10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2000

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-10746

JONES APPAREL GROUP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania (State or other jurisdiction of incorporation or organization)	06-0935166 (I.R.S. Employer Identification No.)
250 Rittenhouse Circle Bristol, Pennsylvania (Address of principal executive offices)	19007 (Zip Code)

(215) 785-4000
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [  ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock
$.01 par value Outstanding at November 8, 2000
119,322,876

<PAGE> 2

JONES APPAREL GROUP, INC.

Index                                                                 Page No.


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets
           October 1, 2000 and December 31, 1999........................  3
        Consolidated Statements of Income
           Quarters and Nine Months ended October 1, 2000
           and October 3, 1999..........................................  4
        Consolidated Statements of Stockholders' Equity
           Nine Months ended October 1, 2000 and October 3, 1999........  5
        Consolidated Statements of Cash Flows
           Nine Months ended October 1, 2000 and October 3, 1999........  6

        Notes to Consolidated Financial Statements......................  7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations............................. 12

Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings .............................................. 18

Item 5. Other Information............................................... 18

Item 6. Exhibits and Reports on Form 8-K................................ 19

Signatures.............................................................. 19

Index to Exhibits....................................................... 20

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<PAGE>  3

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Jones Apparel Group, Inc.
Consolidated Balance Sheets
(All amounts in millions except per share data)

                                                      October 1, 2000   December 31, 1999
                                                           (Unaudited)


ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                  $   53.3            $   47.0
  Accounts receivable, net of allowance
    for doubtful accounts of $14.7 and $26.6                    645.3               271.1
  Inventories                                                   580.9               619.6
  Prepaid and refundable income taxes                               -                34.5
  Deferred taxes                                                 59.9                98.9
  Prepaid expenses and other current assets                      56.3                59.5
                                                             --------            --------
TOTAL CURRENT ASSETS                                          1,395.7             1,130.6

PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated
  depreciation and amortization                                 228.2               239.8
GOODWILL, less accumulated amortization                       1,112.1               989.9
OTHER INTANGIBLES, at cost, less accumulated amortization       345.0               345.4
OTHER ASSETS                                                    134.9                86.3
                                                             --------            --------
                                                             $3,215.9            $2,792.0
                                                             ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term debt and current portion of long-term
    debt and capital lease obligations                       $  787.0            $  266.9
  Accounts payable                                              212.8               205.1
  Accrued restructuring costs                                    40.9                61.1
  Accrued employee compensation                                  36.7                34.1
  Taxes payable                                                  27.7                   -
  Accrued expenses and other current liabilities                115.3                94.2
                                                             --------            --------
  TOTAL CURRENT LIABILITIES                                   1,220.4               661.4
                                                             --------            --------
NONCURRENT LIABILITIES:
  Long-term debt                                                544.5               801.5
  Obligations under capital leases                               30.2                32.7
  Other                                                          30.3                55.4
                                                             --------            --------
  TOTAL NONCURRENT LIABILITIES                                  605.0               889.6
                                                             --------            --------
  TOTAL LIABILITIES                                           1,825.4             1,551.0
                                                             --------            --------
COMMITMENTS AND CONTINGENCIES                                       -                   -

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value - shares
    authorized 1.0; none issued                                     -                   -
  Common stock, $.01 par value - shares authorized 200.0;
    issued 136.3 and 134.6                                        1.4                 1.4
  Additional paid-in capital                                    728.6               693.0
  Retained earnings                                           1,020.6               782.2
  Accumulated other comprehensive income                         (2.2)                0.3
                                                             --------            --------
                                                              1,748.4             1,476.9
  Less treasury stock, 17.5 and 12.0 shares, at cost           (357.9)             (235.9)
                                                             --------            --------
  TOTAL STOCKHOLDERS' EQUITY                                  1,390.5             1,241.0
                                                             --------            --------
                                                             $3,215.9            $2,792.0
                                                             ========            ========

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc.
Consolidated Statements of Income (Unaudited)
(All amounts in millions except per share data)

                                   Quarter Ended                   Nine Months Ended        
                          October 1, 2000  October 3, 1999  October 1, 2000  October 3, 1999


Net sales                        $1,185.6         $1,139.4         $3,164.2         $2,220.1
Licensing income (net)                5.9              7.3             16.3             16.0
                                 --------         --------         --------         --------
Total revenues                    1,191.5          1,146.7          3,180.5          2,236.1
Cost of goods sold                  700.6            668.2          1,872.8          1,336.9
Purchase accounting adjustments
  to cost of goods sold (1)           2.1             39.1              2.1             45.6
                                 --------         --------         --------         --------
Gross profit                        488.8            439.4          1,305.6            853.6

Selling, general and
  administrative expenses           266.4            280.2            803.3            530.0
Amortization of goodwill              9.6              7.2             27.4             13.7
                                 --------         --------         --------         --------
Operating income                    212.8            152.0            474.9            309.9
Interest income                       0.7              0.4              1.3              2.5
Interest expense and
  financing costs                   (26.4)           (25.2)           (78.8)           (43.8)
                                 --------         --------         --------         --------
Income before provision
  for income taxes                  187.1            127.2            397.4            268.6
Provision for income taxes           74.8             52.2            159.0            107.3
                                 --------         --------         --------         --------
Net income                       $  112.3         $   75.0         $  238.4         $  161.3
                                 ========         ========         ========         ========


Earnings per share
    Basic                           $0.95            $0.61            $2.00            $1.45
    Diluted                         $0.93            $0.59            $1.96            $1.40

Weighted average common
  shares and share
  equivalents outstanding
    Basic                           118.7            122.4            118.9            111.4
    Diluted                         121.3            126.3            121.6            115.4

See accompanying notes to consolidated financial statements

(1) Reflects a non-cash increase in cost of goods sold attributable to the fair value of inventory over cost, recorded as a result of the acquisition of Nine West Group Inc. in 1999 and Victoria + Co Ltd. in 2000 as required by the purchase method of accounting.

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<PAGE> 5

Jones Apparel Group, Inc.
Consolidated Statements of Stockholders' Equity (Unaudited)
(All amounts in millions)

                                      Total                              Accumulated
                                     stock-        Additional                  other
                                   holders' Common    paid-in Retained comprehensive  Treasury
                                     equity  stock    capital earnings        income     stock


Balance, January 1, 1999:          $  594.4  $ 1.2    $ 234.8  $ 593.8        $ (2.3) $ (233.1)

Nine Months ended October 3, 1999:
  Comprehensive income:
    Net income                        161.3      -          -    161.3             -         -
    Foreign currency
      translation adjustments           2.2      -          -        -           2.2         -
                                      -----
    Total comprehensive income        163.5
                                      -----
Amortization of deferred
  compensation in connection
  with executive stock options          0.1      -        0.1        -             -         -
Exercise of stock options              11.5      -       11.5        -             -         -
Tax benefit derived from
  exercise of stock options             7.5      -        7.5        -             -         -
Stock issued as additional
  consideration for acquisition
  of Sun Apparel, Inc.                 14.3      -       14.3        -             -         -
Treasury stock acquired                (0.8)     -          -        -             -      (0.8)
Stock and options issued for
  acquisition of Nine West Group
  Inc. net of issuance costs          421.6    0.1      421.5        -             -         -
Other                                  (0.2)     -       (0.2)       -             -         -
                                   -----------------------------------------------------------
Balance, October 3, 1999           $1,211.9  $ 1.3    $ 689.5  $ 755.1        $ (0.1) $ (233.9)
                                   ===========================================================

Balance, January 1, 2000:          $1,241.0  $ 1.4    $ 693.0  $ 782.2        $  0.3  $ (235.9)

Nine Months ended October 1, 2000:
  Comprehensive income:
    Net income                        238.4      -          -    238.4             -         -
    Foreign currency
      translation adjustments          (2.5)     -          -        -          (2.5)        -
                                      -----
    Total comprehensive income        235.9
                                      -----
Amortization of deferred
  compensation in connection
  with executive stock options          1.1      -        1.1        -             -         -
Exercise of stock options              10.8      -       10.9        -             -      (0.1)
Tax benefit derived from
  exercise of stock options             5.3      -        5.3        -             -         -
Treasury stock acquired              (121.9)     -          -        -             -    (121.9)
Stock issued as additional
  consideration for acquisition
  of Sun Apparel, Inc.                 18.3      -       18.3        -             -         -
                                   -----------------------------------------------------------
Balance, October 1, 2000           $1,390.5  $ 1.4    $ 728.6 $1,020.6        $ (2.2) $ (357.9)
                                   ===========================================================

See accompanying notes to consolidated financial statements

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Jones Apparel Group, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(All amounts in millions)

                                                             Nine Months Ended        
                                                      October 1, 2000  October 3, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                    $ 238.4          $ 161.3
                                                               ------           ------
Adjustments to reconcile net income to net cash used
  in operating activities, net of acquisitions:
    Amortization of goodwill                                     27.4             13.7
    Depreciation and other amortization                          54.8             33.2
    Provision for losses on accounts receivable                   0.9              5.9
    Deferred taxes                                               62.9             10.2
    Other                                                        (3.5)             0.8
  Decrease (increase) in:
    Accounts receivable, including a $67.0 payment
      in 2000 to terminate Nine West's accounts
      receivable securitization program                        (377.8)          (249.9)
    Inventories                                                  49.0             16.8
    Prepaid and refundable income taxes                          34.5                -
    Prepaid expenses and other current assets                     4.2             30.9
    Other assets                                                 (2.4)            (2.0)
  Increase (decrease) in:
    Accounts payable                                             (0.1)            78.8
    Taxes payable                                                28.9              6.3
    Accrued expenses and other current liabilities              (78.5)           (48.5)
                                                               ------           ------
    Total adjustments                                          (199.7)          (103.8)
                                                               ------           ------
    Net cash provided by operating activities                    38.7             57.5
                                                               ------           ------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                          (33.5)           (19.5)
  Loans to officers                                             (19.5)               -
  Acquisition of Canadian Polo Ralph Lauren
    licenses and related assets                                 (15.0)               -
  Acquisition of Nine West Group Inc. net of
    cash acquired                                                (0.1)          (433.8)
  Acquisition of Victoria + Co Ltd. net of cash acquired        (13.8)               -
  Additional consideration paid for acquisition of
    Sun Apparel, Inc.                                           (26.6)           (20.1)
  Acquisition of intangibles                                     (1.9)           (28.4)
  Other                                                          (2.2)             5.3
                                                               ------           ------
  Net cash used in investing activities                        (112.6)          (496.5)
                                                               ------           ------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of 7.5% Senior Notes, net of discount                    -            173.5
  Issuance of 7.875% Senior Notes, net of discount                  -            222.8
  Debt issuance costs                                               -             (5.6)
  Repurchase of Nine West Senior Notes                              -           (344.0)
  Premiums paid on repurchase of Nine West Senior Notes             -            (12.9)
  Net borrowings under long-term credit facilities              262.6            305.7
  Refinancing of acquired Victoria + Co Ltd. debt               (71.0)               -
  Principal payments on capital leases                           (3.2)            (3.3)
  Purchases of treasury stock                                  (121.9)            (0.8)
  Proceeds from exercise of stock options                        10.8             11.5
  Other                                                             -             (0.2)
                                                               ------           ------
  Net cash provided by financing activities                      77.3            346.7
                                                               ------           ------
EFFECT OF EXCHANGE RATES ON CASH                                  2.9             (0.2)
                                                               ------           ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              6.3            (92.5)
CASH AND CASH EQUIVALENTS, BEGINNING                             47.0            129.0
                                                               ------           ------
CASH AND CASH EQUIVALENTS, ENDING                             $  53.3          $  36.5
                                                               ======           ======

See accompanying notes to consolidated financial statements

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<PAGE> 7

JONES APPAREL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and its wholly-owned subsidiaries (collectively, the "Company"). The financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") for interim financial information and in accordance with the requirements of Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the footnotes therein included within the Company's Annual Report on Form 10-K. As used in this Report, "Sun," "Nine West" and "Victoria" refer to the Company's wholly-owned subsidiaries Sun Apparel, Inc., Nine West Group Inc. (acquired June 15, 1999) and Victoria + Co Ltd. (acquired July 31, 2000), respectively. The results of Nine West and Victoria are included in the Company's operating results from the date of acquisition and, therefore, the Company's operating results for the periods presented are not comparable.

    In the opinion of management, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2000. The Company reports interim results in 13 week quarters; however, the annual reporting period is the calendar year.

