Exhibit 10.1



$850,000,000



 


FOURTH AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT


dated as of June 12, 2001,


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 SALOMON SMITH BARNEY INC.


as Co-Lead Arrangers


and Joint Bookrunners,




FIRST UNION NATIONAL BANK,


as Administrative Agent, 


and




THE CHASE MANHATTAN BANK and CITIBANK, N.A.,


as Syndication Agents,


and




FLEET NATIONAL BANK and BANK OF AMERICA, N.A.,


as Documentation Agents




 






TABLE OF CONTENTS




 




                                                                                                          Page


ARTICLE I DEFINITIONS ......................................................................................1
  SECTION 1.1 Definitions ..................................................................................1
  SECTION 1.2 General .....................................................................................13
  SECTION 1.3 Other Definitions and Provisions ............................................................13
ARTICLE II REVOLVING CREDIT FACILITY ......................................................................13
  SECTION 2.1 Revolving Credit Loans ......................................................................13
  SECTION 2.2 Procedure for Advances of Revolving Credit Loans ............................................13
  SECTION 2.3 Repayment of Revolving Credit Loans .........................................................14
  SECTION 2.4 Evidence of Debt ............................................................................15
  SECTION 2.5 Permanent Reduction of the Revolving Credit Commitment ......................................15
  SECTION 2.6 Termination of Revolving Credit Facility ....................................................15
ARTICLE III LETTER OF CREDIT FACILITY .....................................................................16
  SECTION 3.1 L/C Commitment ..............................................................................16
  SECTION 3.2 Procedure for Issuance of Letters of Credit .................................................17
  SECTION 3.3 Fees and Other Charges ......................................................................17
  SECTION 3.4 L/C Participations ..........................................................................17
  SECTION 3.5 Reimbursement ...............................................................................18
  SECTION 3.6 Provisions Regarding National Currency Units and the Euro ...................................19
  SECTION 3.7 Obligations Absolute ........................................................................20
  SECTION 3.8 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....................22
  SECTION 5.3 Fees ........................................................................................22
  SECTION 5.4 Manner of Payment ...........................................................................23
  SECTION 5.5 Crediting of Payments and Proceeds ..........................................................23
  SECTION 5.6 Adjustments..................................................................................24
  SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the
              Administrative Agent ........................................................................24
  SECTION 5.8 Joint and Several Liability of the Credit Parties ...........................................24
  SECTION 5.9 Changed Circumstances .......................................................................26
  SECTION 5.10 Indemnity ..................................................................................28
  SECTION 5.11 Capital Requirements .......................................................................28
  SECTION 5.12 Taxes ......................................................................................28
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING ...................................................30
  SECTION 6.1 Closing .....................................................................................30
  SECTION 6.2 Conditions to Closing and Initial Revolving Credit Loans and Letters of Credit ..............30
  SECTION 6.3 Conditions to All Extensions of Credit ......................................................32
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES ..........................................32
  SECTION 7.1 Representations and Warranties ..............................................................32
  SECTION 7.2 Survival of Representations and Warranties, Etc. ............................................37
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES ............................................................37
  SECTION 8.1 Financial Statements and Projections ........................................................37
  SECTION 8.2 Officer's Compliance Certificate ............................................................37
  SECTION 8.3 Accountants' Certificate ....................................................................37
  SECTION 8.4 Other Reports ...............................................................................38
  SECTION 8.5 Notice of Litigation and Other Matters ......................................................38
  SECTION 8.6 Accuracy of Information .....................................................................39
ARTICLE IX AFFIRMATIVE COVENANTS ..........................................................................39



i







  SECTION 9.1 Preservation of Corporate Existence and Related Matters .....................................39
  SECTION 9.2 Maintenance of Property .....................................................................39
  SECTION 9.3 Insurance ...................................................................................39
  SECTION 9.4 Accounting Methods and Financial Records ....................................................39
  SECTION 9.5 Payment and Performance of Obligations ......................................................39
  SECTION 9.6 Compliance With Laws and Approvals ..........................................................39
  SECTION 9.7 Environmental Laws ..........................................................................39
  SECTION 9.8 Compliance with ERISA .......................................................................40
  SECTION 9.9 Conduct of Business .........................................................................40
  SECTION 9.10 Visits and Inspections .....................................................................40
  SECTION 9.11 Use of Proceeds ............................................................................40
ARTICLE X FINANCIAL COVENANTS .............................................................................40
  SECTION 10.1 Interest Coverage Ratio ....................................................................40
  SECTION 10.2 Minimum Net Worth. As of the end of any fiscal quarter, permit Consolidated Net
              Worth to be less than $905,772,400 ..........................................................41
ARTICLE XI NEGATIVE COVENANTS .............................................................................41
  SECTION 11.1 Limitations on Debt and Guaranty Obligations ...............................................41
  SECTION 11.2 [Reserved] .................................................................................42
  SECTION 11.3 Limitations on Liens .......................................................................42
  SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions ...............................44
  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: ...............................................44
  SECTION 11.6 Limitations on Sale or Transfer of Assets ..................................................45
  SECTION 11.7 Limitations on Dividends and Distributions .................................................46
  SECTION 11.8 Transactions with Affiliates ...............................................................46
  SECTION 11.9 Changes in Fiscal Year End .................................................................46
  SECTION 11.10 Amendments; Payments and Prepayments of Material Debt and Subordinated Debt ...............46
ARTICLE XII DEFAULT AND REMEDIES ..........................................................................46
  SECTION 12.1 Events of Default ..........................................................................46
  SECTION 12.2 Remedies ...................................................................................48
  SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; Etc. ...........................................50
ARTICLE XIII THE ADMINISTRATIVE AGENT .....................................................................50
  SECTION 13.1 Appointment ................................................................................50
  SECTION 13.2 Delegation of Duties .......................................................................50
  SECTION 13.3 Exculpatory Provisions .....................................................................50
  SECTION 13.4 Reliance by the Administrative Agent .......................................................50
  SECTION 13.5 Notice of Default ..........................................................................51
  SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders .................................51
  SECTION 13.7 Indemnification ............................................................................51
  SECTION 13.8 The Administrative Agent in Its Individual Capacity ........................................52
  SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent ....................52
  SECTION 13.10 Syndication and Documentation Agents ......................................................52
ARTICLE XIV MISCELLANEOUS .................................................................................52
  SECTION 14.1 Notices ....................................................................................52
  SECTION 14.2 Expenses; Indemnity ........................................................................53
  SECTION 14.3 Set-off ....................................................................................54
  SECTION 14.4 Governing Law ..............................................................................54
  SECTION 14.5 Consent to Jurisdiction ....................................................................54
  SECTION 14.6 Waiver of Jury Trial .......................................................................54
  SECTION 14.7 Reversal of Payments .......................................................................54
  SECTION 14.8 Injunctive Relief; Punitive Damages ........................................................55
  SECTION 14.9 Accounting Matters .........................................................................55
  SECTION 14.10 Successors and Assigns; Participations ....................................................55
  SECTION 14.11 Amendments, Waivers and Consents ..........................................................58



ii







  SECTION 14.12 Performance of Duties .....................................................................59
  SECTION 14.13 All Powers Coupled with Interest ..........................................................59
  SECTION 14.14 Survival of Indemnities ...................................................................59
  SECTION 14.15 Titles and Captions .......................................................................59
  SECTION 14.16 Severability of Provisions ................................................................59
  SECTION 14.17 Counterparts ..............................................................................59
  SECTION 14.18 Term of Agreement .........................................................................59
  SECTION 14.19 Inconsistencies with Other Documents; Independent Effect of Covenants .....................59









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(p) - Debt and Guaranty Obligations


Schedule 7.1(q) - Litigation


Schedule 11.3 - Existing Liens


Schedule 11.4 - Existing Loans, Advances and Investments


iii








    FOURTH AMENDED AND RESTATED 364-DAY CREDIT
AGREEMENT, dated as of the 12th day of June, 2001, by and among 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 SALOMON
SMITH BARNEY INC., as Co-Lead Arrangers and Joint Bookrunners, FIRST UNION NATIONAL BANK,
as Administrative Agent for the Lenders, and THE CHASE MANHATTAN BANK and CITIBANK, N.A.,
as Syndication Agents, and FLEET NATIONAL BANK and BANK OF AMERICA, N.A., as Documentation
Agents.


