Exhibit 10.1
 
 
AMENDMENT NO. 2
TO
CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS
 
AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS, dated as of June
29, 2010 (this “Agreement”), among JONES APPAREL GROUP, INC. (the “Company”),
JONES APPAREL GROUP HOLDINGS, INC., JONES APPAREL GROUP USA, INC., JAG FOOTWEAR,
ACCESSORIES AND RETAIL CORPORATION, JONES INVESTMENT CO. INC., JONES JEANSWEAR
GROUP, INC., NINE WEST DEVELOPMENT CORPORATION and JONES JEWELRY GROUP, INC., as
the U.S. Borrowers (such capitalized term and all other capitalized terms used
but not defined herein shall have the meanings provided for in Section 1.2),
JONES APPAREL GROUP CANADA, LP, as the Canadian Borrower (together with the U.S.
Borrowers, the “Borrowers”), the various Subsidiaries of the Company parties
hereto, the Lenders parties hereto, JPMORGAN CHASE BANK, N.A., as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”), and
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as administrative agent for the
Canadian Lenders (in such capacity, the “Canadian Administrative Agent”).
 
W I T N E S S E T H:
 
WHEREAS, the Borrowers, the Lenders, the Administrative Agent and the Canadian
Administrative Agent are parties to the Credit Agreement, dated as of May 13,
2009, as heretofore amended (the “Credit Agreement”), and the other Loan
Documents;
 
WHEREAS, the Borrowers have requested that certain amendments be made to the
Credit Agreement and the other Loan Documents on the terms set forth herein; and
 
WHEREAS, the Lenders are willing, subject to the terms and conditions
hereinafter set forth, to consent and agree to such amendments;
 
NOW, THEREFORE, in consideration of the agreements herein contained, the parties
hereto hereby agree as follows:
 
 
ARTICLE I
 
DEFINITIONS
 
SECTION 1.1     Certain Definitions.  The following terms (whether or not
underscored) when used in this Agreement shall have the following meanings:
 
“Administrative Agent” is defined in the preamble.
 
“Agreement” is defined in the preamble.
 
“Borrowers” is defined in the preamble.
 
 
 
 

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“Canadian Administrative Agent” is defined in the preamble.
 
“Company” is defined in the preamble.
 
“Credit Agreement” is defined in the first recital.
 
“Effective Date” is defined in Section 5.1.
 
SECTION 1.2     Other Definitions.  Unless otherwise defined or the context
otherwise requires, terms used herein (including in the preamble and recitals
hereto) have the meanings provided for in the Credit Agreement.
 
 
ARTICLE II

 
AMENDMENTS
 
Effective on (and subject to the occurrence of) the Effective Date, the Credit
Agreement and the other Loan Documents are amended as follows:
 
SECTION 2.1     Amendments to Section 1.01 of the Credit Agreement.
 
(a)  The following definitions set forth in the Credit Agreement are amended and
restated in their entirety as follows:
 
“Applicable Rate” means, for any day, with respect to any ABR Loan, Canadian
Prime Rate Loan, Eurodollar Loan or BA Drawing, as the case may be, the
applicable rate per annum set forth below under the caption “ABR Spread”,
“Canadian Prime Spread”, “Eurodollar Spread” or “BA Drawing Spread”, as the case
may be, based upon the daily average Availability during the most recently
completed fiscal quarter of the Company (the “Average Availability”); provided
that until the last day of the second full fiscal quarter ending after the
Amendment No. 2 Effective Date, the Applicable Rate shall be the applicable rate
per annum set forth below in Category 2:
 
Availability
ABR Spread and
Canadian Prime Spread
Eurodollar Spread and
BA Drawing Spread
Category 1
≥ $400,000,000
1.50%
2.50%
Category 2
 < $400,000,000 but ≥ 200,000,000
1.75%
2.75%
Category 3
< 200,000,000
2.00%
3.00%

 
For purposes of the foregoing, the Applicable Rate shall be determined as of the
end of each fiscal quarter of the Company based upon the Borrowing Base
Certificate that is delivered from time to time pursuant to Section 5.01(g),
with any changes to the Applicable Rate resulting from changes in the Average
Availability to be effective on the first day after such fiscal quarter end;
provided that the Average Availability shall be deemed to be in Category 3 (A)
at any time that any Event of Default has occurred and is continuing (other than
an Event of Default arising from the failure to deliver any Borrowing Base
Certificate) or (B) if the Company fails to deliver any Borrowing Base
Certificate that is required to be delivered pursuant to Section 5.01(g), during
the period from the expiration of the time for delivery thereof until five days
after each such Borrowing Base Certificate is so delivered; provided further
that if any Borrowing Base Certificate is at any time restated or otherwise
revised or if the information set forth in any Borrowing Base Certificate
otherwise proves to be false or incorrect such that the Applicable Rate would
have been higher than was otherwise in effect during any period, without
constituting a waiver of any Default or Event of Default arising as a result
thereof, interest due under this Agreement shall be immediately recalculated at
such higher rate for any such applicable periods and shall be due and payable on
demand.
 
