**EXHIBIT 10.1**

**EMPLOYMENT AGREEMENT**

        AGREEMENT effective as of January1, 2002 by and between NORTON McNAUGHTON OF SQUIRE, INC., a New York corporation(the "Company"), and LYNNE F. FISH (the "Executive").

**W I T N E S S E T H :**

        WHEREAS, the Company wishes tocontinue to employ the Executive, and the Executive wishes to continueemployment with the Company on the terms and conditions hereinafter set forth.

        NOW, THEREFORE, it is agreed asfollows:

        1. **Employment.** During theterm of this Agreement, the Company shall employ the Executive as the Presidentof the Company, with overall responsibility for and authority over all of theoperations of the Company, other than the operations of Miss Erika, Inc. andJeri-Jo Knitwear, Inc., which the Company anticipates will be merged with andinto the Company and which will be operated as independent divisions reportingdirectly to the chief executive officer (the "Group CEO") of theModerate Apparel Group ("MAG") of Jones Apparel Group, Inc.("Jones"). Executive shall also serve as the President of MAG, withdirect responsibility for those MAG product lines (presently Evan-Picone, JonesWear and Nine and Company) for which she may have responsibility from time totime (all references herein to Executive's responsibilities with and to theCompany shall include such responsibilities for any such MAG product lines). TheExecutive shall report directly to the Group CEO. During the Term of thisAgreement, and excluding any periods of vacation and sick leave to which theExecutive is entitled, the Executive agrees to devote all of Executive'sbusiness time and attention to the business affairs of the Company, and toperform such responsibilities in a professional manner. Notwithstanding theforegoing, during the Term of this Agreement, it shall not be a violation ofthis Agreement for the Executive to (a) serve on civic or charitable boards orcommittees; (b) deliver lectures, fulfill speaking engagements or teach ateducational institutions; (c) serve as a non-employee member of a board ofdirectors of a business entity which is not competitive with Jones and as towhich the Board of Directors of Jones has given its consent; and (d) attend topersonal business, so long as such activities do not interfere with theperformance of the Executive's responsibilities in accordance with thisAgreement.

        2. **Term.** The Executiveshall be employed for the period (the "Initial Term") commencingJanuary 1,2002 (the "Employment Commencement Date") and ending onDecember 31, 2004 (the "Expiration Date"), as renewed in accordancewith the following sentence (the "Term"). The Executive's employmentwill continue, and this Agreement will be automatically extended withoutlimitation, for successive 12-month periods commencing January 1 and endingDecember 31, unless either party to this Agreement advises the other in writing,no later than December 31, 2002 and each December 31 thereafter, that such partydoes not wish to extend (a "Non-extension Notice"). If this Agreementshall be so extended, the "Expiration Date" shall mean the thenapplicable extended "Expiration Date", and the "Term" shallmean the 

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period commencing on the Employment Commencement Date and ending on the thenapplicable extended "Expiration Date".

        For example, (i) if by December31, 2002, neither party has given a Non-extension Notice to the other, the Termwill be automatically extended through December 31, 2005, and (ii) if the Termis so extended through December 31, 2005, then if by December 31, 2003, neitherparty has given a Non-extension Notice to the other, the Term will beautomatically extended through December 31, 2006.

        3. **Salary, Retirement Plans,Fringe Benefits and Allowances; Commencement Bonus.**

               (a) Throughout the Term, the Executive shall receive a salary at the annual rateof not less than $600,000. The Executive's salary shall be payable at suchregular times and intervals as the Company customarily pays its seniorexecutives from time to time, but no less frequently than once a month.

               (b) During the Term, the Executive shall be eligible to participate in allsavings and retirement plans, practices, policies and programs to the extentapplicable generally to other senior executives of the Company.

               (c) During the Term, the Executive and/or the Executive's family, as the casemay be, shall be eligible for participation in and shall receive all benefitsunder welfare, fringe and other benefit plans, practices, policies and programsprovided by the Company (including, without limitation, medical, prescriptiondrug, dental, disability, accidental death and travel accident insurance plansand programs) to the extent applicable generally to other senior executives ofthe Company.

               (d) The Executive shall be entitled to an aggregate of four (4) weeks paidvacation during each 12-month period ending December 31 (a "Year").The Executive shall also be entitled to the benefits of the Company's policiesrelating to sick leave and holidays.