    STATEMENT OF PURPOSE


    The Borrower (as defined below) has requested and
the Lenders have agreed to amend and restate the Prior Credit Agreement (as defined below)
as set forth herein to amend and restate, and as of the Closing Date replace, on
substantially the same terms, the Obligations provided for in the Prior Credit Agreement.


    NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby 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
  Group in their capacities as co-obligors under this Agreement. 

      "Administrative Agent" means First
  Union 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 any 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 Fourth
  Amended and Restated 364-Day Credit Agreement, as amended, restated, supplemented or
  otherwise modified.

      "Alternative Currency" means (i)
  Pounds Sterling, (ii) any national currency of Italy, Spain, the Federal Republic of
  Germany or the Republic of France (in each case, so long as such national currency unit
  continues to be available as legal tender for obligations of the same type and character
  as the obligations set forth in this Agreement, is freely convertible and is not subject
  to exchange controls), (iii) the euro or (iv) any other lawful currency (other than
  Dollars) acceptable to the Issuing Lenders which, in the case of this clause (iv), 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 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. ("Moodys") as follows:





				Applicable
    Margin Per Annum

	Level
	S&P
    Rating
	Moodys
    Rating
	LIBOR
    Rate
	Base
    Rate
	Trade
    L/C Fee
	Standby
    L/C Fee
	Facility
    Fee

	I
	>=A-
	>=A3
	0.350%
	0.000%
	0.150%
	0.350%
	0.100%

	II
	>=BBB+
	>=Baa1
	0.500%
	0.000%
	0.200%
	0.500%
	0.125%

	III
	>=BBB
	>=Baa2
	0.600%
	0.000%
	0.225%
	0.600%
	0.150%

	IV
	>=BBB-
	>=Baa3
	0.800%
	0.000%
	0.300%
	0.800%
	0.200%

	V
	<=BB+
	<=Ba1
	1.125%
	0.000%
	0.350%
	1.125%
	0.250%






 



  provided, that if both Moodys 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 Moodys 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 Moodys 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 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).

      "beginning of the Third State of EMU"
  means January 1, 1999.

      "Borrower" means Jones Apparel
  Group USA, Inc.




2






      "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 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 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




3






  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 of goodwill, transaction expenses, covenants not
  to compete and other intangible assets, and non-cash charges resulting from purchase
  accounting related to the Nine West Acquisition) 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 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.

      "EMU Legislation" means legislative
  measures of the European Council (or any duly authorized successor thereto) for the
  introduction of the change over to or operation of a single or unified European currency
  (whether known as the euro or otherwise), being in part the beginning of the Third Stage
  of EMU.

      "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.




4






      "euro" means the single currency to
  which Participating Member States of the European Union have converted.

      "euro unit" means the currency unit
  of the euro.

      "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 6.25% Senior Notes due 2001, the 7.50% Senior Notes due 2004, 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 such Lender then outstanding, and (ii) such
  Lender's Revolving Credit Commitment Percentage 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. 

      "First Union" means First Union
  National Bank, a national banking association, and its successors.

      "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 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.

      "Fixed Exchange Rate" means the
  exchange rate for a national currency unit into a euro unit set in accordance with EMU
  Legislation in effect from time to time.




5






      "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.

      "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.




6






      "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 (a) First
  Union and The Chase Manhattan Bank, each in its capacity as issuer of any Letter of
  Credit, and any other Lender mutually acceptable and on terms satisfactory to the Borrower
  and the Administrative Agent and (b) with regard to any Letter of Credit denominated in an
  Alternative Currency the Correspondent of any entity identified in clause (a); 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 Eight
  Hundred Fifty Million Dollars ($850,000,000).

      "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; provided
  that the amount of L/C Obligations shall be deemed to be reduced on any day by the amount
  on deposit in a cash collateral account on such day after giving effect to cash collateral
  funded by the Borrower or by the proceeds of Base Rate Loans in accordance with Section
  2.6.

      "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 Dow Jones Market 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 Dow Jones Market Screen 3750,
  then "LIBOR" shall be determined by the Administrative Agent to be the
  arithmetic average (rounded upward, if 




7






  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 or otherwise referred to
  herein or contemplated hereby, 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.

      "national currency unit" means the
  unit of currency (other than a euro unit) of a Participating Member State.

      "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),
  the income (or loss) of any Person (other than a Subsidiary of such Person) in which such
  Person has an ownership interest unless received by such 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.

      "Nine West Acquisition" means the
  acquisition of all of the outstanding stock of the predecessor company to Nine West Group
  one of the Credit Parties.

      "Nine West Group" means Nine West
  Group Inc., a Delaware corporation.

      "Non-Consenting Lenders" shall have
  the meaning assigned thereto in Section 2.6.

      "Notice of Account Designation"
  shall have the meaning assigned thereto in Section 2.2(b).




8






      "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. 

      "Outstanding Nine West Debt Obligations"
  means the collective reference to (a) the existing 8-3/8% Series B Senior Notes due 2005
  of Nine West Group (the "Nine West Senior Notes"), (b) the existing 9%
  Series B Senior Subordinated Notes due 2007 of Nine West Group (the "Nine West
  Senior Subordinated Notes") and (c) the existing 5-1/2% Convertible Subordinated
  Notes due 2003 of Nine West Group (the "Nine West Convertible Subordinated Notes").

      "Participating Member State" means
  each state so described in any EMU Legislation.

      "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 and, in addition, a policy designed to earn a profit on changes in
  interest rates by means of entering into transactions pursuant to which Nine West Group
  will borrow U.S. treasury bonds pursuant to a secured lending agreement, sell such U.S.
  treasury bonds short at fair value and pledge the proceeds of such short sales (or
  investments made with such proceeds) to the lender of such treasury bonds, provided
  that (a) the aggregate principal amount of such treasury bonds sold short on any date of
  determination does not exceed an amount equal to 25% of Consolidated Net Worth, (b) such
  short trades shall be no more than 




9






  nine months in maturity and (c) the long-term senior unsecured credit
  ratings of the lender of such treasury bonds shall not be less than A/A2.

      "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 First Union 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
  First Union 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
  Third Amended and Restated 364-Day Credit Agreement dated as of June 13, 2000, by and
  among the Borrower, the Prior Lenders and First Union, 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.

      "Revolving Credit Commitment" means
  (a) as to any Lender, the obligation of such Lender to make Revolving Credit Loans to the
  Borrower 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




10






  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 Eight Hundred
  Fifty Million Dollars ($850,000,000).

      "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.