 
 
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 “Joint Bookrunners” means, individually and collectively as the context may
require, J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Banc of
America Securities LLC, Wells Fargo Bank, N.A., SunTrust Robinson Humphrey, Inc.
and General Electric Capital Corporation, in their respective capacities as
joint bookrunners hereunder, and each of their successors and assigns in such
capacity.
 
“Maturity Date” means May 13, 2015 or any earlier date on which the Revolving
Commitments are reduced to zero or otherwise terminated pursuant to the terms
hereof.
 
“Reserves” means any and all reserves which the Joint Collateral Agents deem
necessary, in their Permitted Discretion, to maintain (including, without
limitation, reserves for accrued and unpaid interest on the Secured Obligations,
Banking Services Reserves, Customer Credit Liability Reserves, Rent Reserves,
Priority Payable Reserves, Existing Debt Securities Reserves, reserves for
dilution of Accounts, reserves for Inventory shrinkage, reserves for customs
charges and shipping charges related to any Inventory in transit, reserves for
Swap Obligations, reserves for contingent liabilities of any Loan Party,
reserves for uninsured losses of any Loan Party, reserves for uninsured,
underinsured, un-indemnified or under-indemnified liabilities or potential
liabilities with respect to any litigation and reserves for taxes, fees,
assessments, and other governmental charges) with respect to the Collateral or
any Loan Party; provided, that the Joint Collateral Agents may impose, in their
Permitted Discretion, the Existing Debt Securities Reserve (2014 Senior Notes)
if the Existing Debt Securities that are maturing in November 2014 have not been
repaid, prepaid or purchased in full in accordance with Section 6.08(b)(ii) or
(vi), or  refinanced in full in accordance with Section 6.01(f), prior to August
15, 2014.
 
“Weekly Reporting Period” means any period during (a) which any Default under
paragraph (a) of Article VII or any Event of Default has occurred and is
continuing or (b) that constitutes a Level 2 Minimum Availability Period.
 
(b)  Paragraph (e) of the definition “Eligible Accounts” in the Credit Agreement
is amended and restated in the entirety as follows:
 
“(e)     which is owing by an Account Debtor to the extent the aggregate amount
of Accounts owing from such Account Debtor and its Affiliates to all the
Borrowers exceeds 20% of the aggregate amount of Eligible Accounts of all the
Borrowers; provided that (i) no Accounts owing by Macy’s, Inc. or its Affiliates
shall be ineligible solely as a result of this paragraph (e) except to the
extent the aggregate amount of Accounts owing from Macy’s, Inc. and its
Affiliates to all the Borrowers exceeds 40% of the aggregate amount of Eligible
Accounts of all the Borrowers; and (ii) no Accounts owing by Wal-Mart Stores,
Inc. or its Affiliates shall be ineligible solely as a result of this paragraph
(e) except to the extent the aggregate amount of Accounts owing from Wal-Mart
Stores, Inc. and its Affiliates to all the Borrowers exceeds 40% of the
aggregate amount of Eligible Accounts of all the Borrowers;”
 
 
 
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 (c)  Paragraph (b) of the definition “Eligible Foreign Accounts” in the Credit
Agreement is amended and restated in the entirety as follows:
 
“(b)     which is owed by an Account Debtor which is either located in, or
organized under the laws of, any country (other than the U.S., any State of the
U.S., Canada or any Province of Canada) that is not acceptable to the Joint
Collateral Agents in their Permitted Discretion (it being agreed that, for
purposes of this paragraph (b), as of the Effective Date the United Kingdom,
France, Ireland, the Netherlands, Norway, Spain, Germany and Switzerland are
acceptable to the Joint Collateral Agents, provided that the Joint Collateral
Agents, in their Permitted Discretion, shall have the right to remove any such
countries or add additional countries that are acceptable to them and
provided, further, that the Accounts of any such Account Debtor that are backed
by one or more standby letters of credit that are acceptable to the Joint
Collateral Agents in their sole discretion and that are in the possession of,
and assigned to and directly drawable by, the Administrative Agent, shall, in
any event, be deemed Eligible Accounts;”
 
 (d)  Paragraph (h) of the definition “Eligible Inventory” in the Credit
Agreement is amended and restated in the entirety as follows:
 
