) to have the exercise of Warrants set forth in the Exercise Notice (the “Warrant Exercise”) net share settled pursuant to the procedures set forth in Section 4.01(c) (a “Net Share Settlement”) or (B) the Company elects (a “Full Share Settlement Election”) to have the Warrant Exercise settled solely in shares of Common Stock pursuant to the procedures set forth in Section 4.01(d) (a “Full Share Settlement”). If the Company shall not have provided such a notice to the Warrant Agent by 5:00 p.m., New York City time, on the third (3rd) Business Day following the Company’s receipt of any such Exercise Notice, the Company will be deemed to have made a Full Share Settlement Election with respect to the Warrants to which such Exercise Notice relates, as of such time.

(c)If the Company makes a Net Share Settlement Election pursuant to Section 4.01(b) with respect to the Warrant Exercise, then the Warrant Exercise shall be “net share settled” whereupon Warrant will be converted into shares of Common Stock pursuant to a cashless exercise, after which the Company will issue to the Holder the Warrant Shares equal to the result obtained by (i) subtracting B from A, (ii) dividing the result by A, and (iii) multiplying the difference by C as set forth in the following equation:

X = ((A - B)/A) x C

where:

X =

the Warrant Shares issuable upon exercise pursuant to this paragraph (c).

A =

the Market Value of a share of Common Stock as of the date on which the Holder delivers the applicable Exercise Notice.

B =

the Exercise Price per share of Common Stock.

C =

with respect to the Warrant then being exercised, the number of shares of Common Stock for which such Warrant is exercisable, prior to the Net Share Settlement procedures pursuant to this paragraph (c).

If the foregoing calculation results in a negative number, then no shares of Common Stock shall be issued upon exercise pursuant to this paragraph (c). The Company shall calculate and transmit to the Warrant Agent, and the Warrant Agent shall have no obligation under this Agreement to make, any calculations in respect of any Net Share Settlements. The number of Warrant Shares to be issued on such Net Share Settlement will be determined by the Company (with written notice thereof to the Warrant Agent) using the formula set forth in this Section 4.01(c). The Warrant Agent shall have no duty or obligation to investigate or confirm whether the Company’s

determination of the number of Warrant Shares to be issued on such exercise, pursuant to this Section 4.01(c) is accurate or correct.

(d)If a Full Share Settlement Election is made pursuant to Section 4.01(b) with respect to a Warrant Exercise, then within one (1) Business Day following the date of the Full Share Settlement Election, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price multiplied by the number of Warrant Shares issuable as to which the Warrant was so exercised in cash or via wire transfer of immediately available funds; provided that the failure to deliver payment shall not prejudice the Holder’s right to receive the number of shares of Common Stock into which the Warrant is exercisable upon payment of the Exercise Price.

(e)Upon compliance with the provisions set forth above, the Company shall promptly deliver or cause to be delivered, to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of whole Warrant Shares issuable upon the exercise of such Warrants or other securities or property to which such Holder is entitled, together with cash in lieu of fractional shares as provided in Section 6.02. Such certificate or certificates or other securities or property shall be deemed to have been issued, and any person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares or other securities or property, as of the date of the delivery of the Exercise Notice, notwithstanding that the stock transfer books of the Company shall then be closed or the certificates or other securities or property have not been delivered. If applicable, the Company shall provide to the Warrant Agent an initial funding of one thousand dollars ($1,000) for the purpose of issuing cash in lieu of fractional shares. From time to time thereafter, the Warrant Agent may request additional funding to cover fractional payments. The Warrant Agent shall have no obligation to make fractional payments unless the Company shall have provided the necessary funds to pay in full all amounts due and payable with respect thereto.

(f)The Warrant Agent shall keep copies of this Agreement and any notices given or received hereunder available for inspection by the Holders during normal business hours at its office upon reasonable notice to the Warrant Agent by the Holders. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may reasonably request.

(g)Certificates, if any, representing Warrant Shares shall bear a Restricted Legend (with all references to Warrants therein replaced by references to Common Stock, and with such changes thereto as the Company may deem appropriate) if (i) the Warrants for which they were issued carried a Restricted Legend or (ii) the Warrant Shares are issued in a transaction exempt from registration under the Securities Act (other than the exemption provided by Section 3(a)(9) of the Securities Act), in each case until and unless the circumstances set forth in Section 3.01(b) apply to such Warrant Shares, and any transfers thereof shall comply with the Restricted Legend.

(h)Notwithstanding anything to the contrary herein, (i) unless otherwise agreed by the Company and the Holder, the Warrant Shares shall be in uncertificated, book-entry form as permitted by the by-laws of the Company and the laws of the Delaware General Corporation Law, and (ii) delivery of Warrant Shares upon exercise of a Warrant shall be

made to the applicable Holder through the facilities of The Depository Trust Company as directed by such Holder unless such Holder shall otherwise instruct.

Section 4.02 Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of a Warrant is to be made in connection with a public offering or a sale of the Company (pursuant to a merger, sale of stock or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

Section 4.03 Cost Basis Information.

(a)In the event of a Full Share Settlement, the Company shall instruct the Warrant Agent to record cost basis for newly issued Warrant Shares issued pursuant to a Full Share Settlement in a manner reasonably determined by the Company to be subsequently communicated by the Company to the Warrant Agent.

(b)In the event of a Net Share Settlement, the Company shall provide cost basis for Warrant Shares issued pursuant to a Net Share Settlement at the time the Company confirms the number of Warrant Shares issuable in connection with the Net Share Settlement to the Warrant Agent.

ARTICLE V

COVENANTS OF THE COMPANY

Section 5.01 Maintenance of Office or Agency. The Company will maintain in the United States an office or agency where Warrants may be surrendered for registration of transfer or exchange or for presentation for exercise. The Company hereby initially designates the Corporate Trust Office of the Warrant Agent as such office of the Company. The Company will give prompt written notice to the Warrant Agent of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Warrant Agent with the address thereof, such presentations and surrenders may be made or served to the Warrant Agent.

The Company may also from time to time designate one or more other offices or agencies where the Warrants may be surrendered or presented for any of such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Warrant Agent of any such designation or rescission and of any change in the location of any such other office or agency.

Section 5.02 Payment of Taxes. The Company will pay all documentary, stamp or similar issue or transfer taxes in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants; provided that the exercising Holder shall be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of any Warrants or any Warrant Shares in a name other than that of the registered holder of a Warrant surrendered upon exercise, and the Company and the Warrant Agent shall not be required to issue such Warrant unless or until the exercising Holder shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company and the Warrant Agent that such tax has been paid.

Section 5.03 Rule 144A(d)(4) Information. For so long as any of the Warrants or Warrant Shares remain outstanding and constitute “restricted securities” under Rule 144, the Company will make available upon request to any prospective purchaser of the Warrants or Warrant Shares or beneficial owner of Warrants or Warrants Shares in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act; provided that such information shall be deemed conclusively to be made available pursuant to this Section 5.03 if the Company has filed such information with the Commission via its Electronic Data Gathering, Analysis and Retrieval System (or any successor electronic system maintained by the Commission) and such information is publicly available on such system.

Section 5.04 Reservation of Warrant Shares. (a) The Company will reserve and keep available for issuance and delivery such number of its authorized but unissued shares of Common Stock or other securities of the Company as will from time to time be sufficient to permit the exercise in full of all outstanding Warrants, which shares or securities will, when issued, be free and clear of all liens, security interests, charges and other encumbrances and free and clear of all preemptive rights.

