Document:

Exhibit 10.1

EXHIBIT 10.1

$850,000,000

 

FIFTH AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT

dated as of June 11, 2002,

by and among

JONES APPAREL GROUP USA, INC.,

the Additional Obligors referred to herein,

the Lenders referred to herein,

SALOMON SMITH BARNEY INC. and J.P. MORGAN SECURITIES
INC.,

as Joint-Lead Arrangers

and Joint Bookrunners,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

and

CITIBANK, N.A. and JPMORGAN CHASE BANK,

as Syndication Agents,

and

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

as Documentation Agents

TABLE OF CONTENTS

  		
        Page

	ARTICLE I
        DEFINITIONS	1
		  

        SECTION 1.01. Definitions

          

        SECTION 1.02. General.

          

        SECTION 1.03. Other Definitions and Provisions.

          	  

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	ARTICLE II
        REVOLVING CREDIT FACILITY	15
		  

        SECTION 2.01. Revolving Credit Loans.

          

        SECTION 2.02. Procedure for Advances of Revolving Credit Loans.

          

        SECTION 2.03. Repayment of Revolving Credit Loans.

          

        SECTION 2.04. Evidence of Debt.

          

        SECTION 2.05. Permanent Reduction of the Revolving Credit Commitment.

          

        SECTION 2.06. Termination of Revolving Credit Facility.

          	 

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	ARTICLE III
        LETTER OF CREDIT FACILITY	19
		  

        SECTION 3.01. L/C Commitment.

          

        
        SECTION 3.02. Procedure for Issuance of Letters of Credit.

          

        
        SECTION 3.03. Fees and Other Charges.

          

        
        SECTION 3.04. L/C Participations.

          

        
        SECTION 3.05. Reimbursement.

          

        
        SECTION 3.06. Obligations Absolute.

          

        
        SECTION 3.07 Effect of Application.

          	 

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    ARTICLE IV [RESERVED]

       	23
	ARTICLE V GENERAL LOAN PROVISIONS 	23
		

         

        SECTION 5.01. Interest.

         

        SECTION 5.02. Notice and Manner of Conversion or Continuation of
        Revolving Credit Loans.

         

      	 

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i

 
  		

         

        SECTION 5.03. Fees.

         

        SECTION 5.04. Manner of Payment.

         

        SECTION 5.05. Crediting of Payments and Proceeds.

         

        SECTION 5.06. Adjustments.

         

        SECTION 5.07. Nature of Obligations of Lenders Regarding Extensions
        of Credit; 

 Assumption by the Administrative Agent.

         

        SECTION 5.08. Joint and Several Liability of the Credit Parties.

         

        SECTION 5.09. Changed Circumstances.

         

        SECTION 5.10. Indemnity.

         

        SECTION 5.11. Capital Requirements.

         

        SECTION 5.12. Taxes.

         

      	

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    ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING 	34
		

         

        SECTION 6.01. Closing.

         

        SECTION 6.02. Conditions to Closing and Initial Revolving Credit
        Loans and 

 Letters of Credit.

         

        SECTION 6.03. Conditions to All Extensions of Credit.

         

      	 

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    ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES 	37
		

         

        SECTION 7.01. Representations and Warranties.

         

        SECTION 7.02. Survival of Representations and Warranties, Etc.

         

        	

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        41
	

    ARTICLE VIII FINANCIAL INFORMATION AND NOTICES 	42
		

         

        SECTION 8.01. Financial Statements and Projections.

         

        SECTION 8.02. Officer's Compliance Certificate.

         

        SECTION 8.03. Accountants' Certificate.

         

        SECTION 8.04. Other Reports.

         

        SECTION 8.05. Notice of Litigation and Other Matters.

         

        SECTION 8.06. Accuracy of Information.

         

      	 

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    ARTICLE IX AFFIRMATIVE COVENANTS 	44

        
 ii

        

  		

        SECTION 9.01. Preservation of Corporate Existence and Related
        Matters.

         

        SECTION 9.02. Maintenance of Property.

         

        SECTION 9.03. Insurance.

         

        SECTION 9.04. Accounting Methods and Financial Records.

         

        SECTION 9.05. Payment and Performance of Obligations.

         

        SECTION 9.06. Compliance With Laws and Approvals.

         

        SECTION 9.07. Environmental Laws.

         

        SECTION 9.08. Compliance with ERISA.

         

        SECTION 9.09. Conduct of Business.

         

        SECTION 9.10. Visits and Inspections.

        

        SECTION 9.11. Use of Proceeds.

         

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    ARTICLE X FINANCIAL COVENANTS 	46
		

         

        SECTION 10.01. Interest Coverage Ratio.

         

        SECTION 10.02. Minimum Net Worth.

          

      	 

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        46
	

    ARTICLE XI NEGATIVE COVENANTS 	46
		

         

        SECTION 11.01. Limitations on Debt and Guaranty Obligations.

         

        SECTION 11.02. [Reserved].

         

        SECTION 11.03. Limitations on Liens.

         

        SECTION 11.04. Limitations on Loans, Advances, Investments and
        Acquisitions.

         

        SECTION 11.05. Limitations on Mergers and Liquidation.

         

        SECTION 11.06. Limitations on Sale or Transfer of Assets.

         

        SECTION 11.07. Limitations on Dividends and Distributions.

         

        SECTION 11.08. Transactions with Affiliates.

         

        SECTION 11.09. Changes in Fiscal Year End.

         

        SECTION 11.10. Amendments; Payments and Prepayments of Material Debt
        and Subordinated Debt.

         

        	 

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    ARTICLE XII DEFAULT AND REMEDIES 	52

        iii

        

  		

         

        SECTION 12.01. Events of Default.

         

        SECTION 12.02. Remedies.

         

        SECTION 12.03. Rights and Remedies Cumulative; Non-Waiver; Etc.

         

        	 

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    ARTICLE XIII THE ADMINISTRATIVE AGENT 	55
		

         

        SECTION 13.01. Appointment.

         

        SECTION 13.02. Delegation of Duties.

         

        SECTION 13.03. Exculpatory Provisions.

         

        SECTION 13.04. Reliance by the Administrative Agent.

         

        SECTION 13.05. Notice of Default.

         

        SECTION 13.06. Non-Reliance on the Administrative Agent and Other
        Lenders.

         

        SECTION 13.07. Indemnification.

         

        SECTION 13.08. The Administrative Agent in Its Individual Capacity.

         

        SECTION 13.09. Resignation of the Administrative Agent; Successor
        Administrative Agent.

         

        SECTION 13.10. Syndication and Documentation Agents.

         

        	 

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    ARTICLE XIV MISCELLANEOUS  	58
		

         

        SECTION 14.01. Notices.

         

        SECTION 14.02. Expenses; Indemnity.

         

        SECTION 14.03. Set-off.

         

        SECTION 14.04. Governing Law.

         

        SECTION 14.05. Consent to Jurisdiction.

         

        SECTION 14.06. Waiver of Jury Trial.

         

        SECTION 14.07. Reversal of Payments.

         

        SECTION 14.08. Injunctive Relief; Punitive Damages.

         

        SECTION 14.09. Accounting Matters.

         

        SECTION 14.10. Successors and Assigns; Participations.

        

        SECTION 14.11. Amendments, Waivers and Consents.

         

        	 

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        iv

        

  		

        SECTION 14.12. Performance of Duties.

         

        
        SECTION 14.13. All Powers Coupled with Interest.

         

        
        SECTION 14.14. Survival of Indemnities.

         

        
        SECTION 14.15. Titles and Captions.

         

        
        SECTION 14.16. Severability of Provisions.

         

        
        SECTION 14.17. Counterparts.

         

        
        SECTION 14.18. Term of Agreement.

         

        
        SECTION 14.19. Inconsistencies with Other Documents; Independent
        Effect of Covenants.

         

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  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

  v

  

      FIFTH AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT, dated as of the 11th
  day of June, 2002, 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, SALOMON SMITH BARNEY INC., and J.P.
  MORGAN SECURITIES INC., as Joint-Lead Arrangers and Joint Bookrunners,
  WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders,
  CITIBANK, N.A. and JPMORGAN CHASE BANK, as Syndication Agents, and BANK OF
  AMERICA, N.A and FLEET NATIONAL BANK, 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 1.01. 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 Wachovia in its capacity
      as Administrative Agent hereunder, and any successor thereto appointed
      pursuant to Section 13.9.

          "Administrative Agent's Office" means the office of
      the Administrative Agent specified in or determined in accordance with the
      provisions of Section 14.1(c).

          "Affiliate" means, with respect to any Person, any
      other Person (other than a Subsidiary) which directly or indirectly
      through one or more intermediaries, controls, or is controlled by, or is
      under common control with, such first Person or any of its Subsidiaries.
      The term "control" means the possession, directly or
      indirectly, of 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 Fifth Amended and Restated
      364-Day Credit Agreement, as amended, restated, supplemented or otherwise
      modified.

          "Alternative Currency" means (i) Pounds Sterling, (ii)
      the euro or (iii) any other lawful currency (other than Dollars)
      acceptable to the Issuing Lenders which, in the case of this clause (iii),
      is freely transferable and convertible into Dollars in the United States 

    

  

  

  
    
      
      currency market and is freely available to all Issuing Lenders in the
      London interbank deposit market.