“(h)     which is not located in the U.S. or Canada (only with respect to the
Inventory owned by the Canadian Borrower) or is in transit with a common carrier
from vendors and suppliers; provided that, up to the lesser of (x) $200,000,000
and (y) 33% of the total Revolving Commitment of Inventory in transit from
vendors and suppliers may be included as eligible pursuant to this paragraph (h)
so long as (i) the Administrative Agent shall have received (1) access, during
normal business hours and at other times reasonably requested by the
Administrative Agent, to a true and correct copy of the bill of lading and other
shipping documents for such Inventory, (2) evidence of satisfactory casualty
insurance naming the Administrative Agent as loss payee and otherwise covering
such risks as the Administrative Agent may reasonably request, and (3) if the
bill of lading is (A) non-negotiable and the inventory is in transit within the
United States or in transit to the United States or Canada, a duly executed
Collateral Access Agreement from the applicable customs broker for such
Inventory, or (B) negotiable, confirmation that the bill is issued in the name
of a Borrower and consigned to the order of the Administrative Agent, and an
acceptable agreement has been executed with such Borrower’s customs broker, in
which the customs broker agrees that it holds the negotiable bill as agent for
the Administrative Agent and has granted the Administrative Agent access to the
Inventory, (ii) the common carrier is not an Affiliate of the applicable vendor
or supplier and (iii) the customs broker is not an Affiliate of any Borrower;”
 
(e)  Paragraph (d) of the definition “U.S. Borrowing Base” in the Credit
Agreement is amended and restated in the entirety as follows:
 
“(d)     the product of (i) 35% multiplied by (ii) the Eligible Foreign Accounts
of the U.S. Borrowers at such time; provided that the availability represented
by Eligible Foreign Accounts of the U.S. Borrowers included in the Borrowing
Base shall not at any time exceed $5,000,000, in the case of Eligible Foreign
Accounts referred to in paragraph (b) of the definition thereof that are not
backed by standby letters of credit referred to therein, and $15,000,000, in the
case of Eligible Foreign Accounts referred to in paragraph (b) of the definition
thereof that are backed by standby letters of credit referred to therein,”
 
 
 
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 (f)  The following new definitions are added to Section 1.01 of the Credit
Agreement in the appropriate alphabetical order:
 
“Amendment No. 2” means Amendment No. 2 to Credit Agreement and Other Loan
Documents, dated as of June 29, 2010, among the parties to this Agreement.
 
“Amendment No. 2 Effective Date” means “Effective Date” as defined in Amendment
No. 2.
 
“Existing Debt Securities Reserve (2014 Senior Notes)” means, with respect to
the Existing Debt Securities maturing in November 2014, an amount equal to all
remaining principal and interest payments due in respect thereof through and
including the Maturity Date, which reserve shall, at the request of the
Borrowers, be released if and to the extent each such amount is paid in full in
cash; provided, that if, with respect to such Existing Debt Securities both the
Existing Debt Securities Reserve and the Existing Debt Securities Reserve (2014
Notes) may be imposed by the Joint Collateral Agents at the same time, only the
Existing Debt Securities Reserve (2014 Senior Notes) may be so imposed.
 
(g)  The definition “Maximum Utilization Period” is deleted.
 
SECTION 2.2     Amendments to Section 2.12(a) of the Credit Agreement.
 
Section 2.12(a) of the Credit Agreement is amended and restated in its entirety
as follows:
 
“(a)      The U.S. Borrowers agree to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at a rate equal to
(i), if the average daily unused portion of the Revolving Commitment is greater
than 50% of the total Revolving Commitment during the period in respect of which
the payment is being made, 0.625% per annum, and (ii), if the average daily
unused portion of the total Revolving Commitment is less than or equal to 50% of
the total Revolving Commitment during the period in respect of which the payment
is being made, 0.50% per annum, in each case on the average daily amount of the
Available Revolving Commitment of such Lender during the period from and
including the Amendment No. 2 Effective Date to but excluding the date on which
the Lenders’ Revolving Commitments terminate.  Accrued commitment fees shall be
payable in arrears on the first day of each calendar month and on the date on
which the Revolving Commitments terminate, commencing on the first such date to
occur after the date hereof.  All commitment fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).”
 
 
 
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SECTION 2.3     Amendments to Section 5.08 of the Credit Agreement.
 
Section 5.08 of the Credit Agreement is amended and restated in its entirety as
follows:
 
“SECTION 5.08 Use of Proceeds.  The proceeds of the Loans will be used only to
(a) repay amounts outstanding under the Prior Credit Agreement, (b) repay the
Existing Debt Securities that are maturing in November 2009, subject to the
limitations set forth in Section 6.08(b)(v), (c) repay, prepay or purchase the
Existing Debt Securities that are maturing in November 2014, subject to the
limitations set forth in Section 6.08(b)(ii) or 6.08(b)(vi), as applicable, and
(d) for general corporate purposes (including, without limitation, payments on
Open Account Obligations) of the Borrowers and, subject to compliance with
Article VI of this Agreement, their respective Subsidiaries in the ordinary
course of business.  No part of the proceeds of any Loan and no Letter of Credit
will be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations T, U and
X.”
 
SECTION 2.4     Amendments to Section 6.01(k) of the Credit Agreement.
 
