10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

FORM 10-K

(Mark One)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004
[  ]	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)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common Stock, $0.01 par value Name of each exchange
on which registered New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:  None

    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. [X] Yes [  ] No

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

    Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  [X] Yes [  ] No

    The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant's most recently completed second fiscal quarter, based on the closing price of the registrant's common stock as reported on the New York Stock Exchange composite tape on July 2, 2004, was approximately $4,858,157,435.

    As of February 23, 2005, 122,413,858 shares of the registrant's common stock were outstanding.

TABLE OF CONTENTS

	Page
PART I
Item 1     Business	4
Item 2     Properties	22
Item 3     Legal Proceedings	23
Item 4     Submission of Matters to a Vote of Security Holders	24
Executive Officers of the Registrant	24
PART II
Item 5     Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6     Selected Financial Data	27
Item 7     Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A   Quantitative and Qualitative Disclosures About Market Risk	40
Item 8     Financial Statements and Supplementary Data	41
Item 9     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	75
Item 9A     Controls and Procedures	75
Item 9B     Other Information	79
PART III
Item 10    Directors and Executive Officers of the Registrant	79
Item 11    Executive Compensation	79
Item 12    Security Ownership of Certain Beneficial Owners and Management	79
Item 13    Certain Relationships and Related Transactions	80
Item 14    Principal Accounting Fees and Services	80
PART IV
Item 15    Exhibits, Financial Statement Schedules	81
Signatures	82
Index to Financial Statement Schedules	83
Exhibit Index	83

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DOCUMENTS INCORPORATED BY REFERENCE

    The documents incorporated by reference into this Form 10-K and the Parts hereof into which such documents are incorporated are listed below:

Document	Part
Those portions of the registrant's proxy statement for the registrant's 2005 Annual Meeting of Stockholders (the "Proxy Statement") that are specifically identified herein as incorporated by reference into this Form 10-K.	III

DEFINITIONS

    As used in this Report, unless the context requires otherwise, "our," "us" and "we" means Jones Apparel Group, Inc. and consolidated subsidiaries, "Sun" means Sun Apparel, Inc., "Nine West Group" means Nine West Group Inc., "Nine West" means Nine West Footwear Corporation, "Victoria" means Victoria + Co Ltd., "Judith Jack" means Judith Jack, LLC, "McNaughton" means McNaughton Apparel Group Inc., "Gloria Vanderbilt" means Gloria Vanderbilt Apparel Corp. (acquired April 8, 2002), "l.e.i." means R.S.V. Sport, Inc. and its related companies (acquired August 15, 2002), "Kasper" means Kasper, Ltd. (acquired December 1, 2003), "Maxwell" means Maxwell Shoe Company Inc. (acquired July 8, 2004), "Barneys" means Barneys New York, Inc. (acquired December 20, 2004), "FASB" means the Financial Accounting Standards Board, "SFAS" means Statement of Financial Accounting Standards and "SEC" means the United States Securities and Exchange Commission.

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 our 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 our expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of national and regional economic conditions, lowered levels of consumer spending resulting from a general economic downturn or generally reduced shopping activity caused by public safety concerns, the performance of our 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 we operate, the integration of the organizations and operations of any acquired businesses into our existing organization and operations, our foreign operations and manufacturing, our reliance on independent manufacturers, changes in the costs of raw materials, labor and advertising, and our 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 we believe 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 our 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 us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.

WEBSITE ACCESS TO COMPANY REPORTS

    Copies of our filings under the Securities Exchange Act of 1934 (including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports) are available free of charge on our investor relations website at www.jny.com on the same day they are electronically filed with the SEC.

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PART I

ITEM 1. BUSINESS

General

    Jones Apparel Group, Inc. is a leading designer, marketer and wholesaler of branded apparel, footwear and accessories. We also market directly to consumers through our chain of specialty retail and value-based stores, and operate the Barneys chain of luxury stores. Our nationally recognized brands include Jones New York, Evan-Picone, Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Kasper, Anne Klein, Albert Nipon, Le Suit and Barneys New York. The Company also markets apparel under the Polo Jeans Company brand licensed from Polo Ralph Lauren Corporation ("Polo"), costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger Licensing, Inc. ("Hilfiger") and the Givenchy brand licensed from Givenchy Corporation and footwear under the Dockers Women brand licensed from Levi Strauss & Co. Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer. We primarily contract for the manufacture of our products through a worldwide network of quality manufacturers. We have capitalized on our nationally known brand names by entering into various licenses for several of our trademarks, including Jones New York, Evan-Picone, Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., with select manufacturers of women's and men's products which we do not manufacture. For more than 30 years, we have built a reputation for excellence in product quality and value, and in operational execution.

    On July 8, 2004, we acquired all the outstanding shares of Maxwell. Maxwell designs and markets casual and dress footwear for women and children under multiple brand names, each of which is targeted to a distinct segment of the footwear market. Maxwell markets its products nationwide to national chains, department stores and specialty retailers. Maxwell offers footwear for women in the moderately priced market segment under the Mootsies Tootsies, Sam & Libby and Dockers Women brands, in the better market segment under the AK Anne Klein and Circa Joan & David brands and in the bridge segment under the Joan and David and Albert Nipon brands. Maxwell also sells moderately priced children's footwear under both the Mootsies Tootsies and Sam & Libby brands and licenses the J. G. Hook trademark from J. G. Hook, Inc. to source and develop private label products for retailers who require brand identification.

    On December 20, 2004, we acquired 100% of the common stock of Barneys. Barneys is a luxury retailer that provides its customers with a wide variety of merchandise across a broad range of prices, including a diverse selection of Barneys label merchandise. Barneys' preferred arrangements with established and emerging designers, combined with creative merchandising, store designs and displays, advertising campaigns, publicity events and emphasis on customer service, has positioned it as a leading retailer of men's and women's fashion, cosmetics, jewelry and home furnishings. Barneys complements its merchandise offerings from designers such as Giorgio Armani, Manolo Blahnik, Marc Jacobs, Prada, Jil Sander and Ermenegildo Zegna with a diverse selection of Barneys label merchandise, including ready-to-wear apparel, handbags, shoes, dress shirts, ties and sportswear. Barneys label merchandise is manufactured by independent third parties according to Barneys' specifications and is of comparable quality to the designer merchandise.

Operating Segments

    Our operations are comprised of four reportable segments: wholesale better apparel, wholesale moderate apparel, wholesale footwear and accessories, and retail. We identify operating segments based on, among other things, the way our management organizes the components of our 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 our own retail locations. See "Business Segment and Geographic Area Information" in the Notes to Consolidated Financial Statements.

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Wholesale Better Apparel

    Our brands cover a broad array of categories for the women's markets; we also provide Polo Jeans Company apparel to the men's markets. Within those brands, various product classifications include career and casual sportswear, jeanswear, dresses, suits, and a combination of all components termed lifestyle collection. We also produce a collection of sportswear under the Anne Klein New York brand and suits under the Albert Nipon brand that are priced for the bridge market. Career and casual sportswear are marketed as individual items or groups of skirts, pants, shorts, jackets, blouses, sweaters and related accessories which, while sold as separates, are coordinated as to styles, color schemes and fabrics, and are designed to be worn together. New collections are introduced in the four principal selling seasons - Spring, Summer, Fall and Holiday. Each season is comprised of a series of individual items or groups which have systematically spaced shipment dates to ensure a fresh flow of goods to the retail floor. In addition, certain labels offer key item styles, which are less seasonal in nature, on a replenishment basis (which ship generally within three to five days from receipt of order).

    The following table summarizes selected aspects of the products sold under both our brands and licensed brands:

	Label	Product Classification	Retail Price Points
Jones New York Labels    Skirts, blouses, pants,    jackets, sweaters,    jeanswear, suits,    dresses, casual tops,    outerwear, shorts	Jones New York Jones New York Signature Jones New York Sport Jones Jeans Jones New York Country Jones New York Dress Jones New York Suit	Collection Sportswear Lifestyle Casual Sportswear Casual Sportswear Lifestyle Dresses Suits	$20 - $420
Nine West Labels    Skirts, blouses, pants,    jackets, sweaters, dresses,    outerwear, shorts,    casual tops	Nine West Easy Spirit	Lifestyle Lifestyle	$20 - $259
Anne Klein Labels    Skirts, blouses, pants,    jackets, sweaters, vests,    dresses, casual tops	Anne Klein New York AK Anne Klein AK Sport Anne Klein Dress	Collection Sportswear Collection Sportswear Casual Sportswear Dresses	$55 - - $2,495 $29 - - $1,081 $10 - $80 $160 - $360
Other Labels    Skirts, blouses, pants,    jackets, sweaters,    suits, dresses	Kasper Albert Nipon Evan-Picone Dress Le Suit	Suits, Dresses, Sportswear Suits Dresses Suits	$39 - - $521 $262 - - $1,174 $69 - - $159 $100 - - $342
Labels Under License    Skirts, t-shirts,    pants, jackets, dresses,    sweaters, jeanswear	Polo Jeans Company	Casual Sportswear	$20 - $849

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Wholesale Moderate Apparel

    Our brands cover a broad array of categories for the women's, juniors and girls markets. Within those brands, various product classifications include career and casual sportswear, jeanswear, dresses, suits, and a combination of all components termed lifestyle collection. Career and casual sportswear are marketed as individual items or groups of skirts, pants, shorts, jackets, blouses, sweaters and related accessories which, while sold as separates, are coordinated as to styles, color schemes and fabrics, and are designed to be worn together. New collections are introduced in the four principal selling seasons - Spring, Summer, Fall and Holiday. Each season is comprised of a series of individual items or groups which have scheduled shipment dates to ensure a fresh flow of goods to the retail floor. In addition, certain labels offer key item styles, which are less seasonal in nature, on a replenishment basis (which ship generally within three to five days from receipt of order).

    The following table summarizes selected aspects of the products sold under our brands:

 

	Label	Product Classification	Retail Price Points
Jones New York Labels    Skirts, blouses,    jackets, sweaters,    casual tops	Jones Wear Jones Wear Sport	Collection Sportswear Casual Sportswear	$20 - $150
Nine West Labels    Skirts, blouses,    jackets, sweaters,    casual tops	Nine & Company Bandolino	Lifestyle Casual Sportswear	$16 - $260
McNaughton Labels    Skirts, blouses,    jackets, sweaters,    casual tops	Norton McNaughton Maggie McNaughton	Collection Sportswear Collection Sportswear	$29 - $103
Gloria Vanderbilt Labels    Skirts, blouses, shorts,    jackets, sweaters,    jeanswear, capris,    casual tops	Gloria Vanderbilt	Lifestyle	$36 - $65
Other Labels    Skirts, blouses, pants,    jackets, sweaters,    jeanswear, dresses,     casual tops and bottoms	Evan-Picone Energie Erika l.e.i. Jeanstar A|Line Pappagallo Rena Rowan Glo/Glo Girls	Lifestyle Casual Sportswear Casual Sportswear Casual Sportswear Casual Sportswear Casual Sportswear Casual Sportswear Career Sportswear Casual Sportswear	$6 - - $104

    In addition to the products sold under these brands, we provide design and manufacturing resources to certain retailers to develop moderately-priced product lines to be sold under private labels.

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Wholesale Footwear and Accessories

    Our wholesale footwear and accessories operations include the sale of both brand name and private label footwear, handbags, small leather goods and costume, semi-precious, sterling silver, and marcasite jewelry. The following table summarizes selected aspects of the products sold under both our brands and licensed brands:

Label	Product Classification	Retail Price Points
		Shoes	Boots
Footwear
Bridge labels
Joan & David	Sophisticated Classics	$175 - $225	$325 - $379
Albert Nipon	Sophisticated Classics	$129 - $169	$229 - $329
Garolini	Sophisticated/Contemporary	$110 - $140	$180 - $250
Better labels
Nine West	Contemporary	$49 - $85	$89 - $199
Enzo Angiolini	Sophisticated Classics	$60 - $115	$99 - $289
AK Anne Klein	Modern Classics	$59 - $75	$139 - $159
Circa Joan & David	Sophisticated Classics	$59 - $98	$119 - $189
Upper Moderate labels
Bandolino	Modern Classics	$49 - $69	$79 - $149
Easy Spirit	Comfort/Fit, Active, Sport/Casuals	$49 - $89	$69 - $129
Moderate labels
Nine & Company	Contemporary	$40 - $50	$59 - $99
Westies	Contemporary	$39 - $49	$59 - $99
Pappagallo	Lifestyle	$29 - $49	-
Gloria Vanderbilt	Lifestyle	$30 - $45	$43 - $50
Mootsies Tootsies	Lifestyle	$25 - $35	$30 - $46
Mootsies Tootsies Kids	Children's	$15 - $30	$35 - $40
Sam & Libby	Contemporary	$39 - $49	$49 - $69
Sam & Libby Kids	Children's	$20 - $41	$40 - $60
Dockers Women	Lifestyle	$40 - $55	$40 - $76

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Label	Product Classification	Retail Price Points
Accessories
Bridge Labels
Jones New York	Handbags	$28 - $188
Anne Klein New York	Handbags	$50 - $320
Judith Jack	Marcasite and Sterling Silver Jewelry	$30 - $688
Better Labels
Nine West	Handbags, Luggage, Small Leather Goods and Costume Jewelry	$10 - $100
Givenchy	Costume and Fashion Jewelry	$20 - $295
Tommy Hilfiger	Juniors Costume Jewelry	$14 - $160
Upper Moderate Labels
Easy Spirit	Costume Jewelry	$18 - $60
Bandolino	Handbags	$48 - $138
Moderate Labels
Nine & Company	Handbags, Small Leather Goods and Costume Jewelry	$10 - $42
Gloria Vanderbilt	Handbags, Small Leather Goods and Costume Jewelry	$10 - $36
A|Line	Handbags and Small Leather Goods	$16 - $42
Napier	Costume Jewelry	$8 - $135
l.e.i.	Juniors Costume Jewelry	$6 - $15

Retail

    We market apparel, footwear and accessories directly to consumers through our specialty retail stores operating in malls and urban retail centers, our various value-based ("outlet") stores and, with the acquisition of Barneys, luxury stores located in major urban locations. We constantly evaluate both the opportunities for new locations and the results of underperforming locations for possible modification or closure.