      "Sun Acquisition Agreement" means
  the Agreement and Plan of Merger dated September 10, 1998 by and among the Borrower, SAI
  Acquisition Corp., Sun Apparel, Inc. and the Shareholders of Sun Apparel, Inc., as amended
  and modified from time to time.

      "Syndication Agents" means The
  Chase Manhattan 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) 




11






  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.

      "Third Stage Cutoff Date" shall
  have the meaning assigned to such term in Section 3.6(c) hereof.

      "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" 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).

      "Wholly-Owned" means, with respect
  to a Subsidiary, that all of the shares of capital stock or other ownership interests of
  such Subsidiary are, directly or indirectly, owned or controlled by any Credit Party
  and/or one or more of its Wholly-Owned Subsidiaries.




12





    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."


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 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
(after giving effect to the deposit of any amount requested into a cash collateral account
in accordance with Section 2.6) 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. 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 


13





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. 


    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 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 Dollar Amount of all L/C Obligations 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 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.


14





    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, 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 11, 2002,
(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); provided, that the Borrower may request
on an annual basis a 364-day extension of the date set forth in clause (a) above by
providing the Administrative Agent and each of the Lenders with a written request for such
extension not more than sixty (60) days and not fewer than fifty (50) days prior to the
then existing Revolving Credit Termination Date; provided further that each such extension
shall be subject to the satisfaction by the Borrower of each of the conditions set forth
in Section 6.3 on the then existing Revolving Credit Termination Date. Each of the Lenders
shall provide written notice to the Administrative Agent on or prior to the thirtieth
(30th) day (the "Consent Date") before the then existing Revolving Credit
Termination Date of its desire to extend (any such Lender, a "Consenting Lender")
or not to so extend (any such Lender, a "Non-Consenting Lender") such
date; provided further, that the Termination Date shall not in any event extend beyond
June 13, 2004. No Lender shall be under any obligation or commitment to extend such date
and no such 


15





obligation or commitment on the part of any Lender shall be inferred from the
provisions of this Section 2.6. Failure on the part of any Lender to respond to such
request by the required date set forth above shall be deemed to be a denial by such Lender
of such request and all Revolving Credit Loans of such Non-Consenting Lender shall be
subject to the then existing Revolving Credit Termination Date. If Lenders holding
Revolving Credit Commitment Percentages aggregating less than one hundred percent (100%)
of the Revolving Credit Commitment consent to such extension, the Borrower may elect by
written notice to the Administrative Agent and Lenders to (i) continue the Revolving
Credit Facility for such additional period with a Revolving Credit Commitment equal to the
then effective Revolving Credit Commitment less the total Revolving Credit Commitment of
the Non-Consenting Lenders or (ii) require any such Non-Consenting Lender to transfer and
assign without recourse (in accordance with the provisions of Section 14.10) its Revolving
Credit Commitment and other interests, rights and obligations under this Agreement to an
Eligible Assignee (who consents thereto), which shall assume such obligations upon its
consent to assume such obligations; provided that (A) no such assignment shall conflict
with any Applicable Law, (B) such assignment shall be at the cost and expense of the
Borrower and (C) the purchase price to be paid to such Non-Consenting Lender shall be an
amount equal to the outstanding principal amount of the Revolving Credit Loans of such
Non-Consenting Lender plus all interest accrued and unpaid thereon and all other amounts
owing to such Non-Consenting Lender thereon. To the extent the Administrative Agent is a
Consenting Lender, the Administrative Agent agrees to use reasonable efforts to assist the
Borrower in the syndication of the total Revolving Credit Commitment of the Non-Consenting
Lenders after such extension; provided that any such syndication is made on customary
terms and the Administrative Agent is compensated for such services in an amount
reasonably acceptable to it. The Administrative Agent shall provide a written list of the
Consenting Lenders and Non-Consenting Lenders to the Borrower and the Lenders promptly
following the Consent Date (but in no event less than twenty-five (25) days prior to the
existing Revolving Credit Termination Date). If (x) the sum of the outstanding principal
amount of all Revolving Credit Loans plus the sum of all outstanding L/C Obligations on
the third (3rd) Business Day prior to the existing Revolving Credit Termination
Date exceeds (y) the aggregate amount of the Revolving Credit Commitments of the
Consenting Lenders, each Issuing Bank may require, and the Borrower hereby agrees to so
provide, cash collateral satisfactory to the Administrative Agent in an amount equal to
such excess not later than three (3) Business Days prior to the existing Revolving Credit
Termination Date to be deposited in a cash collateral account and applied in accordance
with Section 12.2(b). To the extent that the Borrower fails to timely provide such cash
collateral, the Administrative Agent shall so notify each L/C Participant whereupon each
L/C Participant shall pay an amount in Dollars equal to such L/C Participant's Revolving
Credit Commitment Percentage of the amount of the payment required to be paid by the
Borrower, such payment by the L/C Participants to be made by the making of a Base Rate
Loan in Dollars pursuant to Section 3.5(c) below on or prior to the existing Revolving
Credit Termination Date and the proceeds of such Base Rate Loans shall be deposited in a
cash collateral account and applied in accordance with Section 12.2(b). If the extension
is granted, upon the then existing date set forth in clause (a) of this Section 2.6, such
date shall be extended to the date which is 364 days from the then current date set forth
therein. 


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 through 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 would exceed the Revolving Credit Commitment after
giving pro forma effect to any reduction of the Revolving Credit Commitment resulting from
the failure to fully syndicate the total Revolving Credit Commitment of any Non-Consenting
Lenders under Section 2.6. Each Letter of Credit shall (i) be 


16





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
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.


    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 Business Days after the 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 


17





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 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 


18





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   Provisions Regarding National Currency
Units and the Euro.  (a)   Effectiveness of Provisions. To the
extent that any provision of this Section 3.6 relates to any state (or the national
currency unit of such state) that is not a Participating Member State at the beginning on
the Third Stage of EMU, such provision shall become effective in relation to such state
(and the national currency unit of such state) at and from the date on which such state
becomes a Participating Member State.


        (b)     Continuity
of Contract.   The Administrative Agent, the Lenders and the Borrower agree
that the occurrence or non-occurrence of EMU, any event or events associated with EMU
and/or the introduction of the euro in all or any part of the European Union will not
result in the discharge, cancellation, rescission or termination in whole or in part of
any agreement between the Administrative Agent, any Lender and the Borrower or give the
Administrative Agent, any Lender or the Borrower the right to cancel, rescind, terminate
or vary any agreement, other than as specifically provided in this Agreement.


        (c)     Redenomination
and Alternative Currencies.   Each obligation of any party under this
Agreement which has been denominated in the national currency unit of a Participating
Member State shall be automatically redenominated into the euro unit at the Fixed Exchange
Rate on January 1, 2002 (the "Third Stage Cutoff Date") and shall
thereafter be payable solely in euro; provided, that if and to the extent that any EMU
Legislation provides that following the beginning of the Third Stage of EMU, and prior to
the Third Stage Cutoff Date, an amount denominated either in the euro unit or in the
national currency unit of a Participating Member State and payable within the
Participating Member State by crediting an account of a creditor can be paid by a debtor
either in the euro unit or in that national currency unit, each party to this Agreement
shall be entitled to pay or repay any such amount either in the euro unit or in such
national currency unit; provided, however, any amount paid in a national currency unit
shall equal, at the Fixed Exchange Rate for that national currency unit, the required
amount stated to be due in euro units.