Section 6.01(k) of the Credit Agreement is amended and restated in its entirety
as follows:
 
“(k)      other unsecured Indebtedness in an aggregate principal amount not
exceeding $600,000,000 at any time outstanding;”
 
SECTION 2.5     New Section 6.02(n) of the Credit Agreement.
 
The word “and” at the end of Section 6.02(l) of the Credit Agreement is deleted,
the period at the end of Section 6.02(m) of the Credit Agreement is replaced by
“; and” and a new Section 6.02(n) is added to the Credit Agreement as follows:
 
“(n)      Liens not otherwise permitted by this Section 6.02 so long as (i) such
Liens only attach to the assets of those Subsidiaries that are not Loan Parties,
(ii) neither (A) the aggregate outstanding principal amount of the obligations
secured thereby nor (B) the aggregate fair market value (determined as of the
date any such Lien is incurred) of the assets subject thereto exceeds (as to all
Subsidiaries that are not Loan Parties) $50,000,000 at any one time and (iii)
any such Liens do not cover any Collateral.”
 
 
 
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SECTION 2.6     Amendments to Section 6.04(c) of the Credit Agreement.
 
Section 6.04(c) of the Credit Agreement is amended and restated in its entirety
as follows:
 
“(c)       Investments by the Borrowers and the Subsidiaries in Equity Interests
in Persons that are (i) Loan Parties, (ii) Subsidiaries that are not Loan
Parties and (iii) GRI and Rachel Roy IP Company LLC; provided that (A) any such
Equity Interests held by a U.S. Loan Party shall be pledged pursuant to the U.S.
Security Agreement (subject to the limitations applicable to Equity Interests of
First-Tier Foreign Subsidiaries referred to in Section 5.14(b)(iv) and any such
Equity Interests held by a Canadian Loan Party shall be pledged pursuant to the
applicable Canadian Security Agreement) and (B) the aggregate amount of
Investments made after the date hereof by Loan Parties in any Person described
in clause (ii) or (iii) above (including intercompany loans permitted under
clause (B) to the proviso to Section 6.04(d) and outstanding Guarantees
permitted under the proviso to Section 6.04(e)) shall not exceed the sum of (1)
(x) Investments existing on the Amendment No. 2 Effective Date in GRI, Rachel
Roy IP Company LLC and Subsidiaries that are not Loan Parties, (y) loans and
advances existing on the Amendment No. 2 Effective Date of the Loan Parties to
Subsidiaries that are not Loan Parties and (z) Guarantees existing on the
Amendment No. 2 Effective Date by Loan Parties of the aggregate principal amount
of Indebtedness of Subsidiaries that are not Loan Parties (in each case as set
forth on Schedule 6.04) and (2) $30,000,000 (the “Investment Basket”) at any
time outstanding (in each case determined without regard to any write-downs or
write-offs);”
 
 
SECTION 2.7     Amendments to Section 6.08(a) of the Credit Agreement.
 
Section 6.08(a) of the Credit Agreement is amended and restated in its entirety
as follows:
 
“(a)      No Loan Party will, nor will it permit any of the Subsidiaries to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except (i)
each Borrower may declare and pay dividends with respect to its common stock
payable solely in additional shares of its common stock, and, with respect to
its preferred stock, payable solely in additional shares of such preferred stock
or in shares of its common stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their Equity Interests, (iii) the Company may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Company and any of its
Subsidiaries in an aggregate amount not to exceed $2,000,000 during any fiscal
year of the Company; provided that, both immediately before and immediately
after giving effect to each such Restricted Payment, no Default or Event of
Default shall have occurred and be continuing, (iv) the Borrowers may make other
Restricted Payments; provided that, (A) both immediately before the declaration
of, and immediately after giving effect to each such Restricted Payment, no
Default or Event of Default shall have occurred and be continuing, and (B) at
the time any Restricted Payment is paid (x) the Fixed Charge Coverage Ratio for
the Test Period in effect at the time shall not be less than 1.25 to 1.00
(determined on a Pro Forma Basis in respect of the Test Period in effect at such
time) and (y) Availability shall not be less than 30% of the total Revolving
Commitment for the period of 60 consecutive days immediately preceding the date
such Restricted Payment is declared after giving pro forma effect thereto and
(v) SW Holdings may make, in each case in accordance with its limited liability
company agreement, (A) no more frequently than once each calendar quarter, tax
distributions to its members in order for each such member to pay its reasonably
estimated federal, state and local income taxes, if any, resulting solely from
the inclusion of the income of SW Holdings in the taxable income of each such
member, (B) no more frequently than once each calendar year, true up
distributions to its members in respect of the tax distributions referred to in
clause (A) above, in the event that any actual income taxes paid or payable by
any such member shall be in excess of the estimated amount thereof, (C)
dividends and distributions from time to time to the Loan Parties or their
Subsidiaries and (D) distributions consisting of closing date balance sheet
settlement payments in respect of the Initial Acquisition provided for by the
purchase agreement relating to the Acquisition (as such terms are defined in
Amendment No. 1 to Credit Agreement).”
 