ACCRUED RESTRUCTURING COSTS

    In connection with the acquisitions of Nine West and Sun (acquired October 2, 1998), the Company assessed and formulated plans to restructure certain operations of each company. These plans involved the closure of manufacturing facilities, certain offices, foreign subsidiaries, and selected domestic and international retail locations. The objectives of the plans were to eliminate unprofitable or marginally profitable lines of business and reduce overhead expenses. The accrual of these costs and liabilities was recorded as an increase to goodwill and include:

                               Balance at        Net                Balance at
   (in millions)            December 31, 1999 Additions Utilized October 1, 2000

   Severance and other
     employee costs              $ 26.7        $ 13.5    $ 21.7       $ 18.5
   Closing of retail stores        15.0         (10.2)        -          4.8
   Consolidation of facilities     14.4           3.4       3.8         14.0
   Other                            5.0          (0.2)      1.2          3.6
                                 ------        ------    ------       ------
   Total                         $ 61.1        $  6.5    $ 26.7       $ 40.9
                                 ======        ======    ======       ======

    Estimated severance payments and other employee costs of $18.5 million accrued at October 1, 2000 relate to the remaining estimated severance for approximately 1,100 employees at locations to be closed, costs associated with employees transferring to continuing offices and other related costs. Employee groups affected (totaling an estimated 4,100 employees) include retail sales personnel at closed store locations, accounting, administrative, customer service and management personnel at

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<PAGE> 8

closed facilities, manufacturing and production personnel at closed plant locations and duplicate corporate headquarters management and administrative personnel. During the nine months ended October 1, 2000, payments of $21.7 million to approximately 3,010 employees were made and charged against the reserve.

    Accrued liabilities for the closing of Nine West retail stores of $4.8 million at October 1, 2000 relate primarily to lease obligations and other closing costs for the remaining 62 stores to be closed after October 1, 2000 from the approximately 250 stores originally identified to be closed.

    The $14.0 million accrued at October 1, 2000 for the consolidation of facilities relate primarily to expected costs to be incurred, including lease obligations, for closing certain Nine West facilities in connection with consolidating their operations into other existing Company facilities.

    The Company's plans have not been finalized in all areas, and additional restructuring costs may result as the Company continues to evaluate and assess the impact of underperforming retail locations and international operations. Any additional costs relating to Nine West or Sun will be charged to operations in the period in which they occur.

INVENTORIES

Inventories are summarized as follows (in millions):

                           October 1, 2000   December 31, 1999

     Raw materials             $ 31.5             $ 25.6
     Work in process             55.4               42.5
     Finished goods             494.0              551.5
                               ------             ------
                               $580.9             $619.6
                               ======             ======

ACQUISITIONS

    On July 31, 2000, the Company purchased 100% of the outstanding securities of Victoria, a privately-held corporation. Victoria is a leading designer and marketer of branded and private label costume jewelry. The total purchase price was $93.8 million, including $16.8 in cash payments (of which $2.0 million is payable in 2002) and the assumption of $77.0 of Victoria's funded debt and accrued interest. This funded debt was refinanced by the Company through its existing credit facilities. In addition, the stockholders of Victoria are entitled to receive future payments in the form of cash and common stock of the Company if certain earnings targets are met in 2001, 2002 and 2003.

    The acquisition has been accounted for under the purchase method of accounting for business combinations. Accordingly, the consolidated financial statements include the results of operations of Victoria from the acquisition date. The purchase price was allocated to Victoria's assets and liabilities, tangible and intangible, with the excess of the purchase price over the fair value of the net assets acquired of approximately $55.9 million being amortized on a straight-line basis over 30 years. The excess purchase price over the fair market value of the underlying net assets was allocated to goodwill and property based on preliminary estimates of fair values and is subject to further adjustments,

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<PAGE> 9

including any that may result from the completion of an appraisal of the acquired intangible assets, which is currently in progress.

    The following unaudited pro forma information presents a summary of the consolidated results of operations of the Company as if the acquisition had taken place on January 1, 1999. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on January 1, 1999, or which may result in the future. For comparative purposes, the pro forma amounts for the nine months ended October 3, 1999 include the results of Nine West as if it had also been acquired on January 1, 1999.

Nine Months Ended:                           October 1,  October 3,
                                                  2000        1999

 Total revenues (in millions)                 $3,217.1    $3,093.6
 Net income (in millions)                       $212.0      $157.8
 Basic earnings per common share                 $1.79       $1.29
 Diluted earnings per common share               $1.75       $1.25

STATEMENT OF CASH FLOWS

Nine Months Ended:                            October 1, October 3,
(In millions)                                      2000       1999

Supplemental disclosures of
  cash flow information:
    Cash paid (received) during the period for:
      Interest                                   $ 78.8     $ 29.1
      Income taxes, net of refunds                 60.5       83.5

Supplemental disclosures of non-cash investing
  and financing activities:
    Equipment acquired through capital lease
      financing                                     1.3        1.6
    Tax benefits related to stock options           5.3        7.5
    Common stock issued as additional
      consideration for the acquisition of Sun     18.3       14.3

Detail of acquisitions:
  Fair value of assets acquired                 $ 129.0   $1,694.0
  Liabilities assumed                            (100.2)    (838.5)
  Common stock and options issued                     -     (421.7)
                                                -------   --------
  Net cash paid for acquisitions                   28.8      433.8
  Cash acquired in acquisitions                     1.0       29.8
                                                -------   --------
  Cash paid for acquisitions                    $  29.8   $  463.6
                                                =======   ========

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<PAGE> 10

SEGMENT INFORMATION

    The Company's operations are comprised of three reportable segments: wholesale apparel, wholesale footwear and accessories, and retail. The Company identifies operating segments based on, among other things, the way that the Company's management organizes the components of the Company's business for purposes of allocating resources and assessing performance. Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and the Company's own retail locations. The wholesale segments include wholesale operations with third party department and other retail stores, while the retail segment includes retail operations by Company-owned retail stores. The Company defines segment profit as operating income before amortization of goodwill, interest expense and income taxes. Summarized below are the Company's segment revenues and income by reportable segments for the quarters and nine months ended October 1, 2000 and October 3, 1999.

(In millions)                                         Wholesale
                                       Wholesale     Footwear &                      Other &
                                         Apparel    Accessories         Retail  Eliminations  Consolidated


For the quarter ended October 1, 2000
  Revenues from external customers       $ 664.2        $ 272.2        $ 249.2         $ 5.9      $1,191.5
  Intersegment revenues                     29.1           24.9              -         (54.0)            -
                                       -------------------------------------------------------------------
  Total revenues                           693.3          297.1          249.2         (48.1)      1,191.5
                                       -------------------------------------------------------------------

  Segment income                         $ 132.4        $  56.7        $  42.1         $(8.8)        222.4
                                       =====================================================
  Amortization of goodwill                                                                            (9.6)
  Net interest expense                                                                               (25.7)
                                                                                                  --------
  Income before provision for income taxes                                                        $  187.1
                                                                                                  ========

For the quarter ended October 3, 1999
  Revenues from external customers       $ 639.1        $ 224.2        $ 276.2         $ 7.2      $1,146.7
  Intersegment revenues                     30.3           39.0              -         (69.3)            -
                                       -------------------------------------------------------------------
  Total revenues                           669.4          263.2          276.2         (62.1)      1,146.7
                                       -------------------------------------------------------------------

  Segment income                         $ 144.7        $   4.9        $  10.4         $(0.8)        159.2
                                       =====================================================
  Amortization of goodwill                                                                            (7.2)
  Net interest expense                                                                               (24.8)
                                                                                                   -------
  Income before provision for income taxes                                                         $ 127.2
                                                                                                   =======

For the nine months ended October 1, 2000
  Revenues from external customers      $1,700.8        $ 709.6        $ 753.8        $ 16.3      $3,180.5
  Intersegment revenues                     72.7           86.8              -        (159.5)            -
                                      --------------------------------------------------------------------
  Total revenues                         1,773.5          796.4          753.8        (143.2)      3,180.5
                                      --------------------------------------------------------------------

  Segment income                        $  301.8        $ 165.5        $  64.8        $(29.8)        502.3
                                      ======================================================
  Amortization of goodwill                                                                           (27.4)
  Net interest expense                                                                               (77.5)
                                                                                                   -------
  Income before provision for income taxes                                                         $ 397.4
                                                                                                   =======

For the nine months ended October 3, 1999
  Revenues from external customers      $1,557.2       $ 277.9         $ 385.0        $ 16.0      $2,236.1
  Intersegment revenues                     74.7          47.0               -        (121.7)            -
                                      --------------------------------------------------------------------
  Total revenues                         1,631.9         324.9           385.0        (105.7)      2,236.1
                                      --------------------------------------------------------------------

  Segment income                        $  316.5       $  10.2         $  18.0        $(21.1)        323.6
                                      ======================================================
  Amortization of goodwill                                                                           (13.7)
  Net interest expense                                                                               (41.3)
                                                                                                   -------
  Income before provision for income taxes                                                         $ 268.6
                                                                                                   =======

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<PAGE> 11

SUPPLEMENTAL SUMMARIZED FINANCIAL INFORMATION

    Certain of the Company's subsidiaries function as obligors and co-obligors of the Company's outstanding debt, including Jones Apparel Group USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings") and Nine West. Jones and Jones Holdings function as co-obligors with respect to the outstanding debt securities of Jones USA and certain of the outstanding debt securities of Nine West. In addition, Nine West functions as a co-obligor with respect to all of Jones USA's outstanding debt securities, and Jones USA functions as a co-obligor with respect to the outstanding debt securities of Nine West as to which Jones and Jones Holdings function as co-obligors.

    The following summarized financial information represents the results of Jones USA and Nine West. Separate financial statements and other disclosures concerning Jones USA, Nine West and Jones Holdings are not presented, because management has determined that such information is not material to the holders of the outstanding debt.

                                                                                 Other and
(In millions)                                         Jones USA    Nine West  Eliminations  Consolidated


On or for the nine months ended October 1, 2000:
  Current assets                                      $ 1,318.4     $  529.8      $ (452.5)    $ 1,395.7
  Noncurrent assets                                       430.5      1,038.5         351.2       1,820.2
  Current liabilities                                   1,282.0        408.4        (470.0)      1,220.4
  Noncurrent liabilities                                  439.1        166.2          (0.3)        605.0

  Total revenues                                        1,211.2      1,333.9         635.4       3,180.5
  Gross profit                                            445.8        623.7         236.1       1,305.6
  Operating income                                        171.4        180.8         122.7         474.9
  Net income                                               54.5         99.0          84.9         238.4

On or for the nine months ended October 3, 1999:
  Current assets                                      $ 1,381.5     $  584.3      $ (604.5)    $ 1,361.3
  Noncurrent assets                                       155.3      1,023.9         458.0       1,637.2
  Current liabilities                                     829.5        533.4        (470.3)        829.6
  Noncurrent liabilities                                  707.2        191.6          (4.8)        894.0

  Total revenues                                        1,135.1        549.9         551.1       2,236.1
  Gross profit                                            426.0        198.5         229.1         853.6
  Operating income                                        174.4         13.1         122.4         309.9
  Net income                                               78.9         (3.8)         86.2         161.3

NEW ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which requires entities to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. SFAS No. 133, as amended by SFAS Nos. 137 and 138, is effective for all fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 will not have a significant impact on future operating results or financial statement disclosures.

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<PAGE> 12

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

    The following discussion provides information and analysis of the Company's results of operations for the quarterly and nine month periods ended October 1, 2000 and October 3, 1999, respectively, and its liquidity and capital resources. The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto included elsewhere herein.

    The Company completed its acquisitions of Nine West on June 15, 1999 and Victoria on July 31, 2000, respectively. The results of operations of Nine West and Victoria are included in the Company's operating results from the date of acquisition. Accordingly, the financial position and results of operations presented and discussed herein are not directly comparable between years.

    The Company operates in three reportable segments: wholesale apparel, wholesale footwear and accessories, and retail.

Results of Operations

Statements of Income Expressed as a Percentage of Total Revenues

                                            Quarter Ended                 Nine Months Ended       
                                   October 1, 2000 October 3, 1999 October 1, 2000 October 3, 1999

  Net sales                                  99.5%           99.4%           99.5%           99.3%
  Licensing income (net)                      0.5%            0.6%            0.5%            0.7%
                                            ------          ------          ------          ------
  Total revenues                            100.0%          100.0%          100.0%          100.0%
  Cost of goods sold                         58.8%           58.3%           58.9%           59.8%
                                            ------          ------          ------          ------
  Gross profit before purchase
    accounting adjustments                   41.2%           41.7%           41.1%           40.2%
  Purchase accounting adjustments             0.2%            3.4%            0.1%            2.0%
                                            ------          ------          ------          ------
  Gross profit                               41.0%           38.3%           41.1%           38.2%
  Selling, general and
    administrative expenses                  22.4%           24.4%           25.3%           23.7%
  Amortization of goodwill                    0.8%            0.6%            0.9%            0.6%
                                            ------          ------          ------          ------
  Operating income                           17.9%           13.3%           14.9%           13.9%
  Net interest expense                        2.2%            2.2%            2.4%            1.8%
                                            ------          ------          ------          ------
  Income before provision for
    income taxes                             15.7%           11.1%           12.5%           12.0%
  Provision for income taxes                  6.3%            4.5%            5.0%            4.8%
                                            ------          ------          ------          ------
  Net income                                  9.4%            6.5%            7.5%            7.2%
                                            ======          ======          ======          ======

    Totals may not agree due to rounding.