          "Alternative Currency L/C Commitment" means the lesser
      of (a) One Hundred Million Dollars ($100,000,000) and (b) the L/C
      Commitment.

          "Applicable Law" means all applicable provisions of
      constitutions, laws, statutes, ordinances, rules, treaties, regulations,
      permits, licenses, approvals, interpretations and 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.

  

    2

  
        "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).

        "Borrower" means Jones Apparel Group USA, Inc.

        "Business Day" means (a) any day other than a Saturday,
    Sunday or legal holiday on which banks in Charlotte, North Carolina,
    Philadelphia, Pennsylvania and New York, New York, are not authorized or
    required by law to remain closed for the conduct of their commercial banking
    business, (b) with respect to all notices and determinations in connection
    with, and payments of principal and interest on, any LIBOR Rate Loan, the
    term "Business Day" shall also exclude any day on which
    banks are not open for trading in Dollar deposits in the London interbank
    market, and (c) with respect to all notices and determinations in connection
    with, and payment of principal and interest on, any L/C Obligation
    denominated in an Alternative Currency; the term "Business Day"
    shall also exclude any day on which banks in London do not provide
    quotations for deposits denominated in such Alternative Currency.

        "Capital Lease" means, with respect to the Credit
    Parties and their Subsidiaries, any lease of any property that should, in
    accordance with GAAP, be classified and accounted for as a capital lease on
    a Consolidated balance sheet of the Credit Parties and their Subsidiaries.

        "Change in Control" shall have the meaning assigned
    thereto in Section 12.1(h).

        "Closing Date" means the date of this Agreement or such
    later Business Day upon which each condition described in Section 6.2 shall
    be satisfied or waived in all respects.

        "Code" means the Internal Revenue Code of 1986, and the
    rules and regulations thereunder, each as amended, supplemented or otherwise
    modified from time to time.

        "Consolidated" means, when used with reference to
    financial statements or financial statement items of the Credit Parties and
    their Subsidiaries, such statements or items on a consolidated basis in
    accordance with applicable principles of consolidation under GAAP.

        "Correspondent" means any financial institution
    designated by an Issuing Lender to act as such Issuing Lender's
    correspondent hereunder with respect to the distribution and payment of
    Letters of Credit denominated in an Alternative Currency.

  

    3

  
        "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 net obligations incurred by any such Person pursuant to
    Hedging Agreements.

        "Default" means any of the events specified in Section
    12.1 which with the passage of time, the giving of notice or any other
    condition, would constitute an Event of Default.

        "Dollar Amount" shall mean (a) with regard to any
    Obligation denominated in Dollars, the amount thereof and (b) with regard to
    any Obligation denominated in an Alternative Currency, the amount of Dollars
    which is equivalent to the sum of (i) the amount so expressed in an
    Alternative Currency at the applicable-quoted spot rate on the appropriate
    page of the Reuter's Screen as determined by the Administrative Agent at the
    relevant time; plus (ii) any amounts owed by the Borrower pursuant to
    Section 3.5(b).

        "Dollars" or "$" means, unless
    otherwise qualified, dollars in lawful currency of the United States.

        "EBITDAR" means, with respect to the Credit Parties and
    their Subsidiaries on a Consolidated basis for any period, the sum of (a)
    Net Income for such period, plus (b) the sum of the following to the extent
    deducted in the determination of Net Income: (i) income and franchise taxes,
    (ii) Interest Expense, (iii) amortization, depreciation, extraordinary
    non-cash losses and any other non-cash charges (including amortization or
    write-off of goodwill, transaction expenses, covenants not to compete and
    other intangible assets, and non-cash charges resulting from purchase
    accounting related to 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,

  

    4

  
    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.

        "Environmental Laws" means any and all federal, state
    and local laws, statutes, ordinances, rules, regulations, permits, licenses,
    approvals, binding interpretations and orders of courts or Governmental
    Authorities, relating to the protection of human health or the environment,
    including, but not limited to, requirements pertaining to the manufacture,
    processing, distribution, use, treatment, storage, disposal, transportation,
    handling, reporting, licensing, permitting, investigation or remediation of
    Hazardous Materials.

        "ERISA" means the Employee Retirement Income Security
    Act of 1974, and the rules and regulations thereunder, each as amended,
    supplemented or otherwise modified from time to time.

        "ERISA Affiliate" means any Person who together with the
    Borrower is treated as a single employer within the meaning of Section
    414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

      "euro" means the lawful currency of the European Union as
  constituted by the Treaty of Rome which established the European Community, as
  such treaty may be amended from time to time and as referred to in the EMU
  legislation.

      "Eurodollar Reserve Percentage" means, for any day, the
  percentage (expressed as a decimal and rounded upwards, if necessary, to the
  next higher 1/100th of 1%) which is in effect for such day as prescribed by
  the Federal Reserve Board (or any successor) for determining the maximum
  reserve requirement (including without limitation any basic, supplemental or
  emergency reserves) in respect of eurocurrency liabilities or any similar
  category of liabilities for a member bank of the Federal Reserve System in New
  York City.

      "Event of Default" means any of the events specified in
  Section 12.1, provided that any requirement for passage of time, giving of
  notice, or any other condition, has been satisfied.

  

  5

  

      "Existing Debt Securities" means 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.

      "Fiscal Year" means the fiscal year of the Credit Parties
  and their Subsidiaries ending on December 31.

      "Five-Year Credit Agreement" means the Five-Year Credit
  Agreement dated as of June 15, 1999 by and among the Borrower, the Additional
  Obligors, the Administrative Agent and the financial institutions party
  thereto, as amended, restated, supplemented or otherwise modified from time to
  time.

      "Five-Year Credit Agreement Obligations" means the
  obligations of the Borrower and the Additional Obligors under the Five-Year
  Credit Agreement.

      "Foreign Lender" means any Lender that is organized under
  the laws of a jurisdiction other than that in which the Borrower is located.
  For purposes of this definition, the United States of America, each state
  thereof and the District of Columbia shall be deemed to constitute a single
  jurisdiction.

      "GAAP" means generally accepted accounting principles, as
  recognized by the American Institute of Certified Public Accountants and the
  Financial Accounting Standards Board, consistently applied and maintained on a
  consistent basis for the Credit Parties and their Subsidiaries throughout the
  period indicated.

      "Governmental Approvals" means all authorizations,
  consents, approvals, licenses and exemptions of, registrations and filings
  with, and reports to, all Governmental Authorities.

  

  6

  

  

      "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.

      "Interest Period" shall have the meaning assigned thereto
  in Section 5.1(b).

  

  7

  

  

      "ISP 98" means the International Standby Practices (1998
  Revision, effective January 1, 1999), International Chamber of Commerce
  Publication No. 590.

      "Issuing Lender" means (a) Wachovia and JPMorgan Chase
  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

  

  8

  

  

  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
  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.

        "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 

    

  

    9

  

  

     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).

        "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).

    

  

    10

  

  

        "Outstanding Letters of Credit" means each letter of
    credit described on Schedule 1.1(b) and outstanding as of the Closing Date.

        "PBGC" means the Pension Benefit Guaranty Corporation
    referred to and defined in ERISA or any successor agency.

        "Pension Plan" means any Employee Benefit Plan, other
    than a Multiemployer Plan, which is subject to the provisions of Title IV of
    ERISA or Section 412 of the Code.

        "Permitted Investment Policy" of the Credit Parties
    means the investment policy of the Credit Parties as in effect on the date
    of this Agreement 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 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 Wachovia as its prime rate
    in effect at its principal office in Charlotte, North Carolina. Each change
    in the Prime Rate shall be effective as of the opening of business on the
    day such change in the Prime Rate occurs. The parties hereto acknowledge
    that the rate announced publicly by Wachovia as its Prime Rate is an index
    or base rate and shall not necessarily be its lowest or best rate charged to
    its customers or other banks.

        "Prior Credit Agreement" means the Fourth Amended and
    Restated 364-Day Credit Agreement dated as of June 12, 2001, by and among
    the Borrower, the Prior Lenders and First Union National Bank, 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).

    

  

    11

  

  

        "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 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.

    

  

    12

  

  

        "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 JPMorgan Chase Bank and
    Citibank, N.A., each in their capacity as syndication agent hereunder, and
    any successor thereto.

        "Taxes" shall have the meaning assigned thereto in
    Section 5.12(a).

        "Termination Event" means: (a) a "Reportable
    Event" described in Section 4043 of ERISA, or (b) the withdrawal of
    the Borrower or any ERISA Affiliate from a Pension Plan during a plan year
    in which it was a "substantial employer" as defined in
    Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the
    filing of a notice of intent to terminate a Pension Plan or the treatment of
    a Pension Plan amendment as a termination under Section 4041 of ERISA, or
    (d) the institution of proceedings to terminate, or the appointment of a
    trustee with respect to, any Pension Plan by the PBGC, or (e) any other
    event or condition which would constitute grounds under Section 4042(a) of
    ERISA for the termination of, or the appointment of a trustee to administer,
    any Pension Plan, or (f) the partial or complete withdrawal of the Borrower
    or any ERISA Affiliate from a Multiemployer Plan, or (g) the imposition of a
    Lien pursuant to Section 412 of the Code or Section 302 of ERISA, or (h) any
    event or condition which results in the reorganization or insolvency of a
    Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or
    condition which results in the termination of a Multiemployer Plan under
    Section 4041A of ERISA or the institution by PBGC of proceedings to
    terminate a Multiemployer Plan under Section 4042 of ERISA.