        (d)     Payments.
   Those Sections of this Agreement providing for payment or repayment by the
Borrower in a national currency unit shall be construed so that, in relation to the
payment of any amount of euro units or national currency units, such amount shall be made
available to the Administrative Agent, any Issuing Lender or any Lender, as applicable, in
immediately available, freely transferable, cleared funds to such account with each bank
(in such principal financial center) as the Administrative Agent, any Issuing Lender or
any Lender, as applicable, may from time to time nominate for this purpose.


        (e)     Payments
by the Administrative Agent and Issuing Lenders Generally.   With respect to
the payment of any amount denominated in the euro unit or in a national currency unit, the
Administrative Agent and the Issuing Lenders shall not be liable to the Borrower or any of
the Lenders in any way whatsoever for any delay, or the consequences of any delay, in the
crediting to any account of any amount required by this Agreement to be paid by the
Administrative Agent or any Issuing Lender, as 


19





applicable, if the Administrative Agent or any Issuing Lender, as
applicable, has made reasonable effort to effect all relevant steps to achieve, on the
date required by this Agreement, the payment of such amount in immediately available,
freely transferable, cleared funds (in the euro unit or, as the case may be, in a national
currency unit) to the account with the bank in the principal financial center in the
Participating Member State which the Borrower or, as the case may be, any Lender shall
have specified for such purpose. In this paragraph, "all relevant steps"
means all such steps as may be prescribed from time to time by the regulations or
operating procedures of such clearing or settlement system as the Administrative Agent or
any Issuing Lender, as applicable, may from time to time reasonably believe to be in
effect for the purpose of clearing or settling payment of the euro.


        (f)     Rounding
and Other Consequential Changes.  Without prejudice and in addition to any method
of conversion or rounding prescribed by any EMU Legislation and without prejudice to the
respective liabilities for indebtedness of the Borrower to the Administrative Agent, any
Issuing Lender or any Lender, as applicable, and the Administrative Agent, any Issuing
Lender or any Lender, as applicable, to the Borrower under or pursuant to this Agreement:



  (i)     each reference in this Agreement to a
  minimum amount (or an integral multiple thereof) in a national currency unit to be paid to
  or by the Administrative Agent, any Issuing Lender or any Lender, as applicable, shall be
  replaced by a reference to such reasonably comparable amount (or an integral multiple
  thereof) in the euro unit as the Administrative Agent may from time to time specify; and





  (ii)     except as expressly provided in this
  Agreement, each provision of this Agreement, including, without limitation, the right to
  combine currencies to affect a set off, shall be subject to such reasonable changes of
  interpretation as the Administrative Agent may from time to time specify to be necessary
  or appropriate to reflect the introduction of or change over to the euro in Participating
  Member States necessary or appropriate to reflect the implementation of EMU to place the
  parties hereto in substantially the position they would have occupied had EMU not been
  implemented.




        (g)     Further
Assurance.  The Borrower agrees, at the request of the Administrative Agent or
any Issuing Lender, at the time of or at any time following the implementation of EMU, to
enter into an agreement amending this Agreement in such manner as the Administrative Agent
or such Issuing Lender reasonably shall request in order to reflect the implementation of
EMU to place the parties hereto in the position they would have been in had EMU not been
implemented.


    SECTION 3.7 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 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 


20





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 3.8   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, unless otherwise agreed by the Administrative Agent and the Lenders, be a period of
one (1), two (2), three (3), or six (6) months 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 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.




21





        (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, 2001; 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 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 


22





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.


        (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 April 26, 2000.


    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 


23





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 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. 


24





        (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 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. 


25





    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 Dow Jones Market 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 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 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 




26






  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 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 an L/C Commitment
is being assigned, the Issuing Bank), 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 


27





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 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 


28





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.


        (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 


29





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 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 6.13  Closing.   The closing shall take
place at the offices of Shearman & Sterling at 10:00 a.m. on June 12, 2001 or at such
other location, on such other date and at such other time as the parties hereto shall
mutually agree.


    SECTION 6.14  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 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 




30






  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, Georgia, New York, North Carolina, Texas, Tennessee, Virginia
  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, 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, 2000
  and the unaudited financial statements of Jones Apparel Group and its Subsidiaries for the
  fiscal quarter ended on April 7, 2001.





  (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 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.






 




31






  (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 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 




32






  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.

  (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 




33






  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 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. 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 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 

  




34






  
    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.

  





  (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 




35






  term is defined or used in the Investment Company Act of 1940, 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,
  2000, 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 7, 2001, 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.  Since
  the later to occur of (i) April 7, 2001 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 or is continuing which constitutes
  a Default or an Event of Default.

  (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.




36





    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, 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 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 and to the Lenders at their respective addresses as
set forth on Schedule 1.1(a), or such other office as may be designated by the
Administrative Agent and Lenders 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
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




37






  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;

  (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.




38





    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 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 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) 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, 


39





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.


    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 and/or footwear industry 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 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 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 


40





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 (i) 2.25 to
1.0 for the period from the Closing Date through and including the fiscal quarter ending
closest to September 30, 2001; (ii) 2.50 to 1.0 thereafter for the period through and
including the end of the fiscal quarter ending closest to September 30, 2002; and (iii)
2.75 to 1.0 for all times thereafter.


    SECTION 10.2  Minimum Net Worth.  As of the end of
any fiscal quarter, permit Consolidated Net Worth to be less than $905,772,400.




 




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:


    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 (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)
  and (iv) any other unsecured Debt of the Subsidiaries of the Credit Parties in an
  aggregate outstanding amount (excluding any attributable Debt from the contemplated 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;




41






  (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 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 hereof 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.




    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;

  (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; 




42






  (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 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.




43





    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 an 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
  conditions of Jones Apparel Group and its Subsidiaries on a Consolidated basis as of
  December 31, 2000, 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; 

  (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 with or into any
  Person; provided that (i) such Credit Party shall be the survivor of such merger 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 with or into any other Wholly-Owned Subsidiary of the Credit Parties;




44






  (c)    any Wholly-Owned Subsidiary may merge 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 with or into any Credit Party; provided that, such Credit Party is the survivor
  of such merger; and 

  (e)    any Credit Party may merge 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; 

  (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 an aggregate basis does not at any time
  exceed thirty-three percent (33%) of Consolidated Net Worth; 

  (f)    the contemplated 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.




45





    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) as
contemplated by the Sun Acquisition 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.

  (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.




46






  (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 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.

  (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 




47






  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 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.




48






  (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.




49





    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 First Union as Administrative Agent of such
Lender under this Agreement and the other Loan Documents for the term hereof and each such
Lender irrevocably authorizes First Union 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 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 


50





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, 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 Loan Documents in accordance with a request of the Required
Lenders (or, when expressly required hereby, 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 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 


51





(including, without limitation, at any time following the 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


    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 Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the 


52





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 First Union as

  First Union National Bank

  Administrative Agent: One First Union Center, TW 4

  301 South College Street

  Charlotte, North Carolina 28288-0608

  Attention: Syndication Agency Services

  Telephone No.: (704) 374-2698

  Telecopy No.: (704) 383-0288

  With copies to:

  First Union National Bank

  1345 Chestnut Street, PA4830

  Philadelphia, Pennsylvania 19107-7618

  Attention: Syndication Agency Services

  Telephone No.: (215) 973-6621

  Telecopy No.: (215) 973-1887

  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 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 


53





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 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 


54





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 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, 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 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; 




55






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


56





        (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 $10,000,000; 

  (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
Bank 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
(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 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, the Issuing Bank 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. 