 
 
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SECTION 2.8                           Amendments to Section 6.08(b)(ii) of the
Credit Agreement.
 
Section 6.08(b)(ii) of the Credit Agreement is amended and restated in its
entirety as follows:
 
“(b)      payment of regularly scheduled interest and principal payments as and
when due in respect of any Indebtedness (including the Existing Debt Securities
that are maturing in November 2009 and November 2014), other than payments in
respect of the Subordinated Indebtedness prohibited by the subordination
provisions thereof or relating thereto; provided that (A) if, either immediately
before or after giving effect to any such payment on the Existing Debt
Securities any Event of Default has occurred and is continuing, no such payment
may be made thereon other than on account of accrued and unpaid interest thereon
and in an amount not exceeding the Existing Debt Securities Reserve, and (B) no
payment on any such Indebtedness  (other than the Existing Debt Securities)
shall be made if, either both immediately before and after giving effect to any
such payment, any Default or Event of Default has occurred and is continuing.”
 
SECTION 2.9     Amendments to Section 6.08(b) of the Credit Agreement.
 
Section 6.08(b)(vi) of the Credit Agreement is renumbered as Section
6.08(b)(vii), and the following is inserted immediately before Section
6.08(b)(vii):
 
“(vi) prepayment of the Existing Debt Securities that are maturing in November
2014 pursuant to open market purchases or a tender offer for such Existing Debt
Securities; provided that (A) both immediately before and after giving effect to
such prepayment, no Default or Event of Default shall have occurred and be
continuing and (B) either (1) after giving effect to such prepayment
Availability plus cash on hand of the Loan Parties (which is reasonably
identified to the satisfaction of the Joint Collateral Agents) shall not be less
than $300,000,000 or (2) both (x) the Fixed Charge Coverage Ratio for the Test
Period in effect at the time such prepayment is made shall not be less than 1.25
to 1.00 (determined on a Pro Forma Basis in respect of the Test Period in effect
at such time) and (y) Availability shall not be less than 30% of the total
Revolving Commitment for the period of 60 consecutive days immediately preceding
the date such prepayment is to be made after giving pro forma effect thereto;
and”
 
SECTION 2.10    Amendments to Article VII of the Credit Agreement.
 
Paragraphs (d) and (e) of Article VII of the Credit Agreement is amended and
restated in the entirety as follows:
 
“(d)      any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to a
Loan Party’s existence), 5.08, 5.15 or 5.16 or in Article VI (other than the
last sentence of Section 6.13);
 
 
 
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(e)        any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement or any other Loan Document
(other than those which constitute a default under another Section of this
Article), and such failure shall continue unremedied for (i) during a Weekly
Reporting Period, a period of one day after the earlier of any Loan Party’s
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of Section 5.01(g), (h) or (i), (ii) a period of five days
after the earlier of any Loan Party’s knowledge of such breach or notice thereof
from the Administrative Agent (which notice will be given at the request of any
Lender) if such breach relates to terms or provisions of Section 5.01 (other
than Section 5.01(g), (h) or (i) during a Weekly Reporting Period), 5.02 (other
than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10, 5.11 or 5.12 of this
Agreement, (iii) a period of 10 days after the earlier of any Loan Party’s
knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to
terms or provisions of the last sentence of Section 6.13 or (iv) a period of 15
days after the earlier of any Loan Party’s knowledge of such breach or notice
thereof from the Administrative Agent (which notice will be given at the request
of any Lender) if such breach relates to terms or provisions of any other
Section of this Agreement;”
 
SECTION 2.11      Amendments to Revolving Commitment Schedule.
 
The Revolving Commitment Schedule is amended and restated in the entirety as set
forth on Annex I attached hereto.
 
SECTION 2.12     Amendments to Section 7.1(a) of the U.S. Security Agreement.
 
Section 7.1(a) of the U.S. Security Agreement is amended and restated in the
entirety as follows:
 