        "Total Committed Amount" means (a) as to any Lending
    Group Member, the sum of (i) the Revolving Credit Commitment of such Lending
    Group Member (or, if such Revolving Credit Commitment has been terminated,
    the aggregate unpaid principal 

    

  

    13

  

  

     amount of all outstanding Extensions of
    Credit of such Lending Group Member) plus (ii) the Revolving Credit
    Commitment (as defined in the Five Year Credit Agreement) of such Lending
    Group Member (or, if such Revolving Credit Commitment has been terminated,
    the aggregate unpaid principal amount of all outstanding Extensions of
    Credit (as defined in the Five Year Credit Agreement) of such Lending Group
    Member) and (b) as to all Lenders, the aggregate Total Committed Amount of
    all Lending Group Members.

        "Total Committed Percentage" means, as to any Lending
    Group Member at any time, the ratio of (a) the amount of the Total Committed
    Amount of such Lending Group Member to (b) the aggregate Total Committed
    Amount of all Lending Group Members.

        "Treaty on European Union" means the Treaty of Rome of
    March 25, 1957, as amended by the Single European Act 1986 and the
    Maastricht Treaty (signed February 7, 1992), as amended from time to time.

        "UCC" means the Uniform Commercial Code as in effect in
    the State of New York, as amended, restated or otherwise modified from time
    to time.

        "Uniform Customs" means the Uniform Customs and Practice
    for Documentary Credits (1994 Revision), International Chamber of Commerce
    Publication No. 500.

        "United States" means the United States of America.

        "Utilization Fee" shall have the meaning assigned
    thereto in Section 5.3(b).

        "Wachovia" means Wachovia Bank, National Association, a
    national banking association, and its successors.

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

    

  

    14

  

  SECTION 1.02. 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 1.03. 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 2.01. 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 2.02. 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 

  15

  

   whole multiple of $250,000 in excess
  thereof and (y) with respect to LIBOR Rate Loans in an aggregate principal
  amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof, (C)
  whether such Revolving Credit Loan is to be a LIBOR Rate Loan or Base Rate
  Loan, and (D) in the case of a LIBOR Rate Loan, the duration of the Interest
  Period applicable thereto. Notices received after 11:00 a.m. (Charlotte time)
  shall be deemed received on the next Business Day. The Administrative Agent
  shall promptly notify the Lenders of each Notice of Revolving Credit
  Borrowing.

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

  SECTION 2.03. 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 amount of all L/C Obligations
  denominated in Dollars and (B) the Alternative Currency L/C Commitment, in
  each case as of the last Business Day of any calendar month during the term
  hereof, then not later than three (3) Business Days after notice of the amount
  of such excess from the Administrative Agent to the Borrower, the Borrower
  shall deposit an amount in Dollars equal to such excess with the
  Administrative Agent to be held as cash collateral in accordance with Section
  12.2(b).

          (c) Optional Repayments. The Borrower may at any time and from time
  to time repay the Revolving Credit Loans, in whole or in part, upon at least
  three (3) Business Days' irrevocable notice to the Administrative Agent with
  respect to LIBOR Rate Loans and one (1) Business Day 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 

  16

  

   the repayment is of LIBOR Rate Loans, Base Rate Loans, or a
  combination thereof, and, if of a combination thereof, the amount allocable to
  each. Upon receipt of such notice, the Administrative Agent shall promptly
  notify each Lender. If any such notice is given, the amount specified in such
  notice shall be due and payable on the date set forth in such notice. Partial
  repayments shall be in an aggregate amount of $1,000,000 or a whole multiple
  of $250,000 in excess thereof with respect to Base Rate Loans and $5,000,000
  or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate
  Loans.

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

  SECTION 2.04. 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 2.05. 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

  17

  

  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 2.06. Termination of Revolving Credit Facility.  The Revolving Credit Facility shall terminate on the earliest of (a) June
  10, 2003, (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 15, 2004. No Lender shall be under any
  obligation or commitment to extend such date and no such 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 

  18

  

   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 3.01. 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 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 3.02. 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 

  19

  

   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 3.03. 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.

  20

  

  SECTION 3.04. L/C Participations.  (a) Each Issuing Lender irrevocably agrees to grant and hereby grants to
  each L/C Participant, and, to induce such Issuing Lender to issue Letters of
  Credit hereunder, each L/C Participant irrevocably agrees to accept and
  purchase and hereby accepts and purchases from such Issuing Lender, on the
  terms and conditions hereinafter stated, for such L/C Participant's own
  account and risk an undivided interest equal to such L/C Participant's
  Revolving Credit Commitment Percentage in such Issuing Lender's obligations
  and rights under each Letter of Credit issued hereunder and the amount of each
  draft paid by such Issuing Lender thereunder. Each L/C Participant
  unconditionally and irrevocably agrees with each Issuing Lender that, if a
  draft is paid under any Letter of Credit for which such Issuing Lender is not
  reimbursed in full by the Borrower in accordance with the terms of this
  Agreement, such L/C Participant shall pay to such Issuing Lender upon demand
  at such Issuing Lender's address for notices specified herein an amount in
  Dollars equal to such L/C Participant's Revolving Credit Commitment Percentage
  of the Dollar Amount of such draft, or any part thereof, which is not so
  reimbursed, such payment to be made by the making of a Base Rate Loan in
  Dollars pursuant to Section 3.5(c) below.

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

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

  SECTION 3.05. 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 

  21

  

   such
  payment shall be made to any Issuing Lender at its address for notices
  specified herein (i) in Dollars if such Letter of Credit was denominated in
  Dollars or (ii) in Dollars or the applicable Alternative Currency, at the
  option of the Borrower, if such Letter of Credit was denominated in an
  Alternative Currency, and in each case, in immediately available funds.
  Interest shall be payable on any and all amounts remaining unpaid by the
  Borrower under this Article III from the day immediately following the date
  such amounts become payable (whether at stated maturity, by acceleration or
  otherwise) until payment in full at the rate which would be payable on any
  outstanding Base Rate Loans which were then overdue.

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

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

  SECTION 3.06. 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 

  22

  

   negligence or
  willful misconduct. The Borrower agrees that any action taken or omitted by
  any Issuing Lender under or in connection with any Letter of Credit or the
  related drafts or documents, if done in the absence of gross negligence or
  willful misconduct and in accordance with the standards of care specified in
  the Uniform Customs and/or ISP 98, as set forth in the Application or as
  determined by the Issuing Lender and, to the extent not inconsistent
  therewith, the laws of the State of New York, shall be binding on the Borrower
  and shall not result in any liability of any Issuing Lender to the Borrower.
  The responsibility of each Issuing Lender to the Borrower in connection with
  any draft presented for payment under any Letter of Credit shall, in addition
  to any payment obligation expressly provided for in such Letter of Credit, be
  limited to determining that the documents (including each draft) delivered
  under such Letter of Credit in connection with such presentment are in
  conformity with such Letter of Credit.

  SECTION 3.07 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 5.01. 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 

    

  

      23

  

  
    
       Business Day occurs in
      such month, such Interest Period shall expire on the next preceding
      Business Day;

          (iii) any Interest Period with respect to a LIBOR Rate Loan that begins
      on the last Business Day of a calendar month (or on a day for which there
      is no numerically corresponding day in the calendar month at the end of
      such Interest Period) shall end on the last Business Day of the relevant
      calendar month at the end of such Interest Period;

          (iv) no Interest Period shall extend beyond the Revolving Credit
      Termination Date; and

          (v) there shall be no more than six (6) Interest Periods in effect at
      any time.

    

  

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

          (d) Interest Payment and Computation. Interest on each Base Rate
  Loan shall be payable in arrears on the last Business Day of each calendar
  quarter commencing June 30, 2002; 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 5.02. 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 

  24

  

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

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

          (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 5.04. 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 

  25

  

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

  SECTION 5.06. 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 

  26

  

   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 5.07. 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 5.08. 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.

          (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 

  27

  

   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.

  28

  

  SECTION 5.09. 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 

    

  

      29

  

  
    
       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 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.

  30

  

          (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 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 

  31

  

   with reference to any Lender's Revolving Credit Commitment
  and other commitments of this type, below the rate which the Lender or such
  other corporation could have achieved but for such introduction, change or
  compliance, then within five (5) Business Days after written demand by any
  such Lender, the Borrower shall pay to such Lender from time to time as
  specified by such Lender additional amounts sufficient to compensate such
  Lender or other corporation for such reduction; provided that no compensation
  shall be payable pursuant to the above if the applicable Lender fails to
  demand compensation for such increased costs within one-hundred eighty (180)
  days following the date on which such lender has actual knowledge of the event
  resulting in such increase. A certificate of such Lender setting forth in
  reasonable detail the basis for determining such amounts necessary to
  compensate such Lender shall be forwarded to the Borrower through the
  Administrative Agent and shall be conclusively presumed to be correct save for
  manifest error.