    Specialty Retail Stores. At December 31, 2004, we operated a total of 402 specialty retail stores. These stores sell either footwear and accessories or apparel (or a combination of these products) primarily under their respective brand names. Our Nine West, Easy Spirit, Enzo Angiolini and Bandolino retail stores offer selections of exclusive products not marketed to our wholesale customers. Certain of our specialty retail stores also sell products licensed by us, including belts, legwear, outerwear, watches and sunglasses.

    The following table summarizes selected aspects of our specialty retail stores at December 31, 2004. Of these stores, 393 are located within the United States, five are located in the United Kingdom and four are located in Canada. In addition to the stores listed in the table, we participate in a joint venture that operates 29 specialty stores in Australia under the Nine West and Enzo Angiolini names.

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			Retail Price Range				Average store size (square feet)
	Number of  locations	Brands offered	Shoes and Boots	Accessories	Apparel	Type of  locations
Nine West	215	Primarily Nine West	$15 -$250	$3 - $400	$44 - $1,000	Upscale and regional malls and urban retail centers	1,661
Easy Spirit	137	Primarily Easy Spirit	$29 - $149	$4 - $140	$39 - $159	Upscale and regional malls and urban retail centers	1,389
Enzo Angiolini	18	Primarily Enzo Angiolini	$24 - $229	$6 - $215	$129 - $259	Upscale malls and urban retail centers	1,497
Bandolino	22	Primarily Bandolino	$34 - $189	$10 - $79	$36 - $199	Urban retail locations and regional malls	1,241
Apparel	10	Various	-	-	$10 - $399	Urban retail locations and regional malls	2,848

    Luxury stores. At December 31, 2004, we operated three Barneys New York flagship stores in prime retail locations in New York City, Beverly Hills and Chicago. The flagship stores, which average 136,667 square feet, establish and promote Barneys New York as a leading retailer of men's and women's fashion. These stores offer customers a wide variety of merchandise, including apparel, accessories, cosmetics and items for the home, catering to affluent, fashion-conscious customers. We also seek to ensure that the ambience of our flagship stores reflects the luxury and distinct style of the merchandise that we sell. The flagship stores in New York and Beverly Hills also include restaurants managed by third-party contractors.

    At December 31, 2004, we operated three Barneys New York regional stores in Manhasset, NY, Seattle, WA and Chestnut Hill, MA. The regional stores, which average 12,133 square feet, provide a limited selection of the merchandise offered in the flagship stores and cater to similar customers as our flagship stores in more localized markets.

    At December 31, 2004, we operated three Barneys New York CO-OP stores in New York City and one in Miami. These free-standing stores, which average 7,569 square feet, are an extension of the CO-OP departments in our flagship stores and focus on providing customers with a selection of high-end, contemporary, urban casual apparel and accessories, often at price points that are slightly lower than our non-CO-OP merchandise. CO-OP stores provide us with the opportunity to develop one of Barneys' fastest growing merchandise categories in a less capital intensive manner, relative to Barneys' other luxury stores. These stores give us the opportunity to enter new markets and expand in our existing markets, while broadening our client base by targeting the younger designer customer. In addition, since we will be attracting our Barneys customer earlier in their life cycle, we also believe this format can serve as the initial entree for the shopper who will ultimately develop into our regional and flagship store customer. Similar to our CO-OP departments, our CO-OP stores offer merchandise from established and emerging designers, as well as our Barneys label.

    Outlet Stores. At December 31, 2004, we operated a total of 625 outlet stores. Our shoe stores focus on breadth of product line, as well as value pricing, and offer a distribution channel for our residual inventories. The majority of the shoe stores' merchandise consists of new production of current and proven prior season's styles, with the remainder of the merchandise consisting of discontinued styles from our specialty retail footwear stores and wholesale divisions. The apparel stores focus on breadth of product line, customer service and value pricing. In addition to our brand name merchandise, these stores also sell merchandise produced by our licensees. The Barneys New York outlet stores leverage the Barneys New York brand to reach a wider audience by providing a lower priced version of the sophistication, style and quality of the retail experience provided in the luxury stores and also provide a clearance vehicle for residual merchandise from the luxury stores.

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    The following table summarizes selected aspects of our outlet stores at December 31, 2004. Of these stores, 606 are located within the United States and its territories and 19 are located in Canada. In addition to the stores listed in the table, we participate in a joint venture that operates five outlet stores in Australia under the Nine West name.

	Number of locations	Brands offered	Type of   locations	Average store size (square feet)
Nine West	143	Primarily Nine West	Manufacturer outlet centers	2,821
Jones New York	157	Primarily Jones New York, Jones New York Sport and Jones New York Country	Manufacturer outlet centers	3,724
Easy Spirit	109	Primarily Easy Spirit	Manufacturer outlet centers	3,998
Stein Mart (leased footwear departments)	104	All Company footwear brands	Strip centers	2,646
Kasper	81	Primarily Kasper	Manufacturer outlet centers	2,618
Anne Klein	19	Primarily Anne Klein	Manufacturer outlet centers	2,689
Barneys New York	11	Various	Manufacturer outlet centers	7,084
Joan & David	1	Primarily Joan & David	Manufacturer outlet center	2,202

    We also operate four Barneys New York warehouse sale events annually, one each spring and fall season in both New York and Santa Monica, California. The warehouse sale events provide another vehicle for liquidation of end of season residual merchandise, as well as a low cost extension of the Barneys New York brand to a wider audience. The events attract a wide range of shoppers, mostly bargain hunters who value quality and fashion.

Licensed Brands

    As a result of the acquisition of Sun, we obtained the right to sell Polo Jeans Company products under long-term license and design agreements which Sun entered into with Polo in 1995 (collectively, the "Polo Jeans License"). Under the Polo Jeans License, Polo has granted us an exclusive license for the design, manufacture and sale of men's and women's jeanswear, sportswear, and related apparel under the Polo Jeans Company by Ralph Lauren trademarks in the United States, its territories and Mexico. The agreements expire on December 31, 2010 and may be renewed by us in five-year increments for up to 20 additional years, provided that we achieve certain minimum sales levels. Renewal of the Polo Jeans License after 2010 requires a one-time payment by us of $25.0 million or, at our option, a transfer of a 20% interest in our Polo Jeans Company business to Polo (with no fees required for subsequent renewals). Polo also has an option, exercisable on or before June 1, 2010, to purchase our Polo Jeans Company business at the end of 2010 for a purchase price, payable in cash, equal to 80% of the then fair value of the business as a going concern, assuming continuation of the Polo Jeans License through 2030. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty and design service payments as set forth in the agreements.

    As a result of the acquisition of Victoria, we obtained the exclusive license to produce and sell costume jewelry in the United States and Canada under the Tommy Hilfiger trademark pursuant to an agreement with Hilfiger. This agreement expires on March 31, 2008. The agreement provides for payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement. We also obtained the exclusive license to produce, market and distribute costume jewelry in the

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United States, Canada, Mexico and Japan under the Givenchy trademark pursuant to an agreement with Givenchy, which expires on December 31, 2005. The agreement provides for the payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement.

    As a result of the acquisition of Maxwell, we obtained the exclusive license to produce and sell women's footwear under the Dockers Women trademark in the United States (including its territories and possessions) pursuant to an agreement with Levi Strauss & Co. and a license to design, develop and market women's and children's shoes under the J. G. Hook and Hook Sport brand names pursuant to an agreement with J. G. Hook, Inc. These agreements expire in December 2005 and December 2006, respectively. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty payments as set forth in the agreements.

Design

    Our apparel product lines have design teams that are responsible for the creation, development and coordination of the product group offerings within each line. We believe our design staff is recognized for its distinctive styling of garments and its ability to update fashion classics with contemporary trends. Our apparel designers travel throughout the world for fabrics and colors, and stay continuously abreast of the latest fashion trends. In addition, we actively monitor the retail sales of our products to determine and react to changes in consumer trends.

    For most sportswear lines, we will develop several groups in a season. A group typically consists of an assortment of skirts, pants, jeans, shorts, jackets, blouses, sweaters, t-shirts and various accessories. We believe that we are able to minimize design risks because we often will not have started cutting fabrics until the first few weeks of a major selling season. Since different styles within a group often use the same fabric, we can redistribute styles and, in some cases, colors, to fit current market demand. We also have a key item replenishment program for certain lines which consists of core products that reflect little variation from season to season.

    Our footwear and accessories product lines are developed by a combination of our own design teams and third-party designers, which independently interpret global lifestyle, clothing, footwear and accessories trends. To research and confirm such trends, the teams travel extensively in Asia, Europe and major American markets, conduct extensive market research on retailer and consumer preferences, and subscribe to fashion and color information services. Each team presents styles that maintain each brand's distinct personality. Samples are refined and then produced. After the samples are evaluated, lines are modified further for presentation at each season's shoe shows and accessory markets.

    Our jewelry brands are developed by separate design teams. Each team presents styles that maintain each brand's distinct personality. A prototype is developed for each new product where appropriate. Most prototypes are produced by our contractors based on technical drawings that we supply. These prototypes are reviewed by our product development team, who negotiate costs with the contractors. After samples are evaluated and cost estimates are received, the lines are modified as needed for presentation for each selling season.

    We complement the designer merchandise in our luxury stores with a diverse selection of comparable quality Barneys label merchandise, including ready-to-wear apparel, handbags, shoes, dress shirts, ties and sportswear. Barneys label merchandise is manufactured by independent third parties according to our specifications. We are intensively involved in all aspects of the design and manufacture of this collection.

    In accordance with standard industry practices for licensed products, we have the right to approve the concepts and designs of all products produced and distributed by our licensees. Similarly, Polo Ralph Lauren provides design services to us for our licensed products and has the right to approve our designs for the Polo Jeans Company product line. Hilfiger, Givenchy and Levi Strauss & Co. also provide design services to us for our licensed products and have the right to approve our designs for the Tommy Hilfiger, Givenchy and Dockers Women product lines, respectively.

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Manufacturing and Quality Control

Apparel

    Apparel sold by us is produced in accordance with our design, specification and production schedules through an extensive network of independent factories located in the United States and its territories, Mexico, China and other locations throughout the world. We also operate manufacturing facilities of our own in Mexico. Approximately 18% of our apparel products were manufactured in the United States and Mexico and 82% in other parts of the world (primarily Asia) during 2004. We source a portion of our products in Central America, enabling us to take advantage of shorter lead times than other offshore locations due to proximity. Sourcing in this region enables us to utilize exemptions under "807" customs regulations, which provide that certain articles assembled abroad from United States components are exempt from United States duties on the value of these components.

    We believe that outsourcing a majority of our products allows us to maximize production flexibility, while avoiding significant capital expenditures, work-in-process inventory build-ups and costs of managing a larger production work force. Our fashion designers, production staff and quality control personnel closely examine garments manufactured by contractors to ensure that they meet our high standards.

    Our comprehensive quality control program is designed to ensure that raw materials and finished goods meet our exacting standards. Substantially all of the fabric purchases for garments manufactured domestically, in Mexico and in Central America are inspected upon receipt in either our warehouse facilities (where they are stored prior to shipment for cutting) or at the contractor's warehouse. Fabrics for garments manufactured offshore are inspected by either independent inspection services or by our contractors upon receipt in their warehouses. Our quality control program includes inspection of both prototypes of each garment prior to cutting by the contractors and a sampling of production garments upon receipt at our warehouse facilities to ensure compliance with our specifications.

    Domestic contractors are supervised by our quality control staff based primarily in Pennsylvania. Our Mexican contractors are monitored by an in-house contractor operations group located in Mexico and other foreign manufacturers' operations are monitored by our Hong Kong-based personnel, buying agents located in other countries and independent contractors and inspection services. Finished goods are generally shipped to our warehouses for final inspection and distribution.

    For our sportswear business, we generally supply the raw material to our domestic manufacturers and occasionally to foreign manufacturers. Otherwise, the raw materials are purchased directly by the manufacturer in accordance with our specifications. Raw materials, which are in most instances made and/or colored especially for us, consist principally of piece goods and yarn and are purchased by us from a number of domestic and foreign textile mills and converters. Our foreign finished goods purchases are generally purchased on a letter of credit basis, while our domestic purchases are generally purchased on open account.