“(a)       Each Grantor shall (i) not later than 60 days after the Effective
Date (or such later date that may be approved by the Administrative Agent in its
discretion) execute and deliver to the Administrative Agent Deposit Account
Control Agreements for each corporate treasury account and each concentration
account (each, a “Collateral Deposit Account”), which Collateral Deposit
Accounts are identified as such on Exhibit B, (ii) use its commercially
reasonable efforts to execute and deliver to the Administrative Agent Deposit
Account Control Agreements for each Retail Deposit Account maintained by such
Grantor, which Retail Deposit Accounts are identified as such on Exhibit B,
(iii) not later than 20 days after the Effective Date (or such later date that
may be approved by the Administrative Agent in its discretion) establish lock
box service (the “Lock Boxes”) with the bank(s) set forth in Exhibit B, which
lock boxes shall be subject to irrevocable lockbox agreements in the form
provided by or otherwise acceptable to the Joint Collateral Agents and shall be
accompanied by an acknowledgment by the bank where the Lock Box is located (or
which controls such Lock Box) of the Lien of the Administrative Agent granted
hereunder and of irrevocable instructions to wire all amounts collected therein
to a Deposit Account that is subject to a Deposit Account Control Agreement (a
“Lock Box Agreement”); provided that each Retail Deposit Account shall be a
zero-balance account (or an account used by the Grantor in a manner consistent
with such Grantor’s historical practice) and will be swept into a Collateral
Deposit Account on a daily basis; and provided, further, that such Grantor
shall, with respect to each such Collateral Deposit Account (other than each
Retail Deposit Account) and Lock Box in which the Administrative Agent has not
received a Deposit Account Control Agreement or Lock Box Agreement, as the case
may be, with respect thereto on or prior to the date that it is required to
deliver the same (pursuant to this Section 7.1), (A) close each such Collateral
Deposit Account and Lock Box, as the case may be, and (B) open and maintain a
new Collateral Deposit Account with a financial institution subject to a Deposit
Account Control Agreement or a new Lock Box subject to a Lock Box Agreement, as
the case may be.”
 
 
 
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SECTION 2.13    Amendments to Section 7.2 of the U.S. Security Agreement.
 
Section 7.2 of the U.S. Security Agreement is amended and restated in the
entirety as follows:
 
“7.2.     Covenant Regarding New Deposit Accounts; Lock Boxes.  Before opening
or replacing the Concentration Deposit Account, any Collateral Deposit Account
or other Deposit Account (other than a Retail Deposit Account), or establishing
a new Lock Box, each Grantor shall cause each bank or financial institution in
which it seeks to open (a) a Deposit Account (other than a Retail Deposit
Account), to enter into a Deposit Account Control Agreement with the
Administrative Agent in order to give the Administrative Agent Control of such
Deposit Account, or (b) a Lock Box, to enter into a Lock Box Agreement with the
Administrative Agent in order to give the Administrative Agent Control of the
Lock Box.  Before opening or replacing any Retail Deposit Account, each Grantor
shall advise the Administrative Agent of the same and use commercially
reasonable efforts to execute and deliver to the Administrative Agent a Deposit
Account Control Agreement with respect thereto.  In the case of a Deposit
Account or Lock Box maintained with Lenders, the terms of the Deposit Account
Control Agreement or Lock Box Agreement with respect thereto shall be subject to
the provisions of the Credit Agreement regarding setoffs.”
 
SECTION 2.14    Amendments to the Post-Closing Deliverables Agreement.
 
Paragraph 5(b) of Schedule I to the Post-Closing Deliverables Agreement is
amended to delete reference therein to “CODE BLEU” and “EVAN-PICONE”.
 
 
ARTICLE III

 
REPRESENTATIONS AND WARRANTIES
 
In order to induce the Lenders to approve all of the amendments that are
provided for in Article II, each Borrower hereby (a) represents and warrants
that (i) each of the representations and warranties of the Loan Parties
contained in the Credit Agreement and in the other Loan Documents is true and
correct in all material respects as of the date hereof as if made on the date
hereof (except, if any such representation and warranty relates to an earlier
date, such representation and warranty is true and correct in all material
respects as of such earlier date); and (ii) both immediately before and after
giving effect to the provisions of this Agreement no Default or Event of Default
has occurred and is continuing; and (b) agrees that the incorrectness in any
material respect of any representation and warranty contained in the preceding
clause (a) shall constitute an immediate Event of Default.  Without limiting the
foregoing, each Borrower hereby (i) ratifies and confirms all of the terms,
covenants and conditions set forth in the Loan Documents and hereby agrees that
it remains liable to the Administrative Agent and the Lenders in accordance with
the terms, covenants and conditions set forth in the Loan Documents, and all
Liens on the Collateral created pursuant to the Collateral Documents continue
unimpaired and in full force and effect, and (ii) waives all defenses, claims,
counterclaims, rights of recoupment or set-off against any of its Obligations as
provided in the Loan Documents.
 
 
 
10

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ARTICLE IV

 
ACKNOWLEDGMENT OF LOAN GUARANTORS
 
By executing this Agreement, each Loan Guarantor hereby confirms and agrees that
each Loan Document to which it is a party is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that on and after the Effective Date each reference therein to the Credit
Agreement shall refer to the Credit Agreement after giving effect to this
Agreement.  Without limiting the foregoing, each such Loan Guarantor waives all
defenses, claims, counterclaims, rights of recoupment or set-off with respect to
any of such Loan Guarantor’s Obligations as provided in the Loan Documents.
 