Quarter Ended October 1, 2000 Compared to Quarter Ended October 3, 1999

    Revenues. Total revenues for the 13 weeks ended October 1, 2000 (hereinafter referred to as the "third quarter of 2000") increased 3.9%, or $44.8 million, to $1.2 billion, compared to $1.1 billion for the 13 weeks ended October 3, 1999 (hereinafter referred to as the "third quarter of 1999").

    The Company has executed a major restructuring across its businesses at Nine West, including the sale of the Nine West Asian and Canadian operations, the sale of the Amalfi brand and the closing of 188 domestic retail stores. Several Nine West footwear brands, including Selby, 9 & Co., Calvin Klein

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<PAGE> 13

and Pappagallo, were also discontinued until alternative distribution channels can be established or sales of these brands can be effected. Excluding the impact of these discontinued lines of business, total revenues for the third quarter of 2000 increased by 8.9%, or $95.7 million, over the third quarter of 1999.

                                                                    Total Revenues From
                                Total Revenues                  Continuing Businesses Only    

                        Third    Third                        Third    Third
                      Quarter  Quarter Increase/ Percent    Quarter  Quarter Increase/ Percent
  (In millions)       of 2000  of 1999 (Decrease) Change    of 2000  of 1999 (Decrease) Change

  Wholesale apparel    $664.2   $639.0     $25.2    3.9%     $664.2   $639.0     $25.2    3.9%
  Wholesale footwear
    and accessories     272.2    224.2      48.0   21.4%      265.3    195.2      70.1   35.9%
  Retail                249.2    276.2     (27.0)  (9.8%)     237.2    235.4       1.8    0.8%
  Other                   5.9      7.3      (1.4) (19.2%)       5.9      7.3      (1.4) (19.2%)
                     -----------------------------------   -----------------------------------
  Total revenues     $1,191.5 $1,146.7     $44.8    3.9%   $1,172.6 $1,076.9     $95.7    8.9%
                     ===================================   ===================================

    Wholesale apparel revenues increased primarily as a result of increases in shipments of Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company products and initial shipments of Nine West apparel, partially offset by lower shipments of Jones New York Sport products. The increase in wholesale footwear and accessories was primarily attributable to increases in shipments of Nine West and Easy Spirit products, initial shipments of the newly-launched Jones New York accessories line, and the addition of costume jewelry as a result of the Victoria acquisition ($28.6 million of the increase).

    Gross Profit. The gross profit margin increased to 41.0% in the third quarter of 2000 compared to 38.3% in the third quarter of 1999. Gross profit was negatively impacted during the third quarters of 2000 and 1999 by $2.1 million and $39.1 million, respectively, of writeoffs of adjustments required under purchase accounting to mark up acquired Victoria and Nine West inventory to market value upon acquisition; without this charge, the gross profit margin for the third quarters of 2000 and 1999 would have been 41.2% and 41.7%, respectively. Wholesale apparel gross profit margins decreased to 35.6% in the third quarter of 2000 compared to 38.3% in the third quarter of 1999, resulting primarily from additional air freight costs to ensure on-time deliveries caused by concerted merchandising changes made to certain product lines coupled with the firming of production pricing in certain areas. Wholesale footwear and accessories gross profit margins increased to 39.4% from 17.3%. Without the effect of purchase accounting adjustments to mark up Victoria's and Nine West's acquired inventory, gross profit margins for this segment for the third quarters of 2000 and 1999 would have been 40.1% and 32.2%, respectively, with the increase resulting from solid performance by the core brands and the higher margins on Victoria products. Retail gross profit margins increased to 51.7% from 48.4%, primarily due to the closing of underperforming domestic stores and certain international operations as part of the restructuring of Nine West.

   Selling, general and administrative ("SG&A") expenses. SG&A expenses of $266.4 million in the third quarter of 2000 represented a decrease of $13.8 million over the third quarter of 1999. As a percentage of total revenues, SG&A expenses decreased to 22.4% in the third quarter of 2000 from 24.4% for the comparable period in 1999. The decrease, which was reflected in all segments, was primarily the result of the restructuring of Nine West and the continued emphasis on cost reductions.

    Operating Income. The resulting third quarter of 2000 operating income of $212.8 million increased 40.0%, or $60.8 million, over the $152.0 million for the third quarter of 1999. The operating margin increased to 17.9% in the third quarter of 2000 from 13.3% in the third quarter of 1999, due to the factors discussed above.

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<PAGE> 14

    Net Interest Expense. Net interest expense was $25.7 million in the third quarter of 2000 compared to $24.8 million in the comparable period of 1999, primarily as a result of additional borrowings to fund the acquisition of Victoria.

    Provision for Income Taxes. The effective income tax rate was 40.0% for the third quarter of 2000 compared to 41.0% for the third quarter of 1999. The decrease was primarily due to nondeductible goodwill having less of an impact in the third quarter of 2000 than in the prior year.

    Net Income. Net income increased 49.7% to $112.3 million in the third quarter of 2000, an increase of $37.3 million over the net income of $75.0 million earned in the third quarter of 1999. Net income as a percentage of total revenues was 9.4% in the third quarter of 2000 and 6.5% in the third quarter of 1999. Excluding the amortization of goodwill, net income for the third quarters of 2000 and 1999 would have been $121.9 million and $82.2 million, respectively ($1.00 and $0.65 per diluted share, respectively).

Nine Months Ended October 1, 2000 Compared to Nine Months Ended October 3, 1999

    Revenues. Total revenues for the 39 weeks ended October 1, 2000 (hereinafter referred to as the "first nine months of 2000") increased 42.2%, or $944.4 million, to $3.2 billion, compared to $2.2 billion for the 39 weeks ended October 3, 1999 (hereinafter referred to as the "first nine months of 1999").

    The revenue growth resulted primarily from the net sales of product lines added as a result of the Nine West and Victoria acquisitions ($790.4 million and $28.6 million, respectively, of the increase). The following is a breakdown of total revenues for both periods as well as revenues adjusted for lines of business that have been discontinued due to the restructuring of Nine West (as previously described).

                                                                Total Revenues From
                                Total Revenues              Continuing Businesses Only
                        First    First                      First    First
                         Nine     Nine                       Nine     Nine
                       Months   Months         Percent     Months   Months         Percent
  (In millions)       of 2000  of 1999 Increase Change    of 2000  of 1999 Increase Change

  Wholesale apparel  $1,700.8 $1,557.2   $143.6   9.2%   $1,700.8 $1,557.2   $143.6   9.2%
  Wholesale footwear
    and accessories     709.6    277.9    431.7 155.3%      667.5    248.9    418.6 168.2%
  Retail                753.8    385.0    368.8  95.8%      690.4    344.2    346.2 100.6%
  Other                  16.3     16.0      0.3   1.9%       16.3     16.0      0.3   1.9%
                     ---------------------------------   ---------------------------------
  Total revenues     $3,180.5 $2,236.1   $944.4  42.2%   $3,075.0 $2,166.3   $908.7  41.9%
                     =================================   =================================

    Wholesale apparel revenues increased primarily as a result of increases in shipments of Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company products, partially offset by lower shipments of Jones New York Sport and Rena Rowan products. The increases in wholesale footwear and accessories and retail revenues are primarily the result of Nine West results included for all 39 weeks during 2000, but only approximately 16 weeks during 1999, and product lines added as a result of the Victoria acquisition.

    Gross Profit. The gross profit margin increased to 41.1% in the first nine months of 2000 compared to 38.2% in the first nine months of 1999. Gross profit was negatively impacted during the first nine months of 2000 and 1999 by $2.1 million and $45.6 million of writeoffs of adjustments required under purchase accounting to mark up acquired Victoria and Nine West inventory to market value upon

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<PAGE> 15

acquisition; without this charge, the gross profit margin for the first nine months of 2000 and 1999 would have been 41.1% and 40.2%, respectively. Wholesale apparel gross profit margins decreased to 35.6% in the first nine months of 2000 compared to 37.5% in the first nine months of 1999, resulting from additional air freight charges to ensure on-time delivery caused by concerted merchandising changes made to certain product lines and higher sales to off-price merchandisers. Wholesale footwear and accessories gross profit margins increased to 36.6% from 18.9%, primarily due to solid performance by the core brands and the discontinuance of several low-margin product lines as part of the Nine West restructuring. Retail gross profit margins increased to 52.3% from 49.3%, primarily due to the closing of underperforming domestic stores and certain international operations as part of the restructuring of Nine West and the clearance of excess Nine West retail inventory in the prior year.

    Selling, general and administrative expenses. SG&A expenses of $803.3 million in the first nine months of 2000 represented an increase of $273.3 million over the first nine months of 1999. As a percentage of total revenues, SG&A expenses increased to 25.3% in the first nine months of 2000 from 23.7% for the comparable period in 1999. The effect of Nine West results being included for all 39 weeks during 2000, but only approximately 16 weeks during 1999, represented $259.8 million of the increase.

    Operating Income. The resulting first nine months of 2000 operating income of $474.9 million increased 53.2%, or $165.0 million, over the $309.9 million for the first nine months of 1999. The operating margin increased to 14.9% in the first nine months of 2000 from 13.9% in the first nine months of 1999, due to the factors discussed above.

    Net Interest Expense. Net interest expense was $77.5 million in the first nine months of 2000 compared to $41.3 million in the comparable period of 1999, primarily as a result of the debt incurred to finance the Victoria and Nine West acquisitions and repurchase treasury shares during the first nine months of 2000.

    Provision for Income Taxes. The effective income tax rate was 40.0% for the first nine months of 2000 compared to 39.9% for the first nine months of 1999. The increase was primarily due to the nondeductibility of the additional goodwill amortization in the first nine months of 2000.

    Net Income. Net income increased 47.8% to $238.4 million in the first nine months of 2000, an increase of $77.1 million over the net income of $161.3 million earned in the first nine months of 1999. Net income as a percentage of total revenues was 7.5% in the first nine months of 2000 and 7.2% in the first nine months of 1999. Excluding the amortization of goodwill, net income for the first nine months of 2000 and 1999 would have been $265.8 million and $175.0 million, respectively ($2.19 and $1.52 per diluted share, respectively).

Liquidity and Capital Resources

    The Company's principal capital requirements have been to fund acquisitions, working capital needs, capital expenditures and repurchases of the Company's common stock on the open market. The Company has historically relied primarily on internally generated funds, trade credit, bank borrowings and the issuance of notes to finance its operations and expansion.

    Cash Provided by Operations. Operating activities provided $38.7 million of cash in the first nine months of 2000 and $57.5 million in the first nine months of 1999. The change from the first nine months of 2000 from the prior period was primarily due to a larger increase in accounts receivable, including a $67.0 million payment in the first quarter of 2000 to discontinue Nine West's five-year Receivables Facility (see below), offset by higher net income before depreciation and amortization.

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<PAGE> 16

    Cash Used in Investing Activities. Investing activities used $112.6 million during the first nine months of 2000, compared to $496.5 million during the first nine months of 1999. The decrease was primarily related to acquisition activity; $13.8 million and $15.0 million were paid during the first nine months of 2000 for the acquisitions of Victoria and the Canadian licenses for several Polo Ralph Lauren brands (including eight retail stores, related inventory and other assets), respectively, while $433.8 million in cash was paid to acquire Nine West in 1999.

    During the first nine months of 2000, $19.5 million in loans were made to company officers, of which $18.0 million was loaned to the Company's Chairman and Chief Executive Officer for his purchase of a residence in New York City. This loan, which will replace an arrangement under which the Chairman has been provided the use of a Company-owned apartment, is secured by the residence and bears interest at the applicable federal rate under IRS regulations.

    Capital expenditures were $33.5 million and $19.5 million during the first nine months of 2000 and 1999, respectively. Total capital expenditures for 2000 are expected to be approximately $60.0 million.

    Cash Provided by Financing Activities. Financing activities provided $77.3 million of cash in the first nine months of 2000, compared to $346.7 million in the first nine months of 1999. Proceeds from borrowings under the Company's long-term credit facilities in the first nine months of 2000 were primarily used to purchase treasury stock and refinance $71.0 million of acquired Victoria debt. The first nine months of 1999 included $396.3 million related to the issuance of various Senior Notes used for the acquisition of Nine West and the repurchase of a portion of Nine West's outstanding debt.

