EXHIBIT 10.2

$700,000,000

THREE YEAR CREDIT AGREEMENT

dated as of June 10, 2003,

by and among

JONES APPAREL GROUP USA, INC.,

the Additional Obligors referred to herein,

the Lenders referred to herein,

J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC.,
as Joint Lead Arrangers
and Joint Bookrunners,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
and

JPMORGAN CHASE BANK and CITIBANK, N.A.,
as Syndication Agents,
and

FLEET NATIONAL BANK and BANK OF AMERICA, N.A.,
as Documentation Agents

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TABLE OF CONTENTS

Page ARTICLE I DEFINITIONS 1 SECTION 1.1. Definitions 1 SECTION 1.2. General 14
SECTION 1.3. Other Definitions and Provisions 14 ARTICLE II REVOLVING CREDIT
FACILITY 15 SECTION 2.1. Revolving Credit Loans 15 SECTION 2.2. Procedure for
Advances of Revolving Credit Loans 15 SECTION 2.3. Repayment of Revolving Credit
Loans 16 SECTION 2.4. Evidence of Debt 16 SECTION 2.5. Permanent Reduction of
the Revolving Credit Commitment 17 SECTION 2.6. Termination of Revolving Credit
Facility 17 ARTICLE III LETTER OF CREDIT FACILITY 17 SECTION 3.1. L/C Commitment
17 SECTION 3.2. Procedure for Issuance of Letters of Credit 18 SECTION 3.3. Fees
and Other Charges 18 SECTION 3.4. L/C Participations 19 SECTION 3.5.
Reimbursement 20 SECTION 3.6. Obligations Absolute 20 SECTION 3.7 Effect of
Application 21 ARTICLE IV [RESERVED] 21 ARTICLE V GENERAL LOAN PROVISIONS 21
SECTION 5.1. Interest 21 SECTION 5.2. Notice and Manner of Conversion or
Continuation of Revolving Credit Loans 23

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SECTION 5.3. Fees 23 SECTION 5.4. Manner of Payment 24 SECTION 5.5. Crediting of
Payments and Proceeds 24 SECTION 5.6. Adjustments 24 SECTION 5.7. Nature of
Obligations of Lenders Regarding Extensions of Credit; Assumption by the
Administrative Agent 25 SECTION 5.8. Joint and Several Liability of the Credit
Parties 25 SECTION 5.9. Changed Circumstances 27 SECTION 5.10. Indemnity 29
SECTION 5.11. Capital Requirements 30 SECTION 5.12. Taxes 30 ARTICLE VI CLOSING;
CONDITIONS OF CLOSING AND BORROWING 32 SECTION 6.1. Closing 32 SECTION 6.2.
Conditions to Closing and Initial Revolving Credit Loans and Letters of Credit
32 SECTION 6.3. Conditions to All Extensions of Credit 34 ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES 35 SECTION 7.1.
Representations and Warranties 35 SECTION 7.2. Survival of Representations and
Warranties, Etc. 40 ARTICLE VIII FINANCIAL INFORMATION AND NOTICES 40 SECTION
8.1. Financial Statements and Projections 40 SECTION 8.2. Officer's Compliance
Certificate 41 SECTION 8.3. Accountants' Certificate 41 SECTION 8.4. Other
Reports 41 SECTION 8.5. Notice of Litigation and Other Matters 41 SECTION 8.6.
Accuracy of Information 42 ARTICLE IX AFFIRMATIVE COVENANTS 42

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SECTION 9.1. Preservation of Corporate Existence and Related Matters 42 SECTION
9.2. Maintenance of Property 42 SECTION 9.3. Insurance 42 SECTION 9.4.
Accounting Methods and Financial Records 43 SECTION 9.5. Payment and Performance
of Obligations 43 SECTION 9.6. Compliance With Laws and Approvals 43 SECTION
9.7. Environmental Laws 43 SECTION 9.8. Compliance with ERISA 44 SECTION 9.9.
Conduct of Business 44 SECTION 9.10. Visits and Inspections 44 SECTION 9.11. Use
of Proceeds 44 ARTICLE X FINANCIAL COVENANTS 44 SECTION 10.01. Interest Coverage
Ratio 44 SECTION 10.02. Minimum Net Worth 44 ARTICLE XI NEGATIVE COVENANTS 44
SECTION 11.1. Limitations on Debt and Guaranty Obligations 45 SECTION 11.2.
[Reserved]. 46 SECTION 11.3. Limitations on Liens 46 SECTION 11.4. Limitations
on Loans, Advances, Investments and Acquisitions. 48 SECTION 11.5. Limitations
on Mergers and Liquidation 49 SECTION 11.6. Limitations on Sale or Transfer of
Assets. 49 SECTION 11.7. Limitations on Dividends and Distributions 51 SECTION
11.8. Transactions with Affiliates 51 SECTION 11.9. Changes in Fiscal Year End
51 SECTION 11.10. Amendments; Payments and Prepayments of Material Debt and
Subordinated Debt 51 ARTICLE XII DEFAULT AND REMEDIES 51

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SECTION 12.1. Events of Default 51 SECTION 12.2. Remedies 53 SECTION 12.3.
Rights and Remedies Cumulative; Non-Waiver; Etc. 54 ARTICLE XIII THE
ADMINISTRATIVE AGENT 54 SECTION 13.1. Appointment 54 SECTION 13.2. Delegation of
Duties 55 SECTION 13.3. Exculpatory Provisions 55 SECTION 13.4. Reliance by the
Administrative Agent 55 SECTION 13.5. Notice of Default 56 SECTION 13.6.
Non-Reliance on the Administrative Agent and Other Lenders 56 SECTION 13.7.
Indemnification 56 SECTION 13.8. The Administrative Agent in Its Individual
Capacity 57 SECTION 13.9. Resignation of the Administrative Agent; Successor
Administrative Agent 57 SECTION 13.10. Syndication and Documentation Agents 57
ARTICLE XIV MISCELLANEOUS 57 SECTION 14.1. Notices 58

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SECTION 14.2. Expenses; Indemnity 59 SECTION 14.3. Set-off 59 SECTION 14.4.
Governing Law 59 SECTION 14.5. Consent to Jurisdiction 59 SECTION 14.6. Waiver
of Jury Trial 60 SECTION 14.7. Reversal of Payments 60 SECTION 14.8. Injunctive
Relief; Punitive Damages 60 SECTION 14.9. Accounting Matters 60 SECTION 14.10.
Successors and Assigns; Participations 61 SECTION 14.11. Amendments, Waivers and
Consents 65 SECTION 14.12. Performance of Duties 66 SECTION 14.13. All Powers
Coupled with Interest 66 SECTION 14.14. Survival of Indemnities 66 SECTION
14.15. Titles and Captions 66 SECTION 14.16. Severability of Provisions 66
SECTION 14.17. Counterparts 66 SECTION 14.18. Term of Agreement 66 SECTION
14.19. Inconsistencies with Other Documents; Independent Effect of Covenants 66

Exhibits

Exhibit A - Form of Revolving Credit Note Exhibit B - Form of Notice of
Revolving Credit Borrowing Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment Exhibit E - Form of Notice of
Conversion/Continuation Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance

Schedules

Schedule 1.1(a) - Lenders and Revolving Credit Commitments Schedule 1.1(b) -
Outstanding Letters of Credit Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(g) - Disclosed Litigation Schedule 7.1(n) - Material Adverse Change
Schedule 7.1(p) - Debt and Guaranty Obligations Schedule 7.1(q) - Litigation
Schedule 11.3 - Existing Liens Schedule 11.4 - Existing Loans, Advances and
Investments

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THREE YEAR CREDIT AGREEMENT

Dated as of June 10, 2003

    JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, the Additional
Obligors (as defined below), the Lenders who are or may become a party to this
Agreement, J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC., as
Joint Lead Arrangers and Joint Bookrunners, WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent for the Lenders, JPMORGAN CHASE BANK and CITIBANK, N.A.,
as Syndication Agents, and FLEET NATIONAL BANK and BANK OF AMERICA, N.A., as
Documentation Agents, agree as follows:

ARTICLE I DEFINITIONS

SECTION 1.1. Definitions. The following terms when used in this Agreement shall
have the meanings assigned to them below:

>     "Additional Debt Securities" shall have the meaning set forth in Section
> 11.1(f).
> 
>     "Additional Obligors" means the collective reference to Jones Apparel
> Group, Jones Apparel Group Holdings and Nine West Footwear in their capacities
> as co-obligors under this Agreement.
> 
>     "Administrative Agent" means Wachovia in its capacity as Administrative
> Agent hereunder, and any successor thereto appointed pursuant to Section 13.9.
> 
>     "Administrative Agent's Office" means the office of the Administrative
> Agent specified in or determined in accordance with the provisions of Section
> 14.1(c).
> 
>     "Affiliate" means, with respect to any Person, any other Person (other
> than a Subsidiary) which directly or indirectly through one or more
> intermediaries, controls, or is controlled by, or is under common control
> with, such first Person or any of its Subsidiaries. The term "control" means
> the possession, directly or indirectly, of the power to direct or cause the
> direction of the management and policies of a Person, whether through
> ownership of voting securities, by contract or otherwise.
> 
>     "Agreement" means this Three Year Credit Agreement, as amended, restated,
> supplemented or otherwise modified.
> 
>     "Alternative Currency" means (i) Pounds Sterling, (ii) the euro or (iii)
> any other lawful currency (other than Dollars) acceptable to the Issuing
> Lenders which, in the case of this clause (iii), is freely transferable and
> convertible into Dollars in the United States currency market and is freely
> available to all Issuing Lenders in the London interbank deposit market.
> 
>     "Alternative Currency L/C Commitment" means the lesser of (a) One Hundred
> Million Dollars ($100,000,000) and (b) the L/C Commitment.
> 
>     "Applicable Law" means all applicable provisions of constitutions, laws,
> statutes, ordinances, rules, treaties, regulations, permits, licenses,
> approvals, interpretations and

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> orders of courts or Governmental Authorities and all orders and decrees of all
> courts and arbitrators.
> 
>     "Applicable Margin" means, for purposes of calculating (a) the Base Rate
> and LIBOR Rate for purposes of Section 5.1(a), (b) the L/C Fee for purposes of
> Section 3.3(a) or (c) the Facility Fee for purposes of Section 5.3(a), the
> corresponding rate set forth below for the applicable rating of the senior,
> unsecured, long-term debt of the Credit Parties, on a collective basis (the
> "Debt Rating") publicly announced by Standard & Poor's Ratings Group, a
> division of The McGraw-Hill Companies ("S&P"), and Moody's Investors Service,
> Inc. ("Moody's") as follows:

Applicable Margin Per Annum

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Level S&P
Rating Moody's
Rating LIBOR
Rate Base
Rate Trade
L/C Fee Standby
L/C Fee Facility
Fee I >=A- >=A3 0.325% 0.000% 0.150% 0.325% 0.125% II >=BBB+ >=Baa1 0.475%
0.000% 0.200% 0.475% 0.150% III >=BBB >=Baa2 0.550% 0.000% 0.250% 0.550% 0.200%
IV >=BBB- >=Baa3 0.750% 0.000% 0.300% 0.750% 0.250% V <=BB+ <=Ba1 1.075% 0.000%
0.350% 1.075% 0.300%

> provided, that if both Moody's and S&P shall not have in effect a Debt Rating
> (other than by reason of the circumstances referred to in the last sentence of
> this definition), then such Debt Rating shall be deemed to be Level V. In the
> event that the corresponding Debt Ratings publicly announced by S&P and
> Moody's listed above differ by (a) one pricing level, the Applicable Margin
> shall be based on the higher of the two ratings, and (b) two or more pricing
> levels, the Applicable Margin shall be based on the rating one rating below
> the higher of the two ratings. Any change in the Applicable Margin shall be
> effective as of the Business Day on which the applicable rating is announced
> or is publicly available. If the rating system of S&P and Moody's shall
> change, or if both of such rating agencies shall cease to be in the business
> of rating corporate debt obligations, the Borrower and the Lenders shall
> negotiate in good faith to amend this definition to reflect such changed
> rating system or the unavailability of ratings from such rating agencies and,
> pending the effectiveness of any such amendment, the Applicable Margin shall
> be determined by reference to the rating most recently in effect prior to such
> change or cessation.
> 
>     "Application" means an application, in the form specified by any Issuing
> Lender from time to time, requesting such Issuing Lender to issue a Letter of
> Credit.
> 
>     "Assignment and Acceptance" shall have the meaning assigned thereto in
> Section 14.10.
> 
>     "Base Rate" means, at any time, the higher of (a) the Prime Rate and (b)
> the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in the
> Base Rate shall take

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> effect simultaneously with the corresponding change or changes in the Prime
> Rate or the Federal Funds Rate.
> 
>     "Base Rate Loan" means any Revolving Credit Loan bearing interest at a
> rate based upon the Base Rate as provided in Section 5.1(a).
> 
>     "Borrower" means Jones Apparel Group USA, Inc.
> 
>     "Business Day" means (a) any day other than a Saturday, Sunday or legal
> holiday on which banks in Charlotte, North Carolina, Philadelphia,
> Pennsylvania and New York, New York, are not authorized or required by law to
> remain closed for the conduct of their commercial banking business, (b) with
> respect to all notices and determinations in connection with, and payments of
> principal and interest on, any LIBOR Rate Loan, the term "Business Day" shall
> also exclude any day on which banks are not open for trading in Dollar
> deposits in the London interbank market, and (c) with respect to all notices
> and determinations in connection with, and payment of principal and interest
> on, any L/C Obligation denominated in an Alternative Currency; the term
> "Business Day" shall also exclude any day on which banks in London do not
> provide quotations for deposits denominated in such Alternative Currency.
> 
>     "Capital Lease" means, with respect to the Credit Parties and their
> Subsidiaries, any lease of any property that should, in accordance with GAAP,
> be classified and accounted for as a capital lease on a Consolidated balance
> sheet of the Credit Parties and their Subsidiaries.
> 
>     "Change in Control" shall have the meaning assigned thereto in Section
> 12.1(h).
> 
>     "Closing Date" means the date of this Agreement or such later Business Day
> upon which each condition described in Section 6.2 shall be satisfied or
> waived in all respects.
> 
>     "Code" means the Internal Revenue Code of 1986, and the rules and
> regulations thereunder, each as amended, supplemented or otherwise modified
> from time to time.
> 
>     "Consolidated" means, when used with reference to financial statements or
> financial statement items of the Credit Parties and their Subsidiaries, such
> statements or items on a consolidated basis in accordance with applicable
> principles of consolidation under GAAP.
> 
>     "Correspondent" means any financial institution designated by an Issuing
> Lender to act as such Issuing Lender's correspondent hereunder with respect to
> the distribution and payment of Letters of Credit denominated in an
> Alternative Currency.
> 
>     "Credit Facility" means the collective reference to the Revolving Credit
> Facility and the L/C Facility.
> 
>     "Credit Parties" means each of the Additional Obligors and the Borrower.
> 
>     "Debt" means, with respect to the Credit Parties and their Subsidiaries at
> any date and without duplication, the sum of the following calculated in
> accordance with GAAP: (a) all liabilities, obligations and indebtedness, in
> each case for borrowed money

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> including but not limited to obligations evidenced by bonds, debentures, notes
> or other similar instruments of any such Person, (b) all obligations to pay
> the deferred purchase price of property or services of any such Person, except
> trade payables arising in the ordinary course of business, (c) all obligations
> of any such Person as lessee under Capital Leases, (d) all Debt of any other
> Person secured by a Lien on any asset of any such Person, (e) all Guaranty
> Obligations of any such Person, (f) all obligations, contingent or otherwise,
> of any such Person relative to the amount of drawn letters of credit not
> reimbursed as required by the terms thereof, including without limitation any
> Reimbursement Obligation not reimbursed as required by the terms hereof, and
> banker's acceptances issued for the account of any such Person, and (g) all
> net obligations incurred by any such Person pursuant to Hedging Agreements.
> 
>     "Default" means any of the events specified in Section 12.1 which with the
> passage of time, the giving of notice or any other condition, would constitute
> an Event of Default.
> 
>     "Dollar Amount" shall mean (a) with regard to any Obligation denominated
> in Dollars, the amount thereof and (b) with regard to any Obligation
> denominated in an Alternative Currency, the amount of Dollars which is
> equivalent to the sum of (i) the amount so expressed in an Alternative
> Currency at the applicable-quoted spot rate on the appropriate page of the
> Reuter's Screen as determined by the Administrative Agent at the relevant
> time; plus (ii) any amounts owed by the Borrower pursuant to Section 3.5(b).
> 
>     "Dollars" or "$" means, unless otherwise qualified, dollars in lawful
> currency of the United States.
> 
>     "EBITDAR" means, with respect to the Credit Parties and their Subsidiaries
> on a Consolidated basis for any period, the sum of (a) Net Income for such
> period, plus (b) the sum of the following to the extent deducted in the
> determination of Net Income: (i) income and franchise taxes, (ii) Interest
> Expense, (iii) amortization, depreciation, extraordinary non-cash losses and
> any other non-cash charges (including amortization or write-off of goodwill,
> transaction expenses, covenants not to compete and other intangible assets,
> and non-cash charges resulting from purchase accounting related to any
> acquisition otherwise permitted pursuant to the terms of this Agreement) and
> (iv) Rental Expense less (c) any items of extraordinary gain which were
> included in determining Net Income.
> 
>     "Eligible Assignee" means, with respect to any assignment of the rights,
> interest and obligations of a Lender hereunder, a Person that is at the time
> of such assignment (a) a commercial bank organized under the laws of the
> United States or any state thereof, having combined capital and surplus in
> excess of $500,000,000, (b) a commercial bank organized under the laws of any
> other country that is a member of the Organization of Economic Cooperation and
> Development, or a political subdivision of any such country, having combined
> capital and surplus in excess of $500,000,000, (c) a finance company,
> insurance company or other financial institution which in the ordinary course
> of business extends credit of the type extended hereunder and that has total
> assets in excess of $1,000,000,000, (d) already a Lender hereunder (whether as
> an original party to this Agreement or as the assignee of another Lender) or
> an Affiliate of a Lender hereunder, (e) the successor (whether by transfer of
> assets, merger or otherwise) to all or substantially all of the commercial
> lending business of the assigning Lender, (f) any SPC solely to the extent
> permitted by Section 14.10(h), or (g) any other Person that has been

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> approved in writing as an Eligible Assignee by the Borrower and the
> Administrative Agent.
> 
>     "Employee Benefit Plan" means any employee benefit plan within the meaning
> of Section 3(3) of ERISA which (a) is maintained for employees of the Borrower
> or any ERISA Affiliate or (b) has at any time within the preceding six (6)
> years been maintained for the employees of the Borrower or any current or
> former ERISA Affiliate.
> 
>     "EMU" mean economic and monetary union as contemplated in the Treaty on
> European Union.
> 
>     "Environmental Laws" means any and all federal, state and local laws,
> statutes, ordinances, rules, regulations, permits, licenses, approvals,
> binding interpretations and orders of courts or Governmental Authorities,
> relating to the protection of human health or the environment, including, but
> not limited to, requirements pertaining to the manufacture, processing,
> distribution, use, treatment, storage, disposal, transportation, handling,
> reporting, licensing, permitting, investigation or remediation of Hazardous
> Materials.
> 
>     "ERISA" means the Employee Retirement Income Security Act of 1974, and the
> rules and regulations thereunder, each as amended, supplemented or otherwise
> modified from time to time.
> 
>     "ERISA Affiliate" means any Person who together with the Borrower is
> treated as a single employer within the meaning of Section 414(b), (c), (m) or
> (o) of the Code or Section 4001(b) of ERISA.
> 
>     "euro" means the lawful currency of the European Union as constituted by
> the Treaty of Rome which established the European Community, as such treaty
> may be amended from time to time and as referred to in the EMU legislation.
> 
>     "Eurodollar Reserve Percentage" means, for any day, the percentage
> (expressed as a decimal and rounded upwards, if necessary, to the next higher
> 1/100th of 1%) which is in effect for such day as prescribed by the Federal
> Reserve Board (or any successor) for determining the maximum reserve
> requirement (including without limitation any basic, supplemental or emergency
> reserves) in respect of eurocurrency liabilities or any similar category of
> liabilities for a member bank of the Federal Reserve System in New York City.
> 
>     "Event of Default" means any of the events specified in Section 12.1,
> provided that any requirement for passage of time, giving of notice, or any
> other condition, has been satisfied.
> 
>     "Existing Debt Securities" means the 7.50% Senior Notes due 2004, the 8
> 3/8% Series B Senior Notes due 2005, the 7.875% Senior Notes due 2006 and the
> Zero Coupon Convertible Senior Notes due 2021 of Jones Apparel Group.
> 
>     "Existing Loans" shall have the meaning assigned thereto in Section
> 6.2(f).
> 
>     "Extensions of Credit" means, as to any Lender at any time, (a) an amount
> equal to the sum of (i) the aggregate principal amount of all Revolving Credit
> Loans made by

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> such Lender then outstanding, and (ii) such Lender's Revolving Credit
> Commitment Percentage of the Dollar Amount of the L/C Obligations then
> outstanding, or (b) the making of any loan or participation in any Letter of
> Credit by such Lender, as the context requires.
> 
>     "Facility Fee" shall have the meaning assigned thereto in Section 5.3(a).
> 
>     "FDIC" means the Federal Deposit Insurance Corporation, or any successor
> thereto.
> 
>     "Federal Funds Rate" means, the rate per annum (rounded upwards, if
> necessary, to the next higher 1/100th of 1%) representing the daily effective
> federal funds rate as quoted by the Administrative Agent and confirmed in
> Federal Reserve Board Statistical Release H.15 (519) or any successor or
> substitute publication selected by the Administrative Agent. If, for any
> reason, such rate is not available, then "Federal Funds Rate" shall mean a
> daily rate which is determined, in the opinion of the Administrative Agent, to
> be the rate at which federal funds are being offered for sale in the national
> federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or
> holidays shall be the same as the rate for the most immediate preceding
> Business Day.
> 
>     "Fiscal Year" means the fiscal year of the Credit Parties and their
> Subsidiaries ending on December 31.
> 
>     "Five-Year Credit Agreement" means the Five-Year Credit Agreement dated as
> of June 15, 1999 by and among the Borrower, the Additional Obligors, the
> Administrative Agent and the financial institutions party thereto, as amended,
> restated, supplemented or otherwise modified from time to time.
> 
>     "Five-Year Credit Agreement Obligations" means the obligations of the
> Borrower and the Additional Obligors under the Five-Year Credit Agreement.
> 
>     "Foreign Lender" means any Lender that is organized under the laws of a
> jurisdiction other than that in which the Borrower is located. For purposes of
> this definition, the United States of America, each state thereof and the
> District of Columbia shall be deemed to constitute a single jurisdiction.
> 
>     "GAAP" means generally accepted accounting principles, as recognized by
> the American Institute of Certified Public Accountants and the Financial
> Accounting Standards Board, consistently applied and maintained on a
> consistent basis for the Credit Parties and their Subsidiaries throughout the
> period indicated.
> 
>     "Governmental Approvals" means all authorizations, consents, approvals,
> licenses and exemptions of, registrations and filings with, and reports to,
> all Governmental Authorities.
> 
>     "Governmental Authority" means any nation, province, state or political
> subdivision thereof, and any government or any Person exercising executive,
> legislative, regulatory or administrative functions of or pertaining to
> government, and any corporation or other entity owned or controlled, through
> stock or capital ownership or otherwise, by any of the foregoing.