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

          (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").

  32

  

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

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

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

  33

  

   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 6.01. Closing.  The closing shall take place at the offices of Shearman & Sterling at
  10:00 a.m. on June 11, 2002 or at such other location, on such other date and
  at such other time as the parties hereto shall mutually agree.

  SECTION 6.02. 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 other Loan Documents to which it is a party, and (D)
      each certificate required to be delivered pursuant to Section 6.2(b)(iii).

    

  

      34

  

  
    
          (iii) Certificates of Good Standing. The Administrative Agent
      shall have received long-form certificates as of a recent date of the good
      standing of the Borrower under the laws of its jurisdiction of
      organization and short-form certificates as of a recent date of the good
      standing of the Borrower under the laws of each of California, New York,
      North Carolina, Texas, Tennessee, 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, 2001
      and the unaudited financial statements of Jones Apparel Group and its
      Subsidiaries for the fiscal quarter ended on April 6, 2002.

          (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

    

  

      35

  

  
    
      account or accounts to which the
      proceeds of any Revolving Credit Loans made after the Closing Date are to
      be disbursed.

          (ii) Proceedings and Documents. All opinions, certificates and other
      instruments and all proceedings in connection with the transactions
      contemplated by this Agreement shall be satisfactory in form and substance
      to the Lenders.

          (iii) Investment Policy. The Borrower shall have delivered to the
      Administrative Agent a true and complete copy of the investment policy
      referenced in Section 11.4(b) in form and content reasonably acceptable to
      the Administrative Agent.

          (f) Refinancing. On the Closing Date hereunder, (i) all
      outstanding loans under the Prior Credit Agreement ("Existing
      Loans") shall be replaced by Revolving Credit Loans hereunder and
      the Administrative Agent shall make such transfers of funds as are
      necessary in order that the outstanding balance of such Revolving Credit
      Loans, together with any Revolving Credit Loans funded on the Closing
      Date, reflect the Revolving Credit Commitment of the Lenders hereunder,
      (ii) all outstanding letters of credit issued pursuant to the Prior Credit
      Agreement shall be deemed Letters of Credit hereunder and each Lender
      shall purchase a participation therein pursuant to Section 3.4 in
      accordance with its Revolving Credit Commitment Percentage, (iii) there
      shall have been paid in cash in full all accrued but unpaid interest due
      on the Existing Loans up to but excluding the Closing Date, (iv) there
      shall have been paid in cash in full all accrued but unpaid fees due under
      the Prior Credit Agreement up to but excluding the Closing Date and all
      other amounts, costs and expenses then owing to any of the Prior Lenders
      and/or any Agent, as agent under the Prior Credit Agreement, in each case
      to the satisfaction of such Agent or Prior Lender, as the case may be,
      regardless of whether or not such amounts would otherwise be due and
      payable at such time pursuant to the terms of the Prior Credit Agreement,
      (v) all outstanding promissory notes issued by the Borrower to the Prior
      Lenders under the Prior Credit Agreement shall be deemed canceled and the
      originally executed copies thereof shall be canceled and promptly returned
      to the Administrative Agent who shall promptly forward such notes to the
      Borrower and (vi) the commitments and, except as expressly set forth in
      the Prior Credit Agreement, other obligations and rights of the Borrower
      and the Prior Lenders shall be terminated without any further action
      hereunder or thereunder.

    

  

  SECTION 6.03. 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.

    

  

      36

  

  
  ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

  
  SECTION 7.01. Representations and Warranties.  To induce the Administrative Agent and Lenders to enter into this Agreement
  and to induce the Lenders to make Extensions of Credit, the Credit Parties
  hereby represent and warrant to the Administrative Agent and Lenders that:

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

          (b) Ownership. Each Subsidiary of each of the Credit Parties as
      of the Closing Date is listed on Schedule 7.1(b). As of the Closing Date,
      the capitalization of the Credit Parties and their Subsidiaries consists
      of the number of shares, authorized, issued and outstanding, of such
      classes and series, with or without par value, described on Schedule
      7.1(b). As of the Closing Date, all outstanding shares have been duly
      authorized and validly issued and are fully paid and nonassessable. The
      shareholders of the Subsidiaries of the Credit Parties and the number of
      shares owned by each as of the Closing Date are described on Schedule
      7.1(b). As of the Closing Date, there are no outstanding stock purchase
      warrants, subscriptions, options, securities, instruments or other rights
      of any type or nature whatsoever, which are convertible into, exchangeable
      for or otherwise provide for or permit the issuance of capital stock of
      the Credit Parties or their Subsidiaries, except as described on Schedule
      7.1(b).

          (c) Authorization of Agreement, Loan Documents and Borrowing.
      Each of the Credit Parties and, if applicable, their Subsidiaries has the
      right, power and authority and has taken all necessary corporate and other
      action to authorize the execution, delivery and performance of each of the
      Loan Documents to which it is a party in accordance with their respective
      terms. Each of the Loan Documents have been duly executed and delivered by
      the duly authorized officers of the Credit Parties and each of their
      Subsidiaries party thereto, as applicable, and each such document
      constitutes the legal, valid and binding obligation of the Credit Parties
      and, if applicable, each of their Subsidiaries party thereto, enforceable
      in accordance with its terms, except as such enforcement may be limited by
      bankruptcy, insolvency, reorganization, moratorium or similar state or
      federal debtor relief laws from time to time in effect which affect the
      enforcement of creditors' rights in general and the availability of
      equitable remedies.

          (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 

    

  

      37

  

  
    
      
      agreement or instrument to which such Person is a party or by which any of
      its properties may be bound or any Governmental Approval relating to such
      Person except as could not reasonably be expected to have a Material
      Adverse Effect, or (iii) result in or require the creation or imposition
      of any material Lien upon or with respect to any property now owned or
      hereafter acquired by such Person.

          (e) Compliance with Law; Governmental Approvals. Other than with
      respect to environmental matters, which are treated exclusively in Section
      7.1(h) hereof, each of the Credit Parties and their Subsidiaries (i) has
      all Governmental Approvals required by any Applicable Law for it to
      conduct its business, each of which is in full force and effect, is final
      and not subject to review on appeal and is not the subject of any pending
      or, to the best of its knowledge, threatened attack by direct or
      collateral proceeding, and (ii) is in compliance with each Governmental
      Approval applicable to it and in compliance with all other Applicable Laws
      relating to it or any of its respective properties; in each case, except
      where the failure to do so could not reasonably be expected to have a
      Material Adverse Effect.

          (f) Tax Returns and Payments. Each of the Credit Parties and
      their Subsidiaries has timely filed or caused to be timely filed all
      federal and state, local and other tax returns required by Applicable Law
      to be filed, and has paid, or made adequate provision for the payment of,
      all federal and state, local and other taxes, assessments and governmental
      charges or levies upon it and its property, income, profits and assets
      which are due and payable, except (a) taxes that are being contested in
      good faith by appropriate proceedings and for which such Credit Party or
      Subsidiary, as applicable, has set aside on its books adequate reserves 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;

        

      

    

  

          38

  

  
    
      
        
              (ii) The properties of the Credit Parties and their Subsidiaries
          and all operations conducted in connection therewith are in
          compliance, and have been in compliance, with all applicable
          Environmental Laws, and there are no Hazardous Materials at, under or
          about such properties or such operations in amounts or concentrations
          which could reasonably be expected to interfere with the continued
          operation of such properties;

              (iii) Neither any of the Credit Parties nor any Subsidiary thereof
          has received any notice of violation, alleged violation,
          non-compliance, liability or potential liability regarding
          environmental matters or compliance with Environmental Laws, nor does
          any of the Credit Parties or any Subsidiary thereof have knowledge or
          reason to believe that any such notice will be received or is being
          threatened;

              (iv) To the knowledge of the Credit Parties, Hazardous Materials
          have not been transported or disposed of from the properties of the
          Credit Parties or any of their Subsidiaries in violation of, or in a
          manner or to a location which could reasonably be expected to give
          rise to liability under, Environmental Laws, nor, to the knowledge of
          the Credit Parties, have any Hazardous Materials been generated,
          treated, stored or disposed of at, on or under any of such properties
          in violation of, or in a manner which could reasonably be expected to
          give rise to liability under, any Environmental Laws;

              (v) No judicial proceedings or governmental or administrative
          action is pending, or, to the knowledge of the Credit Parties,
          threatened, under any Environmental Law to which any of the Credit
          Parties or any Subsidiary thereof will be named as a party, nor are
          there any consent decrees or other decrees, consent orders,
          administrative orders or other orders, or other administrative or
          judicial requirements outstanding under any Environmental Law with
          respect to the properties or operations of the Credit Parties and
          their Subsidiaries; and

              (vi) To the knowledge of the Credit Parties, there has been no
          release, or to the best of the Credit Parties' knowledge, the threat
          of release, of Hazardous Materials at or from the properties of the
          Credit Parties or any of their Subsidiaries, in violation of or in
          amounts or in a manner that could reasonably be expected to give rise
          to liability under Environmental Laws.