    The Company repurchased $121.9 million of its common stock on the open market during the first nine months of 2000. As of October 1, 2000, a total of $356.9 million has been expended under announced programs to acquire up to $500.0 million of such shares. The Company may authorize additional share repurchases in the future depending on, among other things, market conditions and the Company's financial condition. Proceeds from the issuance of common stock to employees exercising stock options amounted to $10.8 million and $11.5 million in the first nine months of 2000 and 1999, respectively.

    Liquidity. The terms of the acquisition agreement for Sun require the Company to pay the former Sun shareholders additional consideration of $2.00 for each $1.00 of Sun's earnings before interest and taxes (as defined in the merger agreement) for each of the years 1998 through 2001 that exceeds certain targeted levels. This additional consideration is to be paid 59% in cash and 41% in the Company's common stock, the value of which will be determined by the prices at which the common stock trades in a defined period preceding delivery in each year. On April 5, 2000, the Company paid $26.6 million in cash and issued 669,323 shares of common stock (valued at $18.3 million) as additional consideration for the Sun acquisition related to 1999 earnings, which was recorded as additional goodwill in the second quarter of 2000.

    The terms of the acquisition agreement for Victoria require the Company to pay the former Victoria shareholders additional consideration of $3.00 for each $1.00 of Victoria's earnings before interest and taxes (as defined in the merger agreement) for each of the twelve-month periods ending June 30, 2001 through 2003 that exceeds certain targeted levels. This additional consideration is to be paid 50% in cash and 50% in the Company's common stock, the value of which will be determined by the prices at which the common stock trades in a defined period preceding delivery in each year.

    During the first quarter of 2000, the Company terminated a five-year Receivables Facility (created in 1995 and amended in 1998) which permitted Nine West to obtain up to $132.0 million of funding

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<PAGE> 17

based on the sale, without recourse, of eligible Nine West accounts receivable. As a result of this termination, reported net accounts receivable will no longer be reduced by proceeds received under the Receivables Facility. This termination will not affect the Company's liquidity.

    At October 1, 2000, the Company had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.45 billion under Senior Credit Facilities. These facilities, of which the entire amount is available for letters of credit or cash borrowings, provide for a $750.0 million 364-Day Revolving Credit Facility (increased from $500.0 million during the second quarter of 2000) and a $700.0 million Five-Year Revolving Credit Facility. At October 1, 2000, $274.4 million was outstanding under the 364-Day Revolving Credit Facility (comprised of $250.2 million in outstanding letters of credit and $24.2 million in cash borrowings) and $480.0 million in cash borrowings was outstanding under the Company's Five-Year Revolving Credit Facility. Borrowings under the Senior Credit Facilities may also be used for working capital and other general corporate purposes, including permitted acquisitions and stock repurchases. The Senior Credit Facilities are unsecured and require the Company to satisfy both a coverage ratio of earnings before interest, taxes, depreciation, amortization and rent to interest expense plus rents and a net worth maintenance covenant, as well as other restrictions, including (subject to exceptions) limitations on the Company's ability to incur additional indebtedness, prepay subordinated indebtedness, make acquisitions, enter into mergers, and pay dividends.

    The Company also has a total of approximately $50.6 million of unsecured foreign lines of credit in Europe, Australia and Canada, under which $19.0 million was outstanding at October 1, 2000.

    The Company believes that funds generated by operations, the Senior Credit Facilities and the foreign lines of credit will provide the financial resources sufficient to meet its foreseeable working capital, letter of credit, capital expenditure and stock repurchase requirements and any ongoing obligations to the former Sun and Victoria shareholders.

NEW ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which requires entities to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. SFAS No. 133, as amended by SFAS Nos. 137 and 138, is effective for all fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 will not have a significant impact on future operating results or financial statement disclosures.

    In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. SAB 101 will have no material impact on the Company's revenue recognition policy.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

    The market risk inherent in the Company's financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in interest rates or foreign currency exchange rates. The Company manages this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Company policy allows the use of derivative financial instruments for identifiable market risk

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<PAGE> 18

exposures, including interest rate and foreign currency fluctuations. The Company does not enter into derivative financial contracts for trading or other speculative purposes.

    The Company employs an interest rate hedging strategy utilizing swaps to effectively float a portion of its interest rate exposure on its fixed rate financing arrangements. The primary interest rate exposures on floating rate financing arrangements are with respect to United States, Canada, United Kingdom and Australian short-term local currency rates. The Company had approximately $1.5 billion in variable rate financing arrangements at October 1, 2000. Other than the interest rate swaps, there were no outstanding derivative financial contracts at October 1, 2000.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

    On March 6, 2000, the Company and Nine West entered into settlement agreements with the Attorneys General of the 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands and Guam (the "States"), and with the Federal Trade Commission, resolving allegations that Nine West engaged in violations of the antitrust laws by coercing retailers to adhere to resale prices of its products. Both agreements are without any admission of liability on the part of Nine West.

    The agreement with the States resolves ongoing investigations and a parens patriae action brought on behalf of consumers in the United States District Court for the Southern District of New York in White Plains. The settlement consists of injunctive relief in the form of a consent decree which specifies the manner in which Nine West may implement its resale pricing policies with its retailer customers, along with a payment of $34.0 million which will be used to benefit consumers. The settlement agreement received preliminary court approval on June 2, 2000. The States have notified the class members of the settlement of the action. A hearing is scheduled for December 14, 2000, at which time the court will hear any objection to the settlement and will decide whether to give the agreement final approval.

    In a separate settlement on March 6, 2000, Nine West agreed to a consent order with the Federal Trade Commission which also specifies the manner in which Nine West may implement its resale pricing policies with its retailer customers. The consent order, which resolved an ongoing investigation by the FTC, was given final approval by the Commission on April 11, 2000.

    There have been no other material changes from the information previously reported under Item 3 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.

Item 5. Other information

Statement Regarding Forward-looking Disclosure

    This Report includes, and incorporates by reference, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the Company's expected financial position, business and financing plans are forward-looking statements. The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of the Company's expectations or beliefs concerning future events that involve risks and uncertainties,

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<PAGE> 19

including those associated with the effect of national and regional economic conditions, the overall level of consumer spending, the performance of the Company's products within the prevailing retail environment, customer acceptance of both new designs and newly-introduced product lines, financial difficulties encountered by customers, the effects of vigorous competition in the markets in which the Company operates, the integration of Nine West, Sun, Victoria or other acquired businesses into the Company's existing operations, the termination or non-renewal of the licenses with Polo Ralph Lauren Corporation, the Company's extensive foreign operations and manufacturing, pending litigation and investigations, changes in the costs of raw materials, labor and advertising, and the Company's ability to secure and protect trademarks and other intellectual property rights. All statements other than statements of historical facts included in this Report, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed in this Report in conjunction with the forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

    See Index to Exhibits.

(b) Reports on Form 8-K

    Not applicable.

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JONES APPAREL GROUP, INC.
(Registrant)

Date: November 13, 2000

By /s/ Sidney Kimmel
SIDNEY KIMMEL
Chief Executive Officer

By /s/ Wesley R. Card
WESLEY R. CARD
Chief Financial Officer

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<PAGE> 20

INDEX TO EXHIBITS

Number	Description
10.1*	Employment Agreement dated as of July 1, 2000 between the Registrant and Sidney Kimmel+
10.2*	Employment Agreement dated as of July 1, 2000 between the Registrant and Jackwyn Nemerov+
10.3*	Employment Agreement dated as of July 1, 2000 between the Registrant and Wesley R. Card+
10.4*	Employment Agreement dated as of July 1, 2000 between the Registrant and Irwin Samelman+
27*	Financial Data Schedule (filed only electronically)

_________
* Filed herewith.
⁺ Management contract or compensatory plan or arrangement.

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EX-10

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

    AGREEMENT made as of July 1, 2000 by and between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company") and SIDNEY KIMMEL (the "Executive").

W I T N E S S E T H:

    WHEREAS, Executive has been serving as a senior executive of the Company; and

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

    NOW, THEREFORE, it is agreed as follows:

    1.   Employment. During the term of this Agreement, the Company shall employ the Executive as the Chairman and Chief Executive Officer of the Company, with such responsibilities and authority as Executive has heretofore had as Chairman and Chief Executive Officer of the Company. The Executive shall report directly to the Board of Directors of the Company. During the term of this Agreement, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote all of Executive's business time and attention to the business affairs of the Company, and to perform such responsibilities in a professional manner. Notwithstanding the foregoing, during the term of this Agreement, it shall not be a violation of this Agreement for the Executive to (a) serve on civic or charitable boards or committees; (b) deliver lectures, fulfill speaking engagements or teach at educational institutions; (c) serve as a non-employee member of a board of directors of a business entity which is not competitive with the Company and as to which the Board of Directors of the Company has given its consent; and (d) attend to personal business, so long as such activities do not interfere with the performance of the Executive's responsibilities as a senior executive of the Company in accordance with this Agreement.

    2.    Term. The Company shall employ the Executive for the period commencing as of July 1, 2000 and ending as of June 30, 2003 (the "Expiration Date"), as renewed in accordance with the following sentence (the "Term"). The Executive's employment with the Company will continue, and this Agreement will be automatically extended without limitation, for successive 12-month periods commencing July 1 and ending June 30 (a "Contract Year"), unless either party to this Agreement advises the other in writing, no later than June 30, 2001 and no later than each June 30 thereafter, that such party does not wish to extend (a "Non-extension Notice"). If this Agreement shall be so extended, the "Expiration Date" shall mean the then applicable extended "Expiration Date", and the "Term" shall mean the period commencing July 1, 2000 and

<PAGE> 2

ending on the then applicable extended "Expiration Date."

For example, (i) if by June 30, 2001, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2004, and (ii) if the Term is so extended through June 30, 2004, then if by June 30, 2002, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2005.

    3.    Salary, Retirement Plans, Fringe Benefits and Allowances.

        (a) Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $1,100,000. The Executive's salary shall be payable at such regular times and intervals as the Company customarily pays its senior executives from time to time, but no less frequently than once a month.

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

        (c) During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare, fringe and other benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other senior executives of the Company.

        (d) The Executive shall be entitled to paid vacation during each calendar year of the Term for such periods as Executive deems reasonable and which are consistent with past practices, provided that such vacation time shall not interfere with the proper performance of Executive's duties. The Executive shall also be entitled to the benefits of the Company's policies relating to sick leave and holidays.

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

        (f) The Company shall make available to the Executive all perquisites that are made available to senior executives of the Company.

    4.    Bonus.

    Executive shall participate in the Company's Executive Annual Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be entitled to receive annual bonus payments for each full calendar year of employment which ends prior to the Expiration Date and

2

<PAGE> 3

throughout which the Executive has been employed by the Company, conditioned upon the attainment of annual criteria and objectives established for participants in the Bonus Plan.

    5.    Stock Options. Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually, on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement):

        (a) Target awards will be in an amount (plus or minus 25%) equal to 400% of Executive's salary;

        (b) For purposes of determining the number of shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives;

        (c) The exercise price per share of the Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and

        (d) The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all Options and all other options to purchase Common Shares then held by the Executive which are not then vested (in the aggregate being referred to herein as "Accelerated Options") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability, a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and

        (e) The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the other senior executives of the Company.

    6.    Termination of Employment.

        (a) By the Company for Cause, or by the Executive without Good Reason. The Company may terminate the Executive's employment for Cause (as defined herein) before the Expiration Date. If the Executive's employment is terminated for Cause, or if Executive resigns during the Term without Good Reason (as defined below), the Company shall pay to the Executive any unpaid salary through the date of termination, as well as reimburse the Executive for any unpaid reimbursable expenses incurred on behalf of the Company, and thereafter the

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Company shall have no additional obligations to the Executive under this Agreement.

        (b) Death or Disability; Retirement. (i) If the Executive's employment terminates before the Expiration Date because of Executive's death or Disability (as defined herein), the Company shall pay Executive or Executive's duly appointed personal representative, as the case may be, (i) any unpaid salary through the date of death or the Disability Termination Date (as defined herein), as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) an amount equal to Executive's monthly salary during each of the six (6) months following Executive's death or the Disability Termination Date, and (iii) the Target Bonus for the calendar year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year. Except as set forth in this Section 6(b), the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b).

            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or his representative, as the case may be, during the remaining original term of the Accelerated Option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death.

        (c) By the Company without Cause, or by the Executive for Good Reason. (i) The Company may terminate the Executive's employment before the Expiration Date without Cause, and the Executive may terminate Executive's employment before the Expiration Date for Good Reason, upon 30-days written notice to the other party. If the Executive's employment is so terminated by the Company without Cause, or by the Executive for Good Reason, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iii) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, (iv) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (v) reimbursement to the Executive for up to $10,000 of executive outplacement services. Except as set forth in this Subsection 6(c), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c).