    Our primary raw material in our jeanswear business is denim, which is primarily purchased from leading mills located in the United States, Mexico, the Pacific Rim and Pakistan. Denim purchase commitments and prices are negotiated on a quarterly or semi-annual basis. We perform our own extensive testing of denim, cotton twill and other fabrics to ensure consistency and durability.

    We do not have long-term arrangements with any of our suppliers. We have experienced little difficulty in satisfying our raw material requirements and consider our sources of supply adequate. Products have historically been purchased from foreign manufacturers in pre-set United States dollar prices, and therefore, we generally have not been adversely affected by fluctuations in exchange rates.

    Our apparel products are manufactured according to plans prepared each year which reflect prior years' experience, current fashion trends, economic conditions and management estimates of a line's performance. We generally order piece goods concurrently with concept development. The purchase of piece goods is controlled and coordinated on a divisional basis. When possible, we limit our exposure to specific colors and fabrics by committing to purchase only a portion of total projected demand with options to purchase additional volume if demand meets the plan.

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    We believe our extensive experience in logistics and production management underlies our success in coordinating with contractors who manufacture different garments included within the same product group. We also contract for the production of a portion of our products through a network of foreign agents. We have had long-term mutually satisfactory business relationships with many of our contractors and agents but do not have long-term written agreements with any of them.

Footwear and Accessories

    To provide a steady source of inventory, we rely on long-standing relationships developed by Nine West and Maxwell with footwear manufacturers in Asia and Brazil, by Nine West with accessories manufacturers in Asia and by Victoria with jewelry manufacturers in Asia. We work through independent buying agents for footwear and our own offices for accessories and jewelry. Allocation of production among our manufacturing resources is determined based upon a number of factors, including manufacturing capabilities, delivery requirements and pricing.

    During 2004, approximately 88% of our footwear products were manufactured by independent footwear manufacturers located in Asia (primarily China) and approximately 12% were manufactured by independently owned footwear manufacturers in Brazil. Our handbags and small leather goods are sourced through our own buying offices in Korea, China and Hong Kong, which utilize independent third party manufacturers located primarily in China. Products have historically been purchased from the Brazilian and Asian manufacturers in pre-set United States dollar prices, and therefore, we generally have not been adversely affected by fluctuations in exchange rates. We do not have contracts with any of our footwear, handbag or small leather goods manufacturers but, with respect to footwear imported from Brazil and China, we rely on established relationships with our Brazilian and Chinese manufacturers directly and through our independent buying agents. For footwear, quality control reviews are done on-site in the factories by our third-party buying agents primarily to ensure that material and component qualities and fit of the product are in accordance with our specifications. For accessories, quality control reviews are done on-site in the factories by our own locally-based inspection technicians. Our quality control program includes approval of prototypes, as well as approval of final production samples to ensure they meet our high standards.

    We believe that our relationships with our Brazilian and Chinese manufacturers provide us with a responsive and adequate source of supply of our products and, accordingly, give us a significant competitive advantage. We also believe that purchasing a significant percentage of our products in Brazil and China allows us to maximize production flexibility while limiting our capital expenditures, work-in-process inventory and costs of managing a larger production work force. Because of the sophisticated manufacturing techniques of footwear manufacturers, individual production lines can be quickly changed from one style to another, and production of certain styles can be completed in as few as four hours, from uncut leather to boxed footwear.

    We place our projected orders for each season's styles with our manufacturers prior to the time we have received all of our customers' orders. Because of our close working relationships with our third party manufacturers (which allow for flexible production schedules and production of large quantities of footwear within a short period of time), most of our orders are finalized only after we have received orders from a majority of our customers. As a result, we believe that, in comparison to our competitors, we are better able to meet sudden demands for particular designs, more quickly exploit market trends as they occur, reduce inventory risk and more efficiently fill reorders booked during a particular season.

    We do not have contracts with any of our jewelry manufacturers but rely on long-standing relationships, principally with third-party Asian manufacturers. We also have our own manufacturing facility to satisfy demand for products manufactured domestically (such as cosmetic containers) and to provide product samples, prototypes, small quantities of test merchandise and a small amount of production capacity in the event of a disruption of certain outsourced manufacturing. Victoria has historically experienced little difficulty in satisfying finished goods requirements, and we consider their source of supplies adequate. Products have historically been purchased from Asian manufacturers in pre-set United States dollar prices, and therefore, we generally have not been adversely affected by fluctuations in exchange rates.

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    During 2004, our jewelry products were manufactured primarily by independently-owned jewelry manufacturers in Asia. We believe that the quality and cost of products manufactured by our suppliers provide us with the ability to remain competitive. Sourcing the majority of our products enables us to better control costs and avoid significant capital expenditures, work in process inventory, and costs of managing a larger production workforce. Victoria's history as manufacturers gives them the requisite experience and knowledge to manage their vendors effectively.

    Forecasts for basic jewelry products are produced on a rolling 12-week basis and are adjusted based on point of sale information from retailers. Manufacturing of fashion jewelry products is based on marketing forecasts and sales plans; actual orders are received several weeks after such forecasts are produced. Quality control testing is performed either by private firms in the country of manufacture or on-site by domestic employees or our own locally-based inspection technicians. Quality assurance checks are also performed upon receipt of finished goods at our distribution facilities.

Workplace Compliance Program

    We have an active program in place to monitor compliance by our contract manufacturers (in all product categories) with the Jones Apparel Group Standards for Contractors and Suppliers ("Factory Standards"). In 1996, we became a participant in the United States Department of Labor's Apparel Manufacturer's Compliance Program Agreement. Under that agreement, and through independent agreements with domestic and foreign manufacturers that produce products for us, we regularly audit for compliance with our Factory Standards and require corrective action when appropriate. In 2003, we also initiated a more active training program for contractors.

    Our Factory Standards, which we have posted on our website, apply to conditions of employment, such as child labor, wages and benefits, working hours and days off, health and safety conditions in the workplace and housing, forced labor, discrimination, disciplinary practices and freedom of association.

    We have a vigorous factory-auditing program. During 2004, 1,364 audits were conducted (including 915 by independent auditors), including domestic and foreign factories for apparel, footwear, handbag and jewelry products. Our Compliance Auditing staff consists of 15 auditors based in three countries. Thirteen auditors claim English as a second language, and virtually all are multi-lingual and have at least a bachelor's degree from a four-year institution in the United States or abroad. In addition to our own staff, we retain several recognized, unaffiliated workplace compliance audit firms to conduct factory audits on our behalf and to report on such findings, including recommendations for remediation.

    During 2003, we initiated a more training-based approach with our contract manufacturers. In China, we funded a mobile training van program run by an independent monitoring firm, in which approximately 20 factories were visited several times during the year, providing worker training in the following topics: nutrition, reproductive health for female workers, psychology and interpersonal relationships, social skills, our Factory Standards, prevention and cure of SARS, calculation of wage and working hours entitlements, and occupational health and safety. These topics were addressed through lectures, group discussions and group exhibits performed by the independent monitor's staff or local experts with relationships to the monitor.

    Expanding on our introduction in 2003 of a more training-based approach, in 2004 we funded training for an initial period of six months with ten footwear factories. This training is being conducted by a China-based labor compliance consulting organization. It addresses setting up policies and procedures with the factories and communicating their policies and procedures throughout the factory workforce. Examples of their policies and procedures are grievance procedures and hiring, promotion, termination and harassment prevention policies. The ten factories have committed to another six months of additional training, focusing on production planning to reduce the number of working hours. Jones is funding one-half of the second six months of training in these ten factories. In addition to the ten footwear factories, we have funded training for 14 accessories factories for an initial six months that is similar to the footwear factory initial training program. These training programs began in October and November 2004.

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    Jones is also providing ongoing support (but not funding) for six apparel factories that have engaged the same China-based labor compliance consulting organization. For 2005, eight additional factories are in the process of engaging the same compliance consulting organization for an initial six months of consulting services.

    Jones utilizes five factories in Lesotho which have been part of an Employee Relations Improvement Program conducted by a local Industrial Relations expert from South Africa. The program was presented at a conference for textile and apparel industries in Lesotho in May 2004, co-hosted by the Commark Trust and the Lesotho National Development Corporation. These five factories and any other factories we may use in Lesotho in the future are eligible for public funding through the Commark Trust to continue the Employee Relations Improvement Program. The Commark Foundation Trust received its initial funding from the UK's Department for International Development.

    In 2003, we funded remediation training for approximately ten factories in Guatemala to address previously unfavorable audit results, specifically verbal harassment of workers. Also at our expense in 2003, a monitor provided an interpersonal relationship training program to workers at two facilities in Vietnam on our behalf, and a general code of conduct informational session for representatives of all footwear factories in China (some of the same factories being visited by the mobile van), bringing in local government representatives to provide detailed information on the local labor code requirements for working hours and wages.

    Obtaining compliance with our Factory Standards is, in many instances, a very challenging process. We deal with many factories in many countries, each with legal systems and cultures far different from those of the United States. Our auditing program invariably reports problems of varying degrees in almost all factories. Our approach, in virtually all cases, has been to attempt to improve conditions through directions to remediate the cited conditions and to conduct follow-up audits, rather than to cease using a given factory, which would assuredly result in severe hardship for the employees working at those factories. We believe that progress and improvement, although incremental, is quite real.

Marketing

    During 2004, no single customer accounted for more than 10% of sales; however, certain of our customers are under common ownership. When considered together as a group under common ownership, sales to seven department store customers currently owned by The May Department Stores Company ("May") accounted for approximately 14% of 2004 sales, and sales to eight department store customers currently owned by Federated Department Stores, Inc. ("Federated") accounted for approximately 12% of 2004 sales. Our ten largest customer groups accounted for approximately 59% of sales in 2004. We believe that purchasing decisions are generally made independently by individual department stores within a commonly controlled group. There has been a trend, however, toward more centralized purchasing decisions. As such decisions become more centralized, the risk to us of such concentration increases. Furthermore, we believe a trend exists among our major customers to concentrate purchasing among a narrowing group of vendors. In addition, in recent years the retail industry has experienced consolidation and other ownership changes. In the future, retailers may have financial problems or consolidate, undergo restructurings or reorganizations, or realign their affiliations, any of which could increase the concentration of our customers. We attempt to minimize our credit risk from our concentration of customers by closely monitoring accounts receivable balances and shipping levels and the ongoing financial performance and credit status of our customers.

    Sportswear products are marketed to department stores and specialty retailing customers during "market weeks," which are generally four to six months in advance of the corresponding industry selling seasons. While we typically will allocate a six-week period to market a sportswear line, most major orders are written within the first three weeks of any market period.

    We believe retail demand for our apparel products is enhanced by our ability to provide our retail accounts and consumers with knowledgeable sales support. In this regard, we have an established program to place retail sales specialists in many major department stores for many of our brands, including Jones New York, Jones New York Sport, Jones New York Signature, Polo Jeans Company, Kasper and Anne Klein. These individuals have been trained by us to support the sale of our products by educating other store personnel

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and consumers about our products and by coordinating our marketing activities with those of the stores. In addition, the retail sales specialists provide us with firsthand information concerning consumer reactions to our products. In addition, we have a program of designated sales personnel in which a store agrees to designate certain sales personnel who will devote a substantial portion of their time to selling our products in return for certain benefits.

    We introduce new collections of footwear at industry-wide shoe shows, held semi-annually in both New York City and Las Vegas. We also present an interim line to customers during the fall and spring of each year. We introduce new handbag and small leather goods collections at market shows that occur five times each year in New York City. Jewelry products are marketed in New York City showrooms through individual customer appointments and at five industry-wide market shows each year. Retailers visit our showrooms at these times to view various product lines and merchandise.

    We market our footwear, handbag and small leather goods businesses with certain department stores and specialty retail stores by bringing our retail and sales planning expertise to those retailers. Under this program, members of branded division management who have extensive retail backgrounds work with the retailer to create a "focus area" or "concept shop" within the store that displays the full collection of a single brand in one area. These individuals assist the department and specialty retail stores by: providing advice about appropriate product assortment and product flow; making recommendations about when a product should be re-ordered; providing sales guidance, including the training of store personnel; and developing advertising programs with the retailer to promote sales of our products. In addition, our sales force and field merchandising associates for footwear, handbags and small leather goods recommend how to display our products, assist with merchandising displays and educate store personnel about us and our products. The goal of this approach is to promote high retail sell-throughs of our products. With this approach, customers are encouraged to devote greater selling space to our products, and we are better able to assess consumer preferences, the future ordering needs of our customers, and inventory requirements.

    We work closely with our wholesale jewelry customers to create long-term sales programs, which include choosing among our diverse product lines and implementing sales programs at the store level. A team of sales representatives and sales managers monitor product performance against plan and are responsible for inventory management, using point-of-sale information to respond to shifts in consumer preferences. Management uses this information to adjust product mix and inventory requirements. In addition, field merchandising associates recommend how to display our products, assist with merchandising displays and educate store personnel about us and our products. Retailers are also provided with customized displays and store-level merchandising designed to maximize sales and inventory turnover. By providing retailers with in-store product management, we establish close relationships with retailers, allowing us to maximize product sales and increase floor space allocated to our product lines. We have also placed retail sales specialists in major department stores to support the sale of our Napier, Nine West, Givenchy, Tommy Hilfiger and Judith Jack jewelry products.