(b) The Company will authorize and direct the transfer agent for the Common Stock (the “Transfer Agent”) and every subsequent transfer agent for any securities of the Company issuable upon the exercise of the Warrants to reserve such number of authorized securities as shall be required for such purpose. The Company will supply such Transfer Agent with duly executed certificates for such purposes and will provide or otherwise make available any cash which may be payable as provided in Sections 4.01(d) and 6.02. The Company will furnish such Transfer Agent a copy of all notices of adjustments, and certificates related thereto, transmitted to each Holder pursuant to Section 6.01(d).

Section 5.05 Listing. The Company shall use commercially reasonable efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on the New York Stock Exchange or the principal securities exchange on which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise. The Company shall take all such actions as may be necessary to ensure that all Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed at the time of such exercise.

Section 5.06 HSR Act. If the Company or any Holder of Warrants determines, after consultation with the other, that a filing is required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) or other similar applicable law outside of the United States, solely in connection with the exercise of Warrants hereunder, then the Company, on the one hand, and such Holder of Warrants, on the other hand, shall as promptly as practicable make, or cause to be made, all filings and submissions required under the HSR Act or such other law with respect to the exercise of such Warrants and use their commercially reasonable efforts to obtain, or cause to be obtained, consent in respect of such filings and submissions (or the termination or expiration of the applicable waiting period, as applicable) as soon as possible thereafter, in each case, at the sole cost and expense of such Holder. The Holder shall, upon written request from the Company, promptly reimburse the Company for any and all costs, fees or

expenses incurred by the Company arising out of, related to or in connection with the actions contemplated by this Section 5.06.

ARTICLE VI

ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE

Section 6.01 Adjustment to Number of Warrant Shares. The number of Warrant Shares issuable upon the exercise of each Warrant (the “Exercise Ratio”) is subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 6.01. Notwithstanding the forgoing, the payment of the Trigger Payment (as defined in the Term Loan Agreement) shall not cause any adjustment to the Exercise Ratio.

In the event that, at any time as a result of the provisions of this Section 6.01, the Holders of the Warrants shall become entitled upon subsequent exercise to receive any shares of Capital Stock of the Company other than Common Stock, the number of such other shares so receivable upon exercise of the Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

(a)Adjustments for Change in Capital Stock.

(i)If the Company pays a dividend (or other distribution) in shares of Common Stock to all holders of the Common Stock, then the Exercise Ratio in effect immediately following the record date for such dividend (or distribution) shall be multiplied by the following fraction:

OS₁

OS₀

where

OS₀ =

the number of shares of Common Stock outstanding immediately prior to the record date for such dividend or distribution; and

OS₁ =

the sum of (A) the number of shares of Common Stock outstanding immediately prior to the record date for such dividend or distribution and (B) the total number of shares of Common Stock constituting such dividend.

(ii)If the Company issues to all holders of shares of the Common Stock rights, options or warrants entitling them, for a period of not more than 60 days from the date of issuance of such rights, options or warrants, to subscribe for or purchase shares of Common Stock at less than the Market Value determined on the Ex-Date for such issuance, then the Exercise Ratio in effect immediately following the close of business on the Ex-Date for such issuance shall be multiplied by the following fraction:

OS₀ + X

OS₀ + Y

where

OS₀ =

the number of shares of Common Stock outstanding at the close of business on the record date for such issuance;

X =

the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and

Y =

the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the Market Value determined as of the last trading day preceding the date of the agreement on pricing such rights, options or warrants.

To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the number of Warrant Shares shall be readjusted to the number of Warrant Shares that would have then been in effect had the adjustment made upon the issuance of such rights, options or warrants been made on the basis of the delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are only exercisable upon the occurrence of certain triggering events, then the number of Warrant Shares shall not be adjusted until such triggering events occur. In determining the aggregate offering price payable for such shares of Common Stock, the conversion agent shall take into account any consideration received for such rights, options or warrants and the value of such consideration (if other than cash, to be determined by the Board of Directors).

(iii)If the Company subdivides, combines or reclassifies the shares of Common Stock into a greater or lesser number of shares of Common Stock, then the Exercise Ratio in effect immediately following the effective date of such share subdivision, combination or reclassification shall be multiplied by the following fraction:

OS₁

OS₀

where

OS₀ =

the number of shares of Common Stock outstanding immediately prior to the effective date of such share subdivision, combination or reclassification; and

OS₁ =

the number of shares of Common Stock outstanding immediately after the opening of business on the effective date of such share subdivision, combination or reclassification (after giving effect thereto).

(iv)If the Company distributes to all holders of shares of Common Stock evidences of indebtedness, shares of Capital Stock (other than Common Stock) or other assets (including cash or securities, but excluding any dividend or distribution referred to in clause (i) above; any rights or warrants referred to in clause (ii) above; and any dividend of shares of Capital Stock of any class or series, or similar equity

interests, of or relating to a subsidiary or other business unit in the case of certain spin-off transactions as described below), then the Exercise Ratio in effect immediately following the close of business on the record date for such distribution shall be multiplied by the following fraction:

SP₀

SP₀ - FMV

where

SP₀ =

the Closing Sale Price per share of Common Stock on the Trading Day immediately preceding the Ex-Date; and

FMV =

the fair market value of the portion of the distribution applicable to one share of Common Stock on the Trading Day immediately preceding the Ex-Date as determined by the Board of Directors.

In a spin-off, where the Company makes a distribution to all holders of shares of Common Stock consisting of Capital Stock of any class or series, or similar equity interests of, or relating to, a subsidiary or other business unit the Exercise Ratio shall be adjusted on the fourteenth Trading Day after the effective date of the distribution by multiplying the Exercise Ratio in effect immediately prior to such fourteenth Trading Day by the following fraction:

MP₀ + MPs

MP₀

where

MP₀ =

the average of the Closing Sale Price of the Common Stock over each of the first 10 Trading Days commencing on and including the fifth Trading Day following the effective date of such distribution; and

MP_S =

the average of the closing sale price of the Capital Stock or equity interests representing the portion of the distribution applicable to one share of Common Stock over each of the first 10 Trading Days commencing on and including the fifth Trading Day following the effective date of such distribution, or, as reported in the principal securities exchange or quotation system or market on which such shares are traded, or if not traded on a national or regional securities exchange or over-the- counter market, the fair market value of the Capital Stock or equity interests representing the portion of the distribution applicable to one share of Common Stock on such date as determined by the Board of Directors.

In the event that such distribution described in this clause (iv) is not so made, the Exercise Ratio shall be readjusted, effective as of the date the Board of Directors publicly announces its decision not to pay such dividend or distribution, to the Exercise Ratio that would then be in effect if such dividend distribution had not been declared.

(v)In case the Company effects a Pro Rata Repurchase of Common Stock at a price per share of Common Stock that is greater than the Market Value of

a share of Common Stock on the trading day immediately preceding the first public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase, then the Exercise Ratio shall be adjusted to the ratio determined by dividing the Exercise Ratio in effect immediately prior to the effective date of such Pro Rata Repurchase by a fraction of which the denominator shall be the product of (x) the number of shares of Common Stock outstanding immediately prior to such Pro Rata Repurchase minus the number of shares of Common Stock so repurchased and (y) the Market Value per share of Common Stock on the trading day immediately preceding the first public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase, and of which the numerator shall be (i) the product of (x) the number of shares of Common Stock outstanding immediately before such Pro Rata Repurchase and (y) the Market Value of a share of Common Stock on the trading day immediately preceding the first public announcement by the Company or any of its Affiliates of the intent to effect such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the Pro Rata Repurchase.