        

      

          (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;

    

  

      39

  

  
    
          (ii) No accumulated funding deficiency (as defined in Section 412 of
      the Code) has been incurred (without regard to any waiver granted under
      Section 412 of the Code), nor has any funding waiver from the Internal
      Revenue Service been received or requested with respect to any Pension
      Plan;

          (iii) Neither the Credit Parties nor any ERISA Affiliate has: (A)
      engaged in a nonexempt prohibited transaction described in Section 406 of
      ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC
      which remains outstanding other than the payment of premiums and there are
      no premium payments which are due and unpaid, (C) failed to make a
      required contribution or payment to a Multiemployer Plan, or (D) failed to
      make a required installment or other required payment under Section 412 of
      the Code except where any of the foregoing individually or in the
      aggregate could not reasonably be expected to have a Material Adverse
      Effect;

          (iv) No Termination Event that could reasonably be expected to result
      in a Material Adverse Effect has occurred or is reasonably expected to
      occur; and

          (v) No proceeding, claim, lawsuit and/or investigation is existing or,
      to the knowledge of the Credit Parties, threatened concerning or involving
      any Employee Benefit Plan that could reasonably be expected to result in a
      Material Adverse Effect.

          (j) Margin Stock. Neither the Credit Parties nor any Subsidiary
      thereof is engaged principally or as one of its activities in the business
      of extending credit for the purpose of "purchasing" or
      "carrying" any "margin stock" (as each
      such term is defined or used in Regulation U of the Board of Governors of
      the Federal Reserve System). No part of the proceeds of any of the
      Revolving Credit Loans or Letters of Credit will be used for purchasing or
      carrying margin stock, unless the Credit Parties shall have given the
      Administrative Agent and Lenders prior notice of such event and such other
      information as is reasonably necessary to permit the Administrative Agent
      and Lenders to comply, in a timely fashion, with all reporting obligations
      required by Applicable Law, or for any purpose which violates, or which
      would be inconsistent with, the provisions of Regulation T, U or X of such
      Board of Governors.

          (k) Government Regulation. Neither the Credit Parties nor any
      Subsidiary thereof is an "investment company" or a
      company "controlled" by an "investment company"
      (as each such term is defined or used in the Investment Company Act of
      1940, 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, 2001, and the
      related statements of 

    

  

      40

  

  
    
       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 6, 2002, 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 6, 2002 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.

    

  

  SECTION 7.02. Survival of Representations and Warranties, Etc. 
  All representations and warranties set forth in this Article VII and all
  representations and warranties contained in any certificate delivered in
  connection with this Agreement, or any of the Loan Documents (including but
  not limited to any such representation or warranty made in or in connection
  with any 

  41

  

   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 8.01. 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.

  42

  

  SECTION 8.02. 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 8.03. Accountants' Certificate.  At each time financial statements are delivered pursuant to Section 8.1(b),
  a certificate of the independent public accountants certifying such financial
  statements addressed to the Administrative Agent for the benefit of the
  Lenders:

  
    
          (a) stating that in making the examination necessary for the
      certification of such financial statements, they obtained no knowledge of
      any Default or Event of Default or, if such is not the case, specifying
      such Default or Event of Default and its nature and period of existence;
      and

          (b) including the calculations prepared by such accountants required to
      establish whether or not the Credit Parties and their Subsidiaries are in
      compliance with the financial covenants set forth in Article X hereof as
      at the end of each respective period.

    

  

  SECTION 8.04. 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 8.05. 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 

    

  

      43

  

  
    
       of the PBGC's intent
      to terminate any Pension Plan or to have a trustee appointed to administer
      any Pension Plan, (iii) all notices received by the Credit Parties or any
      ERISA Affiliate from a Multiemployer Plan sponsor concerning the
      imposition or amount of withdrawal liability pursuant to Section 4202 of
      ERISA which could reasonably have a Material Adverse Effect and (iv) the
      Credit Parties obtaining knowledge or reason to know that the Credit
      Parties or any ERISA Affiliate has filed or intends to file a notice of
      intent to terminate any Pension Plan under a distress termination within
      the meaning of Section 4041(c) of ERISA.

    

  

  SECTION 8.06. 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 9.01. 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 9.02. 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 9.03. 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 9.04. 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 9.05. 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 

  44

  

   (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 9.06. 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 9.07. Environmental Laws. In addition to and without limiting the generality of Section 9.6, (a)
  comply with, and use best efforts to ensure such compliance by all tenants and
  subtenants with all applicable Environmental Laws and obtain and comply with
  and maintain, and use its best efforts to ensure that all tenants and
  subtenants obtain and comply with and maintain, any and all licenses,
  approvals, notifications, registrations or permits required by applicable
  Environmental Laws except where the failure to comply could not reasonably
  have a Material Adverse Effect, (b) conduct and complete all investigations,
  studies, sampling and testing, and all remedial, removal and other actions
  required under Environmental Laws, and promptly comply with all lawful orders
  and directives of any Governmental Authority regarding Environmental Laws
  except (i) where the failure to do so could not reasonably be expected to have
  a Material Adverse Effect or (ii) to the extent the Credit Parties or any of
  their Subsidiaries are contesting, in good faith, any such requirement, order
  or directive before the appropriate Governmental Authority so long as adequate
  reserves are maintained with respect thereto to the extent required by GAAP,
  and (c) defend, indemnify and hold harmless the Administrative Agent and the
  Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
  agents, officers and directors, from and against any claims, demands,
  penalties, fines, liabilities, settlements, damages, costs and expenses of
  whatever kind or nature known or unknown, contingent or otherwise, arising out
  of, or in any way relating to the violation of, noncompliance with or
  liability under any Environmental Laws applicable to the operations of the
  Credit Parties or such Subsidiaries, or any orders, requirements or demands of
  Governmental Authorities related thereto, including, without limitation,
  reasonable attorney's and consultant's fees, investigation and laboratory
  fees, response costs, court costs and litigation expenses, except to the
  extent that any of the foregoing directly result from the gross negligence or
  willful misconduct of the party seeking indemnification therefor.

  SECTION 9.08. 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 9.09. 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, 

  45

  

   "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 10.01. Interest Coverage Ratio. As of the end of any fiscal quarter, permit the ratio (the "Interest
  Coverage Ratio") of (a) EBITDAR for the period of four (4)
  consecutive fiscal quarters ending on or immediately prior to such date to (b)
  the sum of (i) Interest Expense paid or payable in cash and (ii) Rental
  Expense, both for the period of four (4) consecutive fiscal quarters ending on
  or immediately prior to such date, to be less than (i) 2.50 to 1.0 for the
  period from the Closing Date through and including the fiscal quarter ending
  closest to September 30, 2002; and (ii) 2.75 to 1.0 for all times thereafter.

  SECTION 10.02. 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 11.01. 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);

    

  

      46

  

  
    
          (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;

          (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 

    

  

      47

  

  
    
       Parties to pay the
      Obligations. For purposes of this Section 11.1, with regard to any Debt, a
      "Permitted Encumbrance" shall mean any restriction,
      limitation or other encumbrance that applies solely if a default or event
      of default (other than a default resulting solely from the breach of a
      representation or warranty) occurs and is continuing under such Debt;
      provided further that, with respect to any default or event of default
      (other than a payment default, including as a result of acceleration, or a
      bankruptcy event with respect to the obligor of such Debt), such
      encumbrance or restriction may not prohibit dividends to the Credit
      Parties or any Subsidiary thereof to pay the Obligations for more than one
      hundred eighty (180) days in any consecutive three hundred sixty (360) day
      period; and

          (j) Debt incurred in connection with the Permitted Investment Policy.

    

  

  SECTION 11.02. [Reserved].

  SECTION 11.03. 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;

          (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 

    

  

      48

  

  
    
       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.

    

  

      49

  

  SECTION 11.04. Limitations on Loans, Advances, Investments and
  Acquisitions. Purchase, own, invest in or otherwise acquire, directly or indirectly, any
  capital stock (other than capital stock of the Credit Parties), interests in
  any partnership, limited liability company or joint venture (including without
  limitation the creation or capitalization of any Subsidiary), evidence of Debt
  or other obligation or security, substantially all or a portion of the
  business or assets of any other Person or any other investment or interest
  whatsoever in any other Person, or make or permit to exist, directly or
  indirectly, any loans, advances or extensions of credit to, or any investment
  in cash or by delivery of property in, any Person, or enter into, directly or
  indirectly, any commitment or option in respect of the foregoing
  (collectively, "Investments") except:

  
    
          (a) Investments in Subsidiaries existing on the Closing Date and the
      other existing loans, advances and Investments described on Schedule 11.4;

          (b) Investments made in accordance with the Permitted Investment
      Policy;

          (c) Investments by the Credit Parties or any Subsidiary in the form of
      acquisitions, including acquisitions of all or substantially all of the
      business or a line of business (whether by the acquisition of capital
      stock, assets or any combination thereof) of any other Person, so long as
      (i) a Responsible Officer certifies to the Administrative Agent and the
      Required Lenders that no Default or Event of Default has occurred and is
      continuing or would result from the closing of such acquisition, such
      certification to include, for any acquisition involving a purchase price
      in excess of $50,000,000, either individually or in a series of related
      transactions, a financial condition certificate to which is attached a pro
      forma balance sheet of Jones Apparel Group and its Subsidiaries setting
      forth on a pro forma basis the financial conditions of Jones Apparel Group
      and its Subsidiaries on a Consolidated basis as of December 31, 2001,
      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 11.05. 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 

  50

  

   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;

          (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 11.06. 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.