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>     "Granting Lender" shall have the meaning assigned thereto in Section
> 14.10(h).
> 
>     "Guaranty Obligation" means, with respect to the Credit Parties and their
> Subsidiaries, without duplication, any obligation, contingent or otherwise, of
> any such Person pursuant to which such Person has directly or indirectly
> guaranteed any Debt or other obligation of any other Person and, without
> limiting the generality of the foregoing, any obligation, direct or indirect,
> contingent or otherwise, of any such Person (a) to purchase or pay (or advance
> or supply funds for the purchase or payment of) such Debt or other obligation
> (whether arising by virtue of partnership arrangements, by agreement to keep
> well, to purchase assets, goods, securities or services, to take-or-pay, or to
> maintain financial statement condition or otherwise) or (b) entered into for
> the purpose of assuring in any other manner the obligee of such Debt or other
> obligation of the payment thereof or to protect such obligee against loss in
> respect thereof (in whole or in part); provided, that the term Guaranty
> Obligation shall not include (i) endorsements for collection or deposit in the
> ordinary course of business or (ii) a contractual commitment by one Person to
> invest in another Person for so long as such investment is expected to
> constitute a permitted investment under Section 11.4.
> 
>     "Hazardous Materials" means any substances or materials (a) which are or
> become defined as hazardous wastes, hazardous substances, pollutants,
> contaminants, chemical substances or mixtures or toxic substances under any
> Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
> infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
> health or the environment and are or become regulated by any Governmental
> Authority, (c) the presence of which require investigation or remediation
> under any Environmental Law, (d) the discharge or emission or release of which
> requires a permit or license under any Applicable Law or other Governmental
> Approval, or (e) which contain, without limitation, asbestos, polychlorinated
> biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons,
> petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or
> synthetic gas.
> 
>     "Hedging Agreement" means any agreement with respect to an interest rate
> swap, collar, cap, floor or forward rate agreement or other agreement
> regarding the hedging of interest rate risk exposure executed in connection
> with hedging the interest rate exposure of any Credit Party, and any
> confirming letter executed pursuant to such hedging agreement, all as amended,
> restated or otherwise modified from time to time.
> 
>     "Interest Coverage Ratio" shall have the meaning assigned thereto in
> Section 10.1.
> 
>     "Interest Expense" means, for any period, total interest expense
> (including, without limitation, interest expense attributable to Capital
> Leases) determined on a consolidated basis, without duplication, for the
> Credit Parties and their Subsidiaries in accordance with GAAP.
> 
>     "Interest Period" shall have the meaning assigned thereto in Section
> 5.1(b).
> 
>     "ISP 98" means the International Standby Practices (1998 Revision,
> effective January 1, 1999), International Chamber of Commerce Publication No.
> 590.
> 
>     "Issuing Lender" means Wachovia, JPMorgan Chase Bank, Citibank, N.A.,
> Fleet National Bank and Bank of America, N.A., each in its capacity as issuer
> of any Letter of

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> Credit, and any other Lender mutually acceptable and on terms satisfactory to
> the Borrower, the Administrative Agent and such Lender; and Issuing Lenders
> means all such Lenders.
> 
>     "Jones Apparel Group" means Jones Apparel Group, Inc., a Pennsylvania
> corporation.
> 
>     "Jones Apparel Group Holdings" means Jones Apparel Group Holdings, Inc., a
> Delaware corporation.
> 
>     "L/C Commitment" means Seven Hundred Million Dollars ($700,000,000).
> 
>     "L/C Facility" means the letter of credit facility established pursuant to
> Article III hereof.
> 
>     "L/C Fee" shall have the meaning assigned thereto in Section 3.3(a).
> 
>     "L/C Obligations" means at any time, an amount equal to the sum of (a) the
> aggregate undrawn and unexpired amount of the then outstanding Letters of
> Credit and (b) the aggregate amount of drawings under Letters of Credit which
> have not then been reimbursed pursuant to Section 3.5.
> 
>     "L/C Participants" means the collective reference to all the Lenders
> having a Revolving Credit Commitment other than the applicable Issuing Lender.
> 
>     "Lender" means each Person executing this Agreement as a Lender set forth
> on the signature pages hereto and each Person that hereafter becomes a party
> to this Agreement as a Lender pursuant to Section 14.10 other than any party
> hereto that ceases to be a party hereto pursuant to any Assignment and
> Acceptance.
> 
>     "Lending Group Members" means the collective reference to (a) the Lenders
> party to this Agreement and (b) the lenders party to the Five Year Credit
> Agreement.
> 
>     "Lending Office" means, with respect to any Lender, the office of such
> Lender maintaining such Lender's Revolving Credit Commitment Percentage of the
> Revolving Credit Loans.
> 
>     "Letters of Credit" shall have the meaning assigned thereto in Section
> 3.1.
> 
>     "LIBOR" means the rate of interest per annum determined on the basis of
> the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for
> a period equal to the applicable Interest Period which appears on the
> Moneyline Telerate Markets Screen 3750 (or on any successor or substitute page
> of such service, or any successor to or substitute for such service, providing
> rate quotations comparable to those currently provided on such page of such
> service, as determined by the Administrative Agent from time to time for
> purposes of providing quotations of interest rates applicable to dollar
> deposits in the London interbank market) at approximately 11:00 a.m. (London
> time) two (2) Business Days prior to the first day of the applicable Interest
> Period (rounded upward, if necessary, to the nearest one hundredth of one
> percent (1/100%)). If, for any reason, such rate does not appear on Moneyline
> Telerate Markets Screen 3750, then "LIBOR" shall be determined by the
> Administrative Agent to be the arithmetic average (rounded

8

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> upward, if necessary, to the nearest one-hundredth of one percent (1/100%)) of
> the rate per annum at which deposits in Dollars would be offered by the
> Reference Group in the London interbank market to the Administrative Agent as
> of approximately 11:00 a.m. (London time) two (2) Business Days prior to the
> first day of the applicable Interest Period for a period equal to such
> Interest Period and in an amount substantially equal to the amount of the
> applicable Revolving Credit Loan.
> 
>     "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the
> next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
> the following formula:
> 
> LIBOR RATE =  
> 
> LIBOR
> 
> --------------------------------------------------------------------------------
> 
> 1.00 - Eurodollar Reserve Percentage
> 
> 
>     "LIBOR Rate Loan" means any Revolving Credit Loan bearing interest at a
> rate based upon the LIBOR Rate as provided in Section 5.1(a).
> 
>     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
> charge, security interest or encumbrance of any kind in respect of such asset.
> For the purposes of this Agreement, a Person shall be deemed to own subject to
> a Lien any asset which it has acquired or holds subject to the interest of a
> vendor or lessor under any conditional sale agreement, Capital Lease or other
> title retention agreement relating to such asset.
> 
>     "Loan Documents" means, collectively, this Agreement, the Revolving Credit
> Notes, the Applications and each other document, instrument and agreement
> executed and delivered by any Credit Party, its Subsidiaries or their counsel
> in connection with this Agreement, all as may be amended, restated or
> otherwise modified.
> 
>     "Material Adverse Effect" means, with respect to the Credit Parties or any
> of their Subsidiaries, a material adverse effect on the business, assets,
> operations or financial condition of the Credit Parties and their Subsidiaries
> taken as a whole or the ability of any such Person to perform its obligations
> under the Loan Documents, in each case to which it is a party.
> 
>     "Multiemployer Plan" means a "multiemployer plan" as defined in Section
> 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making (or
> has made), or is accruing (or has accrued) an obligation to make,
> contributions either presently or within the preceding six years.
> 
>     "Net Income" means, with respect to the Credit Parties and their
> Subsidiaries for any period, the Consolidated net income (or loss) of the
> Credit Parties and their Subsidiaries for such period determined in accordance
> with GAAP; provided, that there shall be excluded from net income (or loss) of
> a Person (the "computing Person"), the income (or loss) of any Person (other
> than a Subsidiary of the computing Person) in which the computing Person has
> an ownership interest unless received by the computing Person in a cash
> distribution.
> 
>     "Net Worth" means, with respect to the Credit Parties and their
> Subsidiaries, as of any date, the total shareholders' equity that would appear
> on a Consolidated balance sheet of the Credit Parties and their Subsidiaries
> prepared as of such date in accordance with GAAP.

9

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>     "Nine West Footwear" means Nine West Footwear Corporation, a Delaware
> corporation.
> 
>     "Notice of Account Designation" shall have the meaning assigned thereto in
> Section 2.2(b).
> 
>     "Notice of Conversion/Continuation" shall have the meaning assigned
> thereto in Section 5.2.
> 
>     "Notice of Prepayment" shall have the meaning assigned thereto in Section
> 2.3(c).
> 
>     "Notice of Revolving Credit Borrowing" shall have the meaning assigned
> thereto in Section 2.2(a).
> 
>     "Obligations" means, in each case, whether now in existence or hereafter
> arising: (a) the principal of and interest on (including interest accruing
> after the filing of any bankruptcy or similar petition) the Revolving Credit
> Loans, (b) the L/C Obligations, (c) all payment and other obligations owing by
> the Credit Parties to any Lender or Affiliate of a Lender or the
> Administrative Agent under any Hedging Agreement with any Lender or Affiliate
> of a Lender (which such Hedging Agreement is permitted hereunder), and (d) all
> other fees and commissions (including attorney's fees), charges, indebtedness,
> loans, liabilities, financial accommodations, obligations, covenants and
> duties owing by the Credit Parties to the Lenders or the Administrative Agent,
> of every kind, nature and description, direct or indirect, absolute or
> contingent, due or to become due, contractual or tortious, liquidated or
> unliquidated, and whether or not evidenced by any note, in each case under or
> in respect of this Agreement, any Revolving Credit Note, any Letter of Credit
> or any of the other Loan Documents.
> 
>     "Officer's Compliance Certificate" shall have the meaning assigned thereto
> in Section 8.2.
> 
>     "Operating Lease" shall mean, as to any Person, as determined in
> accordance with GAAP, any lease of property (whether real, personal or mixed)
> by such Person as lessee which is not a Capital Lease.
> 
>     "Other Taxes" shall have the meaning assigned thereto in Section 5.12(b).
> 
>     "Outstanding Letters of Credit" means each letter of credit described on
> Schedule 1.1(b) and outstanding as of the Closing Date.
> 
>     "PBGC" means the Pension Benefit Guaranty Corporation referred to and
> defined in ERISA or any successor agency.
> 
>     "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
> Plan, which is subject to the provisions of Title IV of ERISA or Section 412
> of the Code.
> 
>     "Permitted Investment Policy" of the Credit Parties means the investment
> policy of the Credit Parties as in effect on the date of this Agreement which
> has been approved by the Board of Directors of Jones Apparel Group, as
> amended, restated, supplemented or otherwise modified from time to time.

10

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>     "Permitted Lines of Business" shall have the meaning assigned thereto in
> Section 9.9.
> 
>     "Person" means an individual, corporation, limited liability company,
> partnership, association, trust, business trust, joint venture, joint stock
> company, pool, syndicate, sole proprietorship, unincorporated organization,
> Governmental Authority or any other form of entity or group thereof.
> 
>     "Pounds Sterling" means, unless otherwise qualified, pounds sterling in
> lawful currency of the United Kingdom.
> 
>     "Prime Rate" means, at any time, the rate of interest per annum publicly
> announced from time to time by Wachovia as its prime rate in effect at its
> principal office in Charlotte, North Carolina. Each change in the Prime Rate
> shall be effective as of the opening of business on the day such change in the
> Prime Rate occurs. The parties hereto acknowledge that the rate announced
> publicly by Wachovia as its Prime Rate is an index or base rate and shall not
> necessarily be its lowest or best rate charged to its customers or other
> banks.
> 
>     "Prior Credit Agreement" means the Fifth Amended and Restated 364-Day
> Credit Agreement dated as of June 11, 2002, by and among the Borrower, the
> Prior Lenders and Wachovia Bank, National Association, as administrative
> agent.
> 
>     "Prior Lenders" means, collectively, the lenders party to the Prior Credit
> Agreement.
> 
>     "Reference Group" shall mean the Lenders party to this Agreement on the
> Closing Date.
> 
>     "Register" shall have the meaning assigned thereto in Section 2.4(a).
> 
>     "Reimbursement Obligation" means the obligation of the Borrower to
> reimburse each Issuing Lender pursuant to Section 3.5 for amounts drawn under
> Letters of Credit.
> 
>     "Rental Expense" means all obligations of the Credit Parties or any of
> their Subsidiaries for payments under Operating Leases.
> 
>     "Required Agreement Lenders" means, at any date, any combination of
> Lenders whose Revolving Credit Commitment Percentage equals at least fifty-one
> percent (51%) of the Revolving Credit Commitment or if the Revolving Credit
> Commitment has been terminated, any combination of Lenders who collectively
> hold at least fifty-one percent (51%) of the aggregate unpaid principal amount
> of the Extensions of Credit.
> 
>     "Required Lenders" means, at any date, any combination of Lending Group
> Members whose Total Committed Percentage equals at least fifty-one percent
> (51%) of the Total Committed Amount.
> 
>     "Responsible Officer" means any of the following: the chairman, president,
> chief executive officer, chief financial officer or vice president and
> corporate controller of the Borrower or Jones Apparel Group or any other
> officer of the Borrower or Jones Apparel Group reasonably acceptable to the
> Administrative Agent.

11

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>     "Revolving Credit Commitment" means (a) as to any Lender, the obligation
> of such Lender to make Revolving Credit Loans to the Borrower and to
> participate in Letters of Credit hereunder in an aggregate principal amount at
> any time outstanding not to exceed the amount set forth opposite such Lender's
> name on Schedule 1.1(a) hereto as such amount may be reduced or modified at
> any time or from time to time pursuant to the terms hereof and (b) as to all
> Lenders, the aggregate Revolving Credit Commitment of all Lenders to make
> Revolving Credit Loans, as such amount may be reduced at any time or from time
> to time pursuant to the terms hereof. The Revolving Credit Commitment of all
> Lenders on the Closing Date shall be Seven Hundred Million Dollars
> ($700,000,000).
> 
>     "Revolving Credit Commitment Percentage" means, as to any Lender at any
> time, the ratio of (a) the amount of the Revolving Credit Commitment of such
> Lender to (b) the Revolving Credit Commitment of all of the Lenders.
> 
>     "Revolving Credit Facility" means the revolving credit facility
> established pursuant to Article II hereof.
> 
>     "Revolving Credit Loans" means any revolving loan made to the Borrower
> pursuant to Section 2.1, and all such revolving loans collectively as the
> context requires.
> 
>     "Revolving Credit Notes" means the collective reference to the Revolving
> Credit Notes made by the Borrower under this Agreement payable to the order of
> any such Lender requesting such note, substantially in the form of Exhibit A
> hereto, evidencing the obligation owed to such Lender under the Revolving
> Credit Facility, and any amendments and modifications thereto, any substitutes
> therefor, and any replacements, restatements, renewals or extension thereof,
> in whole or in part; "Revolving Credit Note" means any of such Revolving
> Credit Notes.
> 
>     "Revolving Credit Termination Date" means the earliest of the dates
> referred to in Section 2.6.
> 
>     "SPC" shall have the meaning assigned thereto in Section 14.10(h).
> 
>     "Subordinated Debt" means the collective reference to Debt on Schedule
> 7.1(p) hereof designated as Subordinated Debt and any other Debt of the Credit
> Parties or any Subsidiary thereof subordinated in right and time of payment to
> the Obligations and otherwise permitted hereunder.
> 
>     "Subsidiary" means, with respect to any Person (the "parent") at any date,
> any corporation, limited liability company, partnership, association or other
> entity the accounts of which would be Consolidated with those of the parent in
> the parent's Consolidated financial statements if such financial statements
> were prepared in accordance with GAAP as of such date, as well as any other
> corporation, limited liability company, partnership, association or other
> entity (a) of which securities or other ownership interests representing more
> than fifty percent (50%) of the equity or more than fifty percent (50%) of the
> ordinary voting power or, in the case of a partnership, more than fifty
> percent (50%) of the general partnership interests are, as of such date,
> owned, controlled or held, or (b) that is, as of such date, otherwise
> controlled, by the parent or one or more subsidiaries of the parent or by the
> parent and one or more subsidiaries of the parent. Unless otherwise qualified
> references to "Subsidiary" or "Subsidiaries" herein shall refer to those of
> the Borrower.

12

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>     "Syndication Agents" means JPMorgan Chase Bank and Citibank, N.A., each in
> their capacity as syndication agent hereunder, and any successor thereto.
> 
>     "Taxes" shall have the meaning assigned thereto in Section 5.12(a).
> 
>     "Termination Event" means: (a) a "Reportable Event" described in Section
> 4043 of ERISA, or (b) the withdrawal of the Borrower or any ERISA Affiliate
> from a Pension Plan during a plan year in which it was a "substantial
> employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of
> a Pension Plan, the filing of a notice of intent to terminate a Pension Plan
> or the treatment of a Pension Plan amendment as a termination under Section
> 4041 of ERISA, or (d) the institution of proceedings to terminate, or the
> appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e)
> any other event or condition which would constitute grounds under Section
> 4042(a) of ERISA for the termination of, or the appointment of a trustee to
> administer, any Pension Plan, or (f) the partial or complete withdrawal of the
> Borrower or any ERISA Affiliate from a Multiemployer Plan, or (g) the
> imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
> ERISA, or (h) any event or condition which results in the reorganization or
> insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or
> (i) any event or condition which results in the termination of a Multiemployer
> Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to
> terminate a Multiemployer Plan under Section 4042 of ERISA.
> 
>     "Total Committed Amount" means (a) as to any Lending Group Member, the sum
> of (i) the Revolving Credit Commitment of such Lending Group Member (or, if
> such Revolving Credit Commitment has been terminated, the aggregate unpaid
> principal amount of all outstanding Extensions of Credit of such Lending Group
> Member) plus (ii) the Revolving Credit Commitment (as defined in the Five Year
> Credit Agreement) of such Lending Group Member (or, if such Revolving Credit
> Commitment has been terminated, the aggregate unpaid principal amount of all
> outstanding Extensions of Credit (as defined in the Five Year Credit
> Agreement) of such Lending Group Member) and (b) as to all Lenders, the
> aggregate Total Committed Amount of all Lending Group Members.
> 
>     "Total Committed Percentage" means, as to any Lending Group Member at any
> time, the ratio of (a) the amount of the Total Committed Amount of such
> Lending Group Member to (b) the aggregate Total Committed Amount of all
> Lending Group Members.
> 
>     "Treaty on European Union" means the Treaty of Rome of March 25, 1957, as
> amended by the Single European Act 1986 and the Maastricht Treaty (signed
> February 7, 1992), as amended from time to time.
> 
>     "UCC" means the Uniform Commercial Code as in effect in the State of New
> York, as amended, restated or otherwise modified from time to time.
> 
>     "Uniform Customs" means the Uniform Customs and Practice for Documentary
> Credits (1994 Revision), International Chamber of Commerce Publication No.
> 500.
> 
>     "United States" means the United States of America.
> 
>     "Utilization Fee" shall have the meaning assigned thereto in Section
> 5.3(b).

13

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>     "Wachovia" means Wachovia Bank, National Association, a national banking
> association, and its successors.
> 
>     "Wholly-Owned" means, with respect to a Subsidiary, that all of the shares
> of capital stock or other ownership interests of such Subsidiary (other than
> directors' qualifying shares) are, directly or indirectly, owned or controlled
> by any Credit Party and/or one or more of its Wholly-Owned Subsidiaries.

SECTION 1.2. General. Unless otherwise specified, a reference in this Agreement
to a particular section, subsection, Schedule or Exhibit is a reference to that
section, subsection, Schedule or Exhibit of this Agreement. Terms defined in
this Agreement and the Five-Year Credit Agreement shall be construed
consistently and no term defined herein shall be limited or restricted by any
similar definition in the Five-Year Credit Agreement nor shall any such term
herein limit or restrict any similar definition in the Five-Year Credit
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter. Any reference herein to "Charlotte time" shall
refer to the applicable time of day in Charlotte, North Carolina.

SECTION 1.3. Other Definitions and Provisions. (a) Use of Capitalized Terms.
Unless otherwise defined therein, all capitalized terms defined in this
Agreement shall have the defined meanings when used in this Agreement and the
other Loan Documents or any certificate, report or other document made or
delivered pursuant to this Agreement.

    (b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

    (c) Any reference or usage of the word "amount" herein as it pertains to any
Obligation denominated in an Alternative Currency shall be deemed to be a
reference or usage of the term "Dollar Amount."