(vi)In case of any Business Combination or reclassification of Common Stock (other than a reclassification of Common Stock referred to in Section 6.01(a)(iii)), the Holder’s right to receive Warrant Shares upon exercise of the Warrants shall be converted into the right to exercise the Warrants to acquire the number of shares of stock or other securities or property (including cash) that the Common Stock issuable (at the time of such Business Combination or reclassification) upon exercise of each Warrant immediately prior to such Business Combination or reclassification would have been entitled to receive upon consummation of such Business Combination or reclassification; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the Holder shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to the Holder’s right to exercise each Warrant in exchange for any shares of stock or other securities or property pursuant to this Section 6.01(a)(vi). In determining the kind and amount of stock, securities or the property receivable upon exercise of each Warrant following the consummation of such Business Combination, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, then the Holder shall have the right to make a similar election (including being subject to similar proration constraints) upon exercise of each Warrant with respect to the number of shares of stock or other securities or property that the Holder will receive upon exercise of a Warrant.

(vii)If the Company issues Additional Shares (as defined in the Term Loan Agreement), then the Exercise Ratio in effect immediately following the effective date of such issuance shall be multiplied by the following fraction:

WS₁

WS₀

where

WS₀ =

the number of shares of Common Stock into which the Warrants were exercisable on the Issue Date; and

WS₁ =

the number of shares of Common Stock into which the Warrants would have been exercisable on the Issue Date if such Additional Shares had been issued and outstanding on the Issue Date.

(viii)Notwithstanding anything herein to the contrary, no adjustment under this Section 6.01 need be made to the Exercise Ratio unless such adjustment would require a cumulative increase or decrease of at least 2.0% of the Exercise Ratio then in effect. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall amount to a cumulative increase or decrease of at least 2.0% of such Exercise Ratio.

(ix)The Company reserves the right to make such increase in the Exercise Ratio in addition to those required in the foregoing provisions as it considers advisable in order that any event treated for Federal income tax purposes as a dividend or distribution of stock or stock rights will result in less or no tax to the recipients. In the event the Company elects to make such an increase in the Exercise Ratio, the Company shall not be in violation hereof if it makes such adjustment in compliance with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder if and to the extent that such laws and regulations are applicable in connection with the increase of the Exercise Ratio.

(x)Notwithstanding any other provisions of this Section 6.01(a), rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): are deemed to be transferred with such shares of Common Stock; are not exercisable; and are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 6.01(a) (and no adjustment to the Exercise Ratio under this Section 6.01(a) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Exercise Ratio shall be made under Section 6.01(a)(ii). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Exercise Ratio under this Section 6.01(a) was made, in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Exercise Ratio shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants

(assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and in the case of such rights or warrants that shall have expired or been terminated without exercise thereof, the Exercise Ratio shall be readjusted as if such expired or terminated rights and warrants had not been issued. To the extent that the Company has a rights plan or agreement in effect upon exercise of the Warrants, which rights plan provides for rights or warrants of the type described in this clause, then upon exercise of the Warrants, the Holder will receive, in addition to the Common Stock to which such Holder is entitled, a corresponding number of rights in accordance with the rights plan, unless a Trigger Event has occurred and the adjustments to the Exercise Ratio with respect thereto have been made in accordance with the foregoing. In lieu of any such adjustment, the Company may amend such applicable stockholder rights plan or agreement to provide that upon exercise of the Warrants, the Holders will receive, in addition to the Common Stock issuable upon such exercise, the rights that would have attached to such Common Stock if the Trigger Event had not occurred under such applicable stockholder rights plan or agreement.

(b)Notwithstanding anything to the contrary in this Section 6.01, no adjustment to the Exercise Ratio shall be made with respect to any distribution or other transaction if Holders are entitled to participate in such distribution or transaction as if they held a number of shares of Common Stock issuable upon exercise of the Warrants immediately prior to such event, without having to exercise their Warrants.

(c)If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Exercise Ratio then in effect shall be required by reason of the taking of such record.

(d)Notice of Adjustment. Whenever the Exercise Ratio is adjusted, the Company shall provide the notices required by Section 6.03.

(e)Company Determination Final. Notwithstanding anything to the contrary herein, whenever the Board of Directors is permitted or required to determine Market Value or fair market value, such determination shall be made in good faith and, absent manifest error, shall be final and binding on the Holders and the Warrant Agent.

(f)When Issuance or Payment May Be Deferred. In any case in which this Section 6.01 shall require that an adjustment in the Exercise Ratio be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event issuing to the Holder of any Warrant exercised after such record date the Warrant Shares and other Capital Stock of the Company, if any, issuable upon such exercise over and above the Warrant Shares and other Capital Stock of the Company, if any, issuable upon such exercise on the basis of the Exercise Ratio and paying to such Holder any amount in cash in lieu of a fractional share pursuant to Section 6.02; provided that the Company shall deliver to such Holder a due bill or other appropriate instrument evidencing such Holder’s right to receive such additional Warrant Shares, other Capital Stock and cash upon the occurrence of the event requiring such adjustment.

(g)Form of Warrants. Irrespective of any adjustments in the Exercise Ratio or the number or kind of shares purchasable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the Warrants initially issuable pursuant to this Agreement.

Section 6.02 Fractional Interests. The Company shall not be required to issue fractional Warrant Shares or scrip representing fractional shares on the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares issuable on exercise of the Warrants so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 6.02, be issuable on the exercise of any Warrants (or specified portion thereof), the Company may, at its option, either pay an amount in cash equal to the current Closing Sale Price per Warrant Share, as determined on the date the Warrant is presented for exercise, multiplied by such fraction, computed to the nearest whole U.S. cent, or round the number of Warrant Shares issued up to the nearest number of whole Warrant Shares. Whenever a payment for fractional Warrant Shares is to be made by the Warrant Agent, the Company shall promptly prepare and deliver to the Warrant Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and formulas utilized in calculating such payments, and provide sufficient monies to the Warrant Agent in the form of fully collected funds to make such payments. The Warrant Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of, any payment for fractional Warrant Shares under any section of this Agreement relating to the payment of fractional Warrant Shares unless and until the Warrant Agent shall have received such a certificate and sufficient monies. The Company shall provide an initial funding of one thousand dollars ($1,000) for the purpose of paying cash in lieu of fractional Warrant Shares. From time to time thereafter, the Warrant Agent may request additional funding to cover payments in lieu of fractional Warrant Shares.

Section 6.03Notices to Warrant Holders.

(a)Upon any adjustment of the Exercise Ratio pursuant to Section 6.01, the Company shall promptly thereafter cause to be filed with the Warrant Agent a certificate of the Chief Financial Officer of the Company setting forth the Exercise Ratio after such adjustment and setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based and setting forth the number of Warrant Shares (or portion thereof) or other securities or property issuable after such adjustment in the Exercise Ratio, upon exercise of a Warrant, which certificate shall be presumed, absent manifest error, to correctly present the matters set forth therein, and cause to be given to each of the Holders written notice of such adjustments by first-class mail, postage prepaid or by any other manner described in Section 8.02, to the Holders’ respective addresses set forth in the Register. Where appropriate, such notice may be given in advance and included as a part of the notice required to be mailed under the other provisions of this Section 6.03. The Warrant Agent shall have no duty or obligation under this Agreement to investigate or confirm whether any of the Company’s determinations in respect of any adjustment set forth herein are accurate or correct.