Advertising and Promotion

    We employ a cooperative advertising program for our branded products, whereby we share the cost of certain wholesale customers' advertising and promotional expenses in newspapers, magazines and other media up to either a preset maximum percentage of the customer's purchases or an agreed-upon rate of contribution. An important part of the marketing program includes prominent displays of our products in wholesale customers' sales catalogs as well as in-store shop displays.

    We have national advertising campaigns for the following brands:

• Jones New York Collection, Jones New York Sport and Jones New York Signature (in fashion and lifestyle magazines),
• Nine West (footwear, apparel, handbags, jewelry and licensed products, primarily in fashion magazines),
• Easy Spirit (primarily in fashion, lifestyle, health and fitness magazines),
• Nine & Company (in fashion magazines through co-op advertising efforts),
• Bandolino (in fashion magazines),

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• Gloria Vanderbilt (in fashion and trade magazines),
• Glo (in fashion magazines),
• l.e.i. (in lifestyle and fashion magazines and radio),
• Anne Klein New York and AK Anne Klein (in fashion magazines),
• Kasper (in fashion magazines),
• Jeanstar (in fashion magazines) and
• the licensed Polo Jeans Company line (in fashion and lifestyle magazines).

    Given the strong recognition and brand loyalty already afforded our brands, we believe these campaigns will serve to further enhance and broaden our customer base. Except for Polo Jeans Company, our in-house creative services departments oversee the conception, production and execution of virtually all aspects of these activities. We also believe that our retail network promotes brand name recognition and supports the merchandising of complete lines by, and the marketing efforts of, our wholesale customers.

Licensing of Company Brands

    We have entered into various license agreements under which independent licensees either manufacture, market and sell certain products under our trademarks in accordance with designs furnished or approved by us or distribute our products in certain countries where we do not do business. These licenses, the terms of which (not including renewals) expire at various dates through 2015, typically provide for the payment to us of a percentage of the licensee's net sales of the licensed products against guaranteed minimum royalty payments, which typically increase over the term of the agreement. We are also a party to licensing arrangements pursuant to which two retail stores are operated in Japan and a single in-store department is operated in Singapore under the name Barneys New York.

The following table sets forth information with respect to select aspects of our licensing business:

Brand	Category
Jones New York	Men's Accessories and Jewelry (U.S., Canada) Men's Dress Shirts (U.S.) Men's Neckwear (Canada) Men's Neckwear (U.S.) Men's Tailored Clothing, Dress Shirts, Outerwear, Dress Slacks (Canada) Men's Tailored Clothing, Formal Wear (U.S.) Men's Topcoats, Outerwear (U.S.) Men's Umbrellas, Rain Accessories (U.S.) Women's Costume Jewelry (Canada) Women's Leather Outerwear (U.S.) Women's Optical Eyewear (Aruba, Australia, Canada, Colombia, Costa Rica, Curacao, Cyprus,     Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Kuwait, Lebanon,     Mexico, Nicaragua, Panama, Philippines, Trinidad, Turkey, South Africa, Sweden) Women's Outerwear, Rainwear (U.S.) Women's Outerwear, Wool Coats, Rainwear (Canada) Women's Scarves, Wraps and Cold Weather Accessories (U.S., Canada) Women's Sleepwear, Loungewear (U.S., Canada) Women's Sunglasses (U.S., Canada) Women's Umbrellas, Rain Accessories (U.S.) Women's Wool Coats (U.S.)
Kasper	Men's Leather Outerwear (U.S.) Men's Tailored Clothing (U.S., Canada, Mexico)
Evan-Picone	Men's Tailored Clothing, Formal Wear, Topcoats (U.S.) Women's Sheer Hosiery, Casual Legwear (U.S.) Women's Sportswear (Japan)
Albert Nipon	Men's Tailored Clothing (U.S.) Women's Outerwear (U.S.)
A|Line	Costume Jewelry (U.S.) Outerwear, Rainwear (U.S.) Scarves (U.S.) Swimwear (U.S.)

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Brand	Category
Anne Klein New York and AK Anne Klein	Anne Klein New York Footwear (worldwide excluding Japan) AK Anne Klein costume jewelry (U.S.) Belts (U.S., Canada) Home Sewing Patterns (worldwide) Hosiery, Casual Legwear (U.S., Canada) Outerwear, Wool Coats, Rainwear (U.S.) Scarves, Cold Weather Accessories, Gloves (U.S., Canada) Sunglasses, Optical Eyewear (worldwide) Swimwear (U.S.) Umbrellas, Rain Accessories (U.S., Canada) Watches (worldwide) Men's Outerwear (U.S., Canada, Mexico) Bed, Bath, Table Linens (U.S., Mexico) Apparel, Handbags, Belts, Accessories, Costume Jewelry, Footwear, Towels (Japan) Apparel, Handbags, Accessories (Korea) Apparel, Handbags, Accessories (Central America, South America, Caribbean, Dominican     Republic) Apparel, Handbags, Accessories (Mexico) Apparel, Handbags, Accessories, Belts (Hong Kong, China, Taiwan, Singapore, Malaysia,     Thailand, Indonesia, Macau) Apparel, Handbags, Accessories, Belts, Sleepwear, Casual Legwear (Philippines) Retail distribution rights for Apparel, Handbags and Small Leather Goods (Turkey) Retail distribution rights for Apparel, Handbags and Small Leather Goods (Saudi Arabia)
Nine West	Belts (U.S.) Casual Legwear (U.S., Canada) Gloves, Cold Weather Accessories (U.S., Canada) Hats (U.S., Canada) Leather, Wool, Casual Outerwear, Rainwear (U.S., Canada, Spain) Luggage (U.S., Canada) Optical Eyewear (U.S., Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica,     El Salvador, Honduras, Mexico, Netherlands Antilles, Panama, Peru, Venezuela) Sunglasses (U.S., Canada, Spain) Watches (U.S., Argentina, Canada, Chile, El Salvador, Guatemala, Israel, Mexico, Panama,     Saudi Arabia, Spain, Turkey, UAE, Venezuela, Hong Kong)
Nine & Company	Belts (U.S.) Casual Legwear (U.S.) Gloves, Cold Weather Accessories (U.S.) Hats (U.S.) Luggage (U.S.) Leather, Wool, Casual Outerwear, Rainwear (U.S.) Sleepwear, Loungewear (U.S.) Slippers (U.S.) Sunglasses (U.S.) Swimwear (U.S.) Watches (U.S.)
Easy Spirit	Slippers (U.S., Canada)
Enzo Angiolini	Sunglasses (U.S.)
Calico	Footwear (U.S.)
Gloria Vanderbilt	Costume Jewelry (Canada) Knit Tops, Bottoms, ActiveWear, Performance ActiveWear (U.S.) Scarves, Gloves, Cold Weather Accessories (U.S., Canada) Sleepwear, Daywear, Loungewear (U.S., Canada) Sweaters (U.S.) Swimwear (U.S.) Watches (U.S.) Wool, Leather, Casual Outerwear, Rainwear (U.S.) Woven Shirts (U.S.) Infants', Toddlers' and Children's (4-6x) Apparel (U.S., Canada) Bath Towels, Decorative Bedding, Decorative Bath, Bath/Accent Rugs, Pillows, Mattress      Pads and Pillow Protectors (U.S.) Women's, Girls' (4-18), Infants' and Toddlers' Apparel and Accessories (Canada)

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Brand	Category
Vanderbilt for Boys and Vanderbilt for Men	Men's, Boys' (4-18), Infants' and Toddlers' Apparel and Accessories (Canada)
Glo	Infants', Toddlers' and Children's (4-6x) Apparel (U.S.) Swimwear (U.S.)
Energie	Men's Denim & Sportswear (U.S.)
Joan & David	Retail distribution rights for Apparel, Footwear and Handbags (Hong Kong, Taiwan, Japan,     United Kingdom, Singapore, France, Thailand, Spain, Italy, China)
Mootsies Tootsies	Women's and Girls' Hosiery and Casual Legwear (U.S., Canada, Mexico)
Sam & Libby	Men's, Women's and Children's Slippers and Sandals (U.S.)
l.e.i.	Casual Legwear (U.S.) Children's Apparel (U.S.) Footwear (U.S., Canada) Handbags, Belts, Accessories, Cold Weather Accessories (U.S., Canada) Hats (U.S., Canada) Intimate Apparel (U.S.) Outerwear (U.S.) Sunglasses (U.S., Canada) Swimwear (U.S., Canada) Watches (U.S., Canada)
International footwear and accessories retail/wholesale distribution	Nine West retail locations (Bahrain, Kuwait, Oman, Qatar, The United Arab Emirates,     Jordan, India, Poland) Nine West retail locations (Saudi Arabia, Lebanon) Nine West retail locations and wholesale distribution rights for Nine West, Enzo Angiolini,     Bandolino and Easy Spirit footwear and accessories (Belize, Colombia, Costa Rica,     Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Venezuela,     the Dominican Republic, French Guiana, Guyana, Suriname, the Caribbean Islands) Nine West retail locations and wholesale distribution rights for Nine West footwear and     accessories (Greece, Cyprus) Nine West retail locations and wholesale distribution rights for Nine West footwear and     accessories (Chile, Peru) and wholesale distribution rights for Enzo Angiolini     footwear and accessories (Chile) Nine West, Enzo Angiolini, NW Nine West and Easy Spirit retail locations and wholesale     distribution rights for Nine West, Enzo Angiolini, NW Nine West and Easy Spirit footwear     and accessories (Hong Kong, Indonesia, Japan, Korea, Macau, Malaysia, the     People's Republic of China, the Philippines, Singapore, Taiwan, Thailand) Nine West retail locations and wholesale distribution rights for Nine West footwear and     accessories (South Africa) Nine West, Enzo Angiolini and Westies retail locations, wholesale distribution rights for      Nine West footwear and accessories and Enzo Angiolini and Westies footwear and     manufacturing rights for Westies footwear (Mexico) Nine West retail locations (Turkey) Nine West and Easy Spirit retail locations and wholesale distribution rights for Nine West     and Easy Spirit footwear and accessories (Israel) Nine West and Easy Spirit retail locations, wholesale distribution rights for Nine West, Enzo     Angiolini, Easy Spirit, Bandolino, Nine & Company and Westies footwear and accessories     and AK Anne Klein, Circa Joan & David, Sam & Libby and Mootsies Tootsies footwear     (Canada) Nine West retail locations (the United Kingdom, Ireland, the Channel Islands) and     wholesale distribution rights for Nine West and NW Nine West footwear and accessories     and Easy Spirit footwear (the United Kingdom, Ireland, the Channel Islands, Norway,     Denmark, Sweden, Finland, Iceland, Belgium, the Netherlands, Luxembourg) Nine West retail locations and wholesale distribution rights for Nine West and Enzo Angiolini     footwear and accessories (Spain) Wholesale distribution rights for Nine West and Napier costume jewelry (Canada)

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Trademarks

    We utilize a variety of trademarks which we own, including Jones New York, Jones New York Signature, Jones New York Sport, Jones Wear, Jones New York Country, Jones Jeans, Jones Studio, Evan-Picone, Norton McNaughton, Maggie McNaughton, Norton Studio, Erika, Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Banister, Nine & Company, Westies, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Richelieu, Judith Jack, Gloria Vanderbilt, Glo, l.e.i., Albert Nipon, Anne Klein, Anne Klein New York, AK Anne Klein, A|Line, Kasper, Le Suit and Barneys New York. We have registered or applied for registration for these and other trademarks for use on a variety of items of apparel, footwear, accessories and/or related products and, in some cases, for retail store services, in the United States and certain other countries. The expiration dates of the United States trademark registrations for our material registered trademarks are as follows, with our other registered foreign and domestic trademarks expiring at various dates through 2019. Certain brands such as Jones New York are sold under several related trademarks; in these instances, the range of expiration dates is provided. All marks are subject to renewal in the ordinary course of business if no third party successfully challenges such registrations and, in the case of domestic and certain foreign registrations, applicable use and related filing requirements for the goods and services covered by such registrations have been met.

Trademark	Expiration Dates	Trademark	Expiration Dates	Trademark	Expiration Dates
Jones New York	2006-2012	Napier	2009	Anne Klein	2005-2012
Jones New York Sport	2013	Judith Jack	2012	Kasper	2011
Evan-Picone	2013	Norton McNaughton	2014	Le Suit	2008
Nine West	2011-2013	Erika	2014	Joan & David	2008-2014
Easy Spirit	2007-2013	Energie	2008	Mootsies Tootsies	2010
Enzo Angiolini	2005-2014	Gloria Vanderbilt	2005-2012	Sam & Libby	2011
Bandolino	2011	l.e.i.	2011	Barneys New York	2005-2010
Nine & Company	2012	Albert Nipon	2006-2012

    We carefully monitor trademark expiration dates to provide uninterrupted registration of our material trademarks. We also license the Polo Jeans Company by Ralph Lauren, Givenchy, Tommy Hilfiger, Dockers Women, J. G. Hook and Hook Sport trademarks (see "Licensed Brands" above).