14

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ARTICLE II REVOLVING CREDIT FACILITY

SECTION 2.1. Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Revolving Credit Loans in
Dollars to the Borrower from time to time from the Closing Date through the
Revolving Credit Termination Date as requested by the Borrower in accordance
with the terms of Section 2.2; provided, that (a) the aggregate principal amount
of all outstanding Revolving Credit Loans (after giving effect to any amount
requested) shall not exceed the Revolving Credit Commitment less the sum of all
outstanding L/C Obligations and (b) the principal amount of outstanding
Revolving Credit Loans from any Lender to the Borrower shall not at any time
exceed such Lender's Revolving Credit Commitment less such Lender's
participations in outstanding L/C Obligations. Each Revolving Credit Loan by a
Lender shall be in a principal amount equal to such Lender's Revolving Credit
Commitment Percentage of the aggregate principal amount of Revolving Credit
Loans requested on such occasion. Subject to the terms and conditions hereof,
the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder
until the Revolving Credit Termination Date.

SECTION 2.2. Procedure for Advances of Revolving Credit Loans. (a) Requests for
Borrowing. The Borrower shall give the Administrative Agent irrevocable prior
written notice in the form attached hereto as Exhibit B (a "Notice of Revolving
Credit Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the same
Business Day as each Base Rate Loan and (ii) at least three (3) Business Days
before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date
of such borrowing, which shall be a Business Day, (B) the amount of such
borrowing, which shall be in an amount equal to the unused amount of the
Revolving Credit Commitment, or if less, (x) with respect to Base Rate Loans in
an aggregate principal amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof and (y) with respect to LIBOR Rate Loans in an aggregate
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof, (C) whether such Revolving Credit Loan is to be a LIBOR Rate Loan or
Base Rate Loan, and (D) in the case of a LIBOR Rate Loan, the duration of the
Interest Period applicable thereto. Notices received after 11:00 a.m. (Charlotte
time) shall be deemed received on the next Business Day. The Administrative
Agent shall promptly notify the Lenders of each Notice of Revolving Credit
Borrowing.

    (b) Disbursement of Revolving Credit Loans. Not later than 2:00 p.m.
(Charlotte time) on the proposed borrowing date, each Lender will make available
to the Administrative Agent, for the account of the Borrower, at the office of
the Administrative Agent in funds immediately available to the Administrative
Agent, such Lender's Revolving Credit Commitment Percentage of the Revolving
Credit Loans to be made on such borrowing date. The Borrower hereby irrevocably
authorizes the Administrative Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 2.2 in immediately available funds by
crediting or wiring such proceeds to the deposit account of the Borrower
identified in the most recent notice of account designation, substantially in
the form of Exhibit C hereto (a "Notice of Account Designation"), delivered by
the Borrower to the Administrative Agent or as may be otherwise agreed upon by
the Borrower and the Administrative Agent from time to time. Subject to Section
5.7 hereof, the Administrative Agent shall not be obligated to disburse the
portion of the proceeds of any Revolving Credit Loan requested pursuant to this
Section 2.2 for which any Lender is responsible to the extent that such Lender
has not made available to the Administrative Agent its Revolving Credit
Commitment Percentage of such Revolving Credit Loan.

15

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SECTION 2.3. Repayment of Revolving Credit Loans. (a) Repayment on Termination
Date. The Borrower shall repay the outstanding principal amount of all Revolving
Credit Loans in full on the Revolving Credit Termination Date, with all accrued
but unpaid interest thereon.

    (b) Mandatory Repayment of Excess Extensions of Credit. (i) If at any time
the outstanding principal amount of all Revolving Credit Loans plus the sum of
the Dollar Amount of all outstanding L/C Obligations exceeds the Revolving
Credit Commitment, the Borrower shall repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Lenders, Revolving Credit Loans and/or furnish cash collateral reasonably
satisfactory to the Administrative Agent or repay the L/C Obligations in an
amount equal to such excess. Such cash collateral shall be applied in accordance
with Section 12.2(b).

    (ii) Excess Alternative Currency Letters of Credit. If the Administrative
Agent shall determine that the outstanding principal Dollar Amount of all
outstanding Letters of Credit denominated in an Alternative Currency exceeds one
hundred and five percent (105%) of the lesser of (A) the L/C Commitment less the
sum of the outstanding principal amount of all L/C Obligations denominated in
Dollars and (B) the Alternative Currency L/C Commitment, in each case as of the
last Business Day of any calendar month during the term hereof, then not later
than three (3) Business Days after notice of the amount of such excess from the
Administrative Agent to the Borrower, the Borrower shall deposit an amount in
Dollars equal to such excess with the Administrative Agent to be held as cash
collateral in accordance with Section 12.2(b).

    (c) Optional Repayments. The Borrower may at any time and from time to time
repay the Revolving Credit Loans, in whole or in part, upon at least three (3)
Business Days' irrevocable notice to the Administrative Agent with respect to
LIBOR Rate Loans and one (1) Business Day's irrevocable notice with respect to
Base Rate Loans, in the form attached hereto as Exhibit D (a "Notice of
Prepayment") specifying the date and amount of repayment and whether the
repayment is of LIBOR Rate Loans, Base Rate Loans, or a combination thereof,
and, if of a combination thereof, the amount allocable to each. Upon receipt of
such notice, the Administrative Agent shall promptly notify each Lender. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date set forth in such notice. Partial repayments shall be in an
aggregate amount of $1,000,000 or a whole multiple of $250,000 in excess thereof
with respect to Base Rate Loans and $5,000,000 or a whole multiple of $1,000,000
in excess thereof with respect to LIBOR Rate Loans.

    (d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may not repay
any LIBOR Rate Loan on any day other than on the last day of the Interest Period
applicable thereto unless such repayment is accompanied by any amount required
to be paid pursuant to Section 5.10 hereof.

SECTION 2.4. Evidence of Debt. (a) The Administrative Agent shall maintain a
register and a subaccount therein for each Lender (the "Register"), in which
shall be recorded (i) the amount of each Revolving Credit Loan made hereunder,
including each Revolving Credit Loan evidenced by a Revolving Credit Note, and
each Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.

    (b) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.4(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded,

16

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absent manifest error; provided, however, that the failure of the Administrative
Agent to maintain the Register or any such account, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Revolving Credit Loans made to the Borrower in
accordance with the terms of this Agreement.

    (c) The Borrower hereby agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
Revolving Credit Note of such Borrower evidencing the Revolving Credit Loans of
such Lender, substantially in the form of Exhibit A.

SECTION 2.5. Permanent Reduction of the Revolving Credit Commitment (a)
Voluntary Reduction. The Borrower shall have the right at any time and from time
to time, upon at least five (5) Business Days' prior written notice to the
Administrative Agent, to permanently reduce, without premium or penalty, (i) the
entire Revolving Credit Commitment at any time or (ii) portions of the Revolving
Credit Commitment, from time to time, in an aggregate principal amount not less
than $5,000,000 or any whole multiple of $1,000,000 in excess thereof.

    (b) Each permanent reduction of the Revolving Credit Commitment made
pursuant to this Section 2.5 shall be accompanied, if necessary, by a payment of
principal sufficient to reduce the aggregate outstanding Revolving Credit Loans
and L/C Obligations, as applicable, after such reduction to the Revolving Credit
Commitment as so reduced and if the Revolving Credit Commitment as so reduced is
less than the aggregate amount of all outstanding Letters of Credit, the
Borrower shall be required to deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the amount by which the aggregate then
undrawn and unexpired amount of such Letters of Credit exceeds the Revolving
Credit Commitment as so reduced. Any reduction of the Revolving Credit
Commitment to zero (including upon termination of the Revolving Credit Facility
on the Revolving Credit Termination Date) shall be accompanied by payment of all
outstanding Revolving Credit Loans (and furnishing of cash collateral
satisfactory to the Administrative Agent for all L/C Obligations) and shall
result in the termination of the Revolving Credit Commitment and the Revolving
Credit Facility. Such cash collateral shall be applied in accordance with
Section 12.2(b). If the reduction of the Revolving Credit Commitment requires
the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any
amount required to be paid pursuant to Section 5.10 hereof.

SECTION 2.6. Termination of Revolving Credit Facility. The Revolving Credit
Facility shall terminate on the earliest of (a) June 10, 2006, (b) the date of
termination of the entire Revolving Credit Commitment by the Borrower pursuant
to Section 2.5(a), and (c) the date of termination by the Administrative Agent
on behalf of the Lenders pursuant to Section 12.2(a).

ARTICLE III LETTER OF CREDIT FACILITY

SECTION 3.1. L/C Commitment. Subject to the terms and conditions hereof, each
Issuing Lender, in reliance on the agreements of the other Lenders set forth in
Section 3.4(a), agrees to issue trade and standby letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day from the Closing
Date to but not including the Revolving Credit Termination Date in such form as
may be approved from time to time by such Issuing Lender; provided, that no
Issuing Lender shall have any obligation to issue any Letter of Credit if, after
giving effect to such issuance, (a) the L/C Obligations would exceed the L/C
Commitment or (b) the L/C Obligations on account of Letters of Credit
denominated in an Alternative Currency would exceed the Alternative Currency L/C
Commitment or (c) the aggregate principal amount of outstanding Revolving Credit
Loans, plus the aggregate principal amount of L/C Obligations

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would exceed the Revolving Credit Commitment. Each Letter of Credit shall (i) be
denominated in (A) Dollars, if such Letter of Credit is a standby Letter of
Credit, or (B) Dollars or an Alternative Currency, if such Letter of Credit is a
trade Letter of Credit, (ii) be a trade or standby letter of credit issued to
support obligations of the Borrower or any of its Subsidiaries, contingent or
otherwise, incurred in the ordinary course of business, (iii) expire on a date
no later than (A) two hundred twenty-five (225) days from the date of issuance
thereof for trade Letters of Credit and (B) one (1) year from the date of
issuance thereof for standby Letters of Credit, and (iv) be subject to the
Uniform Customs and/or ISP 98, as set forth in the Application or as determined
by the applicable Issuing Lender and, to the extent not inconsistent therewith,
the laws of the State of New York. No Issuing Lender shall at any time be
obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause such Issuing Lender or any L/C Participant to exceed any
limits imposed by, any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires. Each Outstanding Letter of Credit shall be deemed to
have been issued under this Agreement.

SECTION 3.2. Procedure for Issuance of Letters of Credit. The Borrower may from
time to time request that any Issuing Lender issue a Letter of Credit (or amend,
extend or renew an outstanding Letter of Credit) by delivering to such Issuing
Lender at any Issuing Lender's office at any address mutually acceptable to the
Borrower and such Issuing Lender an Application therefor, including, if
applicable, the office of such Issuing Lender's Correspondent, completed to the
satisfaction of such Issuing Lender, and such other certificates, documents and
other papers and information as such Issuing Lender may reasonably request. Upon
receipt of any Application, such Issuing Lender shall process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall,
subject to Section 3.1 and Article VI hereof, promptly issue the Letter of
Credit (or amend, extend or renew the outstanding Letter of Credit) requested
thereby (but in no event shall any Issuing Lender be required to issue any
Letter of Credit (or amend, extend or renew an outstanding Letter of Credit)
earlier than three (3) Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by such Issuing Lender
and the Borrower. Within fifteen (15) Business Days after the end of each month,
the Administrative Agent shall report to each Lender the average daily
outstandings for each day in such month for all Letters of Credit during the
previous month.

SECTION 3.3. Fees and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of each Issuing Lender and the L/C
Participants, a letter of credit fee (the "L/C Fee") (i) with respect to each
trade Letter of Credit, in an amount equal to the Applicable Margin for trade
Letters of Credit times the average daily undrawn amount of such issued Letter
of Credit as reported by the Administrative Agent pursuant to Section 3.2 and
(ii) with respect to each standby Letter of Credit, in an amount equal to the
Applicable Margin for standby Letters of Credit times the face amount of such
Letter of Credit. Such fee shall be payable quarterly in arrears (x) for trade
Letters of Credit, within fifteen (15) Business Days after the end of each
calendar quarter and on the Revolving Credit Termination Date and (y) for
standby Letters of Credit, within fifteen (15) Business Days after the end of
each calendar quarter and on the Revolving Credit Termination Date.

    (b) In addition to the foregoing commission, the Borrower shall pay the
Issuing Lenders an issuance fee of one eighth percent (1/8%) per annum on the
face amount of each standby Letter of Credit, payable quarterly in arrears
within fifteen (15) Business Days after the

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end of each calendar quarter of each calendar quarter and on the Revolving
Credit Termination Date.

    (c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to each Issuing Lender and the L/C Participants all fees received by
the Administrative Agent in accordance with their respective Revolving Credit
Commitment Percentages.

SECTION 3.4. L/C Participations. (a) Each Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce such Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from such Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Commitment Percentage in such Issuing Lender's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each draft paid by such Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with each Issuing Lender
that, if a draft is paid under any Letter of Credit for which such Issuing
Lender is not reimbursed in full by the Borrower in accordance with the terms of
this Agreement, such L/C Participant shall pay to such Issuing Lender upon
demand at such Issuing Lender's address for notices specified herein an amount
in Dollars equal to such L/C Participant's Revolving Credit Commitment
Percentage of the Dollar Amount of such draft, or any part thereof, which is not
so reimbursed, such payment to be made by the making of a Base Rate Loan in
Dollars pursuant to Section 3.5(c) below.

    (b) Upon becoming aware of any amount required to be paid by any L/C
Participant to any Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by such Issuing Lender under any Letter
of Credit, the Administrative Agent shall notify each L/C Participant of the
amount and due date of such required payment and such L/C Participant shall pay
to such Issuing Lender the amount specified on the applicable due date. If any
such amount is paid to such Issuing Lender after the date such payment is due,
such L/C Participant shall pay to such Issuing Lender on demand, in addition to
such amount, the product of (i) such amount, times (ii) the daily average
Federal Funds Rate as determined by the Administrative Agent during the period
from and including the date such payment is due to the date on which such
payment is immediately available to such Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during such period and
the denominator of which is 360. A certificate of any Issuing Lender with
respect to any amounts owing under this Section 3.4(b) shall be conclusive in
the absence of manifest error. With respect to payment to any Issuing Lender of
the unreimbursed amounts described in this Section 3.4(b), if the L/C
Participants receive notice that any such payment is due (A) prior to 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due that Business
Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment
shall be due on the following Business Day.

    (c) Whenever, at any time after any Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its Revolving
Credit Commitment Percentage of such payment in accordance with this Section
3.4, such Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise, or any payment of interest on
account thereof), such Issuing Lender will distribute to such L/C Participant
its pro rata share thereof in accordance with such L/C Participant's Revolving
Credit Commitment Percentage; provided, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such Issuing
Lender, such L/C Participant shall

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return to such Issuing Lender the portion thereof previously distributed by such
Issuing Lender to it.

SECTION 3.5. Reimbursement. (a) Reimbursement by the Borrower. The Borrower
agrees to reimburse each Issuing Lender on each date the Administrative Agent
notifies the Borrower of the date and amount of a draft paid under any Letter of
Credit for the amount of (i) such draft so paid and (ii) any taxes, fees,
charges or other costs or expenses incurred by any Issuing Lender in connection
with such payment (other than those payable pursuant to Section 3.5(b) below).
Each such payment shall be made to any Issuing Lender at its address for notices
specified herein (i) in Dollars if such Letter of Credit was denominated in
Dollars or (ii) in Dollars or the applicable Alternative Currency, at the option
of the Borrower, if such Letter of Credit was denominated in an Alternative
Currency, and in each case, in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
Article III from the day immediately following the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until payment
in full at the rate which would be payable on any outstanding Base Rate Loans
which were then overdue.

    (b) Exchange Indemnification and Increased Costs. The Borrower shall, upon
demand from any Issuing Lender or L/C Participant, pay to such Issuing Lender or
L/C Participant, the amount of (i) any loss or cost or increased cost incurred
by such Issuing Lender or L/C Participant, (ii) any reduction in any amount
payable to or in the effective return on the capital to such Issuing Lender or
L/C Participant, (iii) any currency exchange loss, in each case with respect to
clauses (i), (ii) and (iii), that such Issuing Lender or L/C Participant
sustains as a result of the Borrower's repayment in Dollars of any Letter of
Credit denominated in an Alternative Currency or (iv) any interest or any other
return, including principal, foregone by such Issuing Lender as a result of the
introduction of, change over to or operation of the euro in any member state
participating in the euro. A certificate of such Issuing Lender setting forth in
reasonable detail the basis for determining such additional amount or amounts
necessary to compensate such Issuing Lender shall be conclusively presumed to be
correct save for manifest error.

    (c) Reimbursement by the Lenders. If the Borrower fails to timely reimburse
such Issuing Lender on the date the Borrower receives the notice referred to in
this Section 3.5, the Borrower shall be deemed to have timely given a Notice of
Revolving Credit Borrowing pursuant to Section 2.2 hereunder to the
Administrative Agent requesting the Lenders to make a Base Rate Loan on such
date in an amount in Dollars equal to the Dollar Amount (as of the date of
funding of such Base Rate Loan by each Lender) of such draft paid, together with
any taxes, fees, charges or other costs or expenses incurred by any Issuing
Lender and to be reimbursed pursuant to this Section 3.5 and, regardless of
whether or not the conditions precedent specified in Article VI have been
satisfied, the Lenders shall make Base Rate Loans in such amount, the proceeds
of which shall be applied to reimburse such Issuing Lender for the amount of the
related drawing and costs and expenses. Notwithstanding the foregoing, nothing
in this Section 3.5 shall obligate the Lenders to make such Base Rate Loans if
the making of such Base Rate Loans would violate the automatic stay under
federal bankruptcy laws.

SECTION 3.6. Obligations Absolute. The Borrower's obligations under this Article
III (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrower may have or
have had against any Issuing Lender or any beneficiary of a Letter of Credit.
The Borrower also agrees with each Issuing Lender that no Issuing Lender shall
be responsible for, and the Borrower's Reimbursement Obligation under Section
3.5 shall

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not be affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even though such documents shall in fact prove
to be invalid, fraudulent or forged, or any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. No Issuing Lender shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by such Issuing Lender's gross negligence or willful
misconduct. The Borrower agrees that any action taken or omitted by any Issuing
Lender under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Customs and/or
ISP 98, as set forth in the Application or as determined by the Issuing Lender
and, to the extent not inconsistent therewith, the laws of the State of New
York, shall be binding on the Borrower and shall not result in any liability of
any Issuing Lender to the Borrower. The responsibility of each Issuing Lender to
the Borrower in connection with any draft presented for payment under any Letter
of Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.

SECTION 3.7 Effect of Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Article III, the provisions of this Article III shall apply.

ARTICLE IV [RESERVED]

ARTICLE V GENERAL LOAN PROVISIONS

SECTION 5.1. Interest. (a) Interest Rate Options. Subject to the provisions of
this Section 5.1, at the election of the Borrower, the aggregate principal
balance of any Revolving Credit Loans shall bear interest at (i) the Base Rate
plus the Applicable Margin or (ii) the LIBOR Rate plus the Applicable Margin;
provided that LIBOR Rate Loans shall not be available until three (3) Business
Days after the Closing Date unless the Borrower executes and delivers an
indemnity in favor of the Administrative Agent and the Lenders in form and
substance satisfactory to them. The Borrower shall select the rate of interest
and Interest Period, if any, applicable to any Revolving Credit Loan at the time
a Notice of Revolving Credit Borrowing is given pursuant to Section 2.2 or at
the time a Notice of Conversion/Continuation is given pursuant to Section 5.2.
Each Revolving Credit Loan or portion thereof bearing interest based on the Base
Rate shall be a "Base Rate Loan", and each Revolving Credit Loan or portion
thereof bearing interest based on the LIBOR Rate shall be a "LIBOR Rate Loan."
Any Revolving Credit Loan or any portion thereof as to which the Borrower has
not duly specified an interest rate as provided herein shall be deemed a Base
Rate Loan.

    (b) Interest Periods. In connection with each LIBOR Rate Loan, the Borrower,
by giving notice at the times described in Section 5.1(a), shall elect an
interest period (each, an "Interest Period") to be applicable to such Revolving
Credit Loan, which Interest Period shall be a period of one (1), two (2), three
(3), or six (6) months (or nine (9) or twelve (12) months or any other period if
available from all Lenders) with respect to each LIBOR Rate; provided that:

>     (i) the Interest Period shall commence on the date of advance of or
> conversion to any LIBOR Rate Loan and, in the case of immediately successive
> Interest
> 
> 21

--------------------------------------------------------------------------------

> Periods, each successive Interest Period shall commence on the date on which
> the next preceding Interest Period expires;
> 
>     (ii) if any Interest Period would otherwise expire on a day that is not a
> Business Day, such Interest Period shall expire on the next succeeding
> Business Day; provided, that if any Interest Period with respect to a LIBOR
> Rate Loan would otherwise expire on a day that is not a Business Day but is a
> day of the month after which no further Business Day occurs in such month,
> such Interest Period shall expire on the next preceding Business Day;
> 
>     (iii) any Interest Period with respect to a LIBOR Rate Loan that begins on
> the last Business Day of a calendar month (or on a day for which there is no
> numerically corresponding day in the calendar month at the end of such
> Interest Period) shall end on the last Business Day of the relevant calendar
> month at the end of such Interest Period;
> 
>     (iv) no Interest Period shall extend beyond the Revolving Credit
> Termination Date; and
> 
>     (v) there shall be no more than six (6) Interest Periods in effect at any
> time.

    (c) Default Rate. Subject to Section 12.3, at the discretion of the
Administrative Agent and Required Lenders, upon the occurrence and during the
continuance of an Event of Default, (i) the Borrower shall no longer have the
option to request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall
bear interest at a rate per annum two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans, as applicable, until the end of the applicable
Interest Period and thereafter at a rate equal to two percent (2%) in excess of
the rate then applicable to Base Rate Loans, and (iii) all outstanding Base Rate
Loans shall bear interest at a rate per annum equal to two percent (2%) in
excess of the rate then applicable to Base Rate Loans. Interest shall continue
to accrue on the amount of Revolving Credit Loans outstanding after the filing
by or against the Borrower of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign.

    (d) Interest Payment and Computation. Interest on each Base Rate Loan shall
be payable in arrears on the last Business Day of each calendar quarter
commencing June 30, 2003; and interest on each LIBOR Rate Loan shall be payable
on the last day of each Interest Period applicable thereto, and if such Interest
Period exceeds three (3) months, at the end of each three (3) month interval
during such Interest Period. Interest on LIBOR Rate Loans and all fees payable
hereunder shall be computed on the basis of a 360-day year and assessed for the
actual number of days elapsed and interest on Base Rate Loans shall be computed
on the basis of a 365/66-day year and assessed for the actual number of days
elapsed.