57





        (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.


        (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
  (except as expressly contemplated by Section 2.6), (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




58






  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 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]


59





    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their authorized officers, all as of the day and year first
written above.



	JONES APPAREL GROUP USA, INC.,

    as Borrower
	By: /s/ Patrick M. Farrell 

         Name: Patrick M. Farrell 

         Title: Sr. Vice President & Corp. Controller

	JONES APPAREL GROUP, INC.,

    as Additional Obligor
	By: /s/ Patrick M. Farrell 

         Name: Patrick M. Farrell 

         Title: Sr. Vice President & Corp. Controller
	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/ Ira M. Dansky 

          Name: Ira M. Dansky 

          Title: Executive Vice President 







 




[Signature pages continue]


60






	FIRST UNION NATIONAL BANK,

    as Administrative Agent, Issuing Lender and Lender
	By: /s/ Joan Anderson 

          Name: Joan Anderson 

          Title: Vice President 







 




[Signature pages continue]


61






	THE CHASE MANHATTAN BANK,

    as Issuing Lender and Lender
	By: /s/ James A. Knight 

           Name: James A. Knight 

           Title: Vice President 







 




 


[Signature pages continue]


62






	CITIBANK, N.A.,

    as Lender
	  By: /s/ Steven R. Victoria 

             Name: Steven R. Victoria 

             Title: Vice President 







 




 


[Signature pages continue]


63






	FLEET NATIONAL BANK,

    as Lender
	By: /s/ Stephen J. Garvin 

           Name: Stephen J. Garvin 

           Title: Director 







 




[Signature pages continue]


64






	BANK OF AMERICA, N.A.,

    as Lender
	By: /s/ Chitt Swamidasan 

           Name: Chitt Swamidasan 

           Title: Principal 







 




[Signature pages continue]


65






	ABN AMRO BANK, N.V./EAB,

    as Lender
	By: /s/ Cameron D. Gateman 

           Name: Cameron D. Gateman 

           Title: Senior Vice President By: /s/
    Tracie Elliot 

           Name: Tracie Elliot 

           Title: Vice President 










[Signature pages continue]


66






	BANCA NAZIONALE DELL’AGRICOLTURA,

    NEW YORK BRANCH,

    as Lender
	By: /s/ Giulio Giovine 

           Name: Giulio Giovine 

           Title: Vice President By: /s/
    Leonardo Valentini 

           Name: Leonardo Valentini 

           Title: First Vice President 








 




[Signature pages continue]


67






	BANK ONE, N.A.,

    as Lender
	By: /s/ Vincent R. Henchek 

           Name: Vincent R. Henchek 

           Title: Vice President 









[Signature pages continue]


68






	HSBC BANK USA,

    as Lender
	By: /s/ Adriana D. Collins 

           Name: Adriana D. Collins 

           Title: First Vice President 







 




[Signature pages continue]


69






	THE BANK OF NEW YORK,

    as Lender
	By: /s/ Eliza S. Adams 

           Name: Eliza S. Adams 

           Title: Vice President 







 




[Signature pages continue]


70







 




	BANK OF CHINA, NEW YORK BRANCH,

    as Lender
	By: /s/ Bailin Zheng 

           Name: Bailin Zheng 

           Title: General Manager 









[Signature pages continue]


71






	BEAR STEARNS CORPORATE LENDING, INC.

    as Lender
	By: /s/ Keith Barnish 

           Name: Keith Barnish 

           Title: Executive Vice President 







 




[Signature pages continue]


72






	THE DAI-ICHI KANGYO BANK, LTD.,

    as Lender
	By: /s/ Ying Yang 

           Name: Ying Yang 

           Title: Account Officer 







 




[Signature pages continue]


73






	THE FUJI BANK, LIMITED,

    NEW YORK BRANCH,

    as Lender
	By: /s/ Raymond Ventura 

           Name: Raymond Ventura 

           Title: Senior Vice President 









[Signature pages continue]


74






	THE BANK OF NOVA SCOTIA,

    as Lender
	By: /s/ J. Alan Edwards 

           Name: J. Alan Edwards 

           Title: Managing Director 









[Signature pages continue]


75






	LAND BANK OF TAIWAN,

    LOS ANGELES BRANCH,

    as Lender
	By: /s/ Mayer Chen 

           Name: Mayer Chen 

           Title: Senior Vice President and General
    Manager









[Signature pages continue]


76






	BANCO BILBAO VIZCAYA ARGENTARIA,

    as Lender
	By: /s/ Alberto Conde 

           Name: Alberto Conde 

           Title: Vice President Corporate Banking By:
    /s/ Erich Michel 

           Name: Erich Michel 

           Title: Vice President Trade Finance








 




[Signature pages continue]


77






	FIFTH THIRD,

    as Lender
	By: /s/ Christine L. Wagner 

           Name: Christine L. Wagner 

           Title: Assistant Vice President 







 




[Signature pages continue]


78






	CHANG HWA COMMERCIAL BANK, LTD.,

    NEW YORK BRANCH

    as Lender
	By: /s/ Ming-Hsien Lin 

           Name: Ming-Hsien Lin 

           Title: Vice President & General Manager 







 




[Signature pages continue]


79






	HUA NAN COMMERCIAL BANK, LTD.,

    NEW YORK AGENCY

    as Lender
	By: /s/ Yun-Peng Chang 

           Name: Yun-Peng Chang 

           Title: Senior Vice President & General Manager
    







 




[Signature pages continue]


80






	BANQUE SUDAMERIS, MIAMI AGENCY,

    as Lender
	By: /s/ Sebastiao Cunha 

           Name: Sebastiao Cunha 

           Title: Senior Vice President and Manager By:
    /s/ Efrain C. Lopez 

           Name: Efrain C. Lopez 

           Title: Assistant Vice President








 




[Signature pages continue]


81






	BANCA DI ROMA,

    as Lender
	By: /s/ Alessandro Paoli 

           Name: Alessandro Paoli 

           Title: Assistant Treasurer By: /s/
    Chris Strike 

           Name: Chris Stike 

           Title: Assistant Vice President








 




[Signature pages continue]


82






	BANK HAPOALIM,

    as Lender
	By: /s/ Laura Anne Raffa 

           Name: Laura Anne Raffa 

           Title: Senior Vice President By: /s/
    James P. Surless 

           Name: James P. Surless 

           Title: Vice President 








 




[Signature pages continue]


83










	BANK LEUMI USA,

    as Lender
	By: /s/ Steve Farron 

           Name: Steve Farron 

           Title: Vice President 







 




[Signature pages continue]


84






	THE NORINCHUKIN BANK,

    NEW YORK BRANCH,

    as Lender
	By: /s/ Yoshiro Niiro 

           Name: Yoshiro Niiro 

           Title: General Manager 









[Signature pages continue]


85






	ISRAEL DISCOUNT BANK,

    as Lender
	By: /s/ Howard Weinberg 

           Name: Howard Weinberg 

           Title: First Vice President By: /s/
    Tim McCurry 

           Name: Tim McCurry 

           Title: Assistant Manager 








 




[Signature pages continue]


86






	E. SUN COMMERCIAL BANK, LTD.,

    LOS ANGELES BRANCH,

    as Lender
	By: /s/ Benjamin Lin 

           Name: Benjamin Lin 

           Title: Senior Vice President & General
    Manager 







 