    We also hold numerous patents expiring at various dates through 2019 (subject to payment of annuities and/or periodic maintenance fees) and have additional patent applications pending in the United States Patent and Trademark Office. We regard our trademarks and other proprietary rights as valuable assets which are critical in the marketing of our products. We vigorously monitor and protect our trademarks and patents against infringement and dilution where legally feasible and appropriate.

Imports and Import Restrictions

    Our transactions with our foreign manufacturers and suppliers are subject to the risks of doing business abroad. Imports into the United States are affected by, among other things, the cost of transportation and the imposition of import duties and restrictions. The United States, China, Brazil and other countries in which our products are manufactured may, from time to time, impose new quotas, duties, tariffs or other restrictions, or adjust presently prevailing quotas, duty or tariff levels, which could affect our operations and our ability to import products at current or increased levels. We cannot predict the likelihood or frequency of any such events occurring.

    Our import operations are subject to constraints imposed by bilateral textile agreements between the United States and a number of foreign countries, including Hong Kong, Taiwan, the Philippines, Thailand, Indonesia and South Korea. In certain cases, these agreements impose quotas on the amount and type of goods which can be imported into the United States from these countries. Such agreements also allow the United States to impose, at any time, restraints on the importation of categories of merchandise that, under the terms of the agreements, are not subject to specified limits. Our imported products are also subject to United States customs duties and, in the ordinary course of business, we are from time to time subject to claims by the United States Customs Service for duties and other charges.

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    We monitor duty, tariff and quota-related developments and continually seek to minimize our potential exposure to quota-related risks through, among other measures, geographical diversification of our manufacturing sources, the maintenance of overseas offices, allocation of overseas production to merchandise categories where more quota is available and shifts of production among countries and manufacturers.

    Because our foreign manufacturers are located at greater geographic distances from us than our domestic manufacturers, we are generally required to allow greater lead time for foreign orders, which reduces our manufacturing flexibility. Foreign imports are also affected by the high cost of transportation into the United States and the effects of fluctuations in the value of the dollar against foreign currencies in certain countries.

    In addition to the factors outlined above, our future import operations may be adversely affected by political instability resulting in the disruption of trade from exporting countries and restrictions on the transfer of funds.

Backlog

    We had unfilled customer orders of approximately $1.5 billion and $1.4 billion at December 31, 2004 and December 31, 2003, respectively. These amounts include both confirmed and unconfirmed orders which we believe, based on industry practice and past experience, will be confirmed. The amount of unfilled orders at a particular time is affected by a number of factors, including the mix of product, the timing of the receipt and processing of customer orders and scheduling of the manufacture and shipping of the product, which in some instances is dependent on the desires of the customer. Backlog is also affected by a continuing trend among customers to reduce the lead time on their orders. Due to these factors, as well as the acquisition of Maxwell during 2004, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments.

Competition

    Apparel, footwear and accessories companies face competition on many fronts, including the following:

• establishing and maintaining favorable brand recognition;
• developing products that appeal to consumers;
• pricing products appropriately; and
• obtaining access to retail outlets and sufficient floor space.

    Competition is intense in the sectors of the apparel, footwear and accessory and retail industries in which we participate. We compete with many other manufacturers and retailers, some of which are larger and have greater resources than we do.

    We compete primarily on the basis of fashion, price and quality. We believe our competitive advantages include our ability to anticipate and respond quickly to changing consumer demands, our brand names and range of products and our ability to operate within the industries' production and delivery constraints. Furthermore, our established brand names and relationships with retailers have resulted in a loyal following of customers.

    While new entrants come into markets we serve on a regular basis, we consider the risk of formidable new competitors to be low due to barriers to entry, such as significant startup costs, the long-term nature of supplier and customer relations and the need to develop both adequate financial resources and an efficient operational infrastructure.

    We believe that, during the past few years, major department stores and specialty retailers have been increasingly sourcing products from suppliers who are well capitalized or have established reputations for delivering quality merchandise in a timely manner. However, there can be no assurance that significant new competitors will not develop in the future.

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Employees

    At December 31, 2004, we had approximately 17,260 full-time employees. This total includes approximately 10,095 in quality control, production, design and distribution positions, approximately 3,090 in administrative, sales, clerical and office positions and approximately 4,075 in our retail stores. We also employ approximately 5,240 part-time employees, of which approximately 5,115 work in our retail stores.

    Approximately 210 of our employees located in Bristol, Pennsylvania are members of the Teamsters Union, which has a collective bargaining agreement with us expiring in March 2006. Approximately 80 of our employees located in Vaughan, Ontario are members of the Laundry and Linen Drivers and Industrial Workers Union, which has a collective bargaining agreement with us expiring in March 2006. Approximately 1,060 of our employees located in Mexico are members of an affiliate of the Cofederacion de Trabajadores Mexicanos, which has a collective bargaining agreement expiring on January 1, 2006. Approximately 215 of our employees are members of the Union of Needletrades, Industrial and Textile Employees, which has a labor agreement with Kasper that expires on May 31, 2007. Approximately 765 of our employees are members of UNITE HERE, which has various labor agreements with Barneys that expire between March 1, 2005 and March 31, 2007. We consider our relations with our employees to be satisfactory.

ITEM 2. PROPERTIES

    The general location, use and approximate size of our principal properties are set forth below:

Location	Owned/Leased	Use	Approximate Area in Square Feet
Bristol, Pennsylvania	leased	Headquarters and distribution warehouse	419,200
Bristol, Pennsylvania	leased	Administrative and computer services	170,600
New York, New York	leased	Administrative, executive and sales offices	727,100
Vaughan, Canada	leased	Administrative offices and distribution warehouse	125,000
Lawrenceburg, Tennessee	leased	Distribution warehouses	1,199,100
South Hill, Virginia	leased	Distribution warehouses	534,000
El Paso, Texas	owned	Administrative, warehouse and preproduction facility	165,000
El Paso, Texas	leased	Distribution warehouses	860,500
Durango, Mexico	owned	Finishing, assembly and warehouse facilities	452,600
White Plains, New York	leased	Administrative offices	366,500
West Deptford, New Jersey	leased	Distribution warehouses	868,150
East Providence, Rhode Island	leased	Distribution warehouses, product development, administrative and computer services	241,400
Goose Creek, South Carolina	leased	Distribution warehouses	600,000
Edison, New Jersey	leased	Distribution warehouse	155,000
Commerce, California	leased	Administrative offices and distribution warehouse	86,100
Yuma, Arizona	leased	Distribution warehouse	75,000
San Luis, Mexico	leased	Production and distribution warehouses	946,800
Secaucus, New Jersey	leased	Administrative offices, retail store and  distribution warehouse	384,550
Hyde Park, Massachusetts	leased	Administrative offices	52,000
Brockton, Massachusetts	leased	Distribution warehouse	215,000
Lyndhurst, New Jersey	leased	Distribution warehouse	180,000
New York, New York	leased	Barneys New York flagship retail store	240,000
Beverly Hills, California	leased	Barneys New York flagship retail store	120,000

    We sublease approximately 200,000 square feet of our White Plains facilities and a 220,000 square foot warehouse facility in Teterboro, New Jersey to independent companies. Our Australian joint venture company leases office and distribution facilities in Australia.

    We also own two production facilities totaling 101,000 square feet in Durango, Mexico which are currently not in service.

    Our retail stores are leased pursuant to long-term leases, typically five to seven years for apparel and footwear outlet stores, ten years for footwear and accessories and apparel specialty stores and ten to 20 years with multiple ten-year renewal options for our luxury stores. Certain leases allow us to terminate our

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obligations after a predetermined period (generally one to three years) in the event that a particular location does not achieve specified sales volume, and some leases have options to renew. Many leases include clauses that provide for contingent payments based on sales volumes, and many leases contain escalation clauses for increases in operating costs and real estate taxes.

    We believe that our existing facilities are well maintained, in good operating condition and that our existing and planned facilities will be adequate for our operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

    In October 1995, we acquired an exclusive license to manufacture and market women's shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Lauren by Ralph Lauren ("Lauren") trademark in the United States, Canada and Mexico pursuant to license and design service agreements with Polo (collectively, the "Lauren License"), which were to expire on December 31, 2006. In May 1998, we acquired an exclusive license to manufacture and market women's dresses, shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Ralph by Ralph Lauren ("Ralph") trademark in the United States, Canada and Mexico pursuant to license and design service agreements with Polo (the "Ralph License"). The Ralph License was scheduled to end on December 31, 2003.

    During the course of the discussions concerning the Ralph License, Polo asserted that the expiration of the Ralph License would cause the Lauren License agreements to end on December 31, 2003, instead of December 31, 2006. We believe that this is an improper interpretation and that the expiration of the Ralph License did not cause the Lauren License to end.

    On June 3, 2003, we announced that our discussions with Polo regarding the interpretation of the Lauren License had reached an impasse and that, as a result, we had filed a complaint in the New York State Supreme Court against Polo and its affiliates and our former President, Jackwyn Nemerov. The complaint alleges that Polo breached the Lauren License agreements by claiming that the license ends at the end of 2003. The complaint also alleges that Ms. Nemerov breached the confidentiality and non-compete provisions of her employment agreement with us. Additionally, Polo is alleged to have induced Ms. Nemerov to breach her employment agreement and Ms. Nemerov is alleged to have induced Polo to breach the Lauren License agreements. We asked the court to enter a judgment for compensatory damages of $550 million, as well as punitive damages, and to enforce the confidentiality and non-compete provisions of Ms. Nemerov's employment agreement. On June 3, 2003, Polo also filed a complaint in the New York State Supreme Court against us, seeking among other things a declaratory judgment that the Lauren License terminated as of December 31, 2003. On June 25, 2003, we filed an amended complaint adding a claim against Ms. Nemerov for conversion, which alleges that Ms. Nemerov wrongfully took and possesses documents containing confidential information regarding us.

    On October 2, 2003, Ms. Nemerov filed a motion to stay our claims against her and to compel arbitration of those claims. We opposed that motion. Additionally, on July 3, 2003, Polo served a motion on us to dismiss our breach of contract claim, and to stay our claim regarding inducement of Ms. Nemerov's breach of her employment agreement pending the outcome of arbitration. On July 8, 2003, we served papers opposing Nemerov's motion. On July 23, 2003, we served papers opposing Polo's motion and also served upon Polo a motion seeking summary judgment in Polo's action for a declaratory judgment. On August 12, 2003, Polo filed a cross-motion for summary judgment in that action.

    On March 15, 2004, the Court issued a decision resolving the motions. The Court denied Polo's motion to dismiss our breach of contract claim, granted our motion for summary judgment in Polo's action for a declaratory judgment, and denied Polo's cross-motion for summary judgment in the same action. As a result, the Court dismissed Polo's action for a declaratory judgment and entered judgment in our favor in that action, while permitting our action against Polo to proceed.

    The Court also denied Nemerov's motion to compel arbitration of our claim against her for inducing Polo to breach the Lauren Agreements, but granted her motion to compel arbitration of our remaining claims against her. The Court granted Polo's motion for a stay of proceedings relating to our claim against Polo for

23

inducing Nemerov to breach her employment agreement while those claims are arbitrated by us and Nemerov. We dismissed our claims against Nemerov in the litigation and are pursuing our claims against her in the arbitration.

    Polo and Nemerov have appealed from these rulings. In addition, Polo filed a motion for leave to reargue and to renew its previous motions to dismiss and for summary judgment, which we opposed. On April 16, 2004, the Court heard oral argument on Polo's motion. On August 16, 2004, the court denied Polo's motions to reargue and renew its previous motions. Polo has appealed from this ruling.

    On May 12, 2004, we initiated a Demand for Arbitration with the American Arbitration Association against Ms. Nemerov. The demand alleges Ms. Nemerov breached her employment agreement with us, violated her fiduciary duties and converted our property. Ms. Nemerov has denied these allegations and asserted counterclaims for defamation and breach of the non-disparagement and indemnification clauses of her employment agreement. On August 24, 2004, we amended our demand to add a claim for misappropriation of trade secrets. Ms. Nemerov continues to deny our claims and to pursue her counterclaims.

    We have been named as a defendant in various actions and proceedings arising from our ordinary business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in our opinion, any such liability will not have a material adverse financial effect on us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

    Our executive officers are as follows:

Name	Age	Office
Peter Boneparth	45	President and Chief Executive Officer
Sidney Kimmel	77	Chairman
Wesley R. Card	57	Chief Operating and Financial Officer
Patrick M. Farrell	55	Senior Vice President and Corporate Controller
Rhonda J. Brown	49	President and Chief Executive Officer of Footwear, Accessories and Retail Group and President and Chief Executive Officer of Nine West and Jones Retail
Anita Britt	41	Executive Vice President of Finance
Ira M. Dansky	59	Executive Vice President, General Counsel and Secretary

    Mr. Boneparth was named President in March 2002 and Chief Executive Officer in May 2002. He also serves as Chief Executive Officer of McNaughton. He has been Chief Executive Officer of McNaughton since June 1999, President of McNaughton from April 1997 until January 2002, and Chief Operating Officer of McNaughton from 1997 until its acquisition by us. Prior to that time, Mr. Boneparth was Executive Vice President and Senior Managing Director of Investment Banking for Rodman & Renshaw, Inc., an investment banking firm, from March 1995 to April 1997.

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    Mr. Kimmel founded the Jones Apparel Division of W.R. Grace & Co. in 1970. Mr. Kimmel has served as our Chairman since 1975 and as Chief Executive Officer from 1975 to May 2002.