    (e) Maximum Rate. In no contingency or event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under any of the Loan Documents
charged or collected pursuant to the terms of this Agreement or pursuant to any
other Loan Document exceed the highest rate permissible under any Applicable Law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option (i) promptly refund to the Borrower any interest received by
Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to
the principal balance of the Obligations. It is the

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intent hereof that the Borrower not pay or contract to pay, and that neither the
Administrative Agent nor any Lender receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under Applicable Law.

SECTION 5.2. Notice and Manner of Conversion or Continuation of Revolving Credit
Loans. Provided that no Event of Default has occurred and is then continuing,
the Borrower shall have the option (a) to convert all or any portion of its
outstanding Base Rate Loans in a principal amount equal to $5,000,000 or any
whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans
and (b), (i) to convert all or any part of its outstanding LIBOR Rate Loans in a
principal amount equal to $1,000,000 or a whole multiple of $250,000 in excess
thereof into Base Rate Loans or (ii) to continue such LIBOR Rate Loans as LIBOR
Rate Loans for an additional Interest Period; provided that if any conversion or
continuation is made prior to the expiration of any Interest Period, the
Borrower shall pay any amount required to be paid pursuant to Section 5.10
hereof. Whenever the Borrower desires to convert or continue Revolving Credit
Loans as provided above, the Borrower shall give the Administrative Agent
irrevocable prior written notice in the form attached as Exhibit E (a "Notice of
Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three (3)
Business Days before the day on which a proposed conversion or continuation of
such Revolving Credit Loan is to be effective (except in the case of a
conversion of a LIBOR Rate Loan to a Base Rate Loan in which case same day
notice by the Borrower shall be sufficient) specifying (A) the Revolving Credit
Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to
be converted or continued, the last day of the Interest Period therefor, (B) the
effective date of such conversion or continuation (which shall be a Business
Day), (C) the principal amount of such Revolving Credit Loans to be converted or
continued, and (D) the Interest Period to be applicable to such converted or
continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the
Lenders of such Notice of Conversion/Continuation.

SECTION 5.3. Fees. (a) Facility Fees. The Borrower shall pay to the
Administrative Agent, for the account of the Lenders, a non-refundable facility
fee (the "Facility Fee") at a rate per annum equal to the Applicable Margin on
the full amount of the Revolving Credit Commitment, regardless of usage. The
Facility Fee shall be payable in arrears on the last Business Day of each
calendar quarter for the period commencing on the Closing Date and ending on the
Revolving Credit Termination Date. The Facility Fee shall be distributed by the
Administrative Agent to the Lenders pro rata in accordance with the Lenders'
respective Revolving Credit Commitment Percentages.

    (b) Utilization Fee. The Borrower shall pay a utilization fee (the
"Utilization Fee") at a rate per annum equal to 0.125% on the average amount of
outstanding Revolving Credit Loans during each fiscal quarter that such average
exceeds 50% of the Revolving Credit Commitments (exclusive of any issued and
outstanding Letters of Credit). The average amount of Revolving Credit Loans for
any fiscal quarter shall be calculated by the Administrative Agent (which such
calculation shall be conclusively presumed correct save manifest error) as
follows: (i) the sum of the principal amount of outstanding Revolving Credit
Loans at the close of business for each day during such fiscal quarter, divided
by (ii) the total number of days of such fiscal quarter. The Utilization Fee
shall be payable in arrears on the fifteenth (15th) day following written
notification by the Administrative Agent to the Borrower of the average for the
preceding quarter and the resulting Utilization Fee. The Utilization Fee shall
be distributed by the Administrative Agent to the Lenders pro rata in accordance
with the Lenders' respective Revolving Credit Commitment Percentage.

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    (c) Administrative Agent's and Other Fees. In order to compensate the
Administrative Agent for its obligations hereunder, the Borrower agrees to pay
to the Administrative Agent, for its account, the fees set forth in the separate
fee letter agreement executed by the Borrower and the Administrative Agent dated
May 15, 2003.

SECTION 5.4. Manner of Payment. Each payment by the Borrower on account of the
principal of or interest on the Revolving Credit Loans or of any fee, commission
or other amounts (including the Reimbursement Obligation) payable to the Lenders
under this Agreement or any other Loan Document shall be made not later than
1:00 p.m. (Charlotte time) on the date specified for payment under this
Agreement to the Administrative Agent at the Administrative Agent's Office for
the account of the Lenders (other than as set forth below) pro rata in
accordance with their respective Revolving Credit Commitment Percentages (except
as specified below), in Dollars, in immediately available funds and shall be
made without any set-off, counterclaim or deduction whatsoever. Any payment
received after such time but before 2:00 p.m. (Charlotte time) on such day shall
be deemed a payment on such date for the purposes of Section 12.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to
have been made on the next succeeding Business Day for all purposes. Upon
receipt by the Administrative Agent of each such payment, the Administrative
Agent shall distribute to each Lender at its address for notices set forth
herein its pro rata share of such payment in accordance with such Lender's
Revolving Credit Commitment Percentage (except as specified below), and shall
wire advice of the amount of such credit to each Lender. Each payment to the
Administrative Agent of the L/C Participants' commissions shall be made in like
manner, but for the account of the L/C Participants. Each payment to the
Administrative Agent of Administrative Agent's fees or expenses shall be made
for the account of the Administrative Agent and any amount payable to any Lender
under Section 5.9, 5.10, 5.11, 5.12 or 14.2 shall be paid to the Administrative
Agent for the account of the applicable Lender. Subject to Section 5.1(b)(ii),
if any payment under this Agreement or any other Loan Document shall be
specified to be made upon a day which is not a Business Day, it shall be made on
the next succeeding day which is a Business Day and such extension of time shall
in such case be included in computing any interest if payable along with such
payment.

SECTION 5.5. Crediting of Payments and Proceeds. In the event that the Borrower
shall fail to pay any of the Obligations when due and the Obligations have been
accelerated pursuant to Section 12.2, all payments received by the Lenders upon
the Obligations and all net proceeds from the enforcement of the Obligations
shall be applied first to all expenses then due and payable by the Borrower
hereunder, then to all indemnity obligations then due and payable by the
Borrower hereunder, then to all Administrative Agent's fees then due and
payable, then to all commitment and other fees and commissions then due and
payable, then to accrued and unpaid interest hereunder or under any other Loan
Document, and Reimbursement Obligation (pro rata in accordance with all such
amounts due), then to the principal amount hereunder or under any other Loan
Document, Reimbursement Obligation and any termination payments due in respect
of a Hedging Agreement with any Lender or Affiliate of a Lender (which Hedging
Agreement is permitted hereunder) (pro rata in accordance with all such amounts
due) and then to the cash collateral account described in Section 12.2(b) hereof
to the extent of any L/C Obligations then outstanding, in that order.

SECTION 5.6. Adjustments. If any Lender (a "Benefited Lender") shall at any time
receive any payment of all or part of the Obligations owing to it, or interest
thereon, or if any Lender shall at any time receive any collateral in respect to
the Obligations owing to it (whether voluntarily or involuntarily, by set-off or
otherwise) in a greater proportion than any such payment to and

24

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collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Extensions of Credit, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefited Lender, such purchase shall be rescinded, and the purchase price
and benefits returned to the extent of such recovery, but without interest. The
Borrower agrees that each Lender so purchasing a portion of another Lender's
Extensions of Credit may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

SECTION 5.7. Nature of Obligations of Lenders Regarding Extensions of Credit;
Assumption by the Administrative Agent. The obligations of the Lenders under
this Agreement to make the Revolving Credit Loans and issue or participate in
Letters of Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Sections 2.2(b) and 4.2, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
determined by the Administrative Agent, times (c) a fraction the numerator of
which is the number of days that elapse from and including such borrowing date
to the date on which such amount not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section 5.7
shall be conclusive, absent manifest error. If such Lender's Revolving Credit
Commitment Percentage of such borrowing is not made available to the
Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum applicable to such borrowing, on demand, from the Borrower. The
failure of any Lender to make available its Revolving Credit Commitment
Percentage of any Revolving Credit Loan requested by the Borrower shall not
relieve it or any other Lender of its obligation hereunder to make its Revolving
Credit Commitment Percentage of such Revolving Credit Loan available on the
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Revolving Credit Commitment Percentage of such Revolving
Credit Loan available on the borrowing date.

SECTION 5.8. Joint and Several Liability of the Credit Parties. (a) Each of the
Credit Parties is jointly and severally liable not merely as a surety but as a
co-debtor for each and every Obligation. Each of the Credit Parties is accepting
joint and several liability hereunder in consideration of the financial
accommodations to be provided by the Lenders under this Agreement, for the
mutual benefit, directly or indirectly, of each of the Credit Parties and in
consideration of the undertakings of each of the Credit Parties to accept joint
and several liability for the Obligations.

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    (b) Except as otherwise expressly provided herein, each Credit Party hereby
waives promptness, diligence, presentment, demand, protest, notice of acceptance
of its joint and several liability, notice of any and all advances of the
Revolving Credit Loans and Letters of Credit made under this Agreement and the
other Loan Documents, notice of occurrence of any Default or Event of Default,
or of any demand for any payment under this Agreement and notice of any action
at any time taken or omitted by the Administrative Agent or any Lender under or
in respect of any of the Obligations hereunder. Each Credit Party hereby waives
all defenses which may be available by virtue of any valuation, stay, moratorium
law or other similar law now or hereafter in effect, any right to require the
marshaling of assets of any of the Credit Parties and any other entity or person
primarily or secondarily liable with respect to any of the Obligations, and all
suretyship defenses generally. Each Credit Party hereby assents to, and waives
notice of, any extension or postponement of the time for the payment, or place
or manner for payment, compromise, refinancing, consolidation or renewals of any
of the Obligations hereunder, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Administrative Agent or
any Lender at any time or times in respect of any default by any Credit Party in
the performance or satisfaction of any term, covenant, condition or provision of
this Agreement and the other Loan Documents, any and all other indulgences
whatsoever by the Administrative Agent or any Lender in respect of any of the
Obligations, and the taking, addition, substitution or release, in whole or in
part, at any time or times, of any security for any of such Obligations or the
addition, substitution or release, in whole or in part, of any Credit Party or
any other entity or person primarily or secondarily liable for any Obligation.
If for any reason any of the Credit Parties has no legal existence or is under
no legal obligation to discharge any of the Obligations, or if any of the
Obligations have become irrecoverable from any of the Credit Parties by reason
of such Credit Party's insolvency, bankruptcy or reorganization or by other
operation of law or for any reason, this Agreement and the other Loan Documents
shall nevertheless be binding on each of the other Credit Parties to the same
extent as if such Credit Party at all times had been the sole obligor on such
Obligations. The Obligations of each Credit Party under this Section 5.8 shall
not be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any reconstruction or similar proceeding with respect to any Credit Party, the
Administrative Agent or any Lender.

    (c) If at any time, any payment, or any part thereof, made in respect of any
of the Obligations, is rescinded or must otherwise be restored or returned by
the Administrative Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any of the Credit Parties, or otherwise, the provisions of
this Section 5.8 will forthwith be reinstated in effect as though such payment
had not been made.

    (d) Until the payment and performance in full of all the Obligations, none
of the Credit Parties shall exercise and each hereby waives any rights against
the other Credit Parties as a result of payment by such Credit Party hereunder,
by way of subrogation, reimbursement, restitution, contribution or otherwise,
and none of the Credit Parties will prove any claim in competition with the
Administrative Agent or any Lender in respect of any payment hereunder in
bankruptcy, insolvency, or reorganization proceedings of any nature; none of the
Credit Parties will claim any set-off, recoupment or counterclaim against any of
the other Credit Parties in respect of any liability of one Credit Party to
another Credit Party. Each of the Credit Parties hereby agrees that the payment
of any amounts due with respect to any indebtedness owing by any of the Credit
Party to any other Credit Party is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Credit Party agrees that, after the
occurrence and during the continuance of any Default or Event of Default
hereunder, none of the Credit Parties will demand, sue for or otherwise attempt
to collect any indebtedness of any other Credit Party to such Credit Party until
all of the Obligations of the Credit Parties hereunder shall have been paid in
full

26

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in cash. If, notwithstanding the foregoing sentence, any Credit Party shall
collect, enforce or receive any amounts in respect of such indebtedness in
violation of the foregoing sentence while any Obligations of the Credit Parties
are still outstanding, such amounts shall be collected, enforced and received by
such Credit Party as trustee for the Administrative Agent and the Lenders and be
paid over to the Administrative Agent on account of the Obligations without
affecting in any manner the liability of such Credit Party under the other
provisions hereof.

SECTION 5.9. Changed Circumstances. (a) Circumstances Affecting LIBOR Rate
Availability. If with respect to any Interest Period: (i) the Administrative
Agent or any Lender (after consultation with Administrative Agent) shall
determine that, by reason of circumstances affecting the foreign exchange and
interbank markets generally, deposits in eurodollars, in the applicable amounts
are not being quoted via Moneyline Telerate Markets Screen 3750 (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) or offered to the
Administrative Agent or such Lender for such Interest Period; or (ii) the
Required Lenders reasonably determine (which determination shall be conclusive)
and notify the Administrative Agent that the LIBOR Rate will not adequately and
fairly reflect the cost to the Required Lenders of funding LIBOR Rate Loans for
such Interest Period; then the Administrative Agent shall forthwith give notice
thereof to the Borrower. Thereafter, until the Administrative Agent notifies the
Borrower that such circumstances no longer exist, the obligation of the Lenders
to make LIBOR Rate Loans and the right of the Borrower to convert any Revolving
Credit Loan to or continue any Revolving Credit Loan as a LIBOR Rate Loan shall
be suspended, and the Borrower shall repay in full (or cause to be repaid in
full) the then outstanding principal amount of each such LIBOR Rate Loan
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as
of the last day of such Interest Period.

    (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the
introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
issued after the date hereof of any such Authority, central bank or comparable
agency, shall make it unlawful or impossible for any of the Lenders (or any of
their respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give notice
to the Borrower and the other Lenders. Thereafter, until the Administrative
Agent notifies the Borrower that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrower to convert any Revolving Credit Loan or continue any Revolving Credit
Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may
select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR
Rate Loan shall immediately be converted to a Base Rate Loan for the remainder
of such Interest Period.

    (c) Increased Costs. If, after the date hereof, the introduction of, or any
change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration

27

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thereof, or compliance by any of the Lenders (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
issued after the date hereof of such Authority, central bank or comparable
agency:

>     (i) shall subject any of the Lenders (or any of their respective Lending
> Offices) to any tax, duty or other charge with respect to any Revolving Credit
> Loan, Letter of Credit or Application or shall change the basis of taxation of
> payments to any of the Lenders (or any of their respective Lending Offices) of
> the principal of or interest on any Revolving Credit Loan, Letter of Credit or
> Application or any other amounts due under this Agreement in respect thereof
> (except for changes in the rate of tax on the overall net income of any of the
> Lenders or any of their respective Lending Offices imposed by the jurisdiction
> in which such Lender is organized or is or should be qualified to do business
> or such Lending Office is located); or
> 
>     (ii) shall impose, modify or deem applicable any reserve (including,
> without limitation, any imposed by the Board of Governors of the Federal
> Reserve System), special deposit, insurance or capital or similar requirement
> against assets of, deposits with or for the account of, or credit extended by
> any of the Lenders (or any of their respective Lending Offices) or shall
> impose on any of the Lenders (or any of their respective Lending Offices) or
> the foreign exchange and interbank markets any other condition affecting any
> Revolving Credit Loan; and the result of any of the foregoing is to increase
> the costs to any of the Lenders of maintaining any LIBOR Rate Loan or issuing
> or participating in Letters of Credit or to reduce the yield or amount of any
> sum received or receivable by any of the Lenders under this Agreement or under
> any other Loan Document in respect of a LIBOR Rate Loan or Letter of Credit or
> Application, then such Lender may promptly notify the Administrative Agent,
> and the Administrative Agent shall promptly notify the Borrower of such fact
> and demand compensation therefor and, within fifteen (15) days after such
> notice by the Administrative Agent, the Borrower shall pay to such Lender such
> additional amount or amounts as will compensate such Lender or Lenders for
> such increased cost or reduction. The Administrative Agent and the applicable
> Lender will promptly notify the Borrower of any event of which it has
> knowledge which will entitle such Lender to compensation pursuant to this
> Section 5.9(c); provided, that the Administrative Agent shall incur no
> liability whatsoever to the Lenders or the Borrower in the event it fails to
> do so. The amount of such compensation shall be determined, in the applicable
> Lender's reasonable discretion, based upon the assumption that such Lender
> funded its Revolving Credit Commitment Percentage of the LIBOR Rate Loans in
> the London interbank market and using any reasonable attribution or averaging
> methods which such Lender deems appropriate and practical; provided that no
> compensation shall be payable pursuant to the above if the applicable Lender
> fails to demand compensation for such increased costs within one-hundred
> eighty (180) days following the date on which such Lender has actual knowledge
> of the event resulting in such increase. A certificate of such Lender setting
> forth in reasonable detail the basis for determining such amount or amounts
> necessary to compensate such Lender shall be forwarded to the Borrower through
> the Administrative Agent and shall be conclusively presumed to be correct save
> for manifest error.

    (d) Mitigation Obligations; Replacement of Lenders.

    (i) If any Lender requests compensation under this Section 5.9, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 5.12,
then such Lender shall use reasonable

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efforts to designate a different lending office for funding or booking its
Revolving Credit Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (A) would eliminate or reduce
amounts payable pursuant to this Section 5.9 or Section 5.12, as the case may
be, in the future and (B) would not subject such Lender to any unreimbursed cost
or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

    (ii) If any Lender requests compensation under this Section 5.9, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 5.12,
or if any Lender defaults in its obligation to fund Revolving Credit Loans
hereunder, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 14.10), all its interests, rights and obligations under
this Agreement to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (A) the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a participation in a Letter of Credit is being
assigned, the Issuing Lender that issued such Letter of Credit), which consent
shall not unreasonably be withheld, (B) such Lender shall have received payment
of an amount equal to the outstanding principal of its Revolving Credit Loans
and participations in Letters of Credit, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (C) in the case of any such assignment
resulting from a claim for compensation under this Section 5.9, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.

SECTION 5.10. Indemnity. The Borrower hereby indemnifies each of the Lenders
against any loss or expense which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Revolving Credit Loan (a) as a consequence of any failure
by the Borrower to make any payment when due of any amount due hereunder in
connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to
borrow on a date specified therefor in a Notice of Revolving Credit Borrowing or
Notice of Continuation/Conversion or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor. The amount of such loss, cost or expense to any Lender
shall be deemed to equal an amount determined by such Lender to be the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the LIBOR Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid, were it to bid, at the commencement of such period, for Dollar
deposits of a comparable amount and period from other banks in the London
interbank market; provided that no compensation shall be payable pursuant to the
above if the applicable Lender fails to demand compensation for such increased
costs within one-hundred eighty (180) days following the date on which such
Lender has actual knowledge of the event resulting in such increase. A
certificate of such Lender setting forth in reasonable detail the basis for
determining such amount or

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amounts necessary to compensate such Lender shall be forwarded to the Borrower
through the Administrative Agent and shall be conclusively presumed to be
correct save for manifest error.

SECTION 5.11. Capital Requirements. If either (a) the introduction of, or any
change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request issued after the date hereof from any central bank
or comparable agency or other Governmental Authority (whether or not having the
force of law), has or would have the effect of reducing the rate of return on
the capital of, or has affected or would affect the amount of capital required
to be maintained by, any Lender or any corporation controlling such Lender as a
consequence of, or with reference to any Lender's Revolving Credit Commitment
and other commitments of this type, below the rate which the Lender or such
other corporation could have achieved but for such introduction, change or
compliance, then within five (5) Business Days after written demand by any such
Lender, the Borrower shall pay to such Lender from time to time as specified by
such Lender additional amounts sufficient to compensate such Lender or other
corporation for such reduction; provided that no compensation shall be payable
pursuant to the above if the applicable Lender fails to demand compensation for
such increased costs within one-hundred eighty (180) days following the date on
which such lender has actual knowledge of the event resulting in such increase.
A certificate of such Lender setting forth in reasonable detail the basis for
determining such amounts necessary to compensate such Lender shall be forwarded
to the Borrower through the Administrative Agent and shall be conclusively
presumed to be correct save for manifest error.

SECTION 5.12. Taxes. (a) Payments Free and Clear. Any and all payments by the
Borrower hereunder or under the Revolving Credit Notes or the Letters of Credit
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholding, and all
liabilities with respect thereto excluding, (i) in the case of each Lender and
the Administrative Agent, income and franchise taxes imposed on (or measured by)
its net income by the United States of America or by the jurisdiction under the
laws of which such Lender or the Administrative Agent (as the case may be) is
organized or its principal office is located or is or should be qualified to do
business or any political subdivision thereof, or in the case of any Lender, in
which its applicable Lending Office is located (provided, however, that no
Lender shall be deemed to be located in any jurisdiction solely as a result of
taking any action related to this Agreement or the Revolving Credit Notes or
Letters of Credit) and (ii) any branch profits tax imposed by the United States
of America or any similar tax imposed by any other jurisdiction described in
clause (i) above (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Revolving Credit Note or Letter of
Credit to any Lender or the Administrative Agent, (A) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
5.12) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the amount such party would have received had no such deductions
been made, (B) the Borrower shall make such deductions, (C) the Borrower shall
pay the full amount deducted to the relevant taxing authority or other authority
in accordance with applicable law, and (D) the Borrower shall deliver to the
Administrative Agent evidence of such payment to the relevant taxing authority
or other authority in the manner provided in Section 5.12(d). The Borrower shall
not, however, be required to pay any amounts pursuant to clause (A) of the
preceding sentence to any Foreign Lender or the Administrative Agent not
organized under the laws of the United States of America or a state thereof (or
the District of Columbia) if such Foreign Lender or the Administrative Agent
fails to comply with the requirements of paragraph (e) of this Section 5.12 or
Section 5.9(d), as the case may be.

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    (b) Stamp and Other Taxes. In addition, the Borrower shall pay any present
or future stamp, registration, recordation or documentary taxes or any other
similar fees or charges or excise or property taxes, levies of the United States
or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Revolving Credit Loans, the Letters of Credit, the other Loan Documents
(hereinafter referred to as "Other Taxes").