        (ii) In addition to the foregoing and notwithstanding any other agreement between

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the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated.

        (d) Change in Control. If, following a "Change in Control" (as defined herein) and prior to the Expiration Date, the Company terminates the Executive's employment without Cause, or the Executive terminates employment hereunder for Good Reason, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) a lump-sum payment equal to (x) the sum of (q) Executive's yearly salary at the rate in effect immediately preceding termination and (r) Executive's Target Bonus for the calendar year in which termination occurs, multiplied by (y) the Severance Multiple (as defined herein), (iv) reimbursement to the Executive for up to $10,000 of executive outplacement services, and (v) a lump-sum equal to the Company's cost for health insurance, life insurance and retirement benefits for the Severance Period.

        (e) As used herein:

            (i) the term "Cause" shall mean (v) the Executive's commission of an act of fraud or dishonesty or a crime involving money or other property of the Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo contendere to an indictment for a felony; (x) if, in carrying out Executive's duties hereunder, the Executive engages in conduct which constitutes willful misconduct or gross negligence; (y) the Executive's failure to carry out a lawful order of the Board of Directors of the Company or its Chief Executive Officer; or (z) a material breach by the Executive of this Agreement. Any act or failure to act on the part of the Executive which is based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or authorized in writing by the Chief Executive Officer of the Company, or based upon the advice of counsel for the Company, shall not constitute Cause as used herein. For purposes of this provision only, a breach shall be "material" if it is demonstrably injurious to the Company, its affiliates or any of its respective business units, financially or otherwise.

            Cause shall not exist unless and until the Company (i) has delivered to the Executive a written Notice of Termination that specifically identifies the events, actions, or non-actions, as applicable, that the Company believes constitute Cause hereunder, and, in the case of termination for Cause under clauses (x), (y) or (z) above, the Executive has been provided with an opportunity to cure the offending conduct (if curable) within 30 days after delivery of the written Notice of Termination, and has not so cured such conduct (if curable), and (ii) the Executive has been provided an opportunity to be heard (with counsel) within 30 days after delivery of the Notice of Termination; provided, however, that in the case of termination for

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Cause under clauses (x), (y), and (z) above, the date of termination shall be no earlier than 35 days after delivery of the Notice of Termination.

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

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

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

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

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

                (5) the failure to continue in effect any compensation or benefit plan in which the Executive is participating, unless either (i) an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or (ii) the failure to continue the Executive's participation therein (or in such substitute or alternative plan) does not discriminate against the Executive, both with respect to the amount of benefits provided and the level of the Executive's participation, relative to other similarly situated participants;

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

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

            (iii) the terms "Disabled" or "Disability" shall mean the Executive's physical or mental incapacity which renders the Executive incapable, even with a reasonable accommodation by the Company, of performing the essential functions of the duties required of Executive by this Agreement for one hundred twenty (120) or more consecutive days; the term "Disability Termination Date" shall mean the date as of which the Executive's employment with the Company is terminated, either by the Executive or by the Company, following the suffering

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of a Disability by the Executive.

            (iv) the term "Severance Period" shall mean the period commencing with the termination of the Executive's employment and ending with the Expiration Date.

            (v) the term "Severance Multiple" shall mean 3 times.

            (vi) the term "Change in Control" shall have the same meaning as in the Company's 1999 Stock Option Plan, as in effect on the date hereof.

            (vii) the term "Target Bonus" shall mean 100% of Executive's annual salary for any given year during the Term.

            (viii) the term "Retirement" shall mean voluntary retirement by the Executive after attaining age 55 with 10 years of service with the Company, or, if the Executive has not attained age 55 and/or has less than 10 years of service with the Company, the Company determines that circumstances exist that warrant the granting of Retirement status.

            (f) The Executive shall have no obligation to seek other employment or otherwise mitigate the Company's obligations to make payments under this Section 6, and the Company's obligations shall not be reduced by the amount, if any, of other compensation or income earned or received by the Executive after the effective date of Executive's termination.

    7.    Effect of Section 280G of the Internal Revenue Code.

            (a) Notwithstanding any other provision of this Agreement to the contrary, and except as provided in Section 7(b), to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any

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other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.

        (b) The determination of whether the Total Payments shall be reduced as provided in this Section 7 and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among its independent auditors and the five (5) largest accounting firms (an "Eligible Accounting Firm") in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive's employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section 7, or to have such Determination reviewed by another Eligible Accounting Firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

    8.    Company Property. Any trade name or mark, program, discovery, process, design, invention or improvement which the Executive makes or develops, which relates, directly or indirectly, to the business of the Company or its affiliates, or Executive's employment by the Company, shall be considered as "made for hire" and shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and thereafter, the Executive shall, without additional compensation, execute and deliver to or as requested by the Company, any instruments of transfer and take such other action as the Company may reasonably request to carry out the provisions hereof, including filing, at the Company's sole expense, trademark, patent or copyright applications for any trade name or mark, invention or writing covered hereby and assigning such applications to the Company.

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

    10.    Competition; Recruitment; Non-Disparagement.

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        (a) The Executive shall not, at any time during Executive's employment by the Company and during the Severance Period (provided that the Company is making the payments to Executive which may be required hereby during such Severance Period) (the "Non-Compete Period") and under the following circumstances, engage or become interested (as an owner, stockholder, partner, director, officer, employee, consultant or otherwise) in any business which then competes, directly or indirectly, with the business then conducted by the Company or any of its subsidiaries or affiliates. The ownership of less than 5% of the stock of a publicly owned company which competes with the Company, any of its subsidiaries or affiliates, in and of itself, shall not be considered a violation of the provisions of this Section 10.

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

        (c) For the longer of any period applicable under this Section 10 or a period of three years immediately following the date of termination, (i) the Company, and its respective affiliates and employees shall not disparage the Executive, and (ii) the Executive shall not disparage the Company, or its respective affiliates and employees.

        (d) The Executive acknowledges that these provisions are necessary for the protection of the Company, and its subsidiaries and affiliates and are not unreasonable, because the Executive would be able to recruit and hire personnel other than employees of the Company, and any of their subsidiaries and affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of this Agreement shall result in the immediate cessation of any payments pursuant to this Section 10 and Section 6 hereof, if applicable. The duration and the scope of these restrictions on the Executive's activities are divisible, so that if any provision of this Section 10 is held or deemed to be invalid, that provision shall be automatically modified to the extent necessary to make it valid.

    11.    Notices. Any notice or other communication to the Company or to the Executive under this Agreement shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, to such party at Executive's address below, or to the Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at such other address as such party may specify by written notice to the other party).

    12.    Successors; Binding Agreement.

        (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company, except that such rights or

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obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business or assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business or assets of the Company and such assignee or transferee assumes all of the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid, which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law.

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

    13.    Indemnification. The Company shall indemnify Executive and hold the Executive harmless, to the maximum extent permitted by applicable law, from and against all claims, actions, suits, proceedings, loss, damage, liability, costs, charges and expenses, including reasonable attorneys' fees and costs arising in connection with the Executive's performance of Executive's duties hereunder or Executive's status as an employee, officer, director or agent of the Company or its affiliates, in accordance with the Company's indemnity policies for its senior executives.

    14.    Interest on Late Payments. "Undisputed Late Obligations" shall bear interest beginning on the Due Date until paid in full at an annual rate of one percent (1.0%) plus the prime rate as declared from time to time by The Chase Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean any obligation which remains unpaid 5 days after written notice thereof is delivered to the other party in accordance with Section 11 (the "Due Date") for money under this Agreement owing from one party to another, which obligation (i) is not subject to any bona fide dispute or (ii) has been adjudicated by an arbitration panel or court of competent jurisdiction to be due and payable.

    15.    Arbitration. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of New York, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

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

    17.    Miscellaneous.

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

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

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

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

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

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

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

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first above written.

JONES APPAREL GROUP, INC.

By: /s/ Jackwyn Nemerov
     President

     /s/ Sidney Kimmel
     Executive

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EX-10

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

    AGREEMENT made as of July 1, 2000 by and between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company"), and JACKWYN NEMEROV (the "Executive").

W I T N E S S E T H:

    WHEREAS, Executive has been serving as a senior executive of the Company; and

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

    NOW, THEREFORE, it is agreed as follows:

    1.   Employment. (a) During the term of this Agreement, the Company shall employ the Executive as the President of the Company, with such responsibilities and authority as Executive has heretofore had as President of the Company. The Executive shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote all of Executive's business time and attention to the business affairs of the Company, and to perform such responsibilities in a professional manner. Notwithstanding the foregoing, during the term of this Agreement, it shall not be a violation of this Agreement for the Executive to (a) serve on civic or charitable boards or committees; (b) deliver lectures, fulfill speaking engagements or teach at educational institutions; (c) serve as a non-employee member of a board of directors of a business entity which is not competitive with the Company and as to which the Board of Directors of the Company has given its consent; and (d) attend to personal business, so long as such activities do not interfere with the performance of the Executive's responsibilities as a senior executive of the Company in accordance with this Agreement.

        (b) If neither party has given a Non-extension Notice (as defined in Section 2 hereof) prior to such date, effective July 1, 2001 Executive shall be designated as "President and Chief Operating Officer" of the Company, with such responsibilities and authority as Executive had immediately prior to such date and with such additional responsibilities and authority (if any) as to which Executive and the Chief Executive Officer of the Company may agree, with the concurrence of the Board of Directors of the Company.

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    2.    Term. The Company shall employ the Executive for the period commencing as of July 1, 2000 and ending as of June 30, 2003 (the "Expiration Date"), as renewed in accordance with the following sentence (the "Term"). The Executive's employment with the Company will continue, and this Agreement will be automatically extended without limitation, for successive 12-month periods commencing July 1 and ending June 30 (a "Contract Year"), unless either party to this Agreement advises the other in writing, no later than June 30, 2001 and no later than each June 30 thereafter, that such party does not wish to extend (a "Non-extension Notice"). If this Agreement shall be so extended, the "Expiration Date" shall mean the then applicable extended "Expiration Date", and the "Term" shall mean the period commencing July 1, 2000 and ending on the then applicable extended "Expiration Date".

    For example, (i) if by June 30, 2001, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2004, and (ii) if the Term is so extended through June 30, 2004, then if by June 30, 2002, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2005.

    3.    Salary, Retirement Plans, Fringe Benefits and Allowances.

        (a) Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $1,000,000. The Executive's salary shall be payable at such regular times and intervals as the Company customarily pays its senior executives from time to time, but no less frequently than once a month.

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

        (c) During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare, fringe and other benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other senior executives of the Company.

        (d) The Executive shall be entitled to an aggregate of four (4) weeks paid vacation during each calendar year of the Term. The Executive shall also be entitled to the benefits of the Company's policies relating to sick leave and holidays.

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

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        (f) The Company shall make available to the Executive all perquisites that are made available to senior executives of the Company. Without limiting the foregoing, the Company shall provide the Executive with a Company car and reimbursement of related expenses on a basis consistent with past practice.

    4.    Calendar Year Bonus; Contract Year Bonus.

        (a) Executive shall participate in the Company's Executive Annual Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be entitled to receive annual bonus payments for each full calendar year of employment which ends prior to the Expiration Date and throughout which the Executive has been employed by the Company ("Calendar Year Bonus"), conditioned upon the attainment of annual criteria and objectives established for participants in the Bonus Plan.

        (b)(i) In addition to the Calendar Year Bonuses that the Executive may receive pursuant to Section 4(a) hereof, the Executive shall be paid an aggregate bonus of $3,000,000 for each full Contract Year throughout which the Executive has been employed by the Company during the Term (the "Contract Year Bonus"). The Contract Year Bonus shall be paid in two installments of $1,500,000 (each a "Contract Year Bonus Installment"), payable within 10 days after the first day and the last day of each Contract Year (except that the first Contract Year Bonus Installment for the Contract Year beginning July 1, 2000 shall be paid within 10 days following the execution of this Agreement).

            (ii) Executive may elect to receive all or part of a Contract Year Bonus Installment in shares ("Common Shares") of the Company's common stock (the "Common Stock Amount"), by giving written notice of such election (a "Stock Election Notice") to the Company no later than the July 10 immediately following the end of a Contract Year. If such Stock Election Notice has been given, the number of Common Shares that the Company shall deliver to the Executive shall be equal to the Common Stock Amount divided by the average daily last sale price of the Company's common stock on the New York Stock Exchange (adjusted for intervening stock dividends, stock splits, recapitalizations and any other transactions having a similar effect) during the period from the day following the Company's receipt of the Stock Election Notice and ending on the immediately following July 31 (the "Price Calculation Period"). A stock certificate for the Common Shares comprising the Common Stock Amount shall be delivered to the Executive no later than the end of the fifth business day immediately following the end of the Price Calculation Period.

