**EXHIBIT 10.38**

 

ASSUMPTION AGREEMENT

January 20, 2009

To each of the Lendersparties to theCredit Agreement (as definedbelow) and to Wachovia Bank, National Association,as Administrative Agent for such Lenders

Ladies and Gentlemen:

        Reference is made to the Amendedand Restated Five-Year Credit Agreement dated as of May 16, 2005, amended andrestated as of January 5, 2009, as amended, restated, supplemented or otherwisemodified (the "Credit Agreement"), by and among JONES APPAREL GROUP USA,INC., a Delaware corporation (the "Borrower"), the Additional Obligorsreferred to therein, the lenders party thereto (the "Lenders"), J.P.Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint LeadArrangers and Joint Bookrunners, Wachovia Bank, National Association, asAdministrative Agent, and JPMorgan Chase Bank, N.A. and Citibank, N.A., asSyndication Agents, and Bank of America, N.A., Barclays Bank plc and SunTrustBank, as Documentation Agents. Capitalized terms used herein which are notdefined herein shall have the meanings assigned thereto in the Credit Agreement.

        Please be advised that each of theundersigned (each, a "New Credit Party"), in compliance with Section9.13(y) of the Credit Agreement, does hereby assume each of the obligationsimposed upon an "Additional Obligor" under and for all purposes of the CreditAgreement and agrees to be bound by the terms and conditions of the CreditAgreement. In furtherance of the foregoing, each New Credit Party herebyrepresents and warrants to each of the Lenders as follows:

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        1. Each of the New Credit	Parties and their Subsidiaries is duly organized, validly existing and in	good standing under the laws of the jurisdiction of its incorporation or	formation, has the power and authority to own its properties and to carry on	its business as now being and hereafter proposed to be conducted and is duly	qualified and authorized to do business in each jurisdiction in which the	character of its properties or the nature of its business requires such	qualification and authorization, except where the failure to do so could not	reasonably be expected to have a Material Adverse Effect.

        2. Each of the New Credit	Parties has the right, power and authority and has taken all necessary	corporate and other action to authorize the execution, delivery and	performance of this Assumption Agreement and each of the Loan Documents to	which it is a party in accordance with their respective terms. This	Assumption Agreement has been duly executed and delivered by the duly	authorized officers of the New Credit Parties, and this Assumption Agreement	and the Credit Agreement constitute the legal, valid and binding obligation	of the New Credit Parties, enforceable in accordance with their respective	terms, except as such enforcement may be limited by bankruptcy, insolvency,	reorganization, moratorium or similar state or federal debtor relief laws	from 

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time to time in effect which affect the enforcement of creditors' rights ingeneral and the availability of equitable remedies.

        3. None of (a) the execution,	delivery and performance by the New Credit Parties of this Assumption	Agreement or the Credit Agreement, in accordance with their respective	terms, and the transactions contemplated hereby or (b) the exercise by the	Administrative Agent or any Lender of its rights under the Loan Documents:	do or will, by the passage of time, the giving of notice or otherwise, (i)	require any of the New Credit Parties or any of their Subsidiaries to obtain	any Governmental Approval not otherwise already obtained or violate any	Applicable Law relating to the New 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 New 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) except for the Liens created	under the Loan Documents, 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.

[signatures appear on the following pages] 

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        THIS ASSUMPTION AGREEMENT SHALL BEGOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLESTHEREOF.

|   | Very truly yours,
**ENERGIE KNITWEAR, INC.**

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

**JONES APPAREL GROUP CANADA, LP**

By: **JONES CANADA, INC.,       its general partner**

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

**JONES INVESTMENT CO. INC.**

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

**JONES JEANSWEAR GROUP, INC.**

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

**L.E.I. GROUP, INC.**

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

**NINE WEST DEVELOPMENT CORPORATION**

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

**VICTORIA + CO. LTD.**

By: /s/ Ira M. Dansky		Name: Ira M. Dansky		Title: Assistant Secretary 

**JONES APPAREL GROUP CANADA ULC**

By: /s/ Ira M. Dansky		Name: Ira M. Dansky		Title: SecretaryAccepted and agreed as of the date first above written:		
**WACHOVIA BANK, NATIONAL ASSOCIATION**

By: /s/ Thomas M. Harper		Name: Thomas M. Harper		Title: Senior Vice President  |
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