    (c) Indemnity. The Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 5.12) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. A certificate as to the amount of such payment or liability prepared
by a Lender or the Administrative Agent, absent manifest error, shall be
conclusive, provided that if the Borrower reasonably believes that such Taxes or
Other Taxes were not correctly or legally asserted, such Lender or the
Administrative Agent (as the case may be) shall use reasonable efforts to
cooperate with the Borrower, at the Borrower's expense, to obtain a refund of
such Taxes or Other Taxes. Such indemnification shall be made within thirty (30)
days from the date such Lender or the Administrative Agent (as the case may be)
makes written demand therefor. If a Lender or the Administrative Agent shall
become aware that it is entitled to receive a refund in respect of Taxes or
Other Taxes, it promptly shall notify the Borrower of the availability of such
refund and shall, within sixty (60) days after receipt of a request by the
Borrower pursue or timely claim such refund at the Borrower's expense. If any
Lender or the Administrative Agent receives a refund in respect of any Taxes or
Other Taxes for which such Lender or the Administrative Agent has received
payment from the Borrower hereunder, it promptly shall repay such refund (plus
interest received, if any) to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
5.12 with respect to Taxes or Other Taxes giving rise to such refund), provided
that the Borrower, upon the request of such Lender or the Administrative Agent,
agrees to return such refund (plus any penalties, interest or other charges
required to be paid) to such Lender or the Administrative Agent in the event
such Lender or the Administrative Agent is required to repay such refund to the
relevant taxing authority.

    (d) Evidence of Payment. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 14.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.

    (e) Delivery of Tax Forms. Each Foreign Lender shall deliver to the
Borrower, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms W-8ECI or Forms
W-8BEN, as applicable (or successor forms), properly completed and certifying in
each case that such Foreign Lender is entitled to a complete exemption from
withholding or deduction for or on account of any United States federal income
taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding taxes. Each Foreign Lender further agrees to deliver
to the Borrower, with a copy to the Administrative Agent, a Form W-8BEN or
W-8ECI and Form W-8 or W-9, or successor applicable forms or manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form

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previously delivered by it to the Borrower, certifying in the case of a Form
W-8BEN or W-8ECI that such Foreign Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes (unless in any such case an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders such forms inapplicable
or the exemption to which such forms relate unavailable and such Foreign Lender
notifies the Borrower and the Administrative Agent that it is not entitled to
receive payments without deduction or withholding of United States federal
income taxes) and, in the case of a Form W-8 or W-9, establishing an exemption
from United States backup withholding tax.

    (f) Survival. Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 5.12 shall survive the payment in full of the Obligations and
the termination of the Revolving Credit Commitment.

ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING

SECTION 6.1. Closing. The closing shall take place at the offices of Shearman &
Sterling at 10:00 a.m. on June 10, 2003 or at such other location, on such other
date and at such other time as the parties hereto shall mutually agree.
SECTION 6.2. Conditions to Closing and Initial Revolving Credit Loans and
Letters of Credit. The obligation of the Lenders to close this Agreement and to
make the initial Revolving Credit Loans or issue the initial Letters of Credit
is subject to the satisfaction or waiver of each of the following conditions:

>     (a) Executed Loan Documents. This Agreement and the Revolving Credit Notes
> (to the extent requested as provided herein) shall have been duly authorized,
> executed and delivered to the Administrative Agent by the parties thereto,
> shall be in full force and effect and no default shall exist thereunder, and
> the Borrower shall have delivered original counterparts thereof to the
> Administrative Agent.
> 
>     (b) Closing Certificates; Etc.
> 
>     (i) Officers' Certificate of the Borrower. The Administrative Agent shall
> have received a certificate from a Responsible Officer, in form and substance
> reasonably satisfactory to the Administrative Agent, to the effect that all
> representations and warranties of the Borrower contained in this Agreement and
> the other Loan Documents are true, correct and complete in all material
> respects; that the Borrower is not in violation of any of the covenants
> contained in this Agreement and the other Loan Documents; that, after giving
> effect to the transactions contemplated by this Agreement, no Default or Event
> of Default has occurred and is continuing; and that each of the closing
> conditions has been satisfied or waived (assuming satisfaction of the
> Administrative Agent where not advised otherwise).
> 
>     (ii) General Certificate of the Borrower. The Administrative Agent shall
> have received a certificate of the secretary, assistant secretary or general
> counsel of the Borrower certifying as to the incumbency and genuineness of the
> signature of each officer of the Borrower executing Loan Documents to which it
> is a party and certifying that attached thereto is a true, correct and
> complete copy of (A) the articles of incorporation of the Borrower and all
> amendments thereto, certified as of a recent date by

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> the appropriate Governmental Authority in its jurisdiction of incorporation,
> (B) the bylaws of the Borrower as in effect on the date of such
> certifications, (C) resolutions duly adopted by the Board of Directors of the
> Borrower authorizing the borrowings contemplated hereunder and the execution,
> delivery and performance of this Agreement and the other Loan Documents to
> which it is a party, and (D) each certificate required to be delivered
> pursuant to Section 6.2(b)(iii).
> 
>     (iii) Certificates of Good Standing. The Administrative Agent shall have
> received long-form certificates as of a recent date of the good standing of
> the Borrower under the laws of its jurisdiction of organization and short-form
> certificates as of a recent date of the good standing of the Borrower under
> the laws of each of California, New York, North Carolina, Texas, Tennessee and
> Washington.
> 
>     (iv) Opinions of Counsel. The Administrative Agent shall have received
> favorable opinions of Ira M. Dansky, General Counsel to the Borrower, Cravath,
> Swaine & Moore LLP, special counsel to the Borrower, and Schnader Harrison
> Segal & Lewis LLP, Pennsylvania counsel to the Borrower, addressed to the
> Administrative Agent and the Lenders with respect to the Borrower, the Loan
> Documents and such other matters as the Lenders shall reasonably request.
> 
>     (c) Consents; Defaults.
> 
>     (i) Governmental and Third Party Approvals. The Borrower shall have
> obtained all material approvals, authorizations and consents of any Person and
> of all Governmental Authorities and courts having jurisdiction with respect to
> the transactions contemplated by this Agreement and the other Loan Documents.
> 
>     (ii) No Event of Default. No Default or Event of Default shall have
> occurred and be continuing.
> 
>     (d) Financial Matters.
> 
>     (i) Financial Statements. The Administrative Agent shall have received the
> audited Consolidated financial statements of Jones Apparel Group and its
> Subsidiaries for the Fiscal Year ended on December 31, 2002 and the unaudited
> financial statements of Jones Apparel Group and its Subsidiaries for the
> fiscal quarter ended on April 5, 2003.
> 
>     (ii) Financial Condition Certificate. The Borrower shall have delivered to
> the Administrative Agent a certificate, in form and substance reasonably
> satisfactory to the Administrative Agent, and certified by a Responsible
> Officer, that the financial projections previously delivered to the
> Administrative Agent were prepared in good faith based upon assumptions
> believed to be reasonable at the time.
> 
>     (iii) Payment at Closing; Fee Letters. The Borrower shall have paid the
> fees set forth or referenced in Section 5.3(c) and any other accrued and
> unpaid fees or commissions due hereunder (including, without limitation,
> reasonable legal fees and expenses) to the Administrative Agent and Lenders,
> and to any other Person such amount as may be due thereto in connection with
> the transactions contemplated hereby, including all taxes, fees and other
> charges in connection with the execution, delivery, recording, filing and
> registration of any of the Loan Documents. The Administrative Agent shall

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> have received duly authorized and executed copies of the fee letter agreement
> referred to in Section 5.3(c).
> 
>     (e) Miscellaneous.
> 
>     (i) Notice of Revolving Credit Borrowing. The Administrative Agent shall
> have received a Notice of Revolving Credit Borrowing from the Borrower in
> accordance with Section 2.2(a) and Section 4.2, and a Notice of Account
> Designation specifying the account or accounts to which the proceeds of any
> Revolving Credit Loans made after the Closing Date are to be disbursed.
> 
>     (ii) Proceedings and Documents. All opinions, certificates and other
> instruments and all proceedings in connection with the transactions
> contemplated by this Agreement shall be satisfactory in form and substance to
> the Lenders.
> 
>     (iii) Investment Policy. The Borrower shall have delivered to the
> Administrative Agent a true and complete copy of the investment policy
> referenced in Section 11.4(b) in form and content reasonably acceptable to the
> Administrative Agent.
> 
>     (f) Refinancing. On the Closing Date hereunder, (i) all outstanding loans
> under the Prior Credit Agreement ("Existing Loans") shall be replaced by
> Revolving Credit Loans hereunder and the Administrative Agent shall make such
> transfers of funds as are necessary in order that the outstanding balance of
> such Revolving Credit Loans, together with any Revolving Credit Loans funded
> on the Closing Date, reflect the Revolving Credit Commitment of the Lenders
> hereunder, (ii) all outstanding letters of credit issued pursuant to the Prior
> Credit Agreement shall be deemed Letters of Credit hereunder and each Lender
> shall purchase a participation therein pursuant to Section 3.4 in accordance
> with its Revolving Credit Commitment Percentage, (iii) there shall have been
> paid in cash in full all accrued but unpaid interest due on the Existing Loans
> up to but excluding the Closing Date, (iv) there shall have been paid in cash
> in full all accrued but unpaid fees due under the Prior Credit Agreement up to
> but excluding the Closing Date and all other amounts, costs and expenses then
> owing to any of the Prior Lenders and/or any Agent, as agent under the Prior
> Credit Agreement, in each case to the satisfaction of such Agent or Prior
> Lender, as the case may be, regardless of whether or not such amounts would
> otherwise be due and payable at such time pursuant to the terms of the Prior
> Credit Agreement, (v) all outstanding promissory notes issued by the Borrower
> to the Prior Lenders under the Prior Credit Agreement shall be deemed canceled
> and the originally executed copies thereof shall be canceled and promptly
> returned to the Administrative Agent who shall promptly forward such notes to
> the Borrower and (vi) the commitments and, except as expressly set forth in
> the Prior Credit Agreement, other obligations and rights of the Borrower and
> the Prior Lenders shall be terminated without any further action hereunder or
> thereunder.

SECTION 6.3. Conditions to All Extensions of Credit. The obligations of the
Lenders to make any Extensions of Credit are subject to the satisfaction of the
following conditions precedent on the relevant borrowing or issue date, as
applicable:

>     (a) Continuation of Representations and Warranties. The representations
> and warranties contained in Article VII shall be true and correct on and as of
> such borrowing or issuance date with the same effect as if made on and as of
> such date; except for any

34

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> representation and warranty made as of an earlier date, which representation
> and warranty shall remain true and correct as of such earlier date.
> 
>     (b) No Existing Default. No Default or Event of Default shall have
> occurred and be continuing hereunder (i) on the borrowing date with respect to
> such Revolving Credit Loan or after giving effect to the Revolving Credit
> Loans to be made on such date or (ii) on the issue, extension or renewal date
> with respect to such Letter of Credit or after giving effect to such Letter of
> Credit on such date.

ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

SECTION 7.1. Representations and Warranties. To induce the Administrative Agent
and Lenders to enter into this Agreement and to induce the Lenders to make
Extensions of Credit, the Credit Parties hereby represent and warrant to the
Administrative Agent and Lenders that:

>     (a) Organization; Power; Qualification. Each of the Credit Parties and
> their Subsidiaries is duly organized, validly existing and in good standing
> under the laws of the jurisdiction of its incorporation or formation, has the
> power and authority to own its properties and to carry on its business as now
> being and hereafter proposed to be conducted and is duly qualified and
> authorized to do business in each jurisdiction in which the character of its
> properties or the nature of its business requires such qualification and
> authorization, except where the failure to do so could not reasonably be
> expected to have a Material Adverse Effect.
> 
>     (b) Ownership. Each Subsidiary of each of the Credit Parties as of the
> Closing Date is listed on Schedule 7.1(b). As of the Closing Date, the
> capitalization of the Credit Parties and their Subsidiaries consists of the
> number of shares, authorized, issued and outstanding, of such classes and
> series, with or without par value, described on Schedule 7.1(b). As of the
> Closing Date, all outstanding shares have been duly authorized and validly
> issued and are fully paid and nonassessable. The shareholders of the
> Subsidiaries of the Credit Parties and the number of shares owned by each as
> of the Closing Date are described on Schedule 7.1(b). As of the Closing Date,
> there are no outstanding stock purchase warrants, subscriptions, options,
> securities, instruments or other rights of any type or nature whatsoever,
> which are convertible into, exchangeable for or otherwise provide for or
> permit the issuance of capital stock of the Credit Parties or their
> Subsidiaries, except as described on Schedule 7.1(b).
> 
>     (c) Authorization of Agreement, Loan Documents and Borrowing. Each of the
> Credit Parties and, if applicable, their Subsidiaries has the right, power and
> authority and has taken all necessary corporate and other action to authorize
> the execution, delivery and performance of each of the Loan Documents to which
> it is a party in accordance with their respective terms. Each of the Loan
> Documents have been duly executed and delivered by the duly authorized
> officers of the Credit Parties and each of their Subsidiaries party thereto,
> as applicable, and each such document constitutes the legal, valid and binding
> obligation of the Credit Parties and, if applicable, each of their
> Subsidiaries party thereto, enforceable in accordance with its terms, except
> as such enforcement may be limited by bankruptcy, insolvency, reorganization,
> moratorium or similar state or federal debtor relief laws from time to time in
> effect which affect the enforcement of creditors' rights in general and the
> availability of equitable remedies.

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>     (d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
> The execution, delivery and performance by the Credit Parties and their
> Subsidiaries of the Loan Documents to which each such Person is a party, in
> accordance with their respective terms, the borrowings hereunder and the
> transactions contemplated hereby do not and will not, by the passage of time,
> the giving of notice or otherwise, (i) require any of the Credit Parties or
> any of their Subsidiaries to obtain any Governmental Approval not otherwise
> already obtained or violate any Applicable Law relating to the Credit Parties
> or any of their Subsidiaries, (ii) conflict with, result in a breach of or
> constitute a default under the articles of incorporation, bylaws or other
> organizational documents of the Credit Parties or any of their Subsidiaries or
> any indenture or other material agreement or instrument to which such Person
> is a party or by which any of its properties may be bound or any Governmental
> Approval relating to such Person except as could not reasonably be expected to
> have a Material Adverse Effect, or (iii) result in or require the creation or
> imposition of any material Lien upon or with respect to any property now owned
> or hereafter acquired by such Person.
> 
>     (e) Compliance with Law; Governmental Approvals. Other than with respect
> to environmental matters, which are treated exclusively in Section 7.1(h)
> hereof, each of the Credit Parties and their Subsidiaries (i) has all
> Governmental Approvals required by any Applicable Law for it to conduct its
> business, each of which is in full force and effect, is final and not subject
> to review on appeal and is not the subject of any pending or, to the best of
> its knowledge, threatened attack by direct or collateral proceeding, and (ii)
> is in compliance with each Governmental Approval applicable to it and in
> compliance with all other Applicable Laws relating to it or any of its
> respective properties; in each case, except where the failure to do so could
> not reasonably be expected to have a Material Adverse Effect.
> 
>     (f) Tax Returns and Payments. Each of the Credit Parties and their
> Subsidiaries has timely filed or caused to be timely filed all federal and
> state, local and other tax returns required by Applicable Law to be filed, and
> has paid, or made adequate provision for the payment of, all federal and
> state, local and other taxes, assessments and governmental charges or levies
> upon it and its property, income, profits and assets which are due and
> payable, except (a) taxes that are being contested in good faith by
> appropriate proceedings and for which such Credit Party or Subsidiary, as
> applicable, has set aside on its books adequate reserves to the extent
> required by GAAP or (b) to the extent the failure to do so could not
> reasonably be expected to have a Material Adverse Effect. No Governmental
> Authority has asserted any material Lien or other claim against the Credit
> Parties or any Subsidiary thereof with respect to unpaid taxes (except for
> taxes not yet due) which has not been discharged or resolved.
> 
>     (g) Intellectual Property Matters. Each of the Credit Parties and its
> Subsidiaries owns or possesses rights to use all franchises, licenses,
> copyrights, copyright applications, patents, patent rights or licenses, patent
> applications, trademarks, trademark rights, trade names, trade name rights,
> copyrights and rights with respect to the foregoing which are required to
> conduct its business except where the failure to do so could not reasonably be
> expected to have a Material Adverse Effect. Except as disclosed on Schedule
> 7.1(g), no event has occurred which, to the knowledge of the Credit Parties,
> permits, or after notice or lapse of time or both would permit, the revocation
> or termination of any such rights, and, to the knowledge of the Credit
> Parties, neither the Credit Parties nor any Subsidiary thereof is liable to
> any Person for infringement under

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> Applicable Law with respect to any such rights as a result of its business
> operations, except as could not reasonably be expected to have a Material
> Adverse Effect.
> 
>     (h) Environmental Matters. Except as could not reasonably be expected to
> have a Material Adverse Effect:
> 
> >     (i) The properties of the Credit Parties and their Subsidiaries do not
> > contain, and to their knowledge have not previously contained, any Hazardous
> > Materials in amounts or concentrations which (A) constitute or constituted a
> > violation of applicable Environmental Laws or (B) could give rise to
> > liability under applicable Environmental Laws;
> > 
> >     (ii) The properties of the Credit Parties and their Subsidiaries and all
> > operations conducted in connection therewith are in compliance, and have
> > been in compliance, with all applicable Environmental Laws, and there are no
> > Hazardous Materials at, under or about such properties or such operations in
> > amounts or concentrations which could reasonably be expected to interfere
> > with the continued operation of such properties;
> > 
> >     (iii) Neither any of the Credit Parties nor any Subsidiary thereof has
> > received any notice of violation, alleged violation, non-compliance,
> > liability or potential liability regarding environmental matters or
> > compliance with Environmental Laws, nor does any of the Credit Parties or
> > any Subsidiary thereof have knowledge or reason to believe that any such
> > notice will be received or is being threatened;
> > 
> >     (iv) To the knowledge of the Credit Parties, Hazardous Materials have
> > not been transported or disposed of from the properties of the Credit
> > Parties or any of their Subsidiaries in violation of, or in a manner or to a
> > location which could reasonably be expected to give rise to liability under,
> > Environmental Laws, nor, to the knowledge of the Credit Parties, have any
> > Hazardous Materials been generated, treated, stored or disposed of at, on or
> > under any of such properties in violation of, or in a manner which could
> > reasonably be expected to give rise to liability under, any Environmental
> > Laws;
> > 
> >     (v) No judicial proceedings or governmental or administrative action is
> > pending, or, to the knowledge of the Credit Parties, threatened, under any
> > Environmental Law to which any of the Credit Parties or any Subsidiary
> > thereof will be named as a party, nor are there any consent decrees or other
> > decrees, consent orders, administrative orders or other orders, or other
> > administrative or judicial requirements outstanding under any Environmental
> > Law with respect to the properties or operations of the Credit Parties and
> > their Subsidiaries; and
> > 
> >     (vi) To the knowledge of the Credit Parties, there has been no release,
> > or to the best of the Credit Parties' knowledge, the threat of release, of
> > Hazardous Materials at or from the properties of the Credit Parties or any
> > of their Subsidiaries, in violation of or in amounts or in a manner that
> > could reasonably be expected to give rise to liability under Environmental
> > Laws.