[Signature pages continue]


87










	FIRST COMMERCIAL BANK,

    NEW YORK AGENCY,

    as Lender
	By: /s/ Dong Ho Wong 

           Name: Dong Ho Wong 

           Title: Senior Vice President and General
    Manager 







 




[Signature pages continue]


88






	PNC BANK, N.A.,

    as Lender
	By: /s/ Denise D. Killen 

           Name: Denise D. Killen 

           Title: Managing Director 







 




[Signature pages continue]


89





EXHIBIT A

To






$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents,

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents




 




FORM OF REVOLVING CREDIT NOTE


$________________________________________     
_____________, 2001


    FOR VALUE RECEIVED, the undersigned JONES APPAREL
GROUP USA, INC., a corporation organized under the laws of Pennsylvania, (the "Borrower"),
JONES APPAREL GROUP, INC., a corporation organized under the laws of Pennsylvania, JONES
APPAREL GROUP HOLDINGS, INC., a corporation organized under the laws of Delaware, and NINE
WEST GROUP INC., a corporation organized under the laws of Delaware (collectively, with
the Borrower, the "Debtors"), hereby jointly and severally promise to pay
to the order of _________________, (the "Lender"), at the place and times
provided in the Credit Agreement referred to below, the principal sum of
______________________ DOLLARS ($_____________) or, if less, the aggregate unpaid
principal amount of all Revolving Credit Loans made to the Borrower by the Lender pursuant
to that certain Fourth Amended and Restated 364-Day Credit Agreement dated as of June 12,
2001 (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement") by and among Jones Apparel Group USA, Inc., the Additional Obligors
referred to therein, the Lenders who are or may become a party thereto (collectively, the
"Lenders"), J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.,
as Co-Lead Arrangers and Joint Bookrunners, First Union National Bank, as Administrative
Agent, and The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents and Fleet
National Bank and Bank of America, N.A., as Documentation Agents. Capitalized terms used
herein and not defined herein shall have the meanings assigned thereto in the Credit
Agreement.


    The unpaid principal amount of Revolving Credit
Loans from time to time outstanding is subject to mandatory repayment from time to time as
provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the
Credit Agreement. All payments of principal and interest on Revolving Credit Loans shall
be payable in lawful currency of the United States of America in immediately available
funds to the account designated in the Credit Agreement.


    This Revolving Credit Note (the "Revolving
Credit Note") is entitled to the benefits of, and evidences Obligations incurred
under, the Credit Agreement, to which reference is made for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments and
repayments of principal of the Obligations evidenced by this Revolving Credit Note and on
which such Obligations may be declared to be immediately due and payable.





    THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.


    The Debt evidenced by this Revolving Credit Note is
senior in right of payment to all Subordinated Debt referred to in the Credit Agreement.


    The Debtors hereby waive all requirements as to
diligence, presentment, demand of payment, protest and (except as required by the Credit
Agreement) notice of any kind with respect to this Revolving Credit Note. 


    IN WITNESS WHEREOF, the undersigned have executed
this Revolving Credit Note under seal as of the day and year first above written.




 





	JONES APPAREL GROUP USA, INC.
	By:                                             
    

         Name: 

         Title: 

	JONES APPAREL GROUP, INC.
	By:                                            
    

         Name: 

         Title: 
	JONES APPAREL GROUP HOLDINGS, INC.

    
	By:                                          
    

          Name:

          Title: 
	NINE WEST GROUP INC.
	By:                                        
    

          Name:

          Title: 





2





EXHIBIT B

To






$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents,

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents




 




FORM OF NOTICE OF REVOLVING CREDIT BORROWING




 




NOTICE OF REVOLVING CREDIT BORROWING


Dated as of: ______________


First Union National Bank,

  as Administrative Agent

One First Union Center, TW-4

301 South College Street

Charlotte, North Carolina 28288-0608

Attention: Syndication Agency Services


Ladies and Gentlemen:


    This irrevocable Notice of Revolving Credit
Borrowing is delivered to you under Section 2.2(a) of the Fourth Amended and Restated
364-Day Credit Agreement dated as of June 12, 2001 (as amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), by and among JONES APPAREL
GROUP USA, INC., a Pennsylvania corporation (the "Borrower"), the
Additional Obligors referred to therein, the lenders party thereto (the "Lenders"),
J.P. Morgan Securities Inc., and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent, and The Chase Manhattan
Bank and Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of
America, N.A., as Documentation Agents.


    1.    The Borrower hereby requests
that the Lenders make a Revolving Credit Loan to the Borrower in the aggregate principal
amount of $___________. (Complete with an amount in accordance with Section 2.2(a) of the
Credit Agreement.)


    2.    The Borrower hereby requests
that such Revolving Credit Loan be made on the following Business Day:
_____________________. (Complete with a Business Day in accordance with Section 2.2(a) of
the Credit Agreement).





    3.    The Borrower
hereby requests that the Revolving Credit Loan bear interest at the following interest
rate, plus the Applicable Margin, as set forth below:



	Component of Loan
		Interest Rate
		Interest Period (LIBOR Rate only)
		Termination Date for Interest Period (If applicable)

			Base Rate or
    LIBOR Rate
				





 


    4.    The principal Dollar Amount of
all Revolving Credit Loans and L/C Obligations outstanding as of the date hereof
(including the requested Revolving Credit Loan) does not exceed the maximum Dollar Amount
permitted to be outstanding pursuant to the terms of the Credit Agreement. 


    5.    The Borrower hereby represents
and warrants that the conditions specified in Section 6.3 of the Credit Agreement have
been satisfied or waived as of the date hereof.


    6.    Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


    IN WITNESS WHEREOF, the undersigned has executed
this Notice of Revolving Credit Borrowing as of the ____ day of _______, ____.



	JONES APPAREL GROUP USA, INC.
	By:                                                  
    

           Name:

           Title: 





2





EXHIBIT C

To


$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners,

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents


FORM OF NOTICE OF ACCOUNT DESIGNATION


NOTICE OF ACCOUNT DESIGNATION


Dated as of: _________


First Union National Bank,

  as Administrative Agent

One First Union Center, TW-4

301 South College Street

Charlotte, North Carolina 28288-0608

Attention: Syndication Agency Services


Ladies and Gentlemen:


    This Notice of Account Designation is delivered to
you under Section 2.2(b) of the Fourth Amended and Restated 364-Day Credit Agreement dated
as of June 12, 2001 (as amended, restated, supplemented or otherwise modified, the "Credit
Agreement"), by and among JONES APPAREL GROUP USA, INC., a Pennsylvania
corporation (the "Borrower"), the Additional Obligors referred to
therein, the lenders party thereto (the "Lenders"), J.P. Morgan
Securities Inc., and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent (the "Administrative
Agent"), and The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents,
and Fleet National Bank and Bank of America, N.A., as Documentation Agents.


    1.    The Administrative Agent is
hereby authorized to disburse all Loan proceeds into the following account(s):


ABA Routing Number: 

Account Number: 



    2.    This authorization shall remain
in effect until revoked or until a subsequent Notice of Account Designation is provided by
the Borrower to the Administrative Agent.





    3.    Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


    IN WITNESS WHEREOF, the undersigned has executed
this Notice of Account Designation as of the _____ day of _______, ____.