    

  

  SECTION 11.07. 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 

  51

  

   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 11.08. 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 11.09. 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 12.01. 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 

    

  

      52

  

  
    
       prove to have been incorrect or
      misleading in any material respect when made or deemed made.

          (d) Default in Performance of Certain Covenants. Any of the
      Credit Parties shall default in the performance or observance of any
      covenant or agreement contained in Article X or XI of this Agreement.

          (e) Default in Performance of Other Covenants and Conditions.
      Any of the Credit Parties or any Subsidiary thereof, if applicable, shall
      default in the performance or observance of any term, covenant, condition
      or agreement contained in this Agreement (other than as specifically
      provided for otherwise in this Section 12.1) or any other Loan Document
      and such default shall continue for a period of thirty (30) days after
      written notice thereof has been given to the Borrower by the
      Administrative Agent.

          (f) Hedging Agreement. Any termination payments in an amount
      greater than $35,000,000 shall be due by any Credit Party under any
      Hedging Agreement and such amount is not paid within thirty (30) Business
      Days of the due date thereof.

          (g) Debt Cross-Default. Any of the Credit Parties or any of
      their Subsidiaries shall (i) default in the payment of 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 

    

  

      53

  

  
    
       hereafter in effect), (ii) file a petition
      seeking to take advantage of any other laws, domestic or foreign, relating
      to bankruptcy, insolvency, reorganization, winding up or composition for
      adjustment of debts, (iii) consent to or fail to contest in a timely and
      appropriate manner any petition filed against it in an involuntary case
      under such bankruptcy laws or other laws, (iv) apply for or consent to, or
      fail to contest in a timely and appropriate manner, the appointment of, or
      the taking of possession by, a receiver, custodian, trustee, or liquidator
      of itself or of a substantial part of its property, domestic or foreign,
      (v) admit in writing its inability to pay its debts as they become due,
      (vi) make a general assignment for the benefit of creditors, or (vii) take
      any corporate action for the purpose of authorizing any of the foregoing.

          (j) Involuntary Bankruptcy Proceeding. A case or other
      proceeding shall be commenced against any Credit Party or any Subsidiary
      thereof in any court of competent jurisdiction seeking (i) relief under
      the federal bankruptcy laws (as now or hereafter in effect) or under any
      other laws, domestic or foreign, relating to bankruptcy, insolvency,
      reorganization, winding up or adjustment of debts, or (ii) the appointment
      of a trustee, receiver, custodian, liquidator or the like for any Credit
      Party or any Subsidiary thereof or for all or any substantial part of
      their respective assets, domestic or foreign, and such case or proceeding
      shall continue without dismissal or stay for a period of sixty (60)
      consecutive days, or an order granting the relief requested in such case
      or proceeding (including, but not limited to, an order for relief under
      such federal bankruptcy laws) shall be entered.

          (k) [Reserved]

          (l) Termination Event. The occurrence of any of the following
      events: (i) the Borrower or any ERISA Affiliate fails to make full payment
      to an Employee Benefit Plan when due (after giving effect to any
      applicable grace period) of contributions in excess of $2,000,000, (ii) an
      accumulated funding deficiency in excess of $2,000,000 occurs or exists,
      whether or not waived, with respect to any Pension Plan or (iii) a
      Termination Event that could reasonably be expected to result in liability
      in excess of $5,000,000 to the Borrower or any ERISA Affiliate.

          (m) Judgment. A judgment or order for the payment of money which
      causes the aggregate amount of all such judgments to exceed $35,000,000 in
      any Fiscal Year shall be entered against any Credit Party or any
      Subsidiary thereof by any court and such judgment or order shall continue
      without discharge or stay for a period of thirty (30) days.

    

  

  SECTION 12.02. 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

    

  

      54

  

  
    
      become due and payable
      without presentment, demand, protest or other notice of any kind, all of
      which are expressly waived, anything in this Agreement or the other Loan
      Documents to the contrary notwithstanding, and terminate the Credit
      Facility and any right of the Borrower to request borrowings or Letters of
      Credit thereunder; provided, that upon the occurrence of an Event of
      Default specified in Section 12.1(i) or (j) with respect to the Credit
      Parties, the Credit Facility shall be automatically terminated and all
      Obligations (other than obligations owing under any Hedging Agreement)
      shall automatically become due and payable.

          (b) Letters of Credit. With respect to all Letters of Credit
      with respect to which presentment for honor shall not have occurred at the
      time of an acceleration pursuant to the preceding paragraph, require the
      Borrower at such time to deposit or cause to be deposited in a cash
      collateral account opened by the Administrative Agent an amount equal to
      the Dollar Amount of the aggregate then undrawn and unexpired amount of
      such Letters of Credit. Amounts held in such cash collateral account shall
      be applied by the Administrative Agent to the payment of drafts drawn
      under such Letters of Credit, and the unused portion thereof after all
      such Letters of Credit shall have expired or been fully drawn upon, if
      any, shall be applied to repay the other Obligations. After all such
      Letters of Credit shall have expired or been fully drawn upon, the
      Reimbursement Obligation shall have been satisfied and all other
      Obligations shall have been paid in full, the balance, if any, in such
      cash collateral account shall be promptly returned to the Borrower.

          (c) Rights of Collection. Exercise on behalf of the Lenders all
      of its other rights and remedies under this Agreement, the other Loan
      Documents and Applicable Law, in order to satisfy all of the Obligations.

    

  

  SECTION 12.03. 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 13.01. Appointment. Each of the Lenders hereby irrevocably designates and appoints Wachovia
  as Administrative Agent of such Lender under this Agreement and the other Loan
  Documents for the term hereof and each such Lender irrevocably authorizes
  Wachovia as Administrative Agent for such Lender, to take such action on its
  behalf under the provisions of this Agreement and the other Loan Documents and
  to exercise such powers and perform such 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. 

  55

  

   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 13.02. 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 13.03. 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 13.04. Reliance by the Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully
  protected in relying, upon any note, writing, resolution, notice, consent,
  certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
  teletype message, statement, order or other document or conversation believed
  by it to be genuine and correct and to have been signed, sent or made by the
  proper Person or Persons and upon advice and statements of legal counsel
  (including, without limitation, counsel to the Borrower), independent
  accountants and other experts selected by the Administrative Agent. The
  Administrative Agent may deem and treat the holder of any Revolving Credit
  Loan as the owner thereof for all purposes unless such Revolving Credit Loan
  shall have been transferred in accordance with Section 14.10 hereof. The
  Administrative Agent shall be fully justified in failing or refusing to take
  any action under this Agreement and the other Loan Documents unless it shall
  first receive such advice or concurrence of the Required Lenders (or, when
  expressly required hereby or by the relevant other Loan Document, 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 

  56

  

   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 13.05. 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 13.06. 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 13.07. Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as
  such and (to the extent not reimbursed by the Borrower and without limiting
  the obligation of the Borrower to do so), ratably according to the respective
  amounts of their Revolving Credit Commitment Percentage from and against any
  and all liabilities, obligations, losses, damages, penalties, actions,
  judgments, suits, costs, expenses or disbursements of any kind whatsoever
  which may at any time (including, without limitation, at any time following
  the 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 

  57

  

   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 13.08. 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 13.09. 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 14.01. Notices. (a) Method of Communication. Except as otherwise provided in this
  Agreement, all notices and communications hereunder shall be in writing, or by
  telephone 

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   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 Administrative Agent as understood by the Administrative Agent will be
  deemed to be the controlling and proper notice in the event of a discrepancy
  with or failure to receive a confirming written notice.

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

  
    
  If to the Credit Parties:

  Jones Apparel Group, Inc.

  250 Rittenhouse Circle

  Bristol, Pennsylvania 19007

  Attention: Chief Financial Officer

  Telephone No.: (215) 785-4000

  Telecopy No.: (215) 785-1228

  If to Wachovia:

  Wachovia Bank, National Association

  Administrative Agent: One 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:

  Wachovia Bank, National Association

  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.