(b)In case:

(i)the Company shall authorize the issuance to all holders of shares of Common Stock of rights, options or warrants to subscribe for or purchase shares of Common Stock or of any other subscription rights or warrants;

(ii)the Company shall authorize the distribution to all holders of shares of Common Stock of evidences of its indebtedness or assets (other than dividends or distributions referred to in Section 6.01(a));

(iii)of any reclassification or change of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or a tender offer or exchange offer for shares of Common Stock by the Company;

(iv)of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or

(v)the Company proposes to take any action which would require an adjustment of the Exercise Ratio pursuant to Section 6.01;

then the Company shall cause to be filed with the Warrant Agent and shall cause to be given to each of the Holders, at least five (5) days prior to any applicable record date, or promptly in the case of events for which there is no record date, by first-class mail, postage prepaid or by any other manner described in Section 8.02, to the Holders’ respective addresses set forth in the Register, a written notice stating (x) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such rights, options, warrants or distribution are to be determined, (y) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock, or (z) the date on which any such transaction is expected to become effective or consummated, and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such transaction. The failure to give the notice required by this Section 6.03 or any defect therein shall not affect the legality or validity of any transaction, or the vote upon any action.

Section 6.04 No Rights as Stockholders; Limitations of Liability. Nothing contained in this Agreement or the Warrants shall be construed as conferring upon the holders of Warrants the right to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter, or any rights whatsoever, including the right to receive dividends or other distributions, as stockholders of the Company, or the right to share in the assets of the Company in the event of its liquidation, dissolution or winding up, except in respect of Common Stock received following exercise of Warrants or imposing any fiduciary or other duties on the Company or any of its directors or officers, all of which rights and duties are expressly waived by the Holders. In addition, nothing contained in this Agreement or the Warrants shall be construed as imposing any liabilities on the Holder as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

ARTICLE VII

WARRANT AGENT

Section 7.01 Warrant Agent. The Warrant Agent undertakes the express duties and obligations imposed by this Agreement upon the following terms and conditions (and no duties or obligations shall be inferred), by all of which the Company and the holders of Warrants, by their acceptance thereof, shall be bound:

(a)The statements and recitals contained herein and in the Warrants shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility and shall not be liable for the correctness of any of the same except such as describe the Warrant Agent. The Warrant Agent assumes no responsibility with respect to the distribution of the Warrants except as herein otherwise expressly provided.

(b)The Warrant Agent has no duty to determine when an adjustment under Article VI should be made, how any such adjustment should be made or what any such adjustment should be. Nor shall the Warrant Agent have any obligation hereunder to determine whether an adjustment event has occurred. The Warrant Agent makes no representation as to the validity or value of any securities or assets issued upon exercise of Warrants. The Warrant Agent shall have no obligation under this Agreement to calculate, confirm, investigate or verify the accuracy of the correctness of, the number of Warrant Shares issuable in connection with any exercise hereunder.

(c)The Warrant Agent shall not be accountable with respect to (i) the validity, value, kind or amount of any Warrant Shares, securities or property which may be issued or delivered at any time upon the exercise of any Warrant or (ii) whether any such Warrant Shares or other securities will, when issued, be validly issued, fully paid and nonassessable; and in each case, makes no representation with respect thereto.

(d)The Warrant Agent shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrants.

(e)The Warrant Agent may rely on, and will be held harmless, indemnified and protected and shall incur no liability in acting or refraining from acting, upon any resolution, certificate, statement, instrument, instruction, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document from the Company with respect to any matter relating to its acting as Warrant Agent hereunder believed by it to be genuine and to have been signed or presented by the proper Person. The Warrant Agent need not investigate any fact or matter stated in the document. The Warrant Agent, in its discretion, may make further inquiry or investigation into such facts or matters as it sees fit. The Warrant Agent shall not be held to have notice of any change of authority of any Person, until receipt of written notice thereof from the Company.

(f)The Warrant Agent may consult with legal counsel, and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection to the Warrant Agent and the Warrant Agent will incur no liability for or in respect of any

action taken, suffered or omitted by it hereunder in the absence of willful misconduct, bad faith or gross negligence (each as determined by a final judgment of a court of competent jurisdiction) in reliance thereon and in accordance therewith.

(g)The Warrant Agent may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent absent gross negligence, bad faith or willful misconduct (each as determined by a final judgment of a court of competent jurisdiction) in the appointment of such agent.

(h)The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof. No provision of this Agreement shall be construed to relieve the Warrant Agent from liability for its own gross negligence, bad faith or willful misconduct (each as determined by a final judgment of a court of competent jurisdiction).

(i)The Warrant Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any Holder of Warrants with respect to any action or default by the Company, including any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Company.

(j)The Warrant Agent shall not be obligated to expend or risk its own funds or to take any action that it reasonably believes would expose or subject it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity reasonably satisfactory to it; provided, further, that the Warrant Agent may in any event resign pursuant to Section 7.04(a)(i) instead of taking any such action.

(k)The Warrant Agent shall not be liable or responsible for any failure of the Company to comply with any of its obligations relating to any registration statement filed with the Commission or this Agreement, including obligations under applicable regulation or law.

(l)The Warrant Agent shall not be accountable or under any duty or responsibility for the application by the Company of the proceeds of the issue and sale, or exercise, of the Warrants.

(m)The Warrant Agent shall act hereunder solely as agent for the Company, and its duties shall be determined solely by the express provisions hereof (and no duties or obligations shall be inferred or implied). The Warrant Agent shall not assume any obligations or relationship of agency or trust with any of the owners or holders of the Warrants. The Warrant Agent shall not be charged with knowledge or notice of any fact or circumstance not expressly set forth herein, and shall not be bound by the provisions of any other agreement or document among the Company and the Holders except this Agreement.

(n)The Warrant Agent may rely on and be fully authorized and protected in acting or failing to act upon any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable “signature guarantee program” or insurance program in addition to, or in

substitution for, the foregoing; or any law, act, regulation or any interpretation of the same even though such law, act, or regulation may thereafter have been altered, changed, amended or repealed.

(o)In the event the Warrant Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Warrant Agent hereunder, the Warrant Agent, may, in its reasonable discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Company, any Holder of a Warrant or any other Person for refraining from taking such action, unless the Warrant Agent receives written instructions signed by the Company which eliminates such ambiguity or uncertainty to the reasonable satisfaction of Warrant Agent.

(p)The provisions of this Section 7.01, Section 7.02 and Section 7.03 will survive the termination of this Agreement, the exercise or expiration of the Warrants and the resignation, replacement or removal of the Warrant Agent.

Section 7.02 Compensation; Indemnity; Limitation on Liability. The Company will pay the Warrant Agent compensation for all services rendered by it hereunder as agreed upon in writing for its services. The Company will reimburse the Warrant Agent upon request for all reasonable and documented out-of-pocket expenses, disbursements and advances incurred or made by the Warrant Agent in the exercise and performance of its duties hereunder, except any such expense, disbursement or advance attributable to its gross negligence, bad faith or willful misconduct (each as determined by a final non-appealable judgment of a court of competent jurisdiction).