	JONES APPAREL GROUP USA, INC.
	By:                                                         
    

           Name:

           Title: 





2







 

EXHIBIT D

to


$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners,

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents


FORM OF NOTICE OF PREPAYMENT


NOTICE OF PREPAYMENT


Dated as of: _____________


First Union National Bank,

  as Administrative Agent

One First Union Center

301 South College Street, TW-4

Charlotte, North Carolina 28288-0608

Attention: Syndication Agency Services


Ladies and Gentlemen:


    This irrevocable Notice of Prepayment is delivered
to you under Section 2.3(c) of the Fourth Amended and Restated 364-Day Credit Agreement
dated as of June 12, 2001 (as amended, restated, supplemented or otherwise modified, the
"Credit Agreement") by and among JONES APPAREL GROUP USA, INC., a
Pennsylvania corporation (the "Borrower"), the Additional Obligors
referred to therein, the lenders party thereto (the "Lenders"), J.P.
Morgan Securities Inc. and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent, and The Chase Manhattan
Bank and Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of
America, N.A., as Documentation Agents.


    1.    The Borrower hereby provides
notice to the Administrative Agent that it shall repay the following [Base Rate Loans]
and/or [LIBOR Rate Loans]: ____________________. (Complete with an amount in accordance
with Section 2.3(c) of the Credit Agreement.)


    2.    The Borrower shall repay the
above-referenced Revolving Credit Loans on the following Business Day: _______________.
(Complete in accordance with Section 2.3(c) of the Credit Agreement.)


    3.    Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Credit Agreement.





    IN WITNESS WHEREOF, the undersigned has executed
this Notice of Prepayment as of the ____ day of _______, ____.



	JONES APPAREL GROUP USA, INC.
	By:                                                       
    

           Name:

           Title: 





2





EXHIBIT E

to


$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners,

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents


FORM OF NOTICE OF CONVERSION/CONTINUATION


NOTICE OF CONVERSION/CONTINUATION


Dated as of: _____________


First Union National Bank,

  as Administrative Agent

One First Union Center

301 South College Street, TW-4

Charlotte, North Carolina 28288-0608

Attention: Syndication Agency Services


Ladies and Gentlemen:


    This irrevocable Notice of Conversion/Continuation
(the "Notice") is delivered to you under Section 5.2 of the Fourth
Amended and Restated 364-Day Credit Agreement dated as of June 12, 2001 (as amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), by
and among JONES APPAREL GROUP USA, INC., a Pennsylvania corporation (the "Borrower"),
the Additional Obligors referred to therein, the lenders party thereto (the "Lenders"),
J.P. Morgan Securities Inc., and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent, and The Chase Manhattan
Bank and Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of
America, N.A., as Documentation Agents.


    1.    This Notice is submitted for
the purpose of: (Check one and complete applicable information in accordance with the
Credit Agreement.)



  Converting all or a portion of a Base Rate Loan into a LIBOR Rate Loan

  (a)    The aggregate outstanding principal balance of
  such Revolving Credit Loan is $_______________.

  (b)    The principal amount of such Revolving Credit
  Loan to be converted is $_______________.








  (c)    The requested effective date of the conversion of
  such Revolving Credit Loan is _______________.

  (d)    The requested Interest Period applicable to the
  converted Revolving Credit Loan is _______________.

  Converting all or a portion of a LIBOR Rate Loan into a Base Rate Loan

  (a)    The aggregate outstanding principal balance of
  such Revolving Credit Loan is $_______________

  (b)    The last day of the current Interest Period for
  such Revolving Credit Loan is _______________.

  (c)    The principal amount of such Revolving Credit
  Loan to be converted is $_______________.

  (d)    The requested effective date of the conversion of
  such Revolving Credit Loan is _______________.

  Continuing all or a portion of a LIBOR Rate Loan as a LIBOR Rate Loan

  (a)    The aggregate outstanding principal balance of
  such Revolving Credit Loan is $_______________.

  (b)     The last day of the current Interest Period
  for such Revolving Credit Loan is _______________.

  (c)     The principal amount of such Revolving
  Credit Loan to be continued is $_______________.

  (d)     The requested effective date of the
  continuation of such Revolving Credit Loan is _______________.

  (e)     The requested Interest Period applicable to
  the continued Revolving Credit Loan is _______________.




    2.    The principal Dollar Amount of
all Revolving Credit Loans and L/C Obligations outstanding as of the date hereof does not
exceed the maximum Dollar Amount permitted to be outstanding pursuant to the terms of the
Credit Agreement. 


    3.    The Borrower hereby represents
and warrants that no Default or Event of Default (as defined in the Credit Agreement) has
occurred and is continuing.


    4.    Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Credit Agreement.


    IN WITNESS WHEREOF, the undersigned has executed
this Notice of Conversion/ Continuation as of the ____ day of __________, ____.



	JONES APPAREL GROUP USA, INC.

	By:                                                    
    

           Name:

           Title:





2






EXHIBIT F

to


$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners,

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents




 





 


 

FORM OF OFFICER'S COMPLIANCE CERTIFICATE




 


 

OFFICER'S COMPLIANCE CERTIFICATE


    The undersigned, on behalf of JONES APPAREL GROUP
USA, INC. (the "Borrower"), hereby certifies to the Administrative Agent
and the Lenders, each as defined in the Credit Agreement referred to below, as follows: 


    1.    This Certificate is delivered
to you pursuant to Section 8.2 of the Fourth Amended and Restated 364-Day Credit Agreement
dated as of June 12, 2001 (as amended, restated, supplemented or otherwise modified, the
"Credit Agreement"), by and among the Borrower, the Additional Obligors
referred to therein, the lenders party thereto (the "Lenders"), J.P.
Morgan Securities Inc., and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent (the "Administrative
Agent"), and The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents
and Fleet National Bank and Bank of America, N.A., as Documentation Agents. Capitalized
terms used herein and not defined herein shall have the meanings assigned thereto in the
Credit Agreement.


    2.     I have reviewed the
consolidated financial statements of Jones Apparel Group, Inc. and its Subsidiaries dated
as of _______________ and for the _______________ period[s] then ended and such statements
present fairly in all material respects the consolidated financial condition of Jones
Apparel Group, Inc. and its Subsidiaries as of their respective dates and the results of
the consolidated operations of Jones Apparel Group, Inc. and its Subsidiaries for the
respective period[s] then ended, subject to normal year end adjustments for interim
statements.


    3.    I have reviewed the terms of
the Credit Agreement, and the related Loan Documents and have made, or caused to be made
under my supervision, a review in reasonable detail of the transactions and the condition
of Jones Apparel Group, Inc. and its Subsidiaries during the accounting period covered by
the financial statements referred to in Paragraph 2 above. Such review has not disclosed
the existence during or at the end of such accounting period of any condition or event
that constitutes a Default or an Event of Default, nor do I have any knowledge of the
existence of any such condition or event as at the date of this Certificate [except, if
such condition 





or event existed or exists, describe the nature and period of existence
thereof and what action the Borrower has taken, is taking and proposes to take with
respect thereto].


    4.    The Applicable Margin and
information as to the debt ratings necessary for determining such figure are set forth on
the attached Schedule 1. 


    5.    Jones Apparel Group, Inc. and
its Subsidiaries are in compliance with the financial covenants contained in Article X of
the Credit Agreement as shown on such Schedule 1.


[Signature Page Follows]




 


 

    WITNESS the following signature as of the _____ day
of _________, ____.