  59

  

  SECTION 14.02. Expenses; Indemnity.  The Borrower will (a) pay all reasonable out-of-pocket expenses of the
  Administrative Agent in connection with (i) the preparation, execution and
  delivery of this Agreement and each other Loan Document, whenever the same
  shall be executed and delivered, including without limitation the reasonable
  out-of-pocket syndication and due diligence expenses and reasonable fees and
  disbursements of counsel for the Administrative Agent and (ii) the
  preparation, execution and delivery of any waiver, amendment or consent by the
  Administrative Agent or the Lenders relating to this Agreement or any other
  Loan Document, including without limitation reasonable fees and disbursements
  of counsel for the Administrative Agent, (b) pay all reasonable out-of-pocket
  expenses of the Administrative Agent actually incurred in connection with the
  administration of the Credit Facility, (c) pay all reasonable out-of-pocket
  expenses of the Administrative Agent and each Lender actually incurred in
  connection with the enforcement of any rights and remedies of the
  Administrative Agent and the Lenders under the Credit Facility, including to
  the extent reasonable under the circumstances consulting with accountants,
  attorneys and other Persons concerning the nature, scope or value of any right
  or remedy of the Administrative Agent or any Lender hereunder or under any
  other Loan Document or any factual matters in connection therewith, which
  expenses shall include without limitation the reasonable fees and
  disbursements of such Persons, and (d) defend, indemnify and hold harmless the
  Administrative Agent and the Lenders, and their respective parents,
  Subsidiaries, Affiliates, employees, Administrative Agents, officers and
  directors, from and against any losses, penalties, fines, liabilities,
  settlements, damages, costs and expenses, suffered by any such Person in
  connection with any claim, investigation, litigation or other proceeding
  (whether or not the Administrative Agent or any Lender is a party thereto) and
  the prosecution and defense thereof, arising out of or in any way connected
  with this Agreement, any other Loan Document or the Revolving Credit Loans,
  including without limitation reasonable attorney's and consultant's fees,
  except to the extent that any of the foregoing result from the gross
  negligence or willful misconduct of any indemnified party.

  SECTION 14.03. 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 14.04. 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 14.05. 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 

  60

  

   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 14.06. 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 14.07. Reversal of Payments.  To the extent any Credit Party makes a payment or payments to the
  Administrative Agent for the ratable benefit of the Lenders or the
  Administrative Agent receives any payment or proceeds of the collateral which
  payments or proceeds or any part thereof are subsequently invalidated,
  declared to be fraudulent or preferential, set aside and/or required to be
  repaid to a trustee, receiver or any other party under any bankruptcy law,
  state or federal law, common law or equitable cause, then, to the extent of
  such payment or proceeds repaid, the Obligations or part thereof intended to
  be satisfied shall be revived and continued in full force and effect as if
  such payment or proceeds had not been received by the Administrative Agent.

  SECTION 14.08. 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 14.09. 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 

  61

  

   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;

          (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 

  62

  

   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.

  63

  

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

  
    
          (i) each such participation shall be in an amount not less than
      $5,000,000;

          (ii) such Lender's obligations under this Agreement (including, without
      limitation, its Revolving Credit Commitment) shall remain unchanged;

          (iii) such Lender shall remain solely responsible to the other parties
      hereto for the performance of such obligations;

          (iv) the Credit Parties, the Administrative Agent and the other Lenders
      shall continue to deal solely and directly with such Lender in connection
      with such Lender's rights and obligations under this Agreement;

          (v) such Lender shall not permit such participant the right to approve
      any waivers, amendments or other modifications to this Agreement or any
      other Loan Document other than waivers, amendments or modifications which
      would reduce the principal of or the interest rate on any Revolving Credit
      Loan or Reimbursement Obligation, extend the term or increase the amount
      of the Revolving Credit Commitment, reduce the amount of any fees to which
      such participant is entitled, or extend any scheduled payment date for
      principal, interest or fees of any Revolving Credit Loan, except as
      expressly contemplated hereby or thereby; and

          (vi) any such disposition shall not, without the consent of the
      Borrower, on behalf of itself and the other Credit Parties, require the
      Borrower or any other Credit Party, to file a registration statement with
      the Securities and Exchange Commission or apply to or qualify the
      Revolving Credit Loans or the Revolving Credit Notes under the blue sky
      law of any state.

    

  

          (g) Disclosure of Information; Confidentiality. Each of the
  Administrative Agent, the Issuing 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, 

  64

  

  
  "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.

          (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 

  65

  

   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 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.

    

  

  66

  

  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]

  67

  

      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: Senior Vice President and Corporate Controller

                          JONES APPAREL GROUP, INC.,

                          as Additional Obligor

                          By: /s/ Patrick M. Farrell

                          Name: Patrick M. Farrell

                          Title: Senior Vice President and Corporate 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/ Efthimios P. Sotos

                          Name: Efthimios P. Sotos

                          Title: Treasurer

        

  

                          68

  

  		
                          WACHOVIA BANK, NATIONAL ASSOCIATION,

                          as Administrative Agent, Issuing Lender and Lender

                          By: /s/ Susan T. Vitale

                          Name: Susan T. Vitale

                          Title: Vice President

                          JPMORGAN CHASE BANK,

                          as Issuing Lender and Lender

                          By: /s/ James A. Knight

                          Name: James A. Knight

                          Title: Vice President

                          CITIBANK, N.A.,

                          as Lender

                          By: /s/ Robert A. Snell

                          Name: Robert A. Snell

                          Title: Vice President and MD

        By: /s/ Anita J. Brickell

        Name: Anita J. Brickell

        Title: Vice President

                          BANK OF AMERICA, N.A.,

                          as Lender

                          By:  /s/ Chitt Swanidasan

                          Name: Chitt Swanidasan

                          Title: Principal

                          FLEET NATIONAL BANK,

                          as Lender

                          By: /s/ Suzanne Chomiczewski

                          Name: Suzanne Chomiczewski

                          Title: V.P.

                          BANK ONE, NA,

                          as Lender

                          By: /s/ John D. Runger

                          Name: John D. Runger

                          Title: Managing Director

                          THE BANK OF NOVA SCOTIA,

                          as Lender

                          By: /s/ Todd S. Meller

                          Name: Todd S. Meller

                          Title: Managing Director

      

  69

  

  
    		
                          THE BANK OF NEW YORK,

                          as Lender

                          By: /s/ Brian A. Stern

                          Name: Brian A. Stern

                          Title: Vice President

                          BEAR STEARNS,

                          as Lender

                          By: /s/ Lawrence Alletto

                          Name: Lawrence Alletto

                          Title: Authorized Signatory

                          BANCA NAZIONALE DEL LAVORO,

                          as Lender

                          By: /s/ F. Dimario

                          Name: F. Dimario

                          Title: Vice President

                          By: /s/ Leonardo Valentini

                          Name: Leonardo Valentini

                          Title: First Vice President

                          BANK OF CHINA, NEW YORK BRANCH,

                          as Lender

                          By: /s/ Bailin Zheng

                          Name: Bailin Zheng

                          Title: General Manager

                          THE NORINCHUKIN BANK,

                          NEW YORK BRANCH,

                          as Lender

                          By: /s/ Toshiyuki Futaoka

                          Name: Toshiyuki Futaoka

                          Title: Joint General Manager

                          CHANG HWA COMMERCIAL BANK, LTD.,

                          NEW YORK BRANCH

                          as Lender

          

                          By: /s/ Chen-Yu Chen

                          Name: Chen-Yu Chen

                          Title: VP & Deputy General Manager

                          LAND BANK OF TAIWAN,

                          LOS ANGELES BRANCH,

                          as Lender

                          By: /s/ Mayer M. Y. Chen

                          Name: Mayer M. Y. Chen

                          Title: S.V.P. & General Manager

        

  

                          70

  

  
    		
                          BANCA DI ROMA,

                          as Lender

                          By: /s/ A. Paoli

                          Name: A. Paoli

                          Title: Assistant Treasurer

                          By: /s/ C. Strike

                          Name: C. Strike

                          Title: Vice President

                          FIFTH THIRD BANK,

                          as Lender

                          By: /s/ Christine L. Wagner

                          Name: Christine L. Wagner

                          Title: Assistant Vice President

                          HUA NAN COMMERCIAL BANK, LTD.,

                          NEW YORK AGENCY

                          as Lender

                          By: /s/ Yu-Peng Chang

                          Name: Yu-Peng Chang

                          Title: General Manager & SVP

                          BANQUE SUDAMERIS, MIAMI AGENCY,

                          as Lender

                          By: /s/ Efrain Lopez

                          Name: Efrain Lopez

                          Title: Asst. VP

                          By: /s/ Edouard Crepy

                          Name: Edouard Crepy

                          Title: First VP

                          BANK HAPOALIM,

                          as Lender

                          By: /s/ Marc Bosc

                          Name: Marc Bosc

                          Title: Vice President

                          By: /s/ Laura Anne Raffa

                          Name: Laura Anne Raffa

                          Title: Senior Vice President & Corporate Manager

                          BANK LEUMI USA,

                          as Lender

                          By: /s/ Steven Farrow

                          Name: Steven Farrow

                          Title: Vice President

                          E. SUN COMMERCIAL BANK, LTD.,

                          LOS ANGELES BRANCH,

                          as Lender

                          By: /s/ Benjamin Lin

                          Name: Benjamin Lin

                          Title: EVP & General Manager

        

  

                          71

  

  
    		
                          ISRAEL DISCOUNT BANK OF NEW YORK,

                          as Lender

                          By: /s/ Howard Weinberg

                          Name: Howard Weinberg

                          Title: Senior Vice President

                          By: /s/ Tim McCurry

                          Name: Tim McCurry

                          Title: Assistant Vice President

                          FIRST COMMERCIAL BANK,

                          NEW YORK AGENCY,

                          as Lender

                          By: /s/ Tzu-Hui Chen

                          Name: Tzu-Hui Chen

                          Title: Assistant GM

        

  

                          72

  

  EXHIBIT A

  To

  $850,000,000

  Fifth Amended and Restated 364-Day Credit Agreement

  dated as of June 11, 2002

  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

  Wachovia Bank, National Association,

  as Administrative Agent,

  and

  JPMorgan Chase Bank and Citibank, N.A., as Syndication
  Agents,

  and

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

  FORM OF REVOLVING CREDIT NOTE

              $______________________________________ _____________, 2002

          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 Fifth Amended and Restated 364-Day Credit Agreement dated as of June
  11, 2002 (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, Wachovia Bank, National Association, as Administrative Agent, and
  JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents, and Fleet
  National Bank and Bank of America, N.A., as Documentation Agents. 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.