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>     (i) ERISA.
> 
>     (i) Each of the Credit Parties and each ERISA Affiliate is in compliance
> with all applicable provisions of ERISA and the regulations and published
> interpretations thereunder with respect to all Employee Benefit Plans except
> where any such non-compliance could not reasonably be expected to have a
> Material Adverse Effect. Except for any failure that would not reasonably be
> expected to have a Material Adverse Effect, each Employee Benefit Plan that is
> intended to be qualified under Section 401(a) of the Code has been determined
> by the Internal Revenue Service to be so qualified, and each trust related to
> such plan has been determined to be exempt under Section 501(a) of the Code.
> No liability that could reasonably be expected to result in a Material Adverse
> Effect has been incurred by the Credit Parties or any ERISA Affiliate which
> remains unsatisfied for any taxes or penalties with respect to any Employee
> Benefit Plan or any Multiemployer Plan;
> 
>     (ii) No accumulated funding deficiency (as defined in Section 412 of the
> Code) has been incurred (without regard to any waiver granted under Section
> 412 of the Code), nor has any funding waiver from the Internal Revenue Service
> been received or requested with respect to any Pension Plan;
> 
>     (iii) Neither the Credit Parties nor any ERISA Affiliate has: (A) engaged
> in a nonexempt prohibited transaction described in Section 406 of ERISA or
> Section 4975 of the Code, (B) incurred any liability to the PBGC which remains
> outstanding other than the payment of premiums and there are no premium
> payments which are due and unpaid, (C) failed to make a required contribution
> or payment to a Multiemployer Plan, or (D) failed to make a required
> installment or other required payment under Section 412 of the Code except
> where any of the foregoing individually or in the aggregate could not
> reasonably be expected to have a Material Adverse Effect;
> 
>     (iv) No Termination Event that could reasonably be expected to result in a
> Material Adverse Effect has occurred or is reasonably expected to occur; and
> 
>     (v) No proceeding, claim, lawsuit and/or investigation is existing or, to
> the knowledge of the Credit Parties, threatened concerning or involving any
> Employee Benefit Plan that could reasonably be expected to result in a
> Material Adverse Effect.
> 
>     (j) Margin Stock. Neither the Credit Parties nor any Subsidiary thereof is
> engaged principally or as one of its activities in the business of extending
> credit for the purpose of "purchasing" or "carrying" any "margin stock" (as
> each such term is defined or used in Regulation U of the Board of Governors of
> the Federal Reserve System). No part of the proceeds of any of the Revolving
> Credit Loans or Letters of Credit will be used for purchasing or carrying
> margin stock, unless the Credit Parties shall have given the Administrative
> Agent and Lenders prior notice of such event and such other information as is
> reasonably necessary to permit the Administrative Agent and Lenders to comply,
> in a timely fashion, with all reporting obligations required by Applicable
> Law, or for any purpose which violates, or which would be inconsistent with,
> the provisions of Regulation T, U or X of such Board of Governors.
> 
>     (k) Government Regulation. Neither the Credit Parties nor any Subsidiary
> thereof is an "investment company" or a company "controlled" by an "investment
> company" (as each such term is defined or used in the Investment Company Act
> of 1940,

38

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> as amended) and neither the Credit Parties nor any Subsidiary thereof is, or
> after giving effect to any Extension of Credit will be, subject to regulation
> under the Public Utility Holding Company Act of 1935 or the Interstate
> Commerce Act, each as amended.
> 
>     (l) Burdensome Provisions. Neither the Credit Parties nor any Subsidiary
> thereof is a party to any indenture, agreement, lease or other instrument, or
> subject to any corporate or partnership restriction, Governmental Approval or
> Applicable Law which is so unusual or burdensome as in the foreseeable future
> could be reasonably expected to have a Material Adverse Effect. The Credit
> Parties and their Subsidiaries do not presently anticipate that future
> expenditures needed to meet the provisions of any statutes, orders, rules or
> regulations of a Governmental Authority will be so burdensome as to have a
> Material Adverse Effect.
> 
>     (m) Financial Statements. The (i) Consolidated balance sheets of Jones
> Apparel Group and its Subsidiaries as of December 31, 2002, and the related
> statements of income, stockholders' equity and cash flows for the Fiscal Years
> then ended and (ii) unaudited Consolidated balance sheet of Jones Apparel
> Group and its Subsidiaries as of April 5, 2003, and related unaudited interim
> statements of income, stockholders' equity and cash flows, copies of which
> have been furnished to the Administrative Agent and each Lender, are complete
> in all material respects and fairly present in all material respects the
> assets, liabilities and financial position of Jones Apparel Group and its
> Subsidiaries as at such dates, and the results of the operations and changes
> of financial position for the periods then ended, subject to normal year end
> adjustments. All such financial statements, including the related notes
> thereto, have been prepared in accordance with GAAP.
> 
>     (n) No Material Adverse Change. Except as disclosed on Schedule 7.1(g),
> since the later to occur of (i) April 5, 2003 or (ii) the date of the most
> recently delivered audited financial statements of Jones Apparel Group and its
> Subsidiaries, there has been no Material Adverse Effect.
> 
>     (o) Liens. None of the properties and assets of the Credit Parties or any
> Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
> Section 11.3.
> 
>     (p) Debt and Guaranty Obligations. Schedule 7.1(p) is a complete and
> correct listing of all Debt and Guaranty Obligations of the Credit Parties and
> their Subsidiaries as of the Closing Date in excess of $5,000,000.
> 
>     (q) Litigation. Except for matters existing on the Closing Date and set
> forth on Schedule 7.1(q), there are no actions, suits or proceedings pending
> nor, to the knowledge of the Credit Parties, threatened against or affecting
> the Credit Parties or any Subsidiary thereof or any of their respective
> properties in any court or before any arbitrator of any kind or before or by
> any Governmental Authority, which could reasonably be expected to have a
> Material Adverse Effect or which relate to the enforceability of any Loan
> Documents.
> 
>     (r) Absence of Defaults. To the knowledge of the Credit Parties, no event
> has occurred and is continuing which constitutes a Default or an Event of
> Default.

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>     (s) Accuracy and Completeness of Information. The Credit Parties have
> disclosed to the Lenders all agreements, instruments and corporate or other
> restrictions to which they or any of their Subsidiaries are subject, and all
> other matters known to them, that, individually or in the aggregate, could
> reasonably be expected to have a Material Adverse Effect. The written
> information, taken as a whole, furnished by or on behalf of the Credit Parties
> to the Administrative Agent or any Lender in connection with the negotiation
> of this Agreement or delivered hereunder (as modified or supplemented by other
> information so furnished) does not contain any material misstatement of fact
> or omit to state any material fact necessary to make the statements therein,
> in the light of the circumstances under which they were made, not misleading;
> provided that, with respect to projected financial information, the Credit
> Parties represent only that such information was prepared in good faith based
> upon assumptions believed to be reasonable at the time.

SECTION 7.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate delivered in
connection with this Agreement, or any of the Loan Documents (including but not
limited to any such representation or warranty made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Closing Date, shall survive
the Closing Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.

ARTICLE VIII FINANCIAL INFORMATION AND NOTICES

    Until all the Obligations (other than Obligations under Hedging Agreements)
have been paid and satisfied in full and the Revolving Credit Commitment and L/C
Commitment have terminated, unless consent has been obtained in the manner set
forth in Section 14.11 hereof, the Credit Parties will furnish or cause to be
furnished to the Administrative Agent (which the Administrative Agent will
promptly furnish to the Lenders at their respective addresses as set forth on
Schedule 1.1(a), or such other office as may be designated to the Administrative
Agent from time to time):

SECTION 8.1. Financial Statements and Projections. (a) Quarterly Financial
Statements. As soon as practicable and in any event within forty-five (45) days
after the end of the first three fiscal quarters of each Fiscal Year, an
unaudited Consolidated balance sheet of Jones Apparel Group and its Subsidiaries
as of the close of such fiscal quarter and unaudited Consolidated statements of
income, stockholders' equity and cash flows for the fiscal quarter then ended
and that portion of the Fiscal Year then ended, including the notes thereto, all
in reasonable detail setting forth in comparative form the corresponding figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the preceding Fiscal Year and prepared by Jones Apparel
Group in accordance with GAAP and, if applicable, containing disclosure of the
effect on the financial position or results of operations of any change in the
application of accounting principles and practices during the period, and
certified by a Responsible Officer to present fairly in all material respects
the financial condition of Jones Apparel Group and its Subsidiaries as of their
respective dates and the results of operations of Jones Apparel Group and its
Subsidiaries for the respective periods then ended, subject to normal year end
adjustments.

    (b) Annual Financial Statements. As soon as practicable and in any event
within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of Jones

40

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Apparel Group and its Subsidiaries as of the close of such Fiscal Year and
audited Consolidated statements of income, stockholders' equity and cash flows
for the Fiscal Year then ended, including the notes thereto, all in reasonable
detail setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and prepared by a nationally recognized independent
certified public accounting firm in accordance with GAAP and, if applicable,
containing disclosure of the effect on the financial position or results of
operation of any change in the application of accounting principles and
practices during the year, and accompanied by a report thereon by such certified
public accountants that is not qualified with respect to scope limitations
imposed by Jones Apparel Group or any of its Subsidiaries or with respect to
accounting principles followed by Jones Apparel Group or any of its Subsidiaries
not in accordance with GAAP.

SECTION 8.2. Officer's Compliance Certificate. At each time financial statements
are delivered pursuant to Section 8.1(a) or (b) a certificate of a Responsible
Officer in the form of Exhibit F attached hereto (an "Officer's Compliance
Certificate").

SECTION 8.3. Accountants' Certificate. At each time financial statements are
delivered pursuant to Section 8.1(b), a certificate of the independent public
accountants certifying such financial statements addressed to the Administrative
Agent for the benefit of the Lenders:

>     (a) stating that in making the examination necessary for the certification
> of such financial statements, they obtained no knowledge of any Default or
> Event of Default or, if such is not the case, specifying such Default or Event
> of Default and its nature and period of existence; and
> 
>     (b) including the calculations prepared by such accountants required to
> establish whether or not the Credit Parties and their Subsidiaries are in
> compliance with the financial covenants set forth in Article X hereof as at
> the end of each respective period.

SECTION 8.4. Other Reports. (a) Promptly but in any event within ten (10)
Business Days after the filing thereof, a copy of (i) each report or other
filing made by the Credit Parties or any or their Subsidiaries with the
Securities and Exchange Commission and required by the Securities and Exchange
Commission to be delivered to the shareholders of the Credit Parties or any or
their Subsidiaries, (ii) each report made by the Credit Parties or any of their
Subsidiaries to the Securities and Exchange Commission on Form 8-K and (iii)
each final registration statement of the Credit Parties or any of their
Subsidiaries filed with the Securities and Exchange Commission, except in
connection with pension plans and other employee benefit plans; and

    (b) Such other information regarding the operations, business affairs and
financial condition of the Credit Parties or any of their Subsidiaries as the
Administrative Agent or any Lender may reasonably request.

SECTION 8.5. Notice of Litigation and Other Matters. Prompt (but in no event
later than ten (10) Business Days after a principal officer of the Credit
Parties obtains knowledge thereof) telephonic (confirmed in writing) or written
notice of:

>     (a) the commencement of all proceedings and investigations by or before
> any Governmental Authority and all actions and proceedings in any court or
> before any arbitrator against or involving the Credit Parties or any
> Subsidiary thereof or any of their respective properties, assets or businesses
> which in the reasonable judgment of the Credit Parties could reasonably be
> expected to have a Material Adverse Effect;

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>     (b) any notice of any violation received by the Credit Parties or any
> Subsidiary thereof from any Governmental Authority including, without
> limitation, any notice of violation of Environmental Laws, which in the
> reasonable judgment of the Credit Parties in any such case could reasonably be
> expected to have a Material Adverse Effect;
> 
>     (c) any Default or Event of Default; and
> 
>     (d) (i) any unfavorable determination letter from the Internal Revenue
> Service regarding the qualification of an Employee Benefit Plan under Section
> 401(a) of the Code (along with a copy thereof) which could reasonably be
> expected to have a Material Adverse Effect, (ii) all notices received by the
> Credit Parties or any ERISA Affiliate of the PBGC's intent to terminate any
> Pension Plan or to have a trustee appointed to administer any Pension Plan,
> (iii) all notices received by the Credit Parties or any ERISA Affiliate from a
> Multiemployer Plan sponsor concerning the imposition or amount of withdrawal
> liability pursuant to Section 4202 of ERISA which could reasonably have a
> Material Adverse Effect and (iv) the Credit Parties obtaining knowledge or
> reason to know that the Credit Parties or any ERISA Affiliate has filed or
> intends to file a notice of intent to terminate any Pension Plan under a
> distress termination within the meaning of Section 4041(c) of ERISA.

SECTION 8.6. Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of the Credit
Parties to the Administrative Agent or any Lender (other than financial
forecasts) whether pursuant to this Article VIII or any other provision of this
Agreement, shall be, at the time the same is so furnished, true and complete in
all material respects.

ARTICLE IX AFFIRMATIVE COVENANTS

    Until all of the Obligations (other than any Obligations under any Hedging
Agreement) have been paid and satisfied in full and the Revolving Credit
Commitment and L/C Commitment have terminated, unless consent has been obtained
in the manner provided for in Section 14.11, the Credit Parties will, and will
cause each of their Subsidiaries to:

SECTION 9.1. Preservation of Corporate Existence and Related Matters. Except as
permitted by Section 11.5, preserve and maintain its separate corporate
existence and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction where the nature
and scope of its activities require it to so qualify under Applicable Law in
which the failure to so qualify would have a Material Adverse Effect.

SECTION 9.2. Maintenance of Property. Protect and preserve all properties useful
in and material to its business, including copyrights, patents, trade names and
trademarks; maintain in good working order and condition all buildings,
equipment and other tangible real and personal property material to the conduct
of its business, ordinary wear and tear excepted; and from time to time make or
cause to be made all renewals, replacements and additions to such property
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.

SECTION 9.3. Insurance. Maintain insurance with financially sound and reputable
insurance companies against such risks and in such amounts as are customarily
maintained by similar

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businesses and as may be required by Applicable Law including, without
limitation, hazard and business interruption coverage. 

SECTION 9.4. Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete in all material respects) as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties. 

SECTION 9.5. Payment and Performance of Obligations. Pay and perform all
Obligations under this Agreement and the other Loan Documents, and pay (a) all
material taxes, assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (b) subject to the thresholds and
other limitations set forth in Section 12.1(f) or Section 12.1(g), all other
material indebtedness, obligations and liabilities in accordance with customary
trade practices; provided, that the Credit Parties or such Subsidiary may
contest any item described in clause (a) or (b) of this Section 9.5 in good
faith so long as adequate reserves are maintained with respect thereto to the
extent required by GAAP. It is expected that all payments in respect of the
Obligations, the Existing Debt Securities and the Additional Debt Securities
will be made by the Borrower. 

SECTION 9.6. Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business
except where the failure to observe or comply could not reasonably be expected
to have a Material Adverse Effect. 

SECTION 9.7. Environmental Laws. In addition to and without limiting the
generality of Section 9.6, (a) comply with, and use best efforts to ensure such
compliance by all tenants and subtenants, with all applicable Environmental Laws
and obtain and comply with and maintain, and use its best efforts to ensure that
all tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except where the failure to comply could not
reasonably have a Material Adverse Effect, (b) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws, and promptly comply with all
lawful orders and directives of any Governmental Authority regarding
Environmental Laws except (i) where the failure to do so could not reasonably be
expected to have a Material Adverse Effect or (ii) to the extent the Credit
Parties or any of their Subsidiaries are contesting, in good faith, any such
requirement, order or directive before the appropriate Governmental Authority so
long as adequate reserves are maintained with respect thereto to the extent
required by GAAP, and (c) defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising out
of, or in any way relating to the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of the Credit Parties
or such Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing directly result from the gross negligence or willful misconduct of the
party seeking indemnification therefor.

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SECTION 9.8. Compliance with ERISA. In addition to and without limiting the
generality of Section 9.6, (a) comply with all applicable provisions of ERISA
and the Code and the regulations and published interpretations thereunder with
respect to all Employee Benefit Plans, except where the failure to comply could
not reasonably be expected to have a Material Adverse Effect, (b) not take any
action or fail to take action the result of which would result in a liability to
the PBGC or to a Multiemployer Plan in an amount that could reasonably be
expected to have a Material Adverse Effect, and (c) furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan concerning compliance with this
covenant as may be reasonably requested by the Administrative Agent.

SECTION 9.9. Conduct of Business. Engage only in businesses in substantially the
same fields as the businesses conducted on the Closing Date (including, without
limitation, the apparel, footwear, handbags, accessories, jewelry, denim and
cosmetics or other women's accoutrements industries generally) and in lines of
business reasonably related thereto (collectively, "Permitted Lines of
Business"), or as otherwise permitted pursuant to the terms of this Agreement.

SECTION 9.10. Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender, from time to time upon reasonable prior
notice to visit and inspect its properties; inspect and make extracts from its
books, records and files, including, but not limited to, management letters
prepared by independent accountants; and discuss with its principal officers,
and its independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects.

SECTION 9.11. Use of Proceeds. The Credit Parties shall use the proceeds of the
Revolving Credit Loans and the Letters of Credit to (a) refinance certain
existing Debt, (b) for working capital and general corporate purposes of the
Credit Parties and their Subsidiaries, including acquisitions and stock
repurchases, and (c) the payment of certain fees and expenses incurred in
connection with the transactions contemplated hereby or thereby.

ARTICLE X FINANCIAL COVENANTS

    Until all of the Obligations (other than any Obligations under any Hedging
Agreement) have been paid and satisfied in full and the Revolving Credit
Commitment and L/C Commitment have terminated, unless consent has been obtained
in the manner set forth in Section 14.11 hereof, the Credit Parties and their
Subsidiaries on a Consolidated basis will not:

SECTION 10.1. Interest Coverage Ratio. As of the end of any fiscal quarter,
permit the ratio (the "Interest Coverage Ratio") of (a) EBITDAR for the period
of four (4) consecutive fiscal quarters ending on or immediately prior to such
date to (b) the sum of (i) Interest Expense paid or payable in cash and (ii)
Rental Expense, both for the period of four (4) consecutive fiscal quarters
ending on or immediately prior to such date, to be less than 2.75 to 1.0.

SECTION 10.2. Minimum Net Worth. As of the end of any fiscal quarter, permit
Consolidated Net Worth to be less than $1,750,000,000.

ARTICLE XI NEGATIVE COVENANTS

    Until all of the Obligations (other than any Obligations under any Hedging
Agreement) have been paid and satisfied in full and the Revolving Credit
Commitment has expired or been terminated, unless consent has been obtained in
the manner set forth in Section 14.11 hereof, the Credit Parties will not and
will not permit any of their Subsidiaries to:

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SECTION 11.1. Limitations on Debt and Guaranty Obligations. Create, incur,
assume or suffer to exist any Debt, including Guaranty Obligations, except:

>     (a) the Obligations of the Credit Parties;
> 
>     (b) the Five-Year Credit Agreement Obligations;
> 
>     (c) Debt existing on the Closing Date (other than the Five-Year Credit
> Agreement Obligations), including the Debt as set forth on Schedule 7.1(p);
> 
>     (d) Debt in the form of additional credit facilities of the Credit Parties
> or their Subsidiaries for borrowings denominated in currencies other than
> Dollars; provided that the equivalent Dollar Amount of the aggregate
> commitment thereunder does not exceed $50,000,000 on any date of
> determination;
> 
>     (e) Debt of the Credit Parties and their Subsidiaries, not otherwise
> permitted under this Section 11.1, incurred in connection with (i) Capitalized
> Leases, (ii) purchase money Debt, (iii) Debt of a Subsidiary incurred and
> outstanding on or prior to the date on which such Subsidiary was acquired by
> any Credit Party or otherwise became a Subsidiary of such Credit Party, or
> Debt assumed by a Credit Party or a Subsidiary thereof in connection with an
> asset acquisition which Debt was outstanding prior to the date of such asset
> acquisition (in each case, other than Debt incurred as consideration in, or to
> provide all or any portion of the funds or credit support utilized to
> consummate, the transaction or series of transactions pursuant to which such
> Subsidiary became a Subsidiary of such Credit Party or was otherwise acquired
> by such Credit Party or pursuant to which such assets were acquired) and (iv)
> any other unsecured Debt of the Subsidiaries of the Credit Parties in an
> aggregate outstanding amount (excluding any attributable Debt from the sale
> leaseback transaction involving the Credit Parties' distribution warehouse at
> South Hill, Virginia) not to exceed fifteen percent (15%) of Consolidated Net
> Worth of the Credit Parties and their Subsidiaries on any date of
> determination;
> 
>     (f) additional Debt of the Credit Parties, not otherwise permitted under
> this Section 11.1, arising under or in connection with public or privately
> placed notes, debentures, bonds, or debt securities or related indentures or
> other agreements (the "Additional Debt Securities") so long as no Default or
> Event of Default exists on the date any such Additional Debt Security is
> created or arises as a result of any borrowing thereunder, except in
> connection with the issuance of exchange securities in connection with any
> exchange offer registered under the Securities Act of 1933, as amended,
> following a private placement of Additional Debt Securities;
> 
>     (g) other Debt of the Credit Parties, not otherwise permitted under this
> Section 11.1, in an aggregate outstanding amount not to exceed $300,000,000 on
> any date of determination;
> 
>     (h) Debt of the Credit Parties to any Subsidiary or any other Credit Party
> and of any Subsidiary to the Credit Parties or any other Subsidiary;
> 
>     (i) Debt incurred in respect of the extension, renewal, refinancing,
> replacement or refunding (collectively, the "refinancing") of Debt incurred
> pursuant to clause (a), (b), (c) or (e); provided, that (i) such Debt is an
> aggregate principal amount (or if incurred

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> with original issue discount, an aggregate issue price) not in excess of the
> sum of (x) the aggregate principal amount (or if incurred with original issue
> discount, the aggregate accreted value) then outstanding of the Debt being
> refinanced and (y) an amount necessary to pay any fees and expenses, including
> premiums and defeasance costs, related to such refinancing, (ii) the average
> life of such Debt is equal to or greater than the average life of the Debt
> being refinanced, (iii) the stated maturity of such Debt is no earlier than
> the stated maturity of the Debt being refinanced; and (iv) the new Debt shall
> not be senior in right of payment to the Debt that is being refinanced;
> provided, that none of the Debt permitted to be incurred by this Section shall
> expressly restrict, limit or otherwise encumber (unless such restriction,
> limitation or other encumbrance is a Permitted Encumbrance (as defined
> below)), the ability of any Subsidiary of the Credit Parties to make any
> payment to the Credit Parties or any of their Subsidiaries (in the form of
> dividends, intercompany advances or otherwise) for the purpose of enabling the
> Credit Parties to pay the Obligations. For purposes of this Section 11.1, with
> regard to any Debt, a "Permitted Encumbrance" shall mean any restriction,
> limitation or other encumbrance that applies solely if a default or event of
> default (other than a default resulting solely from the breach of a
> representation or warranty) occurs and is continuing under such Debt; provided
> further that, with respect to any default or event of default (other than a
> payment default, including as a result of acceleration, or a bankruptcy event
> with respect to the obligor of such Debt), such encumbrance or restriction may
> not prohibit dividends to the Credit Parties or any Subsidiary thereof to pay
> the Obligations for more than one hundred eighty (180) days in any consecutive
> three hundred sixty (360) day period; and
> 
>     (j) Debt incurred in connection with the Permitted Investment Policy as in
> effect on the date hereof.

SECTION 11.2. [Reserved].