               (e) The Executive shall have all expenses reasonably incurred by Executive onbehalf of the Company reimbursed by the Company in accordance with the Company'sstandard policies and practices. The Executive shall be entitled to first classseating for air travel on Company business.

        4. **Bonus.** The Executiveshall be eligible to receive an annual bonus for her services hereunder, in thediscretion of the Board of Directors of the Company upon the recommendation ofthe Group CEO.

        5. **Stock Options.** Subjectto the absolute authority of the Stock Option Committee of the Board ofDirectors of Jones from time to time to grant (or not to grant) to eligibleindividuals options to purchase common stock of Jones, during the Term theExecutive shall be eligible to receive options to participate in Jones'stock-based compensation plans which may be in effect from time to time duringthe Term.

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        6. **Termination of Employment.**

               (a) By the Company for Cause, or by the Executive without Good Reason. TheCompany may terminate the Executive's employment for Cause (as defined herein),and the Executive may resign without Good Reason (as defined herein), before theExpiration Date. If the Executive's employment is terminated for Cause, or ifExecutive resigns during the Term without Good Reason (as defined below), theCompany shall pay to the Executive any unpaid salary through the date oftermination and any bonus earned in the prior Year but not yet paid, as well asreimburse the Executive for any unpaid reimbursable expenses incurred on behalfof the Company, and thereafter the Company shall have no additional obligationsto the Executive under this Agreement.

               (b) Death or Disability. (i) If the Executive's employment terminates before theExpiration Date because of Executive's death or Disability (as defined herein),the Company shall pay Executive or Executive's duly appointed personalrepresentative, as the case may be, (i) any unpaid salary through the date ofdeath or the Disability Termination Date (as defined herein) and any bonusearned in the prior Year but not yet paid, as well as reimbursement of anyunpaid reimbursable expenses incurred on behalf of the Company, and (ii) anamount equal to Executive's monthly salary during each of the six (6) monthsfollowing Executive's death or the Disability Termination Date. Except as setforth in this Section 6(b), the Company shall have no additional obligations tothe Executive under this Agreement in the event of Executive's termination ofemployment under this Section 6(b).

                       (ii) In addition to the foregoing and notwithstanding any other agreementbetween the Executive and the Company, all options to purchase the Company'scommon stock which were held by the Executive at the time of the Executive'sdeath or the Disability Termination Date, shall become fully exercisable andshall remain exercisable by the Executive or by the Executive's estate orrepresentative, as the case may be, during the remaining original term of theoption in the case of the Executive's Disability, or during the 3-year periodfollowing the date of the Executive's death.

               (c) By the Company without Cause, or by the Executive for Good Reason. TheCompany may terminate the Executive's employment before the Expiration Datewithout Cause, and the Executive may terminate Executive's employment before theExpiration Date for Good Reason, upon 30-days written notice to the other party.If the Executive's employment is so terminated by the Company without Cause, orby the Executive for Good Reason, as the case may be, the Company shall pay andprovide to the Executive (i) any unpaid salary through the date of terminationand any bonus earned in the prior Year but not yet paid, as well asreimbursement of any unpaid reimbursable expenses incurred on behalf of theCompany, and (ii) during each month of the Severance Period (as defined below),an amount equal to Executive's monthly salary at the rate in effect immediatelypreceding termination. Except as set forth in this Subsection 6(c), the Companyshall not have any additional obligations to the Executive under this Agreementin the event of Executive's termination of employment under this Subsection6(c).

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               (d) As used herein:

                       (i) the term "Cause" shall mean (v) the Executive's commission of aproven act of fraud or dishonesty or a crime involving money or other propertyof the Company; (w) the Executive's conviction of a felony or a plea of guiltyor nolo contendere to an indictment for a felony; (x) if, in carrying outExecutive's duties hereunder, the Executive engages in conduct which constituteswillful misconduct or gross negligence; (y) the Executive's failure to carry outa lawful order of the Board of Directors of the Company or the Group CEO; or (z)a material breach by the Executive of this Agreement. Any act or failure to acton the part of the Executive which is based upon authority given pursuant to aresolution duly adopted by the Board of Directors of the Company or authorizedin writing by the Group CEO, or based upon the advice of counsel for theCompany, shall not constitute Cause as used herein. For purposes of thisprovision only, a breach shall be "material" if it is demonstrablyinjurious to the Company, its affiliates or any of its respective businessunits, financially or otherwise.