(a)The Company will indemnify the Warrant Agent for, and hold it harmless against, any loss, liability, suit, action, proceeding, damage, judgment, fine, penalty, claim, demand, settlement, costs or expense incurred (including the reasonable fees and expenses of outside legal counsel) without gross negligence, bad faith or willful misconduct on the part of the Warrant Agent, for anything done or omitted to be done by the Warrant Agent in connection with the acceptance, administration of, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The reasonable and documented out-of- pocket costs and expenses incurred in enforcing this right of indemnification will be paid by the Company if the Warrant Agent is entitled to indemnification by the Company pursuant to this Agreement (as determined by a final, non-appealable judgment of a court of competent jurisdiction). Failure by the Warrant Agent to so notify the Company shall not relieve the Company of its obligations hereunder, except to the extent the Company is prejudiced thereby. The Warrant Agent shall notify the Company promptly of any claim for which it may seek indemnity. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

(b)Notwithstanding anything in this Agreement to the contrary, in no event will the Warrant Agent be liable for special or punitive loss or damage of any kind whatsoever (unless actually paid or payable to a third party).

Section 7.03 Individual Rights of Warrant Agent. The Warrant Agent, and any stockholder, director, officer or employee of it, may buy, sell or deal in any of the Warrants or other securities of

the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

Section 7.04 Replacement of Warrant Agent. (a) The Warrant Agent

(i)may resign and be discharged from its duties under this Agreement at any time by not less than 30 days’ prior written notice to the Company (pursuant to Section 8.02),

(ii)may be removed at any time by the Company, for any reason, by at least 30 days’ written notice to the Warrant Agent, and

(iii)may be removed immediately by the Company if: the Warrant Agent is adjudged a bankrupt or an insolvent; a receiver or other public officer takes charge of the Warrant Agent or its property; or the Warrant Agent becomes incapable of acting.

In the event the transfer agency relationship in effect between the Company and the Warrant Agent terminates, the Warrant Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of such termination.

(b)If the Warrant Agent resigns or is removed, or if a vacancy exists in the office of Warrant Agent for any reason, the Company will promptly appoint a successor Warrant Agent. If the successor Warrant Agent does not deliver its written acceptance within 30 days after the retiring Warrant Agent resigns or is removed, the retiring Warrant Agent, the Company or the Holders of a majority of the outstanding Warrants may petition any court of competent jurisdiction for the appointment of a successor Warrant Agent.

(c)Upon delivery by the successor Warrant Agent of a written acceptance of its appointment to the retiring Warrant Agent and to the Company, the retiring Warrant Agent will transfer all property held by it as Warrant Agent to the successor Warrant Agent, the resignation or removal of the retiring Warrant Agent will become effective, and the successor Warrant Agent will have all the rights, powers and duties of the Warrant Agent under this Agreement. Upon request of any successor Warrant Agent, the Company will execute any and all instruments for fully vesting in and confirming to the successor Warrant Agent all such rights and powers. The Company will give notice of any resignation and any removal of the Warrant Agent, and the transfer agent, as the case may be, and each appointment of a successor Warrant Agent to all Holders, and include in the notice the name of the successor Warrant Agent and the address of its Corporate Trust Office.

(d)Notwithstanding replacement of the Warrant Agent pursuant to this Section, the Company’s obligations under Section 7.02 will continue for the benefit of the retiring Warrant Agent.

Section 7.05 Successor Warrant Agent by Merger. If the Warrant Agent consolidates with, merges or converts into, or transfers all or substantially all of its shareholder services business to, another Person or national banking association, the resulting, surviving or transferee Person or national banking association without any further act will be the successor Warrant Agent with the same effect as if the successor Warrant Agent had been named as the Warrant Agent in this Agreement.

Section 7.06 Holder Lists. The Warrant Agent shall 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.

ARTICLE VIII

MISCELLANEOUS

Section 8.01 Holder Actions. Any notice, consent to amendment, supplement or waiver provided by this Agreement to be given by a Holder (an “act”) may be evidenced by an instrument signed by the Holder delivered to the Warrant Agent.

(a)Any act by the Holder of any Warrant binds that Holder and every subsequent Holder of such Warrant. Subject to paragraph (b), a Holder may revoke an act as to its Warrants, but only if the Warrant Agent receives the notice of revocation before the date the amendment or waiver or other consequence of the act becomes effective.

(b)The Company may, but is not obligated to, fix a record date for the purpose of determining the Holders entitled to act with respect to any amendment or waiver or in any other regard. If a record date is fixed, those Persons that were Holders at such record date and only those Persons will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be Holders after the record date. No act will be valid or effective if given or made more than 90 days after any applicable record date with respect thereto.

Section 8.02 Notices and Communications. Any notice or communication by the Company, on the one hand, or the Warrant Agent, on the other hand, to the other shall be in writing and shall be deemed to have been duly given and received when delivered in person, when actually received when mailed by first class mail, postage prepaid, when actually received by overnight delivery by a nationally recognized courier service, or when receipt has been acknowledged when sent via electronic mail (“email”). In each case the notice or communication shall be addressed as follows:

if to the Company:

J.Jill, Inc.

4 Batterymarch Park

Quincy, MA 02169

Attention: Vijay Moses

Email: Vijay.Moses@jjill.com

With copies (which shall not constitute notice) to:

Kirkland & Ellis LLP

601 Lexington Ave.

New York, NY 10022

Attention: Ross M. Leff, P.C.

Email: ross.leff@kirkland.com

if to the Warrant Agent:

American Stock Transfer & Trust Company, LLC

6201 15^th Avenue

Brooklyn, NY 11219

Attention: Reorg Department

other address as the Company or the Warrant Agent may designate in writing by notice delivered to the other party in accordance with this Section 8.02.

(a)Except as otherwise expressly provided with respect to published notices, any notice or communication to a Holder will be deemed duly given and received (i) three (3) days after mailing when mailed to the Holder at its address set forth below or as it appears on the Register by first class mail or (ii) on the date sent by email of a .pdf document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; provided that if the Company has been made aware of a different address, the Company shall provide such notice to such address instead. Copies of any notice or communication to a Holder, if given by the Company, will be mailed to the Warrant Agent at the same time. Defect in mailing a notice or communication to any particular Holder will not affect its sufficiency with respect to other Holders. The notice or communication to the Holders should be addressed to the addresses set forth on Schedule 1 hereto.

(b)Where this Agreement provides for notice, the notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and the waiver will be the equivalent of the notice. Waivers of notice by Holders must be filed with the Warrant Agent, but such filing is not a condition precedent to the validity of any action taken in reliance upon such waivers.

Section 8.03 Entire Agreement. This Agreement is intended by the parties hereto as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or in the certificates representing the Warrants, with respect to the rights granted by the Company set forth herein and therein. This Agreement supersedes all prior written or oral agreements and understandings among the parties hereto with respect to such subject matter.

Section 8.04Amendments, Supplements and Waivers.

(a)The Company and the Warrant Agent may amend, supplement or modify this Agreement or the Warrants without notice to or the consent of any Holder:

(i)to cure any ambiguity, omission, inconsistency or mistake in this Agreement or the Warrants in a manner that is not inconsistent with the provisions of this Agreement;

(ii)to evidence and provide for the acceptance of an appointment hereunder by a successor Warrant Agent; or

(iii)to make any other change that does not adversely affect the rights of any Holder.