SECTION 11.3. Limitations on Liens. Create, incur, assume or suffer to exist,
any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:

>     (a) Liens for taxes, assessments and other governmental charges or levies
> (excluding any Lien imposed pursuant to any of the provisions of ERISA or
> Environmental Laws) not yet due or as to which the period of grace, if any,
> related thereto has not expired or which are being contested in good faith and
> by appropriate proceedings if adequate reserves are maintained to the extent
> required by GAAP;
> 
>     (b) the claims of materialmen, mechanics, carriers, warehousemen,
> processors or landlords for labor, materials, supplies or rentals incurred in
> the ordinary course of business, (i) which are not overdue for a period of
> more than thirty (30) days or (ii) which are being contested in good faith and
> by appropriate proceedings;
> 
>     (c) Liens consisting of deposits or pledges made in the ordinary course of
> business in connection with, or to secure payment of, obligations under
> workers' compensation, unemployment insurance or similar legislation or
> obligations under customer service contracts;

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>     (d) Liens constituting encumbrances in the nature of zoning restrictions,
> easements and rights or restrictions of record on the use of real property,
> which do not, in any case, materially detract from the value of such property
> or materially impair the use thereof in the ordinary conduct of business;
> 
>     (e) Liens of the Administrative Agent for the benefit of the
> Administrative Agent and the Lenders;
> 
>     (f) Liens incurred in the ordinary course of business securing Debt of the
> Credit Parties permitted under Section 11.1 not to exceed $75,000,000 in the
> aggregate outstanding in addition to Liens existing on the Closing Date;
> 
>     (g) Liens existing on any property or asset prior to the acquisition
> thereof by the Credit Parties or any Subsidiary or existing on any property or
> asset of any Person that becomes a Subsidiary or is merged with or into the
> Credit Parties or any Subsidiary after the date hereof prior to the time such
> Person becomes a Subsidiary or is so merged;
> 
>     (h) Liens in existence on the Closing Date and described on Schedule 11.3;
> 
>     (i) Liens securing Debt incurred in connection with Capitalized Leases and
> purchase money Debt permitted under Section 11.1(e); provided that (i) such
> Liens shall be created substantially simultaneously with the acquisition of
> the related asset, (ii) such Liens do not at any time encumber any property
> other than the property financed by such Debt, (iii) the amount of Debt
> secured thereby is not increased and (iv) the principal amount of Debt secured
> by any such Lien shall at no time exceed one hundred percent (100%) of the
> original purchase price of such property at the time it was acquired;
> 
>     (j) Liens incurred to secure appeal bonds and judgment and attachment
> Liens in respect of judgments or orders that do not constitute an Event of
> Default under Section 12.1(m);
> 
>     (k) Liens arising solely by virtue of any statutory or common law
> provision relating to banker's liens, rights of setoff or similar rights and
> remedies, in each case as to deposit accounts or other funds maintained with a
> creditor depository institution;
> 
>     (l) deposits to secure the performance of bids, trade contracts, leases,
> statutory obligations, surety and appeal bonds, performance bonds and other
> obligations of a like nature, in each case in the ordinary course of business;
> 
>     (m) Liens arising in the ordinary course of business that do not secure
> monetary obligations;
> 
>     (n) Liens arising by the terms of letters of credit entered into in the
> ordinary course of business to secure reimbursement obligations thereunder;
> 
>     (o) Liens securing Debt or other obligations between the Credit Parties
> and a Subsidiary or between Subsidiaries or Credit Parties;
> 
>     (p) Liens granted to any bank or other institution securing the payments
> to be made to such bank or other institution by the Credit Parties or a
> Subsidiary of the Credit

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> Parties pursuant to any Hedging Agreement; provided that, such agreements are
> entered into in, or are incidental to, the ordinary course of business;
> 
>     (q) The refinancing of any Lien referred to in clause (g), (h), (i) or (p)
> provided, that the principal amount of Debt (or, if incurred with original
> issue discount, an aggregate issue price) secured thereby and not otherwise
> authorized by clause (g), (h), (i) or (p) shall not exceed the principal
> amount of Debt (or if incurred without original issue discount, the aggregate
> accreted value) plus any fees and expenses, including premiums and defeasance
> costs, payable in connection with any such extension, renewal, replacement or
> refunding, so secured at the time of such extension, renewal, replacement or
> refunding; and
> 
>     (r) Liens incurred in connection with the Permitted Investment Policy as
> in effect on the date hereof.

SECTION 11.4. Limitations on Loans, Advances, Investments and Acquisitions.
Purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock (other than capital stock of the Credit Parties), interests in any
partnership, limited liability company or joint venture (including without
limitation the creation or capitalization of any Subsidiary), evidence of Debt
or other obligation or security, substantially all or a portion of the business
or assets of any other Person or any other investment or interest whatsoever in
any other Person, or make or permit to exist, directly or indirectly, any loans,
advances or extensions of credit to, or any investment in cash or by delivery of
property in, any Person, or enter into, directly or indirectly, any commitment
or option in respect of the foregoing (collectively, "Investments") except:

>     (a) Investments in Subsidiaries existing on the Closing Date and the other
> existing loans, advances and Investments described on Schedule 11.4;
> 
>     (b) Investments made in accordance with the Permitted Investment Policy;
> 
>     (c) Investments by the Credit Parties or any Subsidiary in the form of
> acquisitions, including acquisitions of all or substantially all of the
> business or a line of business (whether by the acquisition of capital stock,
> assets or any combination thereof) of any other Person, so long as (i) a
> Responsible Officer certifies to the Administrative Agent and the Required
> Lenders that no Default or Event of Default has occurred and is continuing or
> would result from the closing of such acquisition, such certification to
> include, for any acquisition involving a purchase price in excess of
> $50,000,000, either individually or in a series of related transactions, a
> financial condition certificate to which is attached a pro forma balance sheet
> of Jones Apparel Group and its Subsidiaries setting forth on a pro forma basis
> the financial condition of Jones Apparel Group and its Subsidiaries on a
> Consolidated basis as of the most recently ended Fiscal Year, reflecting on a
> pro forma basis the effect of the transactions contemplated by such
> acquisition, including all fees and expenses in connection therewith, and
> evidencing compliance on a pro forma basis with the covenants contained in
> Article X hereof, and (ii) such acquisition meets either of the following
> requirements: (A) such acquisition is within a Permitted Line of Business, or
> (B) such acquisition is outside a Permitted Line of Business but the price for
> such acquisition, together with all other acquisitions outside the Permitted
> Lines of Business, does not exceed $50,000,000 in the aggregate;
> 
>     (d) Investments (other than acquisitions) in the Permitted Lines of
> Business;

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>     (e) Investments (other than acquisitions) outside Permitted Lines of
> Business not in excess of $50,000,000 in the aggregate;
> 
>     (f) loans and advances to third party contractors in the ordinary course
> of business and consistent with past practice not to exceed in an aggregate
> outstanding amount $6,000,000 (excluding such loans and advances consisting of
> prepayments or advances for inventory or services); and loans and advances to
> employees of the Credit Parties and their Subsidiaries in an aggregate
> outstanding amount not to exceed $4,000,000; and
> 
>     (g) intercompany loans and advances among the Credit Parties and their
> Subsidiaries so long as permitted under the terms of Sections 11.1 and 11.3.

SECTION 11.5. Limitations on Mergers and Liquidation. Merge, consolidate or
enter into any similar combination with any other Person or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution) except so long as
no Default or Event of Default has occurred and is continuing, or would result
therefrom:

>     (a) any Credit Party may merge or consolidate with or into any Person;
> provided that (i) such Credit Party shall be the survivor of such merger or
> consolidation or (ii) the survivor assumes and succeeds to the Obligations of
> such Credit Party pursuant to an assumption agreement in form reasonably
> satisfactory to the Administrative Agent and the Required Lenders;
> 
>     (b) any Wholly-Owned Subsidiary of the Credit Parties may merge or
> consolidate with or into any other Wholly-Owned Subsidiary of the Credit
> Parties;
> 
>     (c) any Wholly-Owned Subsidiary may merge or consolidate with or into the
> Person such Wholly-Owned Subsidiary was formed to acquire in connection with
> an acquisition permitted by Section 11.4(b), (c) or (d);
> 
>     (d) any Wholly-Owned Subsidiary of the Credit Parties may merge or
> consolidate with or into any Credit Party; provided that, such Credit Party is
> the survivor of such merger or consolidation; and
> 
>     (e) any Credit Party may merge or consolidate with or into any other
> Credit Party.

SECTION 11.6. Limitations on Sale or Transfer of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired (collectively, "sale"), except
for the following:

>     (a) the sale of inventory or the factoring of accounts receivable in the
> ordinary course of business;
> 
>     (b) the sale of obsolete assets no longer used or usable in the business
> of the Credit Parties or any of their Subsidiaries;
> 
>     (c) the sale or discount without recourse of accounts receivable arising
> in the ordinary course of business in connection with the compromise or
> collection thereof;

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>     (d) the sale of assets between the Credit Parties and any Subsidiary or
> between Subsidiaries or Credit Parties;
> 
>     (e) the sale of any other assets of the Credit Parties and their
> Subsidiaries outside the ordinary course of business so long as the total fair
> market value for all such sales on and after the Closing Date on an aggregate
> basis does not at any time exceed thirty-three percent (33%) of Consolidated
> Net Worth;
> 
>     (f) the sale leaseback transaction involving the Credit Parties'
> distribution warehouse in South Hill, Virginia; and
> 
>     (g) the sale of assets purchased in accordance with the Permitted
> Investment Policy as in effect on the date hereof.

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SECTION 11.7. Limitations on Dividends and Distributions. Declare or pay any
dividends upon any of its capital stock; purchase, redeem, retire or otherwise
acquire, directly or indirectly, any shares of its capital stock, or make any
distribution of cash, property or assets among the holders of shares of its
capital stock, or make any change in its capital structure that could reasonably
be expected to have a Material Adverse Effect; provided that: (a) the Credit
Parties may pay dividends solely in shares of their own capital stock or other
ownership interest (including dividends consisting of rights to purchase such
capital stock or other ownership interest), (b) any Subsidiary may pay dividends
or make distributions to the Credit Parties or any Wholly-Owned Subsidiary of
the Credit Parties, (c) any Credit Party may pay dividends or make distributions
to any other Credit Party and (d) as long as no Default or Event of Default has
occurred and is continuing or would be created thereby (i) the Credit Parties
may declare and pay dividends on shares of their capital stock or other
ownership interests, (ii) the Credit Parties or any Subsidiary may redeem shares
of their capital stock or other ownership interest pursuant to a plan approved
by the Board of Directors of the Credit Parties or such Subsidiary, as
applicable and (iii) the Credit Parties or any Subsidiary may take any action
otherwise prohibited by this Section 11.7.

SECTION 11.8. Transactions with Affiliates. Directly or indirectly enter into,
or be a party to, any transaction with any of its Affiliates, except (i) on
terms that are no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not its Affiliate, (ii) without limiting
any other provision of this Agreement, in connection with any acquisition
otherwise permitted pursuant to the terms of this Agreement or (iii) for
transactions between Credit Parties or between Credit Parties and Subsidiaries
of Credit Parties.

SECTION 11.9. Changes in Fiscal Year End. Change its Fiscal Year.

SECTION 11.10. Amendments; Payments and Prepayments of Material Debt and
Subordinated Debt. Upon the occurrence and continuation of a Default or an Event
of Default, amend or modify (or permit the modification or amendment of) in any
manner materially adverse to the Lenders any of the terms or provisions of any
Debt in excess of $25,000,000, including without limitation the Additional Debt
Securities, if any, or any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or redeem or acquire for value
(including without limitation by way of depositing with any trustee with respect
thereto money or securities before due for the purpose of paying when due) any
Subordinated Debt.

ARTICLE XII DEFAULT AND REMEDIES

SECTION 12.1. Events of Default. Each of the following shall constitute an Event
of Default, whatever the reason for such event and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any Governmental
Authority or otherwise:

>     (a) Default in Payment of Principal of Loans and Reimbursement
> Obligations. The Borrower shall default in any payment of principal of any
> Revolving Credit Loan or Reimbursement Obligation when and as due (whether at
> maturity, by reason of acceleration or otherwise).
> 
>     (b) Other Payment Default. The Borrower shall default in the payment when
> and as due (whether at maturity, by reason of acceleration or otherwise) of
> interest on any Revolving Credit Loan or Reimbursement Obligation or the
> payment of any other Obligation (other than any Obligation under any Hedging
> Agreement), and such default shall continue unremedied for three (3) Business
> Days.

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>     (c) Misrepresentation. Any representation or warranty made or deemed to be
> made by the Credit Parties or any of their Subsidiaries, if applicable, under
> this Agreement, any Loan Document or any amendment hereto or thereto, shall at
> any time prove to have been incorrect or misleading in any material respect
> when made or deemed made.
> 
>     (d) Default in Performance of Certain Covenants. Any of the Credit Parties
> shall default in the performance or observance of any covenant or agreement
> contained in Article X or XI of this Agreement.
> 
>     (e) Default in Performance of Other Covenants and Conditions. Any of the
> Credit Parties or any Subsidiary thereof, if applicable, shall default in the
> performance or observance of any term, covenant, condition or agreement
> contained in this Agreement (other than as specifically provided for otherwise
> in this Section 12.1) or any other Loan Document and such default shall
> continue for a period of thirty (30) days after written notice thereof has
> been given to the Borrower by the Administrative Agent.
> 
>     (f) Hedging Agreement. Any termination payments in an amount greater than
> $35,000,000 shall be due by any Credit Party under any Hedging Agreement and
> such amount is not paid within thirty (30) Business Days of the due date
> thereof.
> 
>     (g) Debt Cross-Default. Any of the Credit Parties or any of their
> Subsidiaries shall (i) default in the payment of principal or interest on any
> Debt (other than the Revolving Credit Loans or any Reimbursement Obligation)
> the aggregate outstanding amount of which Debt is in excess of $35,000,000,
> including, without limitation, the obligations under the Five-Year Credit
> Agreement, beyond the period of grace if any, provided in the instrument or
> agreement under which such Debt was created, or (ii) default in the observance
> or performance of any other agreement or condition relating to any Debt (other
> than the Revolving Credit Loans or any Reimbursement Obligation), including,
> without limitation, the obligations under the Five-Year Credit Agreement and
> any other documents executed in connection therewith, the aggregate
> outstanding amount of which Debt is in excess of $35,000,000 or contained in
> any instrument or agreement evidencing, securing or relating thereto or any
> other event shall occur or condition exist, the effect of which default or
> other event or condition is to cause, or to permit the holder or holders of
> such Debt (or a trustee or agent on behalf of such holder or holders) to
> cause, with the giving of notice if required, any such Debt to become due
> prior to its stated maturity (any applicable grace period having expired).
> 
>     (h) Change in Control. Any person or group of persons (within the meaning
> of Section 13(d) of the Securities Exchange Act of 1934, as amended) shall
> obtain ownership or control in one or more series of transactions of more than
> thirty-three and one-third percent (33.33%) of the common stock or
> thirty-three and one-third percent (33.33%) of the voting power of any Credit
> Party entitled to vote in the election of members of the board of directors of
> such Credit Party or there shall have occurred under any indenture or other
> instrument evidencing any debt in excess of $35,000,000 any "change in
> control" (as defined in such indenture or other evidence of debt) obligating
> the Borrower to repurchase, redeem or repay all or any part of the debt or
> capital stock provided for therein (any such event, a "Change in Control").
> Further, except as set forth in Section 11.5, Jones Apparel Group shall at all
> times own 100% of the capital stock of Jones Apparel Group Holdings and Jones
> Apparel Group Holdings shall at all times own 100% of the capital stock of the
> Borrower.

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>     (i) Voluntary Bankruptcy Proceeding. Any Credit Party or any Subsidiary
> thereof shall (i) commence a voluntary case under the federal bankruptcy laws
> (as now or hereafter in effect), (ii) file a petition seeking to take
> advantage of any other laws, domestic or foreign, relating to bankruptcy,
> insolvency, reorganization, winding up or composition for adjustment of debts,
> (iii) consent to or fail to contest in a timely and appropriate manner any
> petition filed against it in an involuntary case under such bankruptcy laws or
> other laws, (iv) apply for or consent to, or fail to contest in a timely and
> appropriate manner, the appointment of, or the taking of possession by, a
> receiver, custodian, trustee, or liquidator of itself or of a substantial part
> of its property, domestic or foreign, (v) admit in writing its inability to
> pay its debts as they become due, (vi) make a general assignment for the
> benefit of creditors, or (vii) take any corporate action for the purpose of
> authorizing any of the foregoing.
> 
>     (j) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
> commenced against any Credit Party or any Subsidiary thereof in any court of
> competent jurisdiction seeking (i) relief under the federal bankruptcy laws
> (as now or hereafter in effect) or under any other laws, domestic or foreign,
> relating to bankruptcy, insolvency, reorganization, winding up or adjustment
> of debts, or (ii) the appointment of a trustee, receiver, custodian,
> liquidator or the like for any Credit Party or any Subsidiary thereof or for
> all or any substantial part of their respective assets, domestic or foreign,
> and such case or proceeding shall continue without dismissal or stay for a
> period of sixty (60) consecutive days, or an order granting the relief
> requested in such case or proceeding (including, but not limited to, an order
> for relief under such federal bankruptcy laws) shall be entered.
> 
>     (k) [Reserved]
> 
>     (l) Termination Event. The occurrence of any of the following events: (i)
> the Borrower or any ERISA Affiliate fails to make full payment to an Employee
> Benefit Plan when due (after giving effect to any applicable grace period) of
> contributions in excess of $2,000,000, (ii) an accumulated funding deficiency
> in excess of $2,000,000 occurs or exists, whether or not waived, with respect
> to any Pension Plan or (iii) a Termination Event that could reasonably be
> expected to result in liability in excess of $5,000,000 to the Borrower or any
> ERISA Affiliate.
> 
>     (m) Judgment. A judgment or order for the payment of money which causes
> the aggregate amount of all such judgments to exceed $35,000,000 in any Fiscal
> Year shall be entered against any Credit Party or any Subsidiary thereof by
> any court and such judgment or order shall continue without discharge or stay
> for a period of thirty (30) days.

SECTION 12.2. Remedies. Upon the occurrence of an Event of Default, with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Credit Parties:

>     (a) Acceleration; Termination of Facilities. Declare the principal of and
> interest on the Revolving Credit Loans, the Reimbursement Obligations at the
> time outstanding, and all other amounts owed to the Lenders and to the
> Administrative Agent under this Agreement or any of the other Loan Documents
> (other than any Hedging Agreement) (including, without limitation, all L/C
> Obligations, whether or not the beneficiaries of the then outstanding Letters
> of Credit shall have presented the documents required

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> thereunder) and all other Obligations (other than Obligations owing under any
> Hedging Agreement), to be forthwith due and payable, whereupon the same shall
> immediately become due and payable without presentment, demand, protest or
> other notice of any kind, all of which are expressly waived, anything in this
> Agreement or the other Loan Documents to the contrary notwithstanding, and
> terminate the Credit Facility and any right of the Borrower to request
> borrowings or Letters of Credit thereunder; provided, that upon the occurrence
> of an Event of Default specified in Section 12.1(i) or (j) with respect to the
> Credit Parties, the Credit Facility shall be automatically terminated and all
> Obligations (other than obligations owing under any Hedging Agreement) shall
> automatically become due and payable.
> 
>     (b) Letters of Credit. With respect to all Letters of Credit with respect
> to which presentment for honor shall not have occurred at the time of an
> acceleration pursuant to the preceding paragraph, require the Borrower at such
> time to deposit or cause to be deposited in a cash collateral account opened
> by the Administrative Agent an amount equal to the Dollar Amount of the
> aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts
> held in such cash collateral account shall be applied by the Administrative
> Agent to the payment of drafts drawn under such Letters of Credit, and the
> unused portion thereof after all such Letters of Credit shall have expired or
> been fully drawn upon, if any, shall be applied to repay the other
> Obligations. After all such Letters of Credit shall have expired or been fully
> drawn upon, the Reimbursement Obligation shall have been satisfied and all
> other Obligations shall have been paid in full, the balance, if any, in such
> cash collateral account shall be promptly returned to the Borrower.
> 
>     (c) Rights of Collection. Exercise on behalf of the Lenders all of its
> other rights and remedies under this Agreement, the other Loan Documents and
> Applicable Law, in order to satisfy all of the Obligations.

SECTION 12.3. Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration
of the rights and remedies of the Administrative Agent and the Lenders set forth
in this Agreement is not intended to be exhaustive and the exercise by the
Administrative Agent and the Lenders of any right or remedy shall not preclude
the exercise of any other rights or remedies, all of which shall be cumulative,
and shall be in addition to any other right or remedy given hereunder or under
the Loan Documents or that may now or hereafter exist in law or in equity or by
suit or otherwise. No delay or failure to take action on the part of the
Administrative Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
the exercise of any other right, power or privilege or shall be construed to be
a waiver of any Event of Default. No course of dealing between the Credit
Parties, the Administrative Agent and the Lenders or their respective agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or any of the other Loan Documents or to constitute a waiver of
any Event of Default.

ARTICLE XIII THE ADMINISTRATIVE AGENT

SECTION 13.1. Appointment. Each of the Lenders hereby irrevocably designates and
appoints Wachovia as Administrative Agent of such Lender under this Agreement
and the other Loan Documents for the term hereof and each such Lender
irrevocably authorizes Wachovia as Administrative Agent for such Lender, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such

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duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Administrative Agent. Any reference to the
Administrative Agent in this Article XIII shall be deemed to refer to the
Administrative Agent solely in its capacity as Administrative Agent and not in
its capacity as a Lender.

SECTION 13.2. Delegation of Duties. The Administrative Agent may execute any of
its respective duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.

SECTION 13.3. Exculpatory Provisions. Neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries
or Affiliates shall be (a) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or the
other Loan Documents (except for actions occasioned solely by its or such
Person's own gross negligence or willful misconduct), or (b) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Borrower or any of its Subsidiaries or any officer
thereof contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or the other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or for any failure of the Borrower or any of its Subsidiaries to
perform its obligations hereunder or thereunder. The Administrative Agent shall
not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower or any of its Subsidiaries.

SECTION 13.4. Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the holder of
any Revolving Credit Loan as the owner thereof for all purposes unless such
Revolving Credit Loan shall have been transferred in accordance with Section
14.10 hereof. The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement and the other Loan Documents
unless it shall first receive such advice or concurrence of the Required Lenders
(or, when expressly required hereby or by the relevant other Loan Document, the
Required Agreement Lenders or all the Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for its own gross negligence or
willful misconduct. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other

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Loan Documents in accordance with a request of the Required Lenders (or, when
expressly required hereby, the Required Agreement Lenders or all the Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Revolving Credit
Loans.

SECTION 13.5. Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless it has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, it shall promptly give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders, except to the extent that other provisions of this Agreement expressly
require that any such action be taken or not be taken only with the consent and
authorization or the request of the Lenders, the Required Agreement Lenders or
Required Lenders, as applicable.

SECTION 13.6. Non-Reliance on the Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Administrative Agent hereinafter taken, including any review
of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries and made its own decision to make its Revolving
Credit Loans and issue or participate in Letters of Credit hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or by the other Loan Documents, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.

SECTION 13.7. Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such and (to the extent not reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so), ratably according
to the respective amounts of their Revolving Credit Commitment Percentage from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the

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payment of the Revolving Credit Loans or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent they result from the
Administrative Agent's bad faith, gross negligence or willful misconduct. The
agreements in this Section 13.7 shall survive the payment of the Revolving
Credit Loans, any Reimbursement Obligation and all other amounts payable
hereunder and the termination of this Agreement.