        Cause shall not exist unless anduntil the Company (i) has delivered to the Executive a written Notice ofTermination that specifically identifies the events, actions, or non-actions, asapplicable, that the Company believes constitute Cause hereunder, and, in thecase of termination for Cause under clauses (x), (y) or (z) above, the Executivehas been provided with an opportunity to cure the offending conduct (if curable)within 30 days after delivery of the written Notice of Termination, and has notso cured such conduct (if curable), and (ii) the Executive has been provided anopportunity to be heard (with counsel) by the Board within 30 days afterdelivery of the notice of Termination; provided, however, that in the case oftermination for Cause under clauses (x), (y), and (z) above, the date oftermination shall be no earlier than 35 days after delivery of the Notice ofTermination.

                       (ii) the term "Good Reason" shall mean any one of the following:

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(1) a material breach of the Company's obligations under this      Agreement, which breach has not been cured within 20 business days after      the Company's receipt of written notice from the Executive of such breach;

(2) a reduction in the Executive's then annual base salary;

(3) the relocation of the Executive's office to a location more than 30      miles from the present offices of the Company;

(4) the failure to pay the Executive any undisputed portion of the      Executive's compensation within 15 business days after the date of receipt      of written notice that such compensation or payment is due;

(5) the failure to continue in effect any compensation or benefit plan      in which the Executive is participating, unless either (i) an equitable      arrangement (embodied in an ongoing substitute or alternative plan) has      been made with respect to such plan; or (ii) the failure to continue

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the Executive's participation therein (or in such substitute or      alternative plan) does not discriminate against the Executive, both with      respect to the amount of benefits provided and the level of the      Executive's participation, relative to other similarly situated      participants;

(6) a reduction in the Executive's title and status as President of the      Company, or any change in the Executive's status as reporting directly to      the Group CEO (other than a change pursuant to which the Executive is      reporting to either the Chief Executive Officer of Jones or to the      Executive Management Committee of Jones or to the Jones Board of      Directors); or the assignment to the Executive of any duties materially      inconsistent with the Executive's position with the Company (including,      without limitation, status, office, title and reporting requirements),      authority, duties or responsibilities as contemplated by Section 1 of this      Agreement, or any other action by the Company which results in a material      diminution in such position, authority, duties or responsibilities,      excluding for this purpose any action not taken in bad faith and which is      remedied by the Company no later than thirty (30) days after written      notice by the Executive; or

(7) any purported termination by the Company of the Executive's      employment otherwise than as expressly permitted in this Agreement.

                       (iii) the terms "Disabled" or "Disability" shall mean theExecutive's physical or mental incapacity which renders the Executive incapable,even with a reasonable accommodation by the Company, of performing the essentialfunctions of the duties required of Executive by this Agreement for one hundredtwenty (120) or more consecutive days; the term "Disability TerminationDate" shall mean the date as of which the Executive's employment with theCompany is terminated, either by the Executive or by the Company, following thesuffering of a Disability by the Executive.

                       (iv) the term "Severance Period" shall mean the period commencing withthe Termination of the Executive's employment and ending with the ExpirationDate, as renewed in accordance with Section 2 hereof, but not less than twelvemonths.

               (f) The Company's obligations to make payments under this Section 6 shall bereduced by the amount, if any, of other compensation or income earned orreceived by the Executive after the effective date of Executive's termination.

        7. **Company Property.** Anytrade name or mark, program, discovery, process, design, invention orimprovement which the Executive makes or develops, which relates, directly orindirectly, to the business of the Company or its affiliates, or Executive'semployment by the Company, shall be considered as "made for hire" andshall belong to the Company and shall be promptly disclosed to the Company.During the Executive's employment and thereafter, the Executive shall, withoutadditional compensation, execute and deliver to or as requested by

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the Company, any instruments of transfer and take such other action as theCompany may reasonably request to carry out the provisions hereof, includingfiling, at the Company's sole expense, trademark, patent or copyrightapplications for any trade name or mark, invention or writing covered hereby andassigning such applications to the Company.

        8. **Confidential Information.**The Executive shall not, either during the term of Executive's employment by theCompany or thereafter, disclose to anyone or use (except, in each case, in theperformance of Executive's responsibilities hereunder and in the regular courseof the Company's business), any information acquired by the Executive inconnection with or during the period of Executive's employment by the Company,with respect to any confidential, proprietary or secret aspect of the affairs ofthe Company or any of its affiliates, including but not limited to therequirements and terms of dealings with existing or potential licensors,licensees, designers, suppliers and customers and methods of doing business, allof which the Executive acknowledges are confidential and proprietary to theCompany, and any of its affiliates, as the case may be.