(b)Except as otherwise provided in paragraphs (a) or (c) of this Section 8.04, this Agreement and the Warrants may be amended or modified only by means of a written amendment signed by the Company, the Warrant Agent and the Holders of a majority of the outstanding Warrants. Any amendment or modification of or supplement to this Agreement or the Warrants, any waiver of any provision of this Agreement, and any consent to any departure by the Company or any Holder from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which such amendment, supplement, modification, waiver or consent has been made or given; provided, that the Holders of a majority of the outstanding Warrants by written notice to the Warrant Agent may waive future compliance by the Company with any provision of this Agreement or the Warrants. In addition, any term of a specific Warrant may be amended or waived with the written consent of the Company and the Holder of such Warrant.

(c)Notwithstanding the provisions of paragraph (b), without the consent of each Holder affected, an amendment or waiver may not:

(i)increase the Exercise Price;

(ii)reduce the term of the Warrants; or

(iii)decrease the number of shares of Common Stock, cash or other securities or property issuable upon exercise of the Warrants except, in each case, for adjustments expressly provided for in this Agreement.

(d)It is not necessary for Holders to approve the particular form of any proposed amendment, supplement or waiver if their consent approves the substance thereof.

(e)Subject to Section 8.04(h), an amendment, supplement or waiver under this Section 8.04(e) will become effective on receipt by the Warrant Agent of written consents from the Holders of the requisite percentage of the outstanding Warrants. After an amendment, supplement or waiver under this Section 8.04(e) becomes effective, the Company will send to the Holders affected thereby a notice describing the amendment, supplement or waiver in reasonable detail. Any failure of the Company to send such notice,

or any defect therein, will not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

(f)After an amendment, supplement or waiver becomes effective, it will bind every Holder unless it is of the type requiring the consent of each Holder affected, pursuant to the terms of this Agreement. If the amendment, supplement or waiver is of the type requiring the consent of each Holder affected, the amendment, supplement or waiver will bind each Holder that has consented to it and every subsequent Holder of a Warrant with respect to which consent was granted.

(g)If an amendment, supplement or waiver changes the terms of a Warrant, the Company or the Warrant Agent may require the Holder to deliver it to the Warrant Agent so that the Warrant Agent may place an appropriate notation of the changed terms on the Warrant and return it to the Holder, or exchange it for a new Warrant that reflects the changed terms. The Warrant Agent may also place an appropriate notation on any Warrant thereafter countersigned. However, the effectiveness of the amendment, supplement or waiver is not affected by any failure to annotate or exchange Warrants in this fashion.

(h)The Warrant Agent shall be entitled to receive, and will be fully protected in relying on, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Section 8.04 is authorized or permitted by this Agreement. If the Warrant Agent has received such an Opinion of Counsel, it shall sign the amendment, supplement or waiver so long as the same does not adversely affect the rights of the Warrant Agent. The Warrant Agent may, but shall not be obligated to, execute any amendment, supplement or waiver that affects the Warrant Agent’s own rights, duties or immunities under this Agreement.

Section 8.05 Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Warrant Agent and the registered holders of Warrants any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the registered holders of Warrants.

Section 8.06 Successors and Assigns. All agreements of the Company in this Agreement and the Warrants will bind its successors and assigns. All agreements of the Warrant Agent in this Agreement will bind its successors and assigns. Subject to the transfer conditions referred to in any legend in effect as set forth herein and Sections 3.05 and 3.06, each Holder may freely assign its Warrants and its rights under this Agreement, in whole or in part, to any Person.

Section 8.07 Governing Law; Jurisdiction and Venue; Waiver of Jury Trial. This Agreement and the Warrants shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to any principles of conflicts of laws thereof that would result in the application of the laws of any other jurisdiction). The Company, the Warrant Agent and each Holder of a Warrant each hereby irrevocably and unconditionally:

(a)submits for itself in any legal action or proceeding relating solely to this Agreement and the Warrant or the transactions contemplated hereby, to the exclusive

jurisdiction of the courts of the State of Delaware and the Federal courts of the United States of America;

(b)consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same to the extent permitted by applicable law;

(c)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the party, as the case may be, at its address set forth in Section 8.02 or at such other address of which the other party shall have been notified pursuant thereto;

(d)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by applicable law or shall limit the right to sue in any other jurisdiction for recognition and enforcement of any judgment or if jurisdiction in the courts referenced in the foregoing clause (a) are not available despite the intentions of the parties hereto;

(e)agrees that final judgment in any such suit, action or proceeding brought in such a court may be enforced in the courts of any jurisdiction to which such party is subject by a suit upon such judgment, provided that service of process is effected upon such party in the manner specified herein or as otherwise permitted by applicable law;

(f)agrees that to the extent that such party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process with respect to itself or its property, such party hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the Warrants issued hereunder, to the extent permitted by applicable law; and

(g)IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT AND THE WARRANTS ISSUED HEREUNDER.

Section 8.08 Severability. In case any provision in this Agreement or in the Warrants is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

Section 8.09 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or .pdf attachment to electronic mail shall be effective as delivery of a manually executed counterpart to this Agreement.

Section 8.10 Table of Contents and Headings. The Table of Contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, and shall not limit or otherwise affect the meaning hereof.

Section 8.11 No Adverse Interpretation of Other Agreements. This Agreement may not be used to interpret another agreement of the Company, and no such agreement may be used to interpret this Agreement.

Section 8.12 No Presumption. If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

Section 8.13 Obligations Limited to Parties to This Agreement and Holders. Each of the parties hereto covenants, agrees and acknowledges that, other than as set forth herein, no Person other than the Warrant Agent, the Holders, their respective permitted assignees and the Company shall have any obligation hereunder and that, notwithstanding that one or more of such Persons may be a corporation, partnership or limited liability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of such Persons or their respective permitted assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of such Persons or any of their respective assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of such Persons or their respective permitted assignees under this Agreement or any documents or instruments delivered in connection herewith or forany claim based on, in respect of or by reason of such obligation or its creation, except, in each case, for any assignee of any Holder hereunder.

Section 8.14 Bank Accounts. All funds received by the Warrant Agent under this Agreement that are to be distributed or applied by the Warrant Agent in the performance of services under this Agreement (the “Funds”) shall be held by the Warrant Agent as agent for the Company and deposited in one or more bank accounts to be maintained by the Warrant Agent in its name as agent for the Company. Until paid pursuant to the terms of this Agreement, the Warrant Agent will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). The Warrant Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by the Warrant Agent in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other third party. The Warrant Agent may from time to time receive interest,

dividends or other earnings in connection with such deposits. The Warrant Agent shall not be obligated to pay such interest, dividends or earnings to the Company, any holder or any other party.

Section 8.15 Further Assurances. The Company shall perform, acknowledge and deliver or cause to be performed, acknowledged and delivered all such further and other acts, documents, instruments and assurances as may be reasonably required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Agreement.

Section 8.16 Confidentiality. The Warrant Agent and the Company agree that all books, records, information and data pertaining to the business of the other party, including personal, non- public Holder information, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement including the fees for services agreed upon by the parties hereto shall remain confidential, and shall not be voluntarily disclosed to any other Person, except as may be required by law or regulation, including pursuant to subpoenas from state or federal government authorities (e.g., in divorce and criminal actions).