SECTION 13.8. The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrower as though the Administrative Agent were not an Administrative Agent
hereunder. With respect to any Revolving Credit Loans made or renewed by it and
with respect to any Letter of Credit issued by it or participated in by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not an Administrative Agent, and the terms "Lender" and "Lenders" shall
include the Administrative Agent in its individual capacity.

SECTION 13.9. Resignation of the Administrative Agent; Successor Administrative
Agent. Subject to the appointment and acceptance of a successor as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Credit Parties. Upon any such resignation, the Required
Lenders shall have the right, subject to the approval of the Credit Parties (so
long as no Default or Event of Default has occurred and is continuing), to
appoint a successor Administrative Agent, which successor shall have minimum
capital and surplus of at least $500,000,000. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, been approved (so
long as no Default or Event of Default has occurred and is continuing) by the
Credit Parties or have accepted such appointment within thirty (30) days after
the Administrative Agent's giving of notice of resignation, then the
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent reasonably acceptable to the Credit Parties (so long as no
Default or Event of Default has occurred and is continuing), which successor
shall have minimum capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 13.9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.

SECTION 13.10. Syndication and Documentation Agents.. Each Syndication Agent in
its capacity as Syndication Agent and each Documentation Agent in its capacity
as Documentation Agent shall have no duties or responsibilities and no
liabilities under this Agreement or any other Loan Document but shall be
entitled, in such capacity, to the same protections afforded to the
Administrative Agent under this Article XIII.

ARTICLE XIV MISCELLANEOUS

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SECTION 14.1. Notices. (a) Method of Communication. Except as otherwise provided
in this Agreement, all notices and communications hereunder shall be in writing,
or by telephone subsequently confirmed in writing. Any notice shall be effective
if delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third (3rd) Business Day following the date
sent by certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.

    (b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.

> > If to the Credit Parties:
> > 
> > Jones Apparel Group, Inc.
> > 250 Rittenhouse Circle
> > Bristol, Pennsylvania 19007
> > Attention: Chief Financial Officer
> > Telephone No.: (215) 785-4000
> > Telecopy No.: (215) 785-1228
> > 
> > If to Wachovia:
> > 
> > Wachovia Bank, National Association
> > Administrative Agent: One Wachovia Center, TW 4
> > 301 South College Street
> > Charlotte, NC 28288-0608
> > Attention: Syndication Agency Services
> > Telephone No: 704-715-1353
> > Telecopy No: 704-383-0288
> > 
> > With copies to:
> > 
> > Wachovia Bank, National Association
> > Administrative Agent: One Wachovia Center, TW 5
> > 301 South College Street
> > Charlotte, NC 28288-0760
> > Attention: Syndication Agency Management
> > Telephone No: 704-383-7190
> > Telecopy No: 704-383-7611
> > 
> > If to any Lender:
> > 
> > To the Address set forth on Schedule 1.1(a) hereto

    (c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrower and the Lenders, as the

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Administrative Agent's Office referred to herein, to which payments due are to
be made and at which Revolving Credit Loans will be disbursed.

SECTION 14.2. Expenses; Indemnity. The Borrower will (a) pay all reasonable
out-of-pocket expenses of the Administrative Agent in connection with (i) the
preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including without
limitation the reasonable out-of-pocket syndication and due diligence expenses
and reasonable fees and disbursements of counsel for the Administrative Agent
and (ii) the preparation, execution and delivery of any waiver, amendment or
consent by the Administrative Agent or the Lenders relating to this Agreement or
any other Loan Document, including without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all reasonable
out-of-pocket expenses of the Administrative Agent actually incurred in
connection with the administration of the Credit Facility, (c) pay all
reasonable out-of-pocket expenses of the Administrative Agent and each Lender
actually incurred in connection with the enforcement of any rights and remedies
of the Administrative Agent and the Lenders under the Credit Facility, including
to the extent reasonable under the circumstances consulting with accountants,
attorneys and other Persons concerning the nature, scope or value of any right
or remedy of the Administrative Agent or any Lender hereunder or under any other
Loan Document or any factual matters in connection therewith, which expenses
shall include without limitation the reasonable fees and disbursements of such
Persons, and (d) defend, indemnify and hold harmless the Administrative Agent
and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, Administrative Agents, officers and directors, from and against any
losses, penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Administrative Agent or any
Lender is a party thereto) and the prosecution and defense thereof, arising out
of or in any way connected with this Agreement, any other Loan Document or the
Revolving Credit Loans, including without limitation reasonable attorney's and
consultant's fees, except to the extent that any of the foregoing result from
the gross negligence or willful misconduct of any indemnified party.

SECTION 14.3. Set-off. In addition to any rights now or hereafter granted under
Applicable Law and not by way of limitation of any such rights, upon and after
the occurrence of any Event of Default and during the continuance thereof, the
Lenders and any assignee or participant of a Lender in accordance with Section
14.10 are hereby authorized by the Credit Parties at any time or from time to
time, without notice to the Credit Parties or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrower against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 12.2 and although such Obligations shall be contingent or unmatured.

SECTION 14.4. Governing Law. This Agreement, the Revolving Credit Notes and the
other Loan Documents, unless otherwise expressly set forth therein, shall be
governed by, construed and enforced in accordance with the laws of the State of
New York.

SECTION 14.5. Consent to Jurisdiction. Each of the parties hereto hereby
irrevocably consents to the personal jurisdiction of the state and federal
courts located in New York County, New

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York, in any action, claim or other proceeding arising out of any dispute in
connection with this Agreement and the other Loan Documents, any rights or
obligations hereunder or thereunder, or the performance of such rights and
obligations. Each of the parties hereto hereby irrevocably consents to the
service of a summons and complaint and other process in any action, claim or
proceeding brought by any other party hereto in connection with this Agreement
or the other Loan Documents, any rights or obligations hereunder or thereunder,
or the performance of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 14.1. Nothing in this Section 14.5
shall affect the right of any of the parties hereto to serve legal process in
any other manner permitted by Applicable Law or affect the right of any of the
parties hereto to bring any action or proceeding against any other party hereto
or its properties in the courts of any other jurisdictions.

SECTION 14.6. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND
EACH CREDIT PARTY HEREBY ACKNOWLEDGE THEY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY JUDICIAL PROCEEDING, ANY DISPUTE, CLAIM OR CONTROVERSY
ARISING OUT OF, CONNECTED WITH OR RELATING TO THE LOAN DOCUMENTS ("Dispute") IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.

SECTION 14.7. Reversal of Payments. To the extent any Credit Party makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.

SECTION 14.8. Injunctive Relief; Punitive Damages. (a) Each of the parties to
this Agreement recognizes that, in the event such party fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement,
any remedy of law may prove to be inadequate relief to the other parties hereto.
Therefore, each of the parties hereto agrees that the other parties hereto, at
such other party's option, shall be entitled to pursue temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.

    (b) The Administrative Agent, Lenders and the Credit Parties (on behalf of
themselves and their Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.

SECTION 14.9. Accounting Matters. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time, provided that, if the Borrower
notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such

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provision (or if the Administrative Agent notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance therewith.

SECTION 14.10. Successors and Assigns; Participations. (a) Benefit of Agreement.
This Agreement shall be binding upon and inure to the benefit of the Credit
Parties, the Administrative Agent and the Lenders, all future holders of the
Revolving Credit Notes, and their respective successors and permitted assigns,
except that the Borrower shall not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender other than pursuant to Section 11.5.

    (b) Assignment by Lenders. Each Lender may, with the consent of the Borrower
(so long as no Default or Event of Default has occurred and is continuing) and
the consent of the Administrative Agent, which consents shall not be
unreasonably withheld or delayed, assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Revolving Credit Notes held by it); provided that:

>     (i) each such assignment shall be of a constant, and not a varying,
> percentage of all the assigning Lender's Revolving Credit Commitment and all
> other rights and obligations under this Agreement;
> 
>     (ii) if less than all of the assigning Lender's Revolving Credit
> Commitment or Revolving Credit Loans is to be assigned, the Revolving Credit
> Commitment or Revolving Credit Loans so assigned shall not be less than
> $5,000,000;
> 
>     (iii) the parties to each such assignment shall execute and deliver to the
> Administrative Agent, for its acceptance and recording in the Register, an
> Assignment and Acceptance in the form of Exhibit G attached hereto (an
> "Assignment and Acceptance"), together with any Revolving Credit Note or
> Revolving Credit Notes subject to such assignment;
> 
>     (iv) such assignment shall not, without the consent of the Borrower, on
> behalf of itself and the other Credit Parties, require the Borrower, or any
> other Credit Party, to file a registration statement with the Securities and
> Exchange Commission or apply to or qualify the Revolving Credit Loans or the
> Revolving Credit Notes under the blue sky laws of any state;
> 
>     (v) the assigning Lender shall pay to the Administrative Agent an
> assignment fee of $3,000 upon the execution by such Lender of the Assignment
> and Acceptance; provided that no such fee shall be payable upon any assignment
> by a Lender to an Affiliate thereof; and
> 
>     (vi) no consents will be required for assignments where the Eligible
> Assignee is an Affiliate of the assigning Lender.

    Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least

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ten (10) Business Days after the execution thereof, (A) the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent of the interest assigned in
such assignment, be released from its obligations under this Agreement.

    (c) Rights and Duties upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.

    (d) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and record the names and addresses of
the Lenders and the amount of the Extensions of Credit with respect to each
Lender from time to time in the Register.

    No assignment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this paragraph. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

    (e) Issuance of New Revolving Credit Notes. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an Eligible
Assignee together with any Revolving Credit Note or Revolving Credit Notes if
any have been issued pursuant to this Agreement, subject to such assignment and
the written consent to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is substantially in the form of
Exhibit G:

>     (i) accept such Assignment and Acceptance;
> 
>     (ii) record the information contained therein in the Register;
> 
>     (iii) give prompt notice thereof to the Lenders and the Borrower, on
> behalf of itself and the other Credit Parties; and
> 
>     (iv) promptly deliver a copy of such Assignment and Acceptance to the
> Borrower.

    Within ten (10) Business Days after receipt of notice, if requested by the
Eligible Assignee the Borrower shall execute and deliver to the Administrative
Agent, in exchange for the surrendered Revolving Credit Note or Revolving Credit
Notes, a new Revolving Credit Note or Revolving Credit Notes to the order of
such Eligible Assignee in amounts equal to the Revolving Credit Commitment
assumed by it pursuant to such Assignment and Acceptance and a new Revolving
Credit Note or Revolving Credit Notes to the order of the assigning Lender in an
amount equal to the Revolving Credit Commitment retained by it hereunder. Such
new Revolving Credit Note or Revolving Credit Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Revolving Credit Note or Revolving Credit Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Revolving Credit Notes delivered to the assigning

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Lender. Each surrendered Revolving Credit Note or Revolving Credit Notes shall
be canceled and returned to the Borrower.

    (f) Participations. Each Lender may sell participations to one or more banks
or other entities in all or a portion of its rights and/or obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Revolving Credit Notes held by it); provided that:

>     (i) each such participation shall be in an amount not less than
> $5,000,000;
> 
>     (ii) such Lender's obligations under this Agreement (including, without
> limitation, its Revolving Credit Commitment) shall remain unchanged;
> 
>     (iii) such Lender shall remain solely responsible to the other parties
> hereto for the performance of such obligations;
> 
>     (iv) the Credit Parties, the Administrative Agent and the other Lenders
> shall continue to deal solely and directly with such Lender in connection with
> such Lender's rights and obligations under this Agreement;
> 
>     (v) such Lender shall not permit such participant the right to approve any
> waivers, amendments or other modifications to this Agreement or any other Loan
> Document other than waivers, amendments or modifications which would reduce
> the principal of or the interest rate on any Revolving Credit Loan or
> Reimbursement Obligation, extend the term or increase the amount of the
> Revolving Credit Commitment, reduce the amount of any fees to which such
> participant is entitled, or extend any scheduled payment date for principal,
> interest or fees of any Revolving Credit Loan, except as expressly
> contemplated hereby or thereby; and
> 
>     (vi) any such disposition shall not, without the consent of the Borrower,
> on behalf of itself and the other Credit Parties, require the Borrower or any
> other Credit Party, to file a registration statement with the Securities and
> Exchange Commission or apply to or qualify the Revolving Credit Loans or the
> Revolving Credit Notes under the blue sky law of any state.

    (g) Disclosure of Information; Confidentiality. Each of the Administrative
Agent, the Issuing Lenders and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors and
representatives (collectively, "Representatives") (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the prior written consent of the Credit Parties, (h) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Section or (B) becomes available to the Administrative Agent,
the Issuing Lenders or any Lender on a

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nonconfidential basis from a source other than the Credit Parties or (i) to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other information (customarily found in such publications) upon
the Credit Parties' prior review and approval, which shall not be unreasonably
withheld or delayed. For the purposes of this Section, "Information" means all
information received from the Credit Parties or any of their Subsidiaries
relating to the Credit Parties or their business, other than any such
information that is available to the Administrative Agent, any Issuing Lender or
any Lender on a nonconfidential basis prior to disclosure by the Credit Parties;
provided that, in the case of information received from the Credit Parties after
the Closing Date (other than certificates or other information specifically
required by the terms of this Agreement), such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything herein to the contrary, the Credit Parties and their respective
Representatives and the Lenders and their respective Representatives may
disclose to any and all Persons, without limitation of any kind, the U.S. tax
treatment and U.S. tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions and other tax analyses) that are
provided to any of them solely relating to such U.S. tax treatment and U.S. tax
structure.

    (h) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle organized for the specific purpose of making or
acquiring participations or investing in loans of the type made pursuant to this
Agreement (a "SPC"), correctly identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Extension of Credit that such
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Extension of Credit and (ii) if an SPC elects not to exercise
such option or otherwise fails to provide all or any part of such Extension of
Credit, the Granting Lender shall be obligated to make such Extension of Credit
pursuant to the terms hereof. The making of an Extension of Credit by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Extension of Credit were made by such Granting Lender.
Each party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this clause, any SPC may (i) with notice to, but without the prior written
consent of, the Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interest in any
Extension of Credit to the Granting Lender or to any financial institution
(consented to by the Borrower and Administrative Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Extensions of Credit and (ii) disclose on a confidential basis
any non-public information relating to Extensions of Credit to any rating
agency, commercial paper dealer or provider of any surety, guarantee or credit
or liquidity enhancement to such SPC. This clause may not be amended without the
written consent of each SPC.

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    (i) Certain Pledges or Assignments. Nothing herein shall prohibit any Lender
from pledging or assigning any Revolving Credit Note to any Federal Reserve Bank
in accordance with Applicable Law.

SECTION 14.11. Amendments, Waivers and Consents. Except as set forth below, any
term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived by the Lenders, and any consent given by
the Lenders, if, but only if, (a) in the case of an amendment, waiver or consent
for which a substantially similar corresponding amendment, waiver or consent
with regard to the Five-Year Credit Agreement will be made effective thereunder
contemporaneously, such amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the case of
an amendment, signed by the Credit Parties and (b) in the case of any other
amendment, waiver or consent specifically impacting only this Agreement and the
other Loan Documents, such amendment, waiver or consent is in writing signed by
the Required Agreement Lenders (or by the Administrative Agent with the consent
of the Required Agreement Lenders) and delivered to the Administrative Agent
and, in the case of an amendment, signed by the Credit Parties; provided, in
each case, that:

>     (a) no amendment, waiver or consent shall (i) release any of the Credit
> Parties, (ii) increase the amount or extend the time of the obligation of the
> Lenders to make Revolving Credit Loans or issue or participate in Letters of
> Credit, (iii) extend the originally scheduled time or times of payment of the
> principal of any Revolving Credit Loan or Reimbursement Obligation or the time
> or times of payment of interest or fees on any Revolving Credit Loan or
> Reimbursement Obligation, (iv) reduce the rate of interest or fees payable on
> any Revolving Credit Loan or Reimbursement Obligation, (v) reduce the
> principal amount of any Revolving Credit Loan or Reimbursement Obligation,
> (vi) permit any subordination of the principal or interest on any Revolving
> Credit Loan or Reimbursement Obligation, (vii) permit any assignment (other
> than as specifically permitted or contemplated in this Agreement) of any of
> the Credit Parties' rights and obligations hereunder or (viii) amend the
> provisions of this Section 14.11 or the definition of Required Lenders or
> Required Agreement Lenders, without the prior written consent of each Lender
> affected thereby; and
> 
>     (b) no amendment, waiver or consent to the provisions of (i) Article XIII
> shall be made without the written consent of the Administrative Agent and (ii)
> Article III without the written consent of each Issuing Lender affected
> thereby.

SECTION 14.12. Performance of Duties. The Credit Parties' obligations under this
Agreement and each of the Loan Documents shall be performed by the Credit
Parties at their sole cost and expense.

SECTION 14.13. All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Lenders, the Administrative Agent and any
Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.

SECTION 14.14. Survival of Indemnities. Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the Lenders are
entitled under the provisions of this Article XIV and any other provision of
this Agreement and the Loan

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Documents shall continue in full force and effect and shall protect the
Administrative Agent and the Lenders against events arising after such
termination as well as before.

SECTION 14.15. Titles and Captions. Titles and captions of Articles, Sections
and subsections in this Agreement are for convenience only, and neither limit
nor amplify the provisions of this Agreement.

SECTION 14.16. Severability of Provisions. Any provision of this Agreement or
any other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remainder of such
provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

SECTION 14.17. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement. Delivery of any executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

SECTION 14.18. Term of Agreement. This Agreement shall remain in effect from the
Closing Date through and including the date upon which all Obligations (other
than obligations owing by any Credit Party to any Lender or Affiliate of a
Lender or the Administrative Agent under any Hedging Agreement) shall have been
indefeasibly and irrevocably paid and satisfied in full. No termination of this
Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination.

SECTION 14.19. Inconsistencies with Other Documents; Independent Effect of
Covenants. (a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control.

    (b) The Borrower expressly acknowledges and agrees that each covenant
contained in Article IX, X, or XI hereof shall be given independent effect.

[Signature pages to follow]

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    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

JONES APPAREL GROUP USA, INC.
as Borrower

By: /s/ Wesley R. Card
     Name: Wesley R. Card
     Title: Chief Financial Officer

JONES APPAREL GROUP, INC.
as Additional Obligor

By: /s/ Wesley R. Card
     Name: Wesley R. Card
     Title: Chief Operating and Financial Officer

JONES APPAREL GROUP HOLDINGS, INC.
as Additional Obligor

By: /s/ Ira M. Dansky
     Name: Ira M. Dansky
     Title: President

NINE WEST GROUP INC.
as Additional Obligor

By: /s/ Gloria W. DiPuma
     Name: Gloria W. DiPuma
     Title: CFO

 

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WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Issuing Lender and Lender

By: /s/ Kimberly A. Quinn
     Name: Kimberly A. Quinn
     Title: Director            

JPMORGAN CHASE BANK,
as Issuing Lender and Lender

By: /s/ James A. Knight
     Name: James A. Knight
     Title: Vice President

CITIBANK, N.A.,
as Issuing Lender and Lender

By: /s/ Judith Green
     Name: Judith Green
     Title: Vice President

BANK OF AMERICA, N.A.,
as Issuing Lender and Lender

By: /s/ Chitt Swamidasan
     Name: Chitt Swamidasan
     Title: Principal

FLEET NATIONAL BANK,
as Issuing Lender and Lender

By: /s/ Stephen J. Garvin
     Name: Stephen J. Garvin
     Title: Managing Director

BANK ONE, NA,
as Lender

By: /s/ Vincent R. Henchek
     Name: Vincent R. Henchek
     Title: Director

BARCLAYS BANK PLC
as Lender

By: /s/ John Giannone
     Name: John Giannone
     Title: Director

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THE BANK OF NEW YORK,
as Lender

By: /s/ Roger A. Grossman
     Name: Roger A. Grossman
     Title: Vice President

BEAR STEARNS,
as Lender

By: /s/ Keith C. Bamish
     Name: Keith C. Bamish
     Title: Executive Vice President

BANCA NAZIONALE DEL LAVORO,
as Lender

By: /s/ Francesco DiMario
     Name: Francesco DiMario
     Title: Vice President

By: /s/ Leonardo Valentini
     Name: Leonardo Valentini
     Title: First Vice President

BANK OF CHINA, NEW YORK BRANCH,
as Lender

By: /s/ William Smith
     Name: William Smith
     Title: Deputy General Manager

By: /s/ Bailin Zheng
     Name: Bailin Zheng
     Title: General Manager

CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH
as Lender

By: /s/ Ming-Hsien Lin
     Name: Ming-Hsien Lin
     Title: VP & General Manager

BANK OF TAIWAN, NEW YORK AGENCY,
as Lender

By: /s/ Shiou-Jsu Yeh
     Name: Shiou-Jsu Yeh
     Title: VP & GM

BANCA DI ROMA,
as Lender

By: /s/ A.Paoli
     Name: A.Paoli
     Title: A.T.

By: /s/ C. Strike
     Name: C. Strike
     Title: V.P.

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FIFTH THIRD BANK,
as Lender

By: /s/ Christine L. Wagner
     Name: Christine L. Wagner
     Title: Assistant Vice President             

HUA NAN COMMERCIAL BANK, LTD., NEW YORK AGENCY
as Lender

By: /s/ Yun-Peng Chang
     Name: Yun-Peng Chang
     Title: General Manager

BANK LEUMI USA,
as Lender

By: /s/ John Koenigsberg
     Name: John Koenigsberg
     Title: First VP

By: /s/ Glenn D. Kreutzer
     Name: Glenn D. Kreutzer
     Title: B.O.

SUNTRUST BANK
as Lender

By: /s/ Lauren P. Carrigan
     Name: Lauren P. Carrigan
     Title: Vice President

FIRST COMMERCIAL BANK, NEW YORK AGENCY,
as Lender

By: /s/ Bruce M.J. Ju
     Name: Bruce M.J. Ju
     Title: VP & General Manager

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FIRST HAWAIIAN BANK

By: /s/ Charles L. Jenkins
     Name: Charles L. Jenkins
     Title: Vice President, Manager