 
ARTICLE V

 
CONDITIONS TO EFFECTIVENESS; EXPIRATION; CONDITION SUBSEQUENT
 
SECTION 5.1     Effective Date.  This Agreement shall become effective on such
date (herein called the “Effective Date”) when the conditions set forth in this
Section have been satisfied.
 
SECTION 5.1.1   Execution of Agreement.  The Administrative Agent shall have
received counterparts of this Agreement duly executed and delivered on behalf of
the Borrowers, the Loan Guarantors, the Administrative Agent and all the
Lenders.
 
SECTION 5.1.2   Representations and Warranties.  The representations and
warranties made by the Borrowers pursuant to Article III shall be true and
correct as of the Effective Date.
 
SECTION 5.1.3   Fees.  The Borrowers shall have paid all the fees that they are
required to pay on the Effective Date as provided in each fee letter that is
being entered into in connection with this Agreement.
 
 
ARTICLE VI

 
MISCELLANEOUS
 
SECTION 6.1    Cross-References.  References in this Agreement to any Article or
Section are, unless otherwise specified, to such Article or Section of this
Agreement.
 
SECTION 6.2    Loan Document Pursuant to the Credit Agreement.  This Agreement
is a Loan Document executed pursuant to the Credit Agreement.  Except as
expressly provided for herein, all of the representations, warranties, terms,
covenants and conditions contained in the Credit Agreement and each other Loan
Document shall remain unamended or otherwise unmodified and in full force and
effect.
 
 
 
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SECTION 6.3    Limitation of Amendments.  The amendments set forth in Article II
shall be limited precisely as provided for herein and shall not be deemed to be
a waiver of, amendment of, consent to or modification of any other term or
provision of the Credit Agreement or of any term or provision of any other Loan
Document or of any transaction or further or future action on the part of any
Borrower or any other Loan Party which would require the consent of any of the
Lenders under the Credit Agreement or any other Loan Document.
 
SECTION 6.4    Counterparts.  This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
 
SECTION 6.5    Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
 
SECTION 6.6    Further Assurances.  Each Borrower shall execute and deliver, and
shall cause each other Loan Party to execute and deliver, from time to time in
favor of the Administrative Agent and the Lenders such documents, agreements,
certificates and other instruments as shall be necessary or advisable to effect
the purposes of this Agreement.
 
SECTION 6.7    Costs and Expenses.  The Borrowers agree to pay all reasonable
costs and expenses of the Administrative Agent (including the reasonable fees
and out-of-pocket expenses of legal counsel of the Administrative Agent) that
are incurred in connection with the execution and delivery of this Agreement and
the other agreements and documents entered into in connection herewith.
 
SECTION 6.8  GOVERNING LAW; WAIVER OF JURY TRIAL; ENTIRE AGREEMENT.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.  EACH PERSON A PARTY HERETO KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY AGREEMENT OR DOCUMENT
ENTERED INTO IN CONNECTION HEREWITH.  THIS AGREEMENT CONSTITUTES THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDES ANY PRIOR AGREEMENT, WRITTEN OR ORAL, WITH RESPECT HERETO.
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers hereunto duly authorized as of the day and year
first above written.
 
 

  BORROWERS:           JONES APPAREL GROUP, INC.,     a Pennsylvania 
corporation     JONES APPAREL GROUP HOLDINGS, INC.,      a Delaware corporation
    JONES APPAREL GROUP USA, INC.,     a Delaware corporation     JAG FOOTWEAR,
ACCESSORIES AND     RETAIL CORPORATION,     a New Jersey corporation     JONES
INVESTMENT CO. INC.,     a Delaware corporation     NINE WEST DEVELOPMENT
CORPORATION,     a Delaware corporation          
 
By
/s/ Joseph T. Donnalley       Name:  Joseph T. Donnalley       In his capacity
as officer for each aforenamed       Borrower as set forth opposite such
Borrower       on Schedule I to the Credit Agreement.  

 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  JONES JEANSWEAR GROUP, INC.,     a New York corporation          
 
By
/s/ Tami Fersko       Name:  Tami Fersko       Title:    Vice President and
Treasurer  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  JONES JEWELRY GROUP, INC.,     a Rhode Island corporation          
 
By
/s/ Thomas Murray       Name:  Thomas Murray       Title:    Senior Executive
Vice President,            Chief Financial Officer and Secretary   

 
 
 
 
 
 
 
 
 
 
 
 
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  JONES APPAREL GROUP CANADA, LP,     an Ontario Limited Partnership          
By  JONES CANADA, INC., its General Partner          
 
By
/s/ Roger Flores       Name:  Roger Flores       Title:    Vice President of
Finance  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  LOAN GUARANTORS:    
JONES DISTRIBUTION CORPORATION, 
    a Delaware corporation     JONES MANAGEMENT SERVICE COMPANY,     a Delaware
corporation     JONES HOLDING, INC.,     a Delaware corporation          
 