    5.     Stock Options. (a) In anticipation of the entering into of this Agreement and as an inducement to the Executive to do so, on July 6, 2000 the Stock Option Committee of the Board of Directors of the Company granted to Executive an option to purchase 500,000 Common Shares on the terms and conditions contained in stock option agreements of that date.

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        (b) Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually (in addition to those described in Section 5(a) hereof), on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement):

            (a) Target awards will be in an amount (plus or minus 25%) equal to 150% of Executive's salary;

            (b) For purposes of determining the number of shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives;

            (c) The exercise price per share of the Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and

            (d) The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all Options (and all other options to purchase Common Shares then held by the Executive) which are not then vested shall become fully vested and immediately exercisable during the remaining original term of the option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement, death, Disability, a Change in Control, and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and

            (e) The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the other senior executives of the Company.

    6.    Termination of Employment.

        (a) By the Company for Cause, or by the Executive without Good Reason. The Company may terminate the Executive's employment for Cause (as defined herein) before the Expiration Date. If the Executive's employment is terminated for Cause, or if Executive resigns during the Term without Good Reason (as defined below), the Company shall pay to the Executive any unpaid salary through the date of termination, as well as reimburse the Executive for any unpaid reimbursable expenses incurred on behalf of the Company, and thereafter the Company shall have no additional obligations to the Executive under this Agreement.

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        (b) Death or Disability; Retirement. (i) If the Executive's employment terminates before the Expiration Date because of Executive's death or Disability (as defined herein), the Company shall pay Executive or Executive's duly appointed personal representative, as the case may be, (i) any unpaid salary through the date of death or the Disability Termination Date (as defined herein), as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) an amount equal to Executive's monthly salary during each of the six (6) months following Executive's death or the Disability Termination Date, (iii) the Target Bonus for the calendar year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year, and (iv) the Contract Year Bonus for the Contract Year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year. Except as set forth in this Section 6(b), the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b).

            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all options to purchase the Company's common stock which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or her representative, as the case may be, during the remaining original term of the option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death.

        (c) By the Company without Cause, or by the Executive for Good Reason. (i) The Company may terminate the Executive's employment before the Expiration Date without Cause, and the Executive may terminate Executive's employment before the Expiration Date for Good Reason, upon 30-days written notice to the other party. If the Executive's employment is so terminated by the Company without Cause, or by the Executive for Good Reason, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iii) the Contract Year Bonus for the Contract Year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iv) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, and (z) one-twelfth of the Contract Year Bonus, (v) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (vi) reimbursement to the Executive for up to $10,000 of

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executive outplacement services. Except as set forth in this Subsection 6(c), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c).

        (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all options to purchase the Company's common stock which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated.

        (d) Change in Control. If, following a "Change in Control" (as defined herein) and prior to the Expiration Date, the Company terminates the Executive's employment without Cause, or the Executive terminates employment hereunder for Good Reason, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) the Contract Year Bonus for the Contract Year in which termination occurs, prorated for the portion of such year preceding termination, (iv) a lump-sum payment equal to (x) the sum of (q) 200% of Executive's yearly salary at the rate in effect immediately preceding termination and (r) the Contract Year Bonus, multiplied by (y) the Severance Multiple (as defined herein), and (v) a lump-sum equal to the Company's cost for health insurance, life insurance and retirement benefits for the Severance Period.

        (e) Special Termination Provision. (i) Any other provision in this Agreement notwithstanding, during the period commencing when Sidney Kimmel first does not hold the position of Chief Executive Officer of the Company and ending on the 90^th day immediately following such event, Executive may give written notice (an "Early Termination Notice") to the Company that she is terminating her employment on the earlier of (x) the first anniversary of the giving of such notice and (y) the Expiration Date (the "Early Termination Date"; the period commencing with the giving of an Early Termination Notice and ending with the Early Termination Date being referred to herein as the "Early Termination Period"). At any time during the Early Termination Period, the Company may terminate Executive's employment on not less than 60-days written notice to the Executive.

            (ii) If the Executive's employment is so terminated by the Executive or by the Company, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iii) the Contract Year Bonus for the Contract Year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following

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termination of employment), plus, if the Severance Period ends after the termination of employment, (iv) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, and (z) one-twelfth of the Contract Year Bonus, (v) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (vi) reimbursement to the Executive for up to $10,000 of executive outplacement services. Except as set forth in this Subsection 6(e), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(e).

        (f) As used herein:

            (i) the term "Cause" shall mean (v) the Executive's commission of an act of fraud or dishonesty or a crime involving money or other property of the Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo contendere to an indictment for a felony; (x) if, in carrying out Executive's duties hereunder, the Executive engages in conduct which constitutes willful misconduct or gross negligence; (y) the Executive's failure to carry out a lawful order of the Board of Directors of the Company or its Chief Executive Officer; or (z) a material breach by the Executive of this Agreement. Any act or failure to act on the part of the Executive which is based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or authorized in writing by the Chief Executive Officer of the Company, or based upon the advice of counsel for the Company, shall not constitute Cause as used herein. For purposes of this provision only, a breach shall be "material" if it is demonstrably injurious to the Company, its affiliates or any of its respective business units, financially or otherwise.

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

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

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

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

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

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

                (5) the failure to continue in effect any compensation or benefit plan in which the Executive is participating, unless either (i) an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or (ii) the failure to continue the Executive's participation therein (or in such substitute or alternative plan) does not discriminate against the Executive, both with respect to the amount of benefits provided and the level of the Executive's participation, relative to other similarly situated participants;

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

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

            (iii) the terms "Disabled" or "Disability" shall mean the Executive's physical or mental incapacity which renders the Executive incapable, even with a reasonable accommodation by the Company, of performing the essential functions of the duties required of Executive by this Agreement for one hundred twenty (120) or more consecutive days; the term "Disability Termination Date" shall mean the date as of which the Executive's employment with the Company is terminated, either by the Executive or by the Company, following the suffering of a Disability by the Executive.

            (iv) the term "Severance Period" shall mean the period commencing with the termination of the Executive's employment and ending with the Expiration Date, or with the Early Termination Date if termination is pursuant to Section 6(e).

            (v) the term "Severance Multiple" shall mean 3 times.

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            (vi) A "Change in Control" shall have the same meaning as in the Company's 1999 Stock Option Plan, as in effect on the date hereof.

            (vii) the term "Target Bonus" shall mean 75% of Executive's annual salary for any given year during the Term.

            (viii) the term "Retirement" shall mean voluntary retirement by the Executive after attaining age 55 with 10 years of service with the Company, or, if the Executive has not attained age 55 and/or has less than 10 years of service with the Company, the Company determines that circumstances exist that warrant the granting of Retirement status.

            (g) The Executive shall have no obligation to seek other employment or otherwise mitigate the Company's obligations to make payments under this Section 6, and the Company's obligations shall not be reduced by the amount, if any, of other compensation or income earned or received by the Executive after the effective date of Executive's termination.

    7.    Effect of Section 280G of the Internal Revenue Code.

        (a) Notwithstanding any other provision of this Agreement to the contrary, and except as provided in Section 7(b), to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.

        (b) The determination of whether the Total Payments shall be reduced as provided in this Section 7 and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among its independent auditors and the five

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(5) largest accounting firms (an "Eligible Accounting Firm") in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive's employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section 7, or to have such Determination reviewed by another Eligible Accounting Firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

    8.    Company Property. Any trade name or mark, program, discovery, process, design, invention or improvement which the Executive makes or develops, which relates, directly or indirectly, to the business of the Company or its affiliates, or Executive's employment by the Company, shall be considered as "made for hire" and shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and thereafter, the Executive shall, without additional compensation, execute and deliver to or as requested by the Company, any instruments of transfer and take such other action as the Company may reasonably request to carry out the provisions hereof, including filing, at the Company's sole expense, trademark, patent or copyright applications for any trade name or mark, invention or writing covered hereby and assigning such applications to the Company.

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

    10.    Competition; Recruitment; Non-Disparagement.

        (a) The Executive shall not, at any time during Executive's employment by the Company and during the Severance Period (provided that the Company is making the payments to Executive which may be required hereby during such Severance Period) (the "Non-Compete Period") and under the following circumstances, engage or become interested (as an owner, stockholder, partner, director, officer, employee, consultant or otherwise) in any business which

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then competes, directly or indirectly, with the business then conducted by the Company or any of its subsidiaries or affiliates. The ownership of less than 5% of the stock of a publicly owned company which competes with the Company, any of its subsidiaries or affiliates, in and of itself, shall not be considered a violation of the provisions of this Section 10.

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

        (c) For the longer of any period applicable under this Section 10 or a period of three years immediately following the date of termination, (i) the Company, and its respective affiliates and employees shall not disparage the Executive, and (ii) the Executive shall not disparage the Company, or its respective affiliates and employees.

        (d) The Executive acknowledges that these provisions are necessary for the protection of the Company, and its subsidiaries and affiliates and are not unreasonable, because the Executive would be able to recruit and hire personnel other than employees of the Company, and any of their subsidiaries and affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of this Agreement shall result in the immediate cessation of any payments pursuant to this Section 10 and Section 6 hereof, if applicable. The duration and the scope of these restrictions on the Executive's activities are divisible, so that if any provision of this Section 10 is held or deemed to be invalid, that provision shall be automatically modified to the extent necessary to make it valid.

    11.    Notices. Any notice or other communication to the Company or to the Executive under this Agreement shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, to such party at Executive's address below, or to the Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at such other address as such party may specify by written notice to the other party).

    12.    Successors; Binding Agreement.

        (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business or assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business or assets of the Company and such assignee or transferee assumes all of the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such

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successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid, which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law.

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

    13.    Indemnification. The Company shall indemnify Executive and hold the Executive harmless, to the maximum extent permitted by applicable law, from and against all claims, actions, suits, proceedings, loss, damage, liability, costs, charges and expenses, including reasonable attorneys' fees and costs arising in connection with the Executive's performance of Executive's duties hereunder or Executive's status as an employee, officer, director or agent of the Company or its affiliates, in accordance with the Company's indemnity policies for its senior executives.

    14.    Interest on Late Payments. "Undisputed Late Obligations" shall bear interest beginning on the Due Date until paid in full at an annual rate of one percent (1.0%) plus the prime rate as declared from time to time by The Chase Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean any obligation which remains unpaid 5 days after written notice thereof is delivered to the other party in accordance with Section 11 (the "Due Date") for money under this Agreement owing from one party to another, which obligation (i) is not subject to any bona fide dispute or (ii) has been adjudicated by an arbitration panel or court of competent jurisdiction to be due and payable.

    15.    Arbitration. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of New York, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

    16.    Attorneys' Fees. The Company shall reimburse the Executive (or the Executive shall reimburse the Company) for all reasonable costs, including without limitation reasonable attorneys' fees, of the Executive or the Company, as the case may be, in any dispute, arbitration or proceeding arising under this Agreement (collectively, a "Proceeding"), so long as the Executive or the Company, as the case may be, "prevails in substantial part" with respect to Executive's or the Company's claims or defenses in such Proceeding. For purposes hereof, the

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Executive shall be deemed to have "prevailed in substantial part" if (i) the Executive is the party originally demanding a Proceeding, and the arbitrator(s) shall have awarded the Executive at least 75% of the amount originally demanded by the Executive, or (ii) the Company is the party originally demanding a Proceeding, and the arbitrator(s) shall have denied the Company the relief originally requested. The Company shall be deemed to have "prevailed in substantial part" if the Executive is the party originally demanding a Proceeding and the arbitrator(s) shall have awarded the Executive less than 25% of the amount originally demanded by the Executive.

    17.    Miscellaneous.

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

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

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

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

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

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

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

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as

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of the date first above written.

JONES APPAREL GROUP, INC.

By: /s/ Sidney Kimmel
     Chairman and Chief Executive Officer

     /s/ Jackwyn Nemerov
     Executive

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EX-10

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

    AGREEMENT made as of July 1, 2000 by and between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company"), and WESLEY R. CARD (the "Executive").

W I T N E S S E T H:

    WHEREAS, Executive has been serving as a senior executive of the Company; and

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

    NOW, THEREFORE, it is agreed as follows:

    1.     Employment. During the term of this Agreement, the Company shall employ the Executive as the Chief Financial Officer of the Company, with such responsibilities and authority as Executive has heretofore had as Chief Financial Officer of the Company. The Executive shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote all of Executive's business time and attention to the business affairs of the Company, and to perform such responsibilities in a professional manner. Notwithstanding the foregoing, during the term of this Agreement, it shall not be a violation of this Agreement for the Executive to (a) serve on civic or charitable boards or committees; (b) deliver lectures, fulfill speaking engagements or teach at educational institutions; (c) serve as a non-employee member of a board of directors of a business entity which is not competitive with the Company and as to which the Board of Directors of the Company has given its consent; and (d) attend to personal business, so long as such activities do not interfere with the performance of the Executive's responsibilities as a senior executive of the Company in accordance with this Agreement.