        9. **Competition; Recruitment;Non-Disparagement.**

               (a) The Executive shall not, at any time during Executive's employment by theCompany and during the Severance Period (provided that the Company is making thepayments to Executive which may be required hereby during such Severance Period)(the "Non-Compete Period") and under the following circumstances,engage or become interested (as an owner, stockholder, partner, director,officer, employee, consultant or otherwise) in any business which then competes,directly or indirectly, with the business then conducted by the Company or anyof its affiliates. The ownership of less than 5% of the stock of a publiclyowned company which competes with the Company or any of its affiliates, in andof itself, shall not be considered a violation of the provisions of this Section9.

               (b) The Executive shall not, at any time during Executive's employment by theCompany and thereafter until the second anniversary of the expiration of theNon-Compete Period, recruit, solicit for employment, hire or engage, or assistany person or entity in recruiting, soliciting for employment, hiring orengaging, any employee or consultant of the Company or any of its affiliates, orany person who was such an employee or consultant of the Company or any of itsaffiliates within one year before the termination of the Executive's employment.

               (c) For the longer of any period applicable under this Section 9 or a period ofthree years immediately following the date of termination, (i) the Company, andits respective affiliates and employees shall not disparage the Executive, and(ii) the Executive shall not disparage the Company, or its respective affiliatesand employees.

               (d) The Executive acknowledges that the provisions in Section 9(b) are necessaryfor the protection of the Company, and its subsidiaries and affiliates and arenot unreasonable, because the Executive would be able to recruit and hirepersonnel other than employees of the Company, and any of their subsidiaries andaffiliates. The Executive further agrees that a breach of Section 7, 8 or 9 ofthis Agreement shall result in the immediate cessation of any payments pursuantto this Section 9 and Section 6 hereof, if applicable. The duration and 

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the scope of these restrictions on the Executive's activities are divisible,so that if any provision of this Section 9 is held or deemed to be invalid, thatprovision shall be automatically modified to the extent necessary to make itvalid.

        10. **Notices.** Any notice orother communication to the Company or to the Executive under this Agreementshall be in writing and shall be considered given on the third business dayfollowing mailing by certified mail, return receipt requested, to such party atExecutive's address on file with the Company, or to the Company at c/o JonesApparel Group, Inc., 1411 Broadway, New York, New York 10018, Attention: GeneralCounsel (or at such other address as such party may specify by written notice tothe other party).

        11. **Successors; BindingAgreement.**

               (a) Company's Successors. No rights or obligations of the Company under thisAgreement may be assigned or transferred by the Company, except that such rightsor obligations may be assigned or transferred pursuant to a merger orconsolidation in which the Company is not the continuing entity, or the sale orliquidation of all or substantially all of the business or assets of theCompany, provided that the assignee or transferee is the successor to all orsubstantially all of the business or assets of the Company and such assignee ortransferee assumes all of the liabilities, obligations and duties of theCompany, as contained in this Agreement, either contractually or as a matter oflaw. The Company will require any such successor to expressly assume and agreeto perform this Agreement in the same manner and to the same extent that theCompany would be required to perform it if no such succession had taken place.As used in this Agreement, "Company" shall mean the Company ashereinbefore defined and any successor to its business or assets as aforesaid,which executes and delivers the agreement provided for in this Section 11 orwhich otherwise becomes bound by all the terms and provisions of this Agreementor by operation of law.

               (b) Executive's Successors. This Agreement shall not be assignable by theExecutive. This Agreement and all rights of the Executive hereunder shall inureto the benefit of and be enforceable by the Executive's personal or legalrepresentatives, executors, administrators, successors, heirs, distributees,devisees and legatees. Upon the Executive's death, all amounts to whichExecutive is entitled hereunder, unless otherwise provided herein, shall be paidin accordance with the terms of this Agreement to the Executive's devisee,legatee, or other designee or, if there be no such designee, to the Executive'sestate.

        12. **Indemnification.** TheCompany shall indemnify Executive and hold the Executive harmless, to themaximum extent permitted by applicable law, from and against all claims,actions, suits, proceedings, loss, damage, liability, costs, charges andexpenses, including reasonable attorneys' fees and costs arising in connectionwith the Executive's performance of Executive's duties hereunder or Executive'sstatus as an employee, officer, director or agent of the Company or itsaffiliates, in accordance with the Company's indemnity policies for its seniorexecutives.

