**EXHIBIT 10.39**

 

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December 10, 2007

Mr. Ira M. DanskyJones Apparel Group, Inc.1411 BroadwayNew York, New York 10018

Re: Amendment No. 2 to Employment Agreement

Dear Mr. Dansky:

Reference is made to the Employment Agreement dated as of April 4, 2002 byand between you and Jones Apparel Group, Inc. (the "Company") (the"Employment Agreement"). All capitalized terms not otherwise definedherein shall have the meanings ascribed thereto in the Employment Agreement.

1. A new Section 6(g) is hereby added to the Employment Agreement, to read asfollows:

        "(g) Post-RetirementBenefits. In addition to any other compensation or benefits to which Executiveis entitled under this Agreement, if (1) the Executive continues in employmentthrough June 30, 2010, and the Executive's employment terminates thereafter forany reason, (2) prior to June 30, 2010, the Executive's employment terminatesbecause of death or Disability or is terminated by the Company without Cause orby the Executive for Good Reason, or (3) on or after June 30, 2009, theExecutive provides to the Board of Directors of the Company (the"Board") at least six months' written notice of his retirement fromthe Company, and the Board consents to such retirement (which consent shall notbe unreasonably withheld or delayed), then the Executive shall receive thefollowing benefits from the Company in accordance with the provisions of thisSection 6(g):

        (i) An annual retirement benefitof $200,000 payable in equal monthly installments to the Executive (or, in theevent of his death, to his designated beneficiary), commencing on the first dayof the month next following the Executive's termination of employment andcontinuing for a period of five years following his termination of employment(the "Retirement Benefit"). Notwithstanding the preceding sentence, ifnecessary to comply with Section 409A of the Internal Revenue Code of 1986, asamended ("Section 409A"), payment of the Retirement Benefit shall notcommence prior to the earliest date permitted by Section 409A and the firstpayment shall include all other monthly payments which, but for this sentence,would have been paid prior to such earliest date; and

        (ii) Continued medical and dentalcoverage for Executive and his spouse, under the Company's group policy orotherwise, for their respective lives. Such coverage shall be consistent withthe coverage in effect for the Executive immediately prior to his termination ofemployment; provided, that (1) if the Executive is entitled to similar coverageunder Section 

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6(c)(v), then coverage under this Section 6(g)(ii) shall commence at the endof the Severance Period; (2) the Company's annual cost of providing suchcoverage shall not exceed $7500 (such amount to be increased, effective January1, 2008, at the rate of 10% per annum), and if the dollar limit in effect for aparticular year exceeds the cost of providing such coverage for such year, theexcess amount shall be paid to the Executive (or, after his death, to hisspouse) no later than March 15 of the year following the year to which suchexcess relates; and (3) such coverage shall be secondary to any coverage towhich the Executive and/or his spouse are then entitled under Medicare orsimilar legislation."

2. Except as otherwise set forth in this Amendment No. 1 to EmploymentAgreement, the Employment Agreement is ratified and confirmed in all respectsand remains in full force and effect.

Please acknowledge your agreement with the foregoing by signing the enclosedcopy of this letter agreement and returning it to the Company.

|  | Very truly yours,        
JONES APPAREL GROUP, INC.

By /s/ Wesley R. Card        Wesley R.Card        Chief Executive Officer
Agreed to in all respects:

/s/ Ira M. DanskyIra M. Dansky

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