    Mr. Card has been our Chief Financial Officer since 1990. He was also named Chief Operating Officer in March 2002.

    Mr. Farrell was appointed Vice President and Corporate Controller in November 1997 and Senior Vice President in September 1999.

    Ms. Brown joined us as President and Chief Executive Officer of Nine West Group and President and Chief Executive Officer of Footwear, Accessories and Retail Group in October 2001. Prior to joining us, Ms. Brown served as President of Steve Madden, Ltd. from February 2000 to September 2001. Ms. Brown also served as Chief Operating Officer of Steve Madden, Ltd. from July 1996 to January 2001 and as a director of that company from October 1996 to September 2001.

    Ms. Britt was named Executive Vice President of Finance in May 2002. She served as Director of Investor Relations and Financial Planning from 1996 to August 2000, Vice President, Finance and Investor Relations from September 2000 to February 2001 and Senior Vice President, Finance and Investor Relations from March 2001 to April 2002.

    Mr. Dansky has been our General Counsel since 1996 and our Secretary since January 2001. He was elected an Executive Vice President in March 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Price range of common stock:
2004
High	$38.18	$40.00	$39.66	$37.49
Low	$33.25	$35.20	$34.41	$33.00
2003
High	$37.44	$31.15	$33.18	$35.91
Low	$25.61	$26.60	$27.98	$30.78
Dividends per share of common stock:
2004	$0.08	$0.08	$0.10	$0.10
2003	-	-	$0.08	$0.08

    Our common stock is traded on the New York Stock Exchange under the symbol "JNY." The above figures set forth, for the periods indicated, the high and low sale prices per share of our common stock as reported on the New York Stock Exchange Composite Tape. The last reported sale price per share of our common stock on February 23, 2005 was $32.83, and on that date there were 508 holders of record of our common stock. However, many shares are held in "street name;" therefore, the number of holders of record may not represent the actual number of shareholders.

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Annual CEO Certification

    The Annual CEO Certification required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual was submitted to the New York Stock Exchange on May 26, 2004.

Issuer Purchases of Equity Securities

    The following table sets forth the repurchases of our common stock for the fiscal quarter ended December 31, 2004.

Issuer Purchases of Equity Securities

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October 2, 2004 to October 29, 2004	850,000	$34.02	850,000	$144,236,442
October 30, 2004 to November 26, 2004	81,000	$35.29	81,000	$141,377,954
November 27, 2004 to December 31, 2004	-	-	-	$141,377,954
Total	931,000	$34.13	931,000	$141,377,954

    These repurchases were made under programs announced on July 27, 2004 for $150.0 million and October 27, 2004 for $100.0 million. Neither plan has an expiration date.

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ITEM 6. SELECTED FINANCIAL DATA

    The following financial information is qualified by reference to, and should be read in conjunction with, our Consolidated Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained elsewhere in this Report. The selected consolidated financial information presented below is derived from our audited Consolidated Financial Statements for each of the five years in the period ended December 31, 2004. We completed our acquisitions of Victoria, Judith Jack, McNaughton, Gloria Vanderbilt, l.e.i., Kasper, Maxwell and Barneys at various dates within the five-year period and, accordingly, the results of their operations are included in our operating results from the respective dates of acquisition.

(All amounts in millions except net income per share data)

Year Ended December 31,		2004	2003	2002	2001	2000
Income Statement Data
	Net sales	$ 4,592.6	$ 4,339.1	$ 4,312.2	$ 4,073.8	$ 4,147.4
	Licensing income (net)	57.1	36.2	28.7	24.8	22.2
	Total revenues	4,649.7	4,375.3	4,340.9	4,098.6	4,169.6
	Cost of goods sold	2,944.4	2,738.6	2,657.0	2,570.4	2,436.5
	Gross profit	1,705.3	1,636.7	1,683.9	1,528.2	1,733.1
	Selling, general and administrative expenses	1,176.9	1,056.9	1,093.3	1,004.1	1,091.6
	Amortization of goodwill	-	-	-	44.2	36.9
	Operating income	528.4	579.8	590.6	479.9	604.6
	Interest income	1.9	3.5	4.6	4.5	2.3
	Interest expense and financing costs	51.2	58.8	62.7	84.6	103.8
	Equity in earnings of unconsolidated affiliates	3.8	2.5	1.0	-	-
	Income before provision for income taxes	482.9	527.0	533.5	399.8	503.1
	Provision for income taxes	181.1	198.4	201.2	163.6	201.2
	Income before cumulative effect of change in accounting principle	301.8	328.6	332.3	236.2	301.9
	Cumulative effect of change in accounting for intangible assets, net of tax	-	-	13.8	-	-
	Net income	$ 301.8	$ 328.6	$ 318.5	$ 236.2	$ 301.9
Per Share Data
	Income per share before cumulative effect of change in accounting principle
	Basic	$2.44	$2.58	$2.59	$1.92	$2.54
	Diluted	$2.39	$2.48	$2.46	$1.82	$2.48
	Net income per share
	Basic	$2.44	$2.58	$2.48	$1.92	$2.54
	Diluted	$2.39	$2.48	$2.36	$1.82	$2.48
	Dividends paid per share	$0.36	$0.16	-	-	-
	Weighted average common shares outstanding
	Basic	123.6	127.3	128.2	123.2	119.0
	Diluted	126.5	136.5	139.0	133.7	121.9
December 31,		2004	2003	2002	2001	2000
Balance Sheet Data
	Working capital	$ 612.3	$ 826.9	$ 890.9	$ 762.8	$ 294.9
	Total assets	4,550.8	4,187.7	3,852.6	3,373.5	2,979.2
	Short-term debt and current portion of long-term debt and capital lease obligations	203.2	180.8	6.3	7.7	499.8
	Long-term debt, including capital lease obligations	1,016.6	835.1	978.1	976.6	576.2
	Stockholders' equity	2,653.9	2,537.8	2,303.5	1,905.4	1,477.2

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The following discussion provides information and analysis of our results of operations from 2002 through 2004, and our liquidity and capital resources. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere herein.

Overview

    We design, contract for the manufacture of, manufacture and market a broad range of women's collection sportswear, suits and dresses, casual sportswear and jeanswear for men, women and children, and women's footwear and accessories. We sell our products through a broad array of distribution channels, including better specialty and department stores and mass merchandisers, primarily in the United States and Canada. We also operate our own network of retail and factory outlet stores. In addition, we license the use of several of our brand names to select manufacturers and distributors of women's and men's apparel and accessories worldwide.

Trends

    We believe that two significant trends are occurring in the women's apparel, footwear and accessories industry. We believe that a trend exists among our major retail accounts to concentrate their women's apparel, footwear and accessories buying among a narrowing group of vendors and to differentiate their product offerings through exclusivity of brands. We also believe that consumers in the United States and Canada are shopping less in department stores (our traditional distribution channel) and more in other channels, such as specialty shops and mid-tier locations where value is perceived to be higher. We have responded to these trends by enhancing the brand equity of our labels through our focus on design, quality and value, and through strategic acquisitions which provide significant diversification to the business by successfully adding new distribution channels, labels and product lines (such as the Gloria Vanderbilt, l.e.i., Kasper, Albert Nipon, AK Anne Klein, Anne Klein New York, Joan & David, Mootsies Tootsies and Sam & Libby brands and the Barneys New York retail stores). Through this diversification, we have evolved into a multidimensional resource in apparel, footwear and accessories. We have leveraged the strength of our brands to increase both the number of locations and amount of selling space in which our products are offered, to introduce product extensions such as the Jones New York Signature, Nine West, Nine & Company, Easy Spirit and Bandolino apparel labels and the Jones New York accessory label, and to reposition the Bandolino and Evan-Picone labels to the moderate market segment.

    On January 1, 2005, the World Trade Organization's 148 member nations lifted all quotas on apparel and textiles. As a result, all textiles and textile apparel manufactured in a member nation and exported on or after January 1, 2005 will no longer be subject to quota restrictions. This will allow retailers, apparel firms and others to import unlimited quantities of apparel and textile items from China, India and other low-cost countries. The effects of this action could lead to lower production costs or allow us to improve the quality of our products for a given cost and could also allow us to concentrate production in the most efficient markets. China, however, has implemented an export tax on many of the items previously subject to quota restriction. In addition, litigation and political activity has been initiated by interested parties seeking to re-impose quotas. As a result, we are unable to predict the long-term effects of the lifting of quota restrictions and related events on our results of operations.

Risk Factors

    There are certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated. Risks and uncertainties that could adversely affect us include, without limitation, the following factors:

• the apparel, footwear and accessories industries are highly competitive, and any increased competition could result in reduced sales or prices (or both);
   
• we may not be able to respond to changing fashion and retail trends in a timely manner;

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• a prolonged period of depressed consumer spending;
   
• the loss of any of our largest customers;
   
• the loss or infringement of our trademarks or other proprietary rights;
   
• the extent of our foreign operations and manufacturing;
   
• fluctuations in the price, availability and quality of raw materials; and
   
• damage to our customer relationships resulting from delays or quality issues, or damage to our reputation resulting from any failure to comply with our factory workplace standards, caused by our reliance on independent manufacturers.

Acquisitions

    We completed our acquisitions of Gloria Vanderbilt on April 8, 2002, l.e.i. on August 15, 2002, Kasper on December 1, 2003, Maxwell on July 8, 2004 and Barneys on December 20, 2004. The results of operations of the acquired companies are included in our operating results from the respective dates of acquisition. Accordingly, the financial position and results of operations presented and discussed herein are not directly comparable between years. Kasper operates primarily in the wholesale better apparel and retail segments, Gloria Vanderbilt and l.e.i. operate in the wholesale moderate apparel segment, Maxwell operates in the wholesale footwear and accessories segment and Barneys operates in the retail segment.

Restructuring and Other Charges

    During 2002, we recorded a $31.9 million charge relating to contractual obligations under employment contracts, primarily for former President Jackwyn Nemerov and former Vice Chairman Irwin Samelman. The charges under these contracts are comprised of pre-tax amounts totaling $11.8 million for contractual salary and bonus obligations and $18.1 million for non-cash compensation expense resulting from contractual vesting of outstanding stock options and restricted stock. Also included is a pre-tax amount of $2.0 million related to certain obligations under the employment agreement that we entered into with Peter Boneparth when we acquired McNaughton in 2001. These obligations were satisfied in March 2002 when Mr. Boneparth was elected President and designated to become our Chief Executive Officer on May 22, 2002.

    Also during 2002 we restructured several of our existing operations to reduce both excess capacity and overhead costs, including the closing of Canadian and Mexican production facilities and the closing of an administrative, warehouse and preproduction facility in El Paso, Texas. As a result, we recorded restructuring charges of $8.8 million, including $5.0 million of employee severance and related costs, $3.3 million of asset impairments (based on estimated market values of the affected properties) and $0.5 million of other costs. Of these charges, $0.9 million is reported as a selling, general and administrative ("SG&A") expense in the wholesale better apparel segment, $6.9 million is reported as an SG&A expense in the wholesale moderate apparel segment and $1.0 million is reported as an SG&A expense in the wholesale footwear and accessories segment.

    During 2003, we further restructured our operations by announcing the closing of a warehouse facility in Rural Hall, North Carolina, which resulted in a charge of $0.7 million for employee severance and related costs which is reported as an SG&A expense in the wholesale better segment. This charge was offset by a reversal of $0.2 million of employee severance cost accruals in the wholesale footwear and accessories segment.

    In 2004, we recorded an additional net restructuring charge of $1.5 million as an SG&A expense in the wholesale better apparel segment, which reflects a $1.7 million lease termination payment related to the North Carolina facility offset by a $0.2 million reduction in accruals for the closing of the Canadian facility.

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Goodwill and Other Intangible Assets

    In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which changed the accounting for goodwill and other intangible assets from an amortization method to an impairment-only approach. Upon our adoption of SFAS No. 142 on January 1, 2002, we ceased amortizing our trademarks without determinable lives and our goodwill. As prescribed under SFAS No. 142, we had our goodwill and trademarks tested for impairment during the first fiscal quarter of 2002.

    Due to market conditions resulting from a sluggish economy compounded by the aftereffects of the events of September 11, 2001, we revised our earnings forecasts for future years for several of our trademarks and licenses. As a result, the fair market value of these assets (as appraised by an independent third party) was lower than their carrying value as of December 31, 2001. We accordingly recorded an after-tax impairment charge of $13.8 million, which is reported as a cumulative effect of change in accounting principle resulting from the adoption of SFAS No. 142.

    In the second fiscal quarter of 2002, we recorded an additional impairment charge of $5.8 million related to two trademarks due to a decrease in projected accessory revenues resulting from a further evaluation of our costume jewelry business. We have our annual impairment test for goodwill and trademarks performed in the fourth fiscal quarter of the year. As a result of continuing decreases in projected revenues in our costume jewelry lines, the conversion of a portion of our Enzo Angiolini retail stores to the more moderately-priced Bandolino brand and the discontinuance of our Rena Rowan better apparel line, we recorded additional trademark impairment charges of $18.6 million in 2002, $4.5 million in 2003 and $0.2 million in 2004. These charges are reported as an SG&A expense in the licensing, other and eliminations segment.