Section 8.17 United States Federal Income Tax Treatment. The Company and the Warrant Agent acknowledge and agree that for U.S. federal and applicable state and local income tax purposes (a) each Warrant will be treated as a number of shares of Common Stock equal to the number of shares of Common Stock issuable upon the exercise of such Warrant and (b) each Holder will be treated as a holder of such number of shares of Common Stock. The Company, the Warrant Agent and the Holders shall not take any position on any tax return that is inconsistent with the treatment described in this Section 8.17.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.

J.JILL, INC.

By:
Name:
Title:

[Signature Page to Warrant Agreement]

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
as Warrant Agent

By:		/s/ Michael Legregin
Name:		Michael Legregin
Title:		Senior Vice Pesident

[Signature Page to Warrant Agreement]

TI IV JJill Holdings, LP, as Holder

By:		/s/ Glenn F. Miller
Name:		Glenn F. Miller
Title:		Vice President

[Signature Page to Warrant Agreement]

SCHEDULE 1

PURCHASER ADDRESSES


Holder Name	Address
TI IV JJill Holdings, LP	c/o TowerBrook Capital Partners L.P. 65 East 55th Street, 19th Floor New York, NY 10022 Attention: Glenn Miller
Basil Alhizami	Villa 4, Naef Alkhraisha Street Amman, Jordan
Michael Menashi Rahameem	Flat 1208/10 Daniel Ramat Yam 60 Herzelia Petuach 46851 Israel

EXHIBIT A

[Face of Common Stock Warrant]

[Insert appropriate legend]


No.	Warrants

CUSIP No.

Common Stock Warrant Certificate

This Common Stock Warrant Certificate certifies (this “Warrant Certificate”) that , or its registered assigns, is the registered holder of Common Stock Warrants (the “Warrants”), exercisable for shares of common stock, par value $0.01 (the “Common Stock”), of J.Jill, Inc., a Delaware corporation (the “Company”). Each Warrant represented hereby entitles the registered holder upon exercise at any time from 9:00 a.m., New York City time, on October 3, 2020 and until 5:00 p.m., New York City time, on October 2, 2025 (the “Expiration Time”) to receive from the Company one (as such number may be adjusted as provided in the Warrant Agreement) fully paid and nonassessable share of Common Stock (the “Warrant Share”) at an exercise price (the “Exercise Price”) of $0.01 per Warrant Share, subject to the conditions and terms set forth herein and in the Warrant Agreement referred to on the reverse hereof. The number of Warrant Shares issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed below by its duly authorized officer.

Dated:

J.JILL, INC.

By:
Name:
Title:

Countersigned on [●]:

		AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
		as Warrant Agent

		By:
		Authorized Signatory

J.JILL, INC.

[Reverse of Common Stock Warrant]

1.	Warrant Agreement

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued or to be issued pursuant to a Warrant Agreement dated as of October 2, 2020 (the “Warrant Agreement”), among the Company and American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the registered holders or registered holder) of the Warrants. To the extent permitted by applicable law, in the event of an inconsistency or conflict between the terms of this Warrant and the Warrant Agreement, the terms of the Warrant Agreement will prevail.

Exercise

Warrants may be exercised at any time from 9:00 a.m., New York City time, on October 3, 2020 and on or before the Expiration Time, subject to the terms of the Warrant Agreement (including Section 3.06(c) therein).

In order to exercise all or any of the Warrants represented by this Warrant Certificate, the holder must deliver to the Company the form of election to exercise on the reverse hereof duly completed, which signature shall be medallion guaranteed by an institution which is a member of a Securities Transfer Association recognized signature guarantee program.

The exercise of Warrants is subject to certain restrictions on exercise (including a minimum number of Warrants being exercised in a partial exercise of Warrants) as described in the Warrant Agreement.

No Warrant may be exercised after the Expiration Time, and, to the extent not exercised by such time, the Warrants evidenced hereby shall become void.

3.	Adjustments

The Warrant Agreement provides that, upon the occurrence of certain events, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted.

4.	No Fractional Shares

No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement.

5.	Book-Entry Form; Transfer

The Warrants have been issued in book-entry form.

The Company and the Warrant Agent may deem and treat the registered holder(s) as shown on the Register as the absolute owner(s) of this Warrant, for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. This Warrant does not entitle any holder hereof to any rights of a stockholder of the Company.

6.	Governing Law; Jurisdiction and Venue; Waiver of Jury Trial

This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware (without giving effect to any principles of conflicts of laws thereof that would result in the application of the laws of any other jurisdiction). The Company and the Holder of this Warrant each hereby irrevocably and unconditionally:

(i)

submits for itself in any legal action or proceeding relating solely to this Warrant or the transactions contemplated hereby, to the exclusive jurisdiction of the courts of the State of Delaware and the Federal courts of the United States of America, in each case located within the State of Delaware, and appellate courts thereof;

(ii)

consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same to the extent permitted by applicable law;

(iii)

agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the party, as the case may be, at its address set forth in the Register or at such other address of which the other party shall have been notified pursuant to the provisions of the Warrant Agreement;

(iv)

agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by applicable law or shall limit the right to sue in any other jurisdiction for recognition and enforcement of any judgment or if jurisdiction in the courts referenced in the foregoing clause (i) are not available despite the intentions of the parties hereto;

(v)

agrees that final judgment in any such suit, action or proceeding brought in such a court may be enforced in the courts of any jurisdiction to which such party is subject by a suit upon such judgment, provided that service of process is effected upon such party in the manner specified herein or as otherwise permitted by applicable law;

(vi)

agrees that to the extent that such party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process with respect to itself or its property, such party hereby irrevocably waives such immunity in respect of its obligations under this Warrant Certificate, to the extent permitted by applicable law; and

(vii)

IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS WARRANT CERTIFICATE.

A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company.

[Form of Exercise Notice]

(To Be Executed Upon Exercise Of Common Stock Warrant)

The undersigned holder (the “Holder”) hereby elects to exercise the right, represented by this Warrant, to acquire shares of Common Stock to be settled pursuant to the procedures set forth in the Warrant Agreement.

The Holder requests that delivery of such shares be made through the facilities of The Depository Trust Company as follows.

DTC Participant:

Participant Account Number:

Contact Person:

Telephone:

E-mail address:

Payment of the Exercise Price shall, at the option of the Company, be either by Net Share Settlement as set forth in Sections 4.01(b) and (c) of the Warrant Agreement or through the procedures (including payment) for Full Share Settlement as set forth in Sections 4.01(b) and 4.01(d) of the Warrant Agreement.

[This exercise is made in connection with [insert relevant public offering or sale of the Company] and is conditioned upon consummation of such transaction. The exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.]

If said number of shares is less than all of the shares of Common Stock issuable hereunder, the Holder requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered to , whose address is .

The undersigned represents and warrants that (x) it is a qualified institutional buyer (as defined in Rule 144A) and is receiving the Warrant Shares for its own account or for the account of another qualified institutional buyer, and it is aware that the Company is issuing the Warrant Shares to it in reliance on Rule 144A; (y) it is an “accredited investor” within the meaning of Rule 501 under the Securities Act; or (z) it is receiving the Warrant Shares pursuant to another available exemption from the registration requirements of the Securities Act. Prior to receiving Warrant Shares pursuant to clause (x) above, the Company and the Warrant Agent may request a certificate substantially in the form of Exhibit C to the Warrant Agreement. Prior to receiving Warrant Shares pursuant to clause (y) above, the Company and the Warrant Agent may request a certificate substantially in the form of Exhibit D and/or an opinion of counsel. Prior to receiving Warrant Shares pursuant to clause (z) above, the Company and the Warrant Agent may request appropriate certificates and/or an opinion of counsel.