    2.    Term. The Company shall employ the Executive for the period commencing as of July 1, 2000 and ending as of June 30, 2003 (the "Expiration Date"), as renewed in accordance with the following sentence (the "Term"). The Executive's employment with the Company will continue, and this Agreement will be automatically extended without limitation, for successive 12-month periods commencing July 1 and ending June 30 (a "Contract Year"), unless either party to this Agreement advises the other in writing, no later than June 30, 2001 and no later than each June 30 thereafter, that such party does not wish to extend (a "Non-extension Notice"). If this Agreement shall be so extended, the "Expiration Date" shall mean the then applicable

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extended "Expiration Date", and the "Term" shall mean the period commencing July 1, 2000 and ending on the then applicable extended "Expiration Date".

For example, (i) if by June 30, 2001, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2004, and (ii) if the Term is so extended through June 30, 2004, then if by June 30, 2002, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2005.

    3.    Salary, Retirement Plans, Fringe Benefits and Allowances.

        (a) Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $575,000. The Executive's salary shall be payable at such regular times and intervals as the Company customarily pays its senior executives from time to time, but no less frequently than once a month.

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

        (c) During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare, fringe and other benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other senior executives of the Company.

        (d) The Executive shall be entitled to an aggregate of four (4) weeks paid vacation during each calendar year of the Term. The Executive shall also be entitled to the benefits of the Company's policies relating to sick leave and holidays.

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

        (f) The Company shall make available to the Executive all perquisites that are made available to senior executives of the Company.

    4.    Bonus.

    Executive shall participate in the Company's Executive Annual Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be entitled to receive annual bonus payments for each full calendar year of employment which ends prior to the Expiration Date and throughout which the Executive has been employed by the Company, conditioned upon the

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attainment of annual criteria and objectives established for participants in the Bonus Plan.

    5.    Stock Options. Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually, on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement):

        (a) Target awards will be in an amount (plus or minus 25%) equal to 150% of Executive's salary;

        (b) For purposes of determining the number of shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives;

        (c) The exercise price per share of the Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and

        (d) The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all such Options and all other options to purchase Common Shares then held by the Executive which are not then vested (in the aggregate being referred to herein as "Accelerated Options") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability, a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and

        (e) The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the other senior executives of the Company.

    6.    Termination of Employment.

        (a) By the Company for Cause, or by the Executive without Good Reason. The Company may terminate the Executive's employment for Cause (as defined herein) before the Expiration Date. If the Executive's employment is terminated for Cause, or if Executive resigns during the Term without Good Reason (as defined below), the Company shall pay to the Executive any unpaid salary through the date of termination, as well as reimburse the Executive for any unpaid reimbursable expenses incurred on behalf of the Company, and thereafter the Company shall have no additional obligations to the Executive under this Agreement.

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        (b) Death or Disability; Retirement. (i) If the Executive's employment terminates before the Expiration Date because of Executive's death or Disability (as defined herein), the Company shall pay Executive or Executive's duly appointed personal representative, as the case may be, (i) any unpaid salary through the date of death or the Disability Termination Date (as defined herein), as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) an amount equal to Executive's monthly salary during each of the six (6) months following Executive's death or the Disability Termination Date, and (iii) the Target Bonus for the calendar year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year. Except as set forth in this Section 6(b), the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b).

            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or his representative, as the case may be, during the remaining original term of the Accelerated Option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death.

        (c) By the Company without Cause, or by the Executive for Good Reason. (i) The Company may terminate the Executive's employment before the Expiration Date without Cause, and the Executive may terminate Executive's employment before the Expiration Date for Good Reason, upon 30-days written notice to the other party. If the Executive's employment is so terminated by the Company without Cause, or by the Executive for Good Reason, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iii) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, (iv) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (v) reimbursement to the Executive for up to $10,000 of executive outplacement services. Except as set forth in this Subsection 6(c), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c).

            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause

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or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated.

        (d) Change in Control. If, following a "Change in Control" (as defined herein) and prior to the Expiration Date, the Company terminates the Executive's employment without Cause, or the Executive terminates employment hereunder for Good Reason, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) a lump-sum payment equal to (x) 200% of Executive's yearly salary at the rate in effect immediately preceding termination multiplied by (y) the Severance Multiple (as defined herein), (iv) reimbursement to the Executive for up to $10,000 of executive outplacement services, and (v) a lump-sum equal to the Company's cost for health insurance, life insurance and retirement benefits for the Severance Period.

        (e) As used herein:

            (i) the term "Cause" shall mean (v) the Executive's commission of an act of fraud or dishonesty or a crime involving money or other property of the Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo contendere to an indictment for a felony; (x) if, in carrying out Executive's duties hereunder, the Executive engages in conduct which constitutes willful misconduct or gross negligence; (y) the Executive's failure to carry out a lawful order of the Board of Directors of the Company or its Chief Executive Officer; or (z) a material breach by the Executive of this Agreement. Any act or failure to act on the part of the Executive which is based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or authorized in writing by the Chief Executive Officer of the Company, or based upon the advice of counsel for the Company, shall not constitute Cause as used herein. For purposes of this provision only, a breach shall be "material" if it is demonstrably injurious to the Company, its affiliates or any of its respective business units, financially or otherwise.

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

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

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

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

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

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

            (5) the failure to continue in effect any compensation or benefit plan in which the Executive is participating, unless either (i) an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or (ii) the failure to continue the Executive's participation therein (or in such substitute or alternative plan) does not discriminate against the Executive, both with respect to the amount of benefits provided and the level of the Executive's participation, relative to other similarly situated participants;

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

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

        (iii) the terms "Disabled" or "Disability" shall mean the Executive's physical or mental incapacity which renders the Executive incapable, even with a reasonable accommodation by the Company, of performing the essential functions of the duties required of Executive by this Agreement for one hundred twenty (120) or more consecutive days; the term "Disability Termination Date" shall mean the date as of which the Executive's employment with the Company is terminated, either by the Executive or by the Company, following the suffering of a Disability by the Executive.

        (iv) the term "Severance Period" shall mean the period commencing with the

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termination of the Executive's employment and ending with the Expiration Date.

        (v) the term "Severance Multiple" shall mean 3 times.

        (vi) the term "Change in Control" shall have the same meaning as in the Company's 1999 Stock Option Plan, as in effect on the date hereof.

        (vii) the term "Target Bonus" shall mean 75% of Executive's annual salary for any given year during the Term.

        (viii) the term "Retirement" shall mean voluntary retirement by the Executive after attaining age 55 with 10 years of service with the Company, or, if the Executive has not attained age 55 and/or has less than 10 years of service with the Company, the Company determines that circumstances exist that warrant the granting of Retirement status.

        (f) The Executive shall have no obligation to seek other employment or otherwise mitigate the Company's obligations to make payments under this Section 6, and the Company's obligations shall not be reduced by the amount, if any, of other compensation or income earned or received by the Executive after the effective date of Executive's termination.

    7.    Effect of Section 280G of the Internal Revenue Code.

    (a) Notwithstanding any other provision of this Agreement to the contrary, and except as provided in Section 7(b), to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.

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    (b) The determination of whether the Total Payments shall be reduced as provided in this Section 7 and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among its independent auditors and the five (5) largest accounting firms (an "Eligible Accounting Firm") in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive's employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section 7, or to have such Determination reviewed by another Eligible Accounting Firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

    8.    Company Property. Any trade name or mark, program, discovery, process, design, invention or improvement which the Executive makes or develops, which relates, directly or indirectly, to the business of the Company or its affiliates, or Executive's employment by the Company, shall be considered as "made for hire" and shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and thereafter, the Executive shall, without additional compensation, execute and deliver to or as requested by the Company, any instruments of transfer and take such other action as the Company may reasonably request to carry out the provisions hereof, including filing, at the Company's sole expense, trademark, patent or copyright applications for any trade name or mark, invention or writing covered hereby and assigning such applications to the Company.

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

    10.    Competition; Recruitment; Non-Disparagement.

        (a) The Executive shall not, at any time during Executive's employment by the Company and during the Severance Period (provided that the Company is making the payments

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to Executive which may be required hereby during such Severance Period) (the "Non-Compete Period") and under the following circumstances, engage or become interested (as an owner, stockholder, partner, director, officer, employee, consultant or otherwise) in any business which then competes, directly or indirectly, with the business then conducted by the Company or any of its subsidiaries or affiliates. The ownership of less than 5% of the stock of a publicly owned company which competes with the Company, any of its subsidiaries or affiliates, in and of itself, shall not be considered a violation of the provisions of this Section 10.

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

        (c) For the longer of any period applicable under this Section 10 or a period of three years immediately following the date of termination, (i) the Company, and its respective affiliates and employees shall not disparage the Executive, and (ii) the Executive shall not disparage the Company, or its respective affiliates and employees.

        (d) The Executive acknowledges that these provisions are necessary for the protection of the Company, and its subsidiaries and affiliates and are not unreasonable, because the Executive would be able to recruit and hire personnel other than employees of the Company, and any of their subsidiaries and affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of this Agreement shall result in the immediate cessation of any payments pursuant to this Section 10 and Section 6 hereof, if applicable. The duration and the scope of these restrictions on the Executive's activities are divisible, so that if any provision of this Section 10 is held or deemed to be invalid, that provision shall be automatically modified to the extent necessary to make it valid.

    11.    Notices. Any notice or other communication to the Company or to the Executive under this Agreement shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, to such party at Executive's address below, or to the Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at such other address as such party may specify by written notice to the other party).

    12. Successors; Binding Agreement.

        (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business or assets of the Company, provided that the assignee or transferee is the successor to all

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or substantially all of the business or assets of the Company and such assignee or transferee assumes all of the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid, which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law.

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

    13.    Indemnification. The Company shall indemnify Executive and hold the Executive harmless, to the maximum extent permitted by applicable law, from and against all claims, actions, suits, proceedings, loss, damage, liability, costs, charges and expenses, including reasonable attorneys' fees and costs arising in connection with the Executive's performance of Executive's duties hereunder or Executive's status as an employee, officer, director or agent of the Company or its affiliates, in accordance with the Company's indemnity policies for its senior executives.

    14.    Interest on Late Payments. "Undisputed Late Obligations" shall bear interest beginning on the Due Date until paid in full at an annual rate of one percent (1.0%) plus the prime rate as declared from time to time by The Chase Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean any obligation which remains unpaid 5 days after written notice thereof is delivered to the other party in accordance with Section 11 (the "Due Date") for money under this Agreement owing from one party to another, which obligation (i) is not subject to any bona fide dispute or (ii) has been adjudicated by an arbitration panel or court of competent jurisdiction to be due and payable.

    15.    Arbitration. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of New York, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

    16.    Attorneys' Fees. The Company shall reimburse the Executive (or the Executive shall reimburse the Company) for all reasonable costs, including without limitation reasonable attorneys' fees, of the Executive or the Company, as the case may be, in any dispute, arbitration

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or proceeding arising under this Agreement (collectively, a "Proceeding"), so long as the Executive or the Company, as the case may be, "prevails in substantial part" with respect to Executive's or the Company's claims or defenses in such Proceeding. For purposes hereof, the Executive shall be deemed to have "prevailed in substantial part" if (i) the Executive is the party originally demanding a Proceeding, and the arbitrator(s) shall have awarded the Executive at least 75% of the amount originally demanded by the Executive, or (ii) the Company is the party originally demanding a Proceeding, and the arbitrator(s) shall have denied the Company the relief originally requested. The Company shall be deemed to have "prevailed in substantial part" if the Executive is the party originally demanding a Proceeding and the arbitrator(s) shall have awarded the Executive less than 25% of the amount originally demanded by the Executive.

    17.    Miscellaneous.

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

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

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

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

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

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

        (g) The obligations of the Executive and the Company hereunder shall survive the termination of the term of this Agreement and the Executive's employment hereunder, to the

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extent necessary to give full effect to the provisions of this Agreement.

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first above written.

JONES APPAREL GROUP, INC.

By: /s/ Sidney Kimmel
     Chairman and Chief Executive Officer

     /s/ Wesley R. Card
     Executive

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EX-10

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

    AGREEMENT made as of July 1, 2000 by and between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company"), and IRWIN SAMELMAN (the "Executive").