Termination as of December 31, 2003 of Licenses with Polo for Lauren and Ralph Brands

    The Ralph License with Polo was scheduled to end on December 31, 2003. During the course of the discussions concerning the Ralph License, Polo asserted that the expiration of the Ralph License would cause the Lauren License to end on December 31, 2003, instead of December 31, 2006. We believe that this is an improper interpretation and that the expiration of the Ralph License did not cause the Lauren License to end.

    On June 3, 2003, we announced that our discussions with Polo regarding the interpretation of the Lauren License had reached an impasse and that, as a result, we had filed a complaint in the New York State Supreme Court against Polo and its affiliates (see "Legal Proceedings"). The complaint alleges that Polo breached the Lauren License agreements by claiming that the license ends at the end of 2003. We asked the Court to enter a judgment for compensatory damages of $550 million as well as punitive damages. On June 3, 2003, Polo also filed a complaint in the New York State Supreme Court against us, seeking among other things a declaratory judgment that the Lauren License terminated as of December 31, 2003. On July 3, 2003, Polo served a motion to dismiss our breach of contract claim. On July 23, 2003, we served papers opposing Polo's motion and also served upon Polo a motion seeking summary judgment in Polo's action for a declaratory judgment. On August 12, 2003, Polo filed a cross-motion for summary judgment in that action.

    On March 15, 2004, the Court issued a decision resolving the motions. The Court denied Polo's motion to dismiss our breach of contract claim, granted our motion for summary judgment in Polo's action for a declaratory judgment, and denied Polo's cross-motion for summary judgment in the same action. As a result, the Court dismissed Polo's action for a declaratory judgment and entered judgment in our favor in that action, while permitting our action against Polo to proceed. Polo has appealed from these rulings. In addition, Polo filed a motion for leave to reargue and to renew its previous motions to dismiss and for summary judgment, which we opposed. On August 16, 2004, the court denied Polo's motions to reargue and renew its previous motions. Polo has appealed from this ruling.

    We assert within the complaint that Polo's actions fully discharged our obligations under the Lauren License agreements for lines to be sold after December 31, 2003. Therefore, we ceased development of Lauren products effective with the Spring 2004 season. Our Lauren business represented a significant portion of our sales and profits. Net sales of Lauren products were $476.4 million for 2003. The termination of our exclusive right to manufacture and market clothing under this trademark in the United States, Canada and elsewhere will have a material adverse effect on our results of operations after 2003. To replace the sales of the Lauren

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brand, we have pursued other opportunities, including internal brands (including the new lifestyle brand under the Jones New York Signature label), acquisitions (including the Kasper acquisition) and licensing options, some of which we previously were precluded from exploring under agreements with Polo. The loss of the Lauren License has not materially adversely impacted our liquidity, and we continue to have a strong financial position.

    The expiration of the Ralph License has not been material to us in any respect. Net sales of Ralph products were $30.7 million for 2003.

    We and Polo have agreed that, in connection with the expiration of the Ralph License, related licenses to produce certain Polo Jeans Company and Polo Ralph Lauren products in Canada terminated as of December 31, 2003. The termination of these Canadian licenses has not been material to us in any respect. Net sales of all products under these Canadian licenses were $41.3 million for 2003. The dispute between us and Polo does not relate to the Polo Jeans License in the United States, and an end to the Canada Licenses does not end our longer term Polo Jeans License in the United States or otherwise adversely affect the Polo Jeans License in the United States.

Stock-Based Compensation

    Effective January 1, 2003, we adopted the fair value method of accounting for employee stock options for all options granted after December 31, 2002 pursuant to the guidelines contained in SFAS No. 123, "Accounting for Stock-Based Compensation" using the "prospective method" set forth in SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." Under this approach, the fair value of the option on the date of grant (as determined by the Black-Scholes option pricing model) is amortized to compensation expense over the option's vesting period. Since the expense to be recorded is dependent on both the timing and the number of options to be granted, we cannot estimate the effect on future results of operations at this time. Prior to January 1, 2003, pursuant to a provision in SFAS No. 123 we had elected to continue using the intrinsic-value method of accounting for stock options granted to employees in accordance with Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees." Accordingly, compensation cost for stock options had been measured as the excess, if any, of the quoted market price of our stock at the date of the grant over the amount the employee must pay to acquire the stock. Under this approach, we had only recognized compensation expense for stock-based awards to employees for options granted at below-market prices. For more information, see "Summary of Accounting Policies - Stock Options" in Notes to Consolidated Financial Statements.

Critical Accounting Policies

    Several of our accounting policies involve significant judgements and uncertainties. The policies with the greatest potential effect on our results of operations and financial position include the estimated collectibility of accounts receivable, the recovery value of obsolete or overstocked inventory and the estimated fair values of both our goodwill and intangible assets with indefinite lives.

    For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends of trade discounts and co-op advertising deductions taken by our customers, allowances we provide to our retail customers to flow goods through the retail channels, and the possibility of non-collection due to the financial position of our customers. For inventory, we estimate the amount of goods that we will not be able to sell in the normal course of business and write down the value of these goods to the recovery value expected to be realized through off-price channels. Historically, actual results in these areas have not been materially different than our estimates, and we do not anticipate that our estimates and assumptions are likely to materially change in the future. However, if we incorrectly anticipate trends or unexpected events occur, our results of operations could be materially affected.

    We utilize independent third-party appraisals to estimate the fair values of both our goodwill and our intangible assets with indefinite lives. These appraisals are based on projected cash flows and interest rates; should interest rates or our future cash flows differ significantly from the assumptions used in these projections, material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts.

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Results of Operations

Statements of Income Stated in Dollars and as a Percentage of Total Revenues

(In millions)		2004		2003		2002
Net sales		$ 4,592.6	98.8%	$ 4,339.1	99.2%	$ 4,312.2	99.3%
Licensing income (net)		57.1	1.2%	36.2	0.8%	28.7	0.7%
	Total revenues	4,649.7	100.0%	4,375.3	100.0%	4,340.9	100.0%
Cost of goods sold		2,944.4	63.3%	2,738.6	62.6%	2,657.0	61.2%
	Gross profit	1,705.3	36.7%	1,636.7	37.4%	1,683.9	38.8%
Selling, general and administrative expenses		1,176.9	25.3%	1,056.9	24.2%	1,061.4	24.5%
Executive compensation obligations		-	-	-	-	31.9	0.7%
	Operating income	528.4	11.4%	579.8	13.3%	590.6	13.6%
Interest income		1.9	0.0%	3.5	0.1%	4.6	0.1%
Interest expense and financing costs		51.2	1.1%	58.8	1.3%	62.7	1.4%
Equity of earnings of unconsolidated affiliates		3.8	0.1%	2.5	0.1%	1.0	0.0%
	Income before provision for income taxes	482.9	10.4%	527.0	12.0%	533.5	12.3%
Provision for income taxes		181.1	3.9%	198.4	4.5%	201.2	4.6%
	Earnings before change in accounting principle	301.8	6.5%	328.6	7.5%	332.3	7.7%
Cumulative effect of change in accounting for intangible assets		-	-	-	-	13.8	0.3%
	Net income	$ 301.8	6.5%	$ 328.6	7.5%	$ 318.5	7.3%

Percentage totals may not agree due to rounding.

2004 Compared to 2003

    Revenues. Total revenues for 2004 were $4.65 billion compared to $4.38 billion for 2003, an increase of 6.3%.

    Revenues by segment were as follows:

(In millions)	2004	2003	Increase	Percent  Change
Wholesale better apparel	$ 1,493.2	$ 1,475.0	$ 18.2	1.2%
Wholesale moderate apparel	1,315.3	1,310.2	5.1	0.4%
Wholesale footwear and accessories	1,002.4	868.3	134.1	15.4%
Retail	780.3	685.6	94.7	13.8%
Licensing and other	58.5	36.2	22.3	61.6%
Total revenues	$ 4,649.7	$ 4,375.3	$ 274.4	6.3%

    Wholesale better apparel revenues were impacted by the discontinuance of the Lauren and Ralph businesses (a decrease of $535.9 million including the Canadian Polo business) which was offset by shipments of the new Jones New York Signature line ($176.3 million) and the product lines added as a result of the Kasper acquisition ($349.2 million). Planned decreases in shipments of the Polo Jeans Company product line and the discontinuance of the Rena Rowan better product line were partially offset by increased shipments of Jones New York Collection and Nine West products, as well as the initial shipments of the AK Sport product line.

    Wholesale moderate apparel revenues increased as a result of higher shipments of our Energie, Gloria Vanderbilt and Bandolino product lines and the initial shipments of our A|Line product, mostly offset by reduced shipments of our Norton McNaughton, Evan-Picone and l.e.i. product lines as well as planned decreases in our private label denim businesses.

    Wholesale footwear and accessories revenues increased primarily due to the product lines added as a result of the Maxwell acquisition ($92.5 million) as well as higher shipments of our Nine West and Bandolino footwear and our Nine West accessories product line, the introduction of Bandolino accessories, and the inclusion of the Anne Klein accessories product line obtained in the Kasper acquisition, as well as an increase in our international footwear business. These increases were partially offset by reductions in shipments of our Easy Spirit footwear product line.

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    Retail revenues increased primarily due to same store sales increasing 1.6% for footwear and accessories stores and 3.8% for ready-to-wear outlet stores as compared to 2003, $14.2 million from the addition of the Jones New York Signature product line to our apparel outlet stores and $62.5 million and $19.3 million, respectively, in sales from locations added as a result of the Kasper and Barneys acquisitions. We began 2004 with 990 retail locations, added 21 locations as a result of the Barneys acquisition and had a net addition of 26 apparel and footwear locations during 2004 to end the period with 1,037 locations.

    Gross Profit. The gross profit margin decreased to 36.7% in 2004 compared to 37.4% in 2003.

    Wholesale better apparel gross profit margins were 34.2% and 38.0% for 2004 and 2003, respectively. The decrease was a result of the discontinuance of the Lauren product line (which carried higher margins than the historical segment average) and the addition of the acquired Kasper business (which generated lower margins than the historical segment average), partially offset by shipments of the new Jones New York Signature line (which carries higher margins than the historical segment average). Margins were also negatively impacted by a higher level of markdowns and lower off-price recoveries than the prior year. Cost of sales for 2004 included $4.1 million related to adjustments required under purchase accounting to write up acquired Kasper inventories to market value.

    Wholesale moderate apparel gross profit margins were 26.1% and 26.0% for 2004 and 2003, respectively. The increase is primarily the result of increased shipping in the higher-margin Gloria Vanderbilt product line.

    Wholesale footwear and accessories gross profit margins were 33.5% and 33.8% for 2004 and 2003, respectively. The decrease was driven primarily by the increase in our lower-margin international business and $6.0 million of adjustments required under purchase accounting to write up acquired Maxwell inventories to market value. The negative impact of these items was partially offset by improved margins in our wholesale accessories and costume jewelry businesses.

    Retail gross profit margins were 53.3% and 54.5% for 2004 and 2003, respectively. The decrease was primarily the result of the effects of the addition of the acquired Kasper apparel retail outlets and Barneys retail locations, which generate lower margins than the historical segment average, as well as a higher level of promotional activity in our domestic retail stores and lower margins in our Canadian retail outlets.

    SG&A Expenses. SG&A expenses of $1.18 billion in 2004 represented an increase of $120.0 million from the $1.06 billion reported for 2003. In 2004, Kasper added $96.8 million to the wholesale better apparel segment, which includes $8.0 million of amortization of the purchase price assigned to acquired customer orders, and $22.4 million to the retail segment; Maxwell added $26.8 million to the wholesale footwear and accessories segment, which includes $13.9 million of amortization of the purchase price assigned to acquired customer orders; and Barneys added $5.7 million to the retail segment. We also recorded an $8.4 million writeoff of unamortized bond discounts and debt issuance costs in the wholesale better apparel segment resulting from the redemption of all of our outstanding Zero Coupon Notes. Increases in expenses in our Gloria Vanderbilt and retail businesses were related to the volume growth of these business over the prior year. These increases were offset by a $66.2 million reduction in royalty and advertising expenses resulting from the discontinuance of the Lauren and Ralph businesses.

    Operating Income. The resulting operating income for 2004 of $528.4 million decreased 8.9%, or $51.4 million, from the $579.8 million for 2003, due to the factors described above.

    Net Interest Expense. Net interest expense was $49.3 million in 2004 compared to $55.3 million in 2003. This was primarily a result of lower overall borrowings during 2004 and a favorable interest rate differential resulting from replacing our Zero Coupon Notes and 7.50% Senior Notes due 2004 with short-term borrowings under our Senior Credit Facilities.

    Provision for Income Taxes. The effective income tax rate was 37.5% for 2004 and 37.65% for 2003. The difference is primarily driven by a favorable change in the state and local effective tax rate resulting from various legal entity reorganizations and business initiatives.

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    Net Income and Earnings Per Share. Net income was $301.8 million in 2004, a decrease of $26.8 million from the net income of $328.6 million earned in 2003. Diluted earnings per share for 2004 was $2.39 compared to $2.48 for 2003, on 7.3% fewer shares outstanding.

2003 Compared to 2002

    Revenues. Total revenues for 2003 were $4.38 billion compared to $4.34 billion for 2002, an increase of 0.8%.