By
/s/ Joseph T. Donnalley       Name:  Joseph T. Donnalley  

    In his capacity as officer for each aforenamed       Guarantor as set forth
opposite such Guarantor       on Schedule I to the Credit Agreement.  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  JPMORGAN CHASE BANK, N.A., as Lender and     Administrative Agent            
   
 
By
/s/ Donna M. DiForio       Name:  Donna M. DiForio       Title:    Vice
President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  JPMORGAN CHASE BANK, N.A., TORONTO      BRANCH, as Canadian Lender and
Canadian     Administrative Agent                
 
By
/s/ Auggie Marchetti       Name:  Auggie Marchetti       Title:    Senior Vice
President & Region Manager  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  CITIBANK, N.A., as Lender                
 
By
/s/ Thomas M. Halsch       Name:  Thomas M. Halsch       Title:    Vice
President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  GENERAL ELECTRIC CAPITAL     CORPORATION, as Lender                
 
By
/s/ Steven B. Flowers       Name:  Steven B. Flowers       Title:    Duly
Authorized Signatory  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  BANK OF AMERICA, N.A., as Lender                
 
By
/s/ David Vega       Name:  David Vega       Title:    Managing Director  

 
 

  BANK OF AMERICA, N.A. (acting through its     Canada branch), as Canadian
Lender                
 
By
/s/ Medina Sales de Andrade       Name:  Medina Sales de Andrade       Title:   
Vice President  

 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  WELLS FARGO BANK, N.A., as Lender                
 
By
/s/ Justin Button       Name:  Justin Button       Title:    Vice President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  SUNTRUST BANK, as Lender                
 
By
/s/ William L Otott Jr.       Name:  William L Otott Jr.       Title:   
Director  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  CIT BANK, as Lender                
 
By
/s/ Benjamin Haslam       Name:  Benjamin Haslam       Title:    Authorized
Signatory  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  PNC BANK, NATIONAL ASSOCIATION, as Lender                
 
By
/s/ Robert T. Orzechowski       Name:  Robert T. Orzechowski       Title:   
Vice President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  U.S. BANK NATIONAL ASSOCIATION, as Lender                
 
By
/s/ Jeffrey S. Gruender       Name:  Jeffrey S. Gruender       Title:    Vice
President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  CAPITAL ONE LEVERAGE FINANCE CORP.,     as Lender                
 
By
/s/ Paul Dellova       Name:  Paul Dellova       Title:    Senior Vice President
 

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  GOLDMAN SACHS LENDING PARTNERS     LLC, as Lender                
 
By
/s/ Mark Walton       Name:  Mark Walton       Title:    Authorized Signatory  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  HSBC BANK USA, NATIONAL ASSOCIATION,      as Lender                
 
By
/s/ Kysha A. Pierre-Louis       Name:  Kysha A. Pierre-Louis       Title:   
Vice President  

 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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  ROYAL BANK OF CANADA, as Lender                
 
By
/s/ Pierre Noriega       Name:  Pierre Noriega       Title:    Attorney-in-Fact
                    By /s/ David Cole       Name:  David Cole       Title:   
Authorized Signatory          

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO AMENDMENT NO. 2 TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS]
 

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Annex I
to
Amendment No.2

REVOLVING COMMITMENT SCHEDULE
 
U.S. Lender
 
U.S.
Commitment
 
Canadian Lender
 
Canadian Commitment
   
Revolving Commitment
 
JPMorgan Chase Bank, N.A.
  $ 79,166,666.67  
JPMorgan Chase Bank, N.A., Toronto Branch
  $ 4,373,849.26     $ 79,166,666.67  
Citibank, N.A.
  $ 79,166,666.67       $ 4,373,849.26     $ 79,166,666.67  
Bank of America, N.A.
  $ 79,166,666.67  
Bank of America, N.A. (acting through its Canada Branch)
  $ 4,373,848.86     $ 79,166,666.67  
Wells Fargo Bank, N.A.
  $ 79,166,666.67       $ 4,373,848.86     $ 79,166,666.67  
SunTrust Bank
  $ 79,166,666.67       $ 0     $ 79,166,666.67  
General Electric Capital Corporation
  $ 79,166,666.67       $ 4,373,848.86     $ 79,166,666.67   CIT Bank   $ 
35,000,000       $   0     $  35,000,000  
US Bank National Association
  $ 35,000,000       $  0     $ 35,000,000   Royal Bank of Canada   $ 
30,000,000       $  1,657,458.62     $  30,000,000  
HSBC Bank USA, National Association
  $ 25,000,000       $  920,810.29     $ 25,000,000  
PNC Bank, National Association
  $ 25,000,000       $  0     $ 25,000,000  
Capital One Leverage Finance Corp.
  $ 15,000,000       $  0     $ 15,000,000  
Goldman Sachs Lending Partners LLC
  $ 10,000,000       $  552,486     $ 10, 000,000  
Total
  $ 650,000,000       $ 25,000,000     $ 650,000,000