	JONES APPAREL GROUP USA, INC.
	By:                                                        
    

           Name:

           Title: 





2





Schedule 1


to


Officer's Compliance Certificate


[To be provided by Borrower in form reasonably acceptable to the
Administrative Agent]





EXHIBIT G

to


$850,000,000

Fourth Amended and Restated 364-Day Credit Agreement

dated as of June 12, 2001

by and among

JONES APPAREL GROUP USA, INC.,

as Borrower,

the Additional Obligors referred to therein,

the Lenders party thereto, 

J.P. Morgan Securities Inc., and Salomon Smith Barney Inc.

as Co-Lead Arrangers,

and Joint Bookrunners,

First Union National Bank,

as Administrative Agent,

and

The Chase Manhattan Bank and Citibank, N.A., as Syndication Agents

and

Fleet National Bank and Bank of America, N.A., as Documentation Agents 




 


 

FORM OF ASSIGNMENT AND ACCEPTANCE


ASSIGNMENT AND ACCEPTANCE


Dated as of: _________


    Reference is made to the Fourth Amended and Restated
364-Day Credit Agreement dated as of June 12, 2001, as amended, restated, supplemented or
otherwise modified (the "Credit Agreement") by and among JONES APPAREL
GROUP USA, INC., a Pennsylvania corporation (the "Borrower"), the
Additional Obligors referred to therein, the lenders party thereto (the "Lenders"),
J.P. Morgan Securities Inc., and Salomon Smith Barney Inc., as Co-Lead Arrangers and Joint
Bookrunners, First Union National Bank, as Administrative Agent, and The Chase Manhattan
Bank and Citibank, N.A., as Syndication Agents and Fleet National Bank and Bank of
America, N.A., as Documentation Agents. Capitalized terms used herein which are not
defined herein shall have the meanings assigned thereto in the Credit Agreement.


___________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:


    1.    The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
as of the Effective Date (as defined below), a ____% interest in and to all of the
Assignor's interest, rights and obligations with respect to its Revolving Credit
Commitment and Revolving Credit Loans (including such percentage of the outstanding L/C
Obligations), which percentage represents not less than $10,000,000, unless such
percentage equals 100% of such Lender's Revolving Credit Commitment, and the Assignor
thereby retains ____% of its interest therein. 


    This Assignment and Acceptance is entered pursuant
to, and authorized by, Section 14.10 of the Credit Agreement.


    2.    The Assignor (i) represents
that, as of the date hereof, its Revolving Credit Commitment Percentage (without giving
effect to assignments thereof which have not yet become effective) under the Credit
Agreement is ____%, the outstanding balances of its Revolving Credit Loans (including its
Revolving Credit Commitment Percentage of the outstanding L/C Obligations); (ii) makes no
representation or warranty and assumes





no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that the Assignor is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or its Subsidiaries or the
performance or observance by the Borrower or its Subsidiaries of any of their obligations
under the Credit Agreement or any other instrument or document furnished or executed
pursuant thereto; and (iv) to the extent it has received Revolving Credit Note(s) from the
Borrower, attaches the applicable Revolving Credit Note(s) delivered to it under the
Credit Agreement and requests that the Borrower exchange such Revolving Credit Note(s) for
new Revolving Credit Notes payable to each of the Assignor and the Assignee as follows:


 



	Revolving Credit Note

    Payable to the Order of:
	

      Principal Amount of Note:
	_______________________

    _______________________
	_______________________

    _______________________






 


    3.    The Assignee (i) represents and
warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 8.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Assignor or any other Lender or the
Administrative Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (iv) confirms that it is an Eligible Assignee; (v)
appoints and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement and the other Loan Documents
as are delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Lender; (vii) agrees
to hold all confidential information in accordance with the provisions of Section 14.10(g)
of the Credit Agreement; and (viii) includes herewith for the Administrative Agent the
forms required by Section 5.11(e) of the Credit Agreement (if not previously delivered).


    4.    The effective date for this
Assignment and Acceptance shall be as set forth in Section 1 of Schedule 1 hereto (the
"Effective Date"), subject to the consents referred to in the following
sentence. Following the execution of this Assignment and Acceptance, it will be delivered
to the Administrative Agent for, to the extent required by the Credit Agreement, consent
by the Borrower and the Administrative Agent and acceptance and recording in the Register.


    5.    Upon such consents, acceptance
and recording, from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and the other Loan Documents to which Lenders are parties and, to the
extent provided in this Assignment and Acceptance, have the rights and obligations of a
Lender under each such agreement, and (ii) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement and the other Loan Documents. 


    6.    Upon such consents, acceptance
and recording, from and after the Effective Date, the Administrative Agent shall make all
payments in respect of the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments for periods prior to the Effective Date or with
respect to the making of this assignment directly between themselves.


    7.    THIS ASSIGNMENT AND ACCEPTANCE
SHALL BE DEEMED TO BE A CONTRACT UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH 


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THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR
CHOICE OF LAW PRINCIPLES THEREOF.


3





    WITNESS the following signatures as of the ____ day
of ______, ____.



	ASSIGNOR:
	By: ___________________________

    Title: _________________________
	ASSIGNEE:
	By: ___________________________

    Name: _________________________

    Title: _________________________





Acknowledged and Consented to on behalf of the Credit Parties:


JONES APPAREL GROUP USA, INC.


By: __________________________

Name: ________________________

Title: _________________________


Consented to and Accepted by:


FIRST UNION NATIONAL BANK,

  as Administrative Agent 


By: _____________________________

Name: ___________________________

Title: ____________________________


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Schedule 1

to

Assignment and Acceptance


  
    
      
        
          
          	1.	Effective Date: _________________, ______

                 
	2.	Assignor's Interest

                Prior to Assignment:

                 

              
		(a)	 Revolving Credit Commitment Percentage

                 	 %
		(b)	 Outstanding balance of Revolving Credit Loans

                 	 $
		(c)	 Outstanding balance of Assignor's Revolving

                Credit Commitment Percentage of the

                L/C Obligations

                 	 $
	3.	 Assigned Interest (from Section 1) of:

                 	
		(a) 	 Revolving Credit Loans

                 	 %
	4.	 Assignee's Extensions of Credit

                After Effective Date:

                 	
		(a)	 Total outstanding balance of

                Assignee's Revolving Credit Loans

                (line 2(b) times line 3(a)) 

                 	 $
		(b)	 Total outstanding balance of

                Assignee's Revolving Credit

                Commitment Percentage

                of the L/C Obligations

                (line 2(c) times line 3(a))

                 	$
	5.	
         Retained Interest of Assignor after

        Effective Date:

         

              	
		(a)	 Retained Interest (from Section 1):

                 	
			(i)     Revolving Credit Commitment Percentage

                 	 %
		(b)	 Outstanding balance of Assignor's Revolving Credit
        Loans

                (line 2(b) times line 5(a)(i)) 

                 	$
		(c) 	 Outstanding balance of Assignor's

                Revolving Credit Commitment

 Percentage of L/C Obligations

                (line 2(c) times line 5(a)(i))

                 	$
	6.	 Payment Instructions:

                 	
		(a)	 If payable to Assignor,

                to the account of Assignor to:

                ABA No.:

                Account Name:

                Account No.

                Attn:

                Ref:	


          
        

          

      

    

  


5





  
    
      
        		(b)	If payable to Assignee, to the account

              of Assignee to:

              

 ABA No.:

 Account Name:

 Account No.

 Attn:

              Ref:	


         

      

    

  


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