        13. **Interest on Late Payments.**"Undisputed Late Obligations" shall bear interest beginning on the DueDate until paid in full at an annual rate of one percent (1.0%) plus the 

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prime rate as declared from time to time by The Chase Manhattan Bank. Forpurposes hereof, "Undisputed Late Obligations" shall mean anyobligation which remains unpaid 5 days after written notice thereof is deliveredto the other party in accordance with Section 10 (the "Due Date") formoney under this Agreement owing from one party to another, which obligation (i)is not subject to any bona fide dispute or (ii) has been adjudicated by anarbitration panel or court of competent jurisdiction to be due and payable.

        14. **Arbitration.** Except asotherwise provided herein, all controversies, claims or disputes arising out ofor related to this Agreement shall be settled under the rules of the AmericanArbitration Association (sitting in Manhattan) then in effect in the State ofNew York, as the sole and exclusive remedy of either party, and judgment uponsuch award rendered by the arbitrator(s) may be entered in any court ofcompetent jurisdiction.

        15. **Attorneys' Fees.** TheCompany shall reimburse the Executive (or the Executive shall reimburse theCompany) for all reasonable costs, including without limitation reasonableattorneys' fees, of the Executive or the Company, as the case may be, in anydispute, arbitration or proceeding arising under this Agreement (collectively, a"Proceeding"), so long as the Executive or the Company, as the casemay be, "prevails in substantial part" with respect to Executive's orthe Company's claims or defenses in such Proceeding. For purposes hereof, theExecutive shall be deemed to have "prevailed in substantial part" if (i)the Executive is the party originally demanding a Proceeding, and thearbitrator(s) shall have awarded the Executive at least 75% of the amountoriginally demanded by the Executive, or (ii) the Company is the partyoriginally demanding a Proceeding, and the arbitrator(s) shall have denied theCompany the relief originally requested. The Company shall be deemed to have"prevailed in substantial part" if the Executive is the partyoriginally demanding a Proceeding and the arbitrator(s) shall have awarded theExecutive less than 25% of the amount originally demanded by the Executive.

        16. **Miscellaneous.**

               (a) Given that a breach of the provisions of this Agreement would injure theCompany irreparably, the Company may, in addition to its other remedies, obtainan injunction or other comparable relief restraining any violation of thisAgreement, and no bond, security or other undertaking shall be required of theCompany in connection therewith.

               (b) The provisions of this Agreement are separable, and if any provision of thisAgreement is invalid or unenforceable, the remaining provisions shall continuein full force and effect.

               (c) This Agreement constitutes the entire understanding and agreement betweenthe parties, and supersedes all other existing agreements between the parties,and cannot be amended, unless such amendment is in writing and signed by bothparties to this Agreement.

Without limiting the foregoing, the parties hereto agree that the EmploymentAgreement dated as of November 11, 1998, between the Company and the Executiveshall have no further effect, and the Company shall have no further obligationunder such employment agreement.

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               (d) This Agreement shall be governed by and construed in accordance with thelaws of the State of New York (other than its choice of laws rules), where ithas been entered and where it is to be performed. The parties hereto consent tothe exclusive jurisdiction of any federal or state court in the State of NewYork to resolve any dispute arising under this Agreement or otherwise.

               (e) The headings in this Agreement are solely for convenience of reference andshall not affect its interpretation.

               (f) The failure of either party to insist on strict adherence to any term ofthis Agreement on any occasion shall not be considered a waiver or deprive thatparty of the right thereafter to insist upon strict adherence to that term orany other term of this Agreement. For any waiver of a provision of thisAgreement to be effective, it must be in writing and signed by the party againstwhom the waiver is claimed.

               (g) The obligations of the Executive and the Company hereunder shall survive thetermination of the term of this Agreement and the Executive's employmenthereunder, to the extent necessary to give full effect to the provisions of thisAgreement.

        IN WITNESS WHEREOF, the partieshereto have caused this Agreement to be signed as of the date first abovewritten.

|  | NORTON McNAUGHTON OF SQUIRE, INC.        By: /s/ Peter Boneparth        Chief Executive Officer          |
|--|---------------------------------------------------------------------------------------------------------------|
|  | /s/ Lynne Fish        Executive                                                                               |

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