  73

  

      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:

        

  

  74

  

  EXHIBIT B

  To

  $850,000,000

  Fifth Amended and Restated 364-Day Credit Agreement

  dated as of June 11, 2002

  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

  Wachovia Bank, National Association,

  as Administrative Agent,

  and

  JPMorgan Chase Bank and Citibank, N.A., as Syndication
  Agents,

  and

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

  FORM OF NOTICE OF REVOLVING CREDIT BORROWING

   

  NOTICE OF REVOLVING CREDIT BORROWING

  Dated as of: ______________

  Wachovia Bank, National Association,

    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 Fifth Amended and Restated 364-Day Credit
  Agreement dated as of June 11, 2002 (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, Wachovia Bank,
  National Association, as Administrative Agent, and JPMorgan Chase Bank and
  Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of
  America, N.A., as Documentation Agents.

  75

  

      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:

      

76

EXHIBIT C

To

$850,000,000

Fifth Amended and Restated 364-Day Credit Agreement

dated as of June 11, 2002

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,

Wachovia Bank, National Association,

as Administrative Agent,

and

JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents

and

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

FORM OF NOTICE OF ACCOUNT DESIGNATION

NOTICE OF ACCOUNT DESIGNATION

Dated as of: _________

Wachovia Bank, National Association,

 

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 Fifth Amended and Restated 364-Day Credit Agreement dated as of June 11,
2002 (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, Wachovia Bank, National Association, as Administrative Agent
(the "Administrative Agent"), and JPMorgan Chase Bank and
Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of
America, N.A., as Documentation Agents.

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

77

  		

                        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:

78

EXHIBIT D

to

$850,000,000

Fifth Amended and Restated 364-Day Credit Agreement

dated as of June 11, 2002

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,

Wachovia Bank, National Association,

as Administrative Agent,

and

JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents

and

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

FORM OF NOTICE OF PREPAYMENT

NOTICE OF PREPAYMENT

Dated as of: _____________

Wachovia Bank, National Association,

  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 Fifth Amended and Restated 364-Day Credit Agreement dated as of
June 11, 2002 (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, Wachovia Bank, National Association, as Administrative
Agent, and JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents, and
Fleet National Bank and Bank of America, N.A., as Documentation Agents.

    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.)

79

    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:

80

EXHIBIT E

to

$850,000,000

Fifth Amended and Restated 364-Day Credit Agreement

dated as of June 11, 2002

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,

Wachovia Bank, National Association,

as Administrative Agent,

and

JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents

and

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

FORM OF NOTICE OF CONVERSION/CONTINUATION

NOTICE OF CONVERSION/CONTINUATION

Dated as of: _____________

Wachovia Bank, National Association,

  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 Fifth Amended and Restated 364-Day
Credit Agreement dated as of June 11, 2002 (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, Wachovia Bank, National
Association, as Administrative Agent, and JPMorgan Chase Bank and Citibank, N.A.,
as Syndication Agents, and Fleet National Bank and Bank of America, N.A., as
Documentation Agents.

    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

    

  

81

  
    
            (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) he 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.

82

    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:

83

EXHIBIT F

to

$850,000,000

Fifth Amended and Restated 364-Day Credit Agreement

dated as of June 11, 2002

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,

Wachovia Bank, National Association,

as Administrative Agent,

and

JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents

and

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

 

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 Fifth
Amended and Restated 364-Day Credit Agreement dated as of June 11, 2002 (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, Wachovia Bank, National Association, as Administrative
Agent (the "Administrative Agent"), and JPMorgan Chase Bank and
Citibank, N.A., as Syndication Agents and Fleet National Bank and Bank of
America, N.A., as Documentation Agents. 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.

84

    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:

85

Schedule 1

to

Officer's Compliance Certificate

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

86

EXHIBIT G

to

$850,000,000

Fifth Amended and Restated 364-Day Credit Agreement

dated as of June 11, 2002

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,

Wachovia Bank, National Association,

as Administrative Agent,

and

JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents

and

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

FORM OF ASSIGNMENT AND ACCEPTANCE

ASSIGNMENT AND ACCEPTANCE

Dated as of: _________

    Reference is made to the Fifth Amended and Restated 364-Day Credit Agreement
dated as of June 11, 2002, 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, Wachovia Bank, National
Association, as Administrative Agent, and JPMorgan Chase Bank and Citibank, N.A.,
as Syndication Agents and Fleet National Bank and Bank of America, N.A., as
Documentation Agents. 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 $5,000,000, unless such
percentage equals 100% of such Lender's Revolving Credit Commitment, and the
Assignor thereby retains ____% of its interest therein.

87

    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.

88

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

89

    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:

WACHOVIA BANK, NATIONAL ASSOCIATION,

 
as Administrative Agent

By: ______________________________

Name: ___________________________

Title: ____________________________

90

Schedule 1

to

Assignment and Acceptance

  	1.

         	 Effective Date: _________________, ______

      	
	2.	
 Assignor's Interest

Prior to Assignment:

 

      	
		(a)

         

        (b)

         

        (c)	
Revolving Credit Commitment Percentage

Outstanding balance of Revolving Credit Loans

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))

 

      	 

         

         

        $

91

	6.	
 Payment Instructions: 

 

    	
		(a)	
 If payable to Assignor,

to the account of Assignor to:

ABA No.:

Account Name:

Account No.

Attn:

Ref:

 

    	
		(b)	
 If payable to Assignee, to the account

of Assignee to:

 

ABA No.:

Account Name:

Account No.:

Attn:

Ref:

    	

92<PAGE>
                                                                   EXHIBIT 10.33

                               [VERITY LETTERHEAD]

September 1, 2001

Mr. Anthony J. Bettencourt
2802 Vizzolini Court
Pleasanton, CA  94566

Dear Anthony:

Verity is pleased to extend your employment for a one year period beginning
September 1, 2001 (the "Term"). Your role will be President, reporting directly
to Verity's CEO. Your monthly salary will be $25,000. Your compensation package
will include a commission plan providing for the payment of a minimum of
$200,000 in commissions with respect to the year ending August 31, 2002, plus a
$105,000 incentive bonus payable on or before September 30, 2002. During the
Term, (i) your salary may not be reduced and (ii) unless you voluntarily
terminate or are terminated by the Company for "cause," as defined below, you
will be paid commissions of a minimum of $200,000 with respect to your services
during the Term.

If your employment by the Company terminates prior to September 30, 2002 (other
than as a result of a termination due to your death or a permanent disability or
a termination by the company without "cause," as defined below), you will not be
entitled to receive the $105,000 incentive bonus.

Your employment with Verity may be terminated by you or Verity at any time.
However, if the company terminates your employment without cause prior to the
end of the Term under this agreement (the "End Date"), (i) you will be entitled
to receive payments on Verity's standard payroll dates at the rate of $41,666.67
per month (comprised of $25,000.00 in salary and $16,666.67 in commissions),
less withholding, from the termination date until the End Date and (ii) you will
be entitled to receive the incentive bonus of $105,000 on or before September
30, 2002. You shall not be entitled to any such benefits if your employment is
terminated by the company for cause or by you voluntarily. For these purposes,
"cause" will be defined to mean (i) your violation of any material provision of
the Inventions Agreement (as defined below), (ii) any act of theft or
dishonesty, (iii) any immoral or illegal act which has a detrimental effect on
this business or reputation of the company or its affiliates or (iv) any
material failure to use reasonable efforts to perform reasonably requested tasks
after written notice and a reasonable opportunity to comply with such notice.
You agree that the benefits stated in this paragraph shall be your sole and
exclusive remedy for any damages or injury arising out of or related to any
termination of your employment by Verity.

This letter and the company's standard agreement relating to proprietary rights
between you and Verity (the "Inventions Agreement") set forth the terms of your
employment with the company and supersede any prior representations or
agreements, whether written or oral. This letter may not be modified or amended,
except by a written agreement, signed by you and the company.

Sincerely,

/s/ GARY J. SBONA
----------------------------
Gary J. Sbona
Chairman and CEO

I agree to and accept the above terms of employment with Verity, Inc. for the
year beginning September 1, 2001.

/s/ ANTHONY J. BETTENCOURT
----------------------------
Signature

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