Date:

		Signature



		Signature Guaranteed

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

[FORM OF TRANSFER NOTICE]

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto (the “Assignee”)

(Please type or print block letters)

(Please print or typewrite name and address including zip code of assignee)

the within Warrant and all rights thereunder (the “Securities”), hereby irrevocably constituting and appointing attorney to transfer said Warrant on the books of the Company with full power of substitution in the premises.

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED LEGEND]

In connection with any transfer of this Warrant occurring prior to the removal of the Restricted Legend, the undersigned confirms (i) the understanding that the Securities have not been registered under the Securities Act of 1933, as amended; (ii) that such transfer is made without utilizing any general solicitation or general advertising; and (iii) further as follows:

Check One

☐

(1) This Warrant is being transferred to a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act of 1933, as amended and certification in the form of Exhibit C to the Warrant Agreement is being furnished herewith.

☐

(2) This Warrant is being transferred other than in accordance with (1) above and documents are being furnished which comply with the conditions of transfer set forth in this Warrant and the Warrant Agreement.

If none of the foregoing boxes is checked, the Warrant Agent is not obligated to register this Warrant in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Warrant Agreement have been satisfied.

Date:

Seller

By:

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever.

[Signature Guaranteed]

EXHIBIT B

RESTRICTED LEGEND

THIS WARRANT AND THE UNDERLYING COMMON STOCK THAT MAY BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

THIS WARRANT EVIDENCES AND ENTITLES THE REGISTERED HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE WARRANT AGREEMENT BETWEEN J.JILL, INC. AND AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC (OR ANY SUCCESSOR WARRANT AGENT) DATED AS OF OCTOBER 2, 2020, AS IT MAY FROM TIME TO TIME BE SUPPLEMENTED OR AMENDED, THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH WARRANT AND THE UNDERLYING COMMON STOCK THAT MAY BE ISSUED UPON ITS EXERCISE, PRIOR TO THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,

(D)PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE WARRANT AGENT’S (INCLUDING ANY SUCCESSOR WARRANT AGENT) RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE WARRANT AGENT, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS

COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE WARRANT AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 UNDER THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE WARRANT AGENT’S (INCLUDING ANY SUCCESSOR WARRANT AGENT) RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE WARRANT AGENT.

EXHIBIT C

Rule 144A Certificate

[ ]

Attention: [ ]

Re:

Warrants to acquire Common Stock of J.Jill, Inc. (the “Warrants”) Issued under the Warrant Agreement (the “Agreement”) dated as of October 2, 2020 relating to the Warrants

Ladies and Gentlemen:

This Certificate relates to our proposed purchase of Warrants issued under the Agreement.

We and, if applicable, each account for which we are acting, in the aggregate owned and invested more than $100,000,000 in securities of issuers that are not affiliated with us (or such accounts, if applicable), as of , 20 , which is a date on or since close of our most recent fiscal year. We and, if applicable, each account for which we are acting, are a qualified institutional buyer within the meaning of Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”). If we are acting on behalf of an account, we exercise sole investment discretion with respect to such account. We are aware that the transfer of Warrants to us is being made in reliance upon the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this Certificate we have received such information regarding the Company as we have requested pursuant to Rule 144A(d)(4) or have determined not to request such information.

You and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Very truly yours,

[NAME OF PURCHASER]


By:
Name:
Title:
Address:
Date:

EXHIBIT D

Accredited Investor Certificate

[ ]

Attention: [ ]

Re:

Warrants to acquire Common Stock of J.Jill, Inc. (the “Warrants”) Issued under the Warrant Agreement (the “Agreement”) dated as of October 2, 2020 relating to the Warrants

Ladies and Gentlemen:

This Certificate relates to our proposed purchase of Warrants issued under the Agreement. We hereby confirm that:

1.We are an “accredited investor” (an “Accredited Investor”) within the meaning of Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”).

2.Any acquisition of Warrants by us will be for our own account or for the account of one or more other Accredited Investors as to which we exercise sole investment discretion.

3.We have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of an investment in the Warrants and we and any accounts for which we are acting are able to bear the economic risks of and an entire loss of our or their investment in the Warrants.

4.We are not acquiring the Warrants with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; provided that the disposition of our property and the property of any accounts for which we are acting as fiduciary will remain at all times within our and their control.

5.We acknowledge that the Warrants have not been registered under the Securities Act and that the Warrants may not be offered or sold within the United States or to or for the benefit of U.S. persons except as set forth below.

We agree for the benefit of the Company, on our own behalf and on behalf of each account for which we are acting, that such Warrants may be offered, sold, pledged or otherwise transferred only in accordance with the Securities Act and any applicable securities laws of any State of the United States and only (a) to the Company or any subsidiary thereof, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) to a person it reasonably believes is a qualified institutional buyer in compliance with Rule 144A under the Securities Act,

(d) to an Accredited Investor that, prior to such transfer, delivers to the Warrant Agent a duly completed and signed certificate (the form of which may be obtained from the Warrant Agent) relating to the restrictions on transfer of the Warrants, or (e) pursuant to any other available exemption from the registration requirements of the Securities Act.

Prior to the registration of any transfer in accordance with clause (c) of the immediately preceding paragraph, we acknowledge that a duly completed and signed certificate (the form of which may be obtained from the Warrant Agent) must be delivered to the Warrant Agent. Prior to the registration of any transfer in accordance with clause (d) or (e) of the immediately preceding paragraph, we acknowledge that the Company reserves the right to require the delivery of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer is being made in compliance with the Securities Act and applicable state securities laws. We acknowledge that no representation is made by or on behalf of the Company or the Warrant Agent as to the availability of any exemption from the registration requirements of the Securities Act.

We understand that the Warrant Agent will not be required to accept for registration of transfer any Warrants acquired by us, except upon presentation of evidence satisfactory to the Company and the Warrant Agent that the foregoing restrictions on transfer have been complied with. We further understand that the Warrants acquired by us will bear a legend reflecting the substance of the immediately preceding paragraph. We further agree to provide to any person acquiring any of the Warrants from us a notice advising such person that resales of the Warrants are restricted as stated herein and that the Warrants will bear a legend to that effect.

We agree to notify you promptly in writing if any of our acknowledgments, representations or agreements herein ceases to be accurate and complete.

We represent to you that we have full power to make the foregoing acknowledgments, representations and agreements on our own behalf and on behalf of any account for which we are acting.

Very truly yours,

[NAME OF PURCHASER]


By:
Name:
Title:
Date:

Upon transfer, the Warrants would be registered in the name of the new beneficial owner as follows:

Taxpayer ID number:

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James Scully, certify that:

1.	I have reviewed this Quarterly Report of J.Jill, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2020;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 11, 2020	By:	/s/ James Scully
		James Scully
		Interim Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Webb, certify that:

1.	I have reviewed this Quarterly Report of J.Jill, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2020;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 11, 2020	By:	/s/ Mark Webb
		Mark Webb
		Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of J.Jill, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 11, 2020	By:	/s/ James Scully
		James Scully
		Interim Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of J.Jill, Inc. (the “Company”) on Form 10-Q for the period ended October 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 11, 2020	By:	/s/ Mark Webb
		Mark Webb
		Executive Vice President and Chief Financial Officer