W I T N E S S E T H:

    WHEREAS, Executive has been serving as a senior executive of the Company; and

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

    NOW, THEREFORE, it is agreed as follows:

    1.    Employment. During the term of this Agreement, the Company shall employ the Executive as the Executive Vice President-Marketing of the Company, with such responsibilities and authority as Executive has heretofore had as Executive Vice President-Marketing of the Company. The Executive shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote all of Executive's business time and attention to the business affairs of the Company, and to perform such responsibilities in a professional manner. Notwithstanding the foregoing, during the term of this Agreement, it shall not be a violation of this Agreement for the Executive to (a) serve on civic or charitable boards or committees; (b) deliver lectures, fulfill speaking engagements or teach at educational institutions; (c) serve as a non-employee member of a board of directors of a business entity which is not competitive with the Company and as to which the Board of Directors of the Company has given its consent; and (d) attend to personal business, so long as such activities do not interfere with the performance of the Executive's responsibilities as a senior executive of the Company in accordance with this Agreement.

    2.     Term. The Company shall employ the Executive for the period commencing as of July 1, 2000 and ending as of June 30, 2003 (the "Expiration Date"), as renewed in accordance with the following sentence (the "Term"). The Executive's employment with the Company will continue, and this Agreement will be automatically extended without limitation, for successive 12-month periods commencing July 1 and ending June 30 (a "Contract Year"), unless either party to this Agreement advises the other in writing, no later than June 30, 2001 and no later than each June 30 thereafter, that such party does not wish to extend (a "Non-extension Notice"). If this Agreement shall be so extended, the "Expiration Date" shall mean the then applicable extended "Expiration Date", and the "Term" shall mean the period commencing July 1, 2000 and

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ending on the then applicable extended "Expiration Date".

For example, (i) if by June 30, 2001, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2004, and (ii) if the Term is so extended through June 30, 2004, then if by June 30, 2002, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2005.

    3.    Salary, Retirement Plans, Fringe Benefits and Allowances.

        (a) Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $900,000. The Executive's salary shall be payable at such regular times and intervals as the Company customarily pays its senior executives from time to time, but no less frequently than once a month.

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

        (c) During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare, fringe and other benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other senior executives of the Company.

        (d) The Executive shall be entitled to an aggregate of four (4) weeks paid vacation during each calendar year of the Term. The Executive shall also be entitled to the benefits of the Company's policies relating to sick leave and holidays.

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

        (f) The Company shall make available to the Executive all perquisites that are made available to senior executives of the Company.

    4.    Bonus.

    Executive shall participate in the Company's Executive Annual Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be entitled to receive annual bonus payments for each full calendar year of employment which ends prior to the Expiration Date and throughout which the Executive has been employed by the Company, conditioned upon the attainment of annual criteria and objectives established for participants in the Bonus Plan.

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    5.    Stock Options. Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually, on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement):

        (a) Target awards will be in an amount (plus or minus 25%) equal to 150% of Executive's salary;

        (b) For purposes of determining the number of shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives;

        (c) The exercise price per share of the Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and

        (d) The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all such Options and all other options to purchase Common Shares then held by the Executive which are not then vested (in the aggregate being referred to herein as "Accelerated Options") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability, a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and

        (e) The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the other senior executives of the Company.

    6.   Termination of Employment.

        (a) By the Company for Cause, or by the Executive without Good Reason. The Company may terminate the Executive's employment for Cause (as defined herein) before the Expiration Date. If the Executive's employment is terminated for Cause, or if Executive resigns during the Term without Good Reason (as defined below), the Company shall pay to the Executive any unpaid salary through the date of termination, as well as reimburse the Executive for any unpaid reimbursable expenses incurred on behalf of the Company, and thereafter the Company shall have no additional obligations to the Executive under this Agreement.

        (b) Death or Disability; Retirement. (i) If the Executive's employment

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terminates before the Expiration Date because of Executive's death or Disability (as defined herein), the Company shall pay Executive or Executive's duly appointed personal representative, as the case may be, (i) any unpaid salary through the date of death or the Disability Termination Date (as defined herein), as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) an amount equal to Executive's monthly salary during each of the six (6) months following Executive's death or the Disability Termination Date, and (iii) the Target Bonus for the calendar year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year. Except as set forth in this Section 6(b), the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b).

            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, (x) all Accelerated Options which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or his representative, as the case may be, during the remaining original term of the Accelerated Option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death, and (y) if the Executive's employment with Company shall terminate for any reason other than Executive's death or for Cause, during the period commencing with the date of such termination and ending with Executive's death, the Company shall continue to include the Executive (and his spouse and dependents, if any) in the Company's health care benefits plans (at the Company's sole expense) in which the Executive was participating immediately prior to his Retirement.

        (c) By the Company without Cause, or by the Executive for Good Reason. (i) The Company may terminate the Executive's employment before the Expiration Date without Cause, and the Executive may terminate Executive's employment before the Expiration Date for Good Reason, upon 30-days written notice to the other party. If the Executive's employment is so terminated by the Company without Cause, or by the Executive for Good Reason, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30^th day immediately following termination of employment), (iii) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, (iv) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (v) reimbursement to the Executive for up to $10,000 of executive outplacement services. Except as set forth in this Subsection 6(c), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c).

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            (ii) In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated.

        (d) Change in Control. If, following a "Change in Control" (as defined herein) and prior to the Expiration Date, the Company terminates the Executive's employment without Cause, or the Executive terminates employment hereunder for Good Reason, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) a lump-sum payment equal to (x) 200% of Executive's yearly salary at the rate in effect immediately preceding termination multiplied by (y) the Severance Multiple (as defined herein), (iv) reimbursement to the Executive for up to $10,000 of executive outplacement services, and (v) a lump-sum equal to the Company's cost for life insurance and retirement benefits for the Severance Period.

        (e) Special Termination Provision. (i) Any other provision in this Agreement notwithstanding, during the period commencing either when Sidney Kimmel first does not hold the position of Chief Executive Officer of the Company or a Change in Control has occurred, and ending on the 90^th day immediately following either such event, Executive may give written notice (an "Early Termination Notice") to the Company that he is terminating his employment effective on the 30^th day following the giving of such Early Termination Notice.

            (ii) If the Executive's employment is so terminated by the Executive, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) a lump-sum payment equal to (x) 200% of Executive's yearly salary at the rate in effect immediately preceding termination multiplied by (y) the Severance Multiple (as defined herein), (iv) reimbursement to the Executive for up to $10,000 of executive outplacement services, and (v) a lump-sum equal to the Company's cost for life insurance and retirement benefits for the Severance Period.

        (f) As used herein:
            (i) the term "Cause" shall mean (v) the Executive's commission of an act of fraud or dishonesty or a crime involving money or other property of the Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo contendere to an indictment for a felony; (x) if, in carrying out Executive's duties hereunder, the Executive engages in conduct which constitutes willful misconduct or gross negligence; (y) the Executive's failure to carry out

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a lawful order of the Board of Directors of the Company or its Chief Executive Officer; or (z) a material breach by the Executive of this Agreement. Any act or failure to act on the part of the Executive which is based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or authorized in writing by the Chief Executive Officer of the Company, or based upon the advice of counsel for the Company, shall not constitute Cause as used herein. For purposes of this provision only, a breach shall be "material" if it is demonstrably injurious to the Company, its affiliates or any of its respective business units, financially or otherwise.

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

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

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

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

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

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

                (5) the failure to continue in effect any compensation or benefit plan in which the Executive is participating, unless either (i) an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or (ii) the failure to continue the Executive's participation therein (or in such substitute or alternative plan) does not discriminate against the Executive, both with respect to the amount of benefits provided and the level of the Executive's participation, relative to other similarly situated participants;

                (6) a reduction in the Executive's title and status as Executive Vice President-Marketing of the Company, or any change in the Executive's status as reporting

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

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

            (iii) the terms "Disabled" or "Disability" shall mean the Executive's physical or mental incapacity which renders the Executive incapable, even with a reasonable accommodation by the Company, of performing the essential functions of the duties required of Executive by this Agreement for one hundred twenty (120) or more consecutive days; the term "Disability Termination Date" shall mean the date as of which the Executive's employment with the Company is terminated, either by the Executive or by the Company, following the suffering of a Disability by the Executive.

            (iv) the term "Severance Period" shall mean the period commencing with the termination of the Executive's employment and ending with the Expiration Date.

            (v) the term "Severance Multiple" shall mean 3 times.

            (vi) the term "Change in Control" shall have the same meaning as in the Company's 1999 Stock Option Plan, as in effect on the date hereof.

            (vii) the term "Target Bonus" shall mean 75% of Executive's annual salary for any given year during the Term.

            (viii) The term "Retirement" shall mean voluntary retirement by the Executive after attaining age 55 with 10 years of service with the Company, or, if the Executive has not attained age 55 and/or less than 10 years of service with the Company, the Company determines that circumstances exist that warrant the granting of Retirement status.

            (g) The Executive shall have no obligation to seek other employment or otherwise mitigate the Company's obligations to make payments under this Section 6, and the Company's obligations shall not be reduced by the amount, if any, of other compensation or income earned or received by the Executive after the effective date of Executive's termination.

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    7.    Effect of Section 280G of the Internal Revenue Code.

        (a) Notwithstanding any other provision of this Agreement to the contrary, and except as provided in Section 7(b), to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.

        (b) The determination of whether the Total Payments shall be reduced as provided in this Section 7 and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among its independent auditors and the five (5) largest accounting firms (an "Eligible Accounting Firm") in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive's employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section 7, or to have such Determination reviewed by another Eligible Accounting Firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

    8.    Company Property. Any trade name or mark, program, discovery, process, design, invention or improvement which the Executive makes or develops, which relates, directly or

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indirectly, to the business of the Company or its affiliates, or Executive's employment by the Company, shall be considered as "made for hire" and shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and thereafter, the Executive shall, without additional compensation, execute and deliver to or as requested by the Company, any instruments of transfer and take such other action as the Company may reasonably request to carry out the provisions hereof, including filing, at the Company's sole expense, trademark, patent or copyright applications for any trade name or mark, invention or writing covered hereby and assigning such applications to the Company.

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

    10.    Competition; Recruitment; Non-Disparagement.

        (a) The Executive shall not, at any time during Executive's employment by the Company and during the Severance Period (provided that the Company is making the payments to Executive which may be required hereby during such Severance Period) (the "Non-Compete Period") and under the following circumstances, engage or become interested (as an owner, stockholder, partner, director, officer, employee, consultant or otherwise) in any business which then competes, directly or indirectly, with the business then conducted by the Company or any of its subsidiaries or affiliates. The ownership of less than 5% of the stock of a publicly owned company which competes with the Company, any of its subsidiaries or affiliates, in and of itself, shall not be considered a violation of the provisions of this Section 10.

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

        (c) For the longer of any period applicable under this Section 10 or a period of three years immediately following the date of termination, (i) the Company, and its respective affiliates and employees shall not disparage the Executive, and (ii) the Executive shall not disparage the Company, or its respective affiliates and employees.

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        (d) The Executive acknowledges that these provisions are necessary for the protection of the Company, and its subsidiaries and affiliates and are not unreasonable, because the Executive would be able to recruit and hire personnel other than employees of the Company, and any of their subsidiaries and affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of this Agreement shall result in the immediate cessation of any payments pursuant to this Section 10 and Section 6 hereof, if applicable. The duration and the scope of these restrictions on the Executive's activities are divisible, so that if any provision of this Section 10 is held or deemed to be invalid, that provision shall be automatically modified to the extent necessary to make it valid.

    11.    Notices. Any notice or other communication to the Company or to the Executive under this Agreement shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, to such party at Executive's address below, or to the Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at such other address as such party may specify by written notice to the other party).

    12.    Successors; Binding Agreement.

        (a) Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business or assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business or assets of the Company and such assignee or transferee assumes all of the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid, which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law.

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

    13.    Indemnification. The Company shall indemnify Executive and hold the Executive harmless, to the maximum extent permitted by applicable law, from and against all claims, actions, suits, proceedings, loss, damage, liability, costs, charges and expenses, including

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reasonable attorneys' fees and costs arising in connection with the Executive's performance of Executive's duties hereunder or Executive's status as an employee, officer, director or agent of the Company or its affiliates, in accordance with the Company's indemnity policies for its senior executives.

    14.    Interest on Late Payments. "Undisputed Late Obligations" shall bear interest beginning on the Due Date until paid in full at an annual rate of one percent (1.0%) plus the prime rate as declared from time to time by The Chase Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean any obligation which remains unpaid 5 days after written notice thereof is delivered to the other party in accordance with Section 11 (the "Due Date") for money under this Agreement owing from one party to another, which obligation (i) is not subject to any bona fide dispute or (ii) has been adjudicated by an arbitration panel or court of competent jurisdiction to be due and payable.

    15.    Arbitration. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of New York, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

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

    17.    Miscellaneous.

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

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

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

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

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

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

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

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first above written.

JONES APPAREL GROUP, INC.

By: /s/ Sidney Kimmel
     Chairman and Chief Executive Officer

     /s/ Irwin Samelman
     Executive

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