    Revenues by segment were as follows:

(In millions)	2003	2002	Increase/ (Decrease)	Percent  Change
Wholesale better apparel	$ 1,475.0	$ 1,636.4	$ (161.4)	(9.9%)
Wholesale moderate apparel	1,310.2	1,093.5	216.7	19.8%
Wholesale footwear and accessories	868.3	882.3	(14.0)	(1.6%)
Retail	685.6	700.0	(14.4)	(2.1%)
Licensing and other	36.2	28.7	7.5	26.1%
Total revenues	$ 4,375.3	$ 4,340.9	$ 34.4	0.8%

    Wholesale better apparel revenues declined primarily as the result of a decrease in shipments and increased customer allowances of our Polo Jeans, Lauren and Ralph businesses. Planned decreases in Jones New York career and decreased shipments in our Jones New York Sport and Rena Rowan products were partially offset by increases in our Nine West, Jones New York Suit and Easy Spirit apparel product lines as well as the product lines added as a result of the Kasper acquisition.

    Wholesale moderate apparel revenues increased primarily as a result of the product lines obtained as a result of the Gloria Vanderbilt and l.e.i. acquisitions. Increases were also realized in the Nine & Company business during 2003, which were offset by reduced shipments of our Jones Wear, Energie, Evan-Picone and Erika products.

    The wholesale footwear and accessories business was planned conservatively in light of the uncertain retail climate. These planned reductions significantly impacted shipments of our Nine West accessories and Enzo Angiolini footwear product lines, which were somewhat offset by new product lines, including ESPRIT and Gloria Vanderbilt in both the footwear and accessories product categories, as well as the growth of our Bandolino footwear line and our Nine West international business.

    Retail revenues decreased primarily due to comparable store sales decreasing approximately 2.3% for footwear and accessories stores and 4.3% for ready-to-wear outlet stores as compared to 2002. The overall decreases were a result of a lack of consumer traffic and the challenging retail environment for most of 2003, although consumer traffic in our footwear stores improved considerably during the fourth fiscal quarter of 2003, and a net reduction of five footwear stores and a consolidation of 12 apparel stores from 2002.

    Gross Profit. The gross profit margin decreased to 37.4% in 2003 compared to 38.8% in 2002.

    Wholesale better apparel gross profit margins were 38.0% and 41.3% for 2003 and 2002, respectively. The decrease was a result of higher levels of sales through the off-price channel and increased discounts and customer allowances provided to our retail customers in relation to the discontinuance of our Lauren business. This decrease was partially offset by improved performance of the Jones New York career products at retail, resulting in lower levels of customer allowances, as well as a higher percentage of sales of our product lines to regular customers at full-price and a lower percentage of sales through the off-price channel. Cost of sales for 2003 included $3.4 million related to adjustments required under purchase accounting to write up acquired inventories to market value.

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    Wholesale moderate apparel gross profit margins were 26.0% and 27.0% for 2003 and 2002, respectively. The margin for the current period was impacted by a higher level of customer allowances as a result of higher promotions at our retail customers, as well as a higher ratio of off-price to full-price sales during the period. Cost of sales for 2002 included $23.1 million related to adjustments required under purchase accounting to write up acquired inventories to market value.

    Wholesale footwear and accessories gross profit margins were 33.8% and 32.0% for 2003 and 2002, respectively. The margin increase, which occurred principally in our costume jewelry business, was driven by our inventory liquidation plan in 2002 and an emphasis on maintaining lower inventory levels, which resulted in lower sales through the off-price channel. This increase was partially offset by challenges in our Nine West accessories business that resulted in a higher level of customer allowances to maintain the flow of inventory through the retail channel. Margins also decreased in the Nine West, Easy Spirit and Bandolino footwear product lines due to a higher level of customer allowances and a higher percentage of sales through the off-price channel.

    Retail gross profit margins were 54.5% and 53.2% for 2003 and 2002, respectively. The increase was primarily the result of improved inventory planning which resulted in a higher percentage of full-price sales and lower promotional activity in our retail stores.

    SG&A Expenses. SG&A expenses of $1.06 billion in 2003 represented a decrease of $36.4 million from the $1.09 billion reported for 2002. In 2003, Kasper added $6.7 million to the wholesale better apparel segment, which includes $1.1 million in amortization of acquired customer orders, and $2.7 million to the retail segment. Gloria Vanderbilt and l.e.i. added a total of $28.2 million to the wholesale moderate apparel segment to 2003, which was somewhat offset by a $26.1 million reduction in our private label denim business (a result of restructuring and integrating its operations into l.e.i.). The reorganization of our costume jewelry business also reduced overhead costs by $17.6 million from the prior year. The remaining decline represents tighter cost controls across the wholesale businesses and leveraging the corporate infrastructure across the organization, eliminating duplicative expenses in our new acquisitions. In 2003 we recorded trademark impairments of $4.5 million in the licensing, other and eliminations segment related primarily to the discontinuance of our Rena Rowan better product line. The prior period reflected $31.9 million of executive compensation costs and a $24.4 million writedown of Enzo Angiolini footwear and costume jewelry trademarks in the licensing, other and eliminations segment.

    Operating Income. The resulting operating income for 2003 of $579.8 million decreased 1.8%, or $10.8 million, from the $590.6 million for 2002, due to the factors described above.

    Net Interest Expense. Net interest expense was $55.3 million in 2003 compared to $58.1 million in 2002. This was primarily a result of both lower interest rates and lower average borrowings in 2003 as compared to 2002.

    Provision for Income Taxes. The effective income tax rate was 37.65% for 2003 and 37.7% for 2002. The difference is primarily the result of an $8.5 million deferred valuation allowance established in 2003 for capital loss carryforwards that will likely expire unused, offset by an $8.7 million reversal of prior year tax accruals as the result of the completion of Internal Revenue Service audits of our federal tax returns through 2000.

    Net Income and Earnings Per Share. Net income was $328.6 million in 2003, an increase of $10.1 million from the net income of $318.5 million earned in 2002. Diluted earnings per share for 2003 was $2.48 compared to $2.36 for 2002, on 1.8% fewer shares outstanding.

Liquidity and Capital Resources

    Our principal capital requirements have been to fund acquisitions, pay dividends, working capital needs, capital expenditures and repurchases of our common stock on the open market. We have historically relied on internally generated funds, trade credit, bank borrowings and the issuance of notes to finance our operations and expansion. As of December 31, 2004, total cash and cash equivalents were $45.0 million, a decrease of $305.0 million from the $350.0 million reported as of December 31, 2003.

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    Operating activities provided $461.9 million, $455.0 million and $716.5 million in 2004, 2003 and 2002, respectively.

    The change from 2003 to 2004 was primarily due to higher levels of non-cash expenses in 2004 (such as depreciation, amortization and deferred taxes) as compared to the prior year. The level of accounts receivable (net of acquisitions) did not significantly change in 2004 compared to the decrease reported for 2003, due to lower wholesale shipments in some of our moderate businesses, the loss of the Polo Licenses in our Canadian business, and seasonal differences related to our Maxwell acquisition, offset by an increase in our Kasper business. Inventories decreased in 2004 compared to an increase in 2003 due to improved inventory management in several of our moderate businesses along with seasonal differences related to our Maxwell and Barneys acquisitions.

    The change from 2002 to 2003 was primarily due to a smaller decrease in accounts receivable in 2003 than in 2002 and a small increase in inventory in 2003 compared to a decrease in 2002. While accounts receivable turns improved in 2003 compared to 2002, the reduction in 2003 was less than in 2002 due primarily to the collection of acquired l.e.i. receivables in 2002. The change in inventory was due to increases required for new product launches (including Jones New York Signature, Gloria Vanderbilt Career and Bandolino apparel) and planned increases in certain wholesale moderate and accessories businesses, which were offset by improved inventory turns in our wholesale better apparel segment and by reductions resulting from the discontinuance of Lauren and Ralph.

    Investing activities used $629.4 million, $274.5 million and $368.7 million in 2004, 2003 and 2002, respectively. The increase for 2004 from 2003 was primarily due to higher payments for acquisitions related to Maxwell and Barneys. The decrease for 2003 from 2002 was primarily due to lower acquisition-related payments in 2003 than in 2002.

    During 2003, we entered into a sale-leaseback agreement for our Virginia warehouse facility. The gross sale price was $25.9 million, which resulted in a net gain of $7.5 million that has been deferred and is being amortized over the 20-year term of the lease agreement (which has been recorded as a capital lease). In connection with this transaction, we repaid $7.4 million of long-term debt related to the Virginia warehouse facility.

    Financing activities used $138.1 million in 2004. On February 2, 2004, we redeemed all of our outstanding Zero Coupon Notes at a redemption price (inclusive of issue price plus accrued original issue discount) of $554.41 per $1,000 of principal amount at maturity for a total payment of $446.6 million, which was financed primarily through our Senior Credit Facilities. As a result of this transaction, we recorded an SG&A expense of $8.4 million in 2004, representing the writeoff of unamortized bond discounts and debt issuance costs. The securities carried a 3.5% yield to maturity with a face value of $805.6 million ($1,000 per note) and were convertible into common stock at a conversion rate of 9.8105 shares per note. On June 15, 2004, we redeemed at maturity all our 7.50% Senior Notes due 2004 at par for a total payment of $175.0 million.

    In November 2004, we issued $250.0 million of 4.250% Senior Notes due 2009, $250.0 million of 5.125% Senior Notes due 2014 and $250.0 million of 6.125% Senior Notes due 2034. Net proceeds of the offerings were $743.5 million, which were used to fund the acquisition of Barneys, to redeem $102.3 million of Barneys' outstanding 9% Senior Secured Notes due 2008 and to repay amounts then outstanding under our Senior Credit Facilities. In connection with the 4.250% Senior Notes due 2009 and the 5.125% Senior Notes due 2014, we had entered into two interest rate lock agreements which were terminated upon the issuance of the notes. These terminations resulted in a gain of $0.2 million, which is being amortized as a reduction of interest expense over the term of the related notes.

    Financing activities used $114.7 million in 2003. The primary uses of cash were to repurchase our common stock and pay dividends to our common shareholders.

    Financing activities used $141.1 million in 2002, primarily to refinance $43.7 million and $83.2 million of debt assumed as part of the acquisitions of Gloria Vanderbilt and l.e.i., respectively, and to repurchase our common stock. In addition, we redeemed the remaining $0.1 million of Nine West Group's 9% Senior

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Subordinated Notes Due 2007 in September 2002 at 104.5% of par. These uses of funds were partially offset by $118.4 million in proceeds from the issuance of common stock to our employees exercising stock options.

    We repurchased $194.9 million, $108.7 million and $129.2 million of our common stock on the open market during 2004, 2003 and 2002, respectively. As of December 31, 2004, a total of $858.6 million had been expended under announced programs to acquire up to $1.0 billion of such shares. We may make additional share repurchases in the future depending on, among other things, market conditions and our financial condition. Proceeds from the issuance of common stock to our employees exercising stock options amounted to $35.5 million, $20.5 million and $118.4 million in 2004, 2003 and 2002, respectively.

    At December 31, 2004, we had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.5 billion under Senior Credit Facilities. These facilities, of which the entire amount is available for letters of credit or cash borrowings, provide for a $500.0 million three-year revolving credit facility (which was reduced from $700.0 million in June 2004 and expires in June 2006) and a $1.0 billion five-year revolving credit facility (which replaced a similar $700.0 million five-year revolving credit facility in June 2004). At December 31, 2004, $69.2 million in cash borrowings was outstanding under the three-year revolving credit facility and $367.8 million in outstanding letters of credit was outstanding under our 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 us 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 our ability to incur additional indebtedness, prepay subordinated indebtedness, make acquisitions, enter into mergers and pay dividends.

    In addition to these committed facilities, we have unsecured uncommitted lines of credit for the purpose of issuing letters of credit and bankers' acceptances for Kasper and Maxwell. As of December 31, 2004, $27.9 million in letters of credit were outstanding under these lines of credit.

    At December 31, 2004, we also had a C$15.0 million unsecured line of credit in Canada, under which no amounts were outstanding.

    Our credit ratings of BBB from Standard & Poor's and Baa2 from Moody's contribute to our ability to successfully access global capital markets. Each rating is considered investment grade. While we have maintained these ratings since our first public debt offering in 1998, Moody's has recently revised our rating outlook to negative as a result of the Barneys acquisition. Any downgrade of our debt rating by Moody's could increase the interest rates charged under our Senior Credit Facilities and could impact our ability to access capital markets in the future.

    In July 2001, December 2001 and August 2002, we entered into transactions relating to the short sale of $139.0 million, $157.9 million and $190.5 million, respectively, of U. S. Treasury securities. These transactions were intended to address interest rate exposure and generate capital gains that could be used to offset previously incurred capital losses. These transactions closed in November 2001, August 2002 and May 2003, respectively. There are no present intentions to enter into any further transactions. See "Short Term Bond Transactions" in Notes to Consolidated Financial Statements.

    We recorded minimum pension liability adjustments of $2.6 million, $3.1 million and $10.8 million in 2004, 2003 and 2002, respectively, to other comprehensive income resulting from the lowering of the discount rate from 6.1% to 5.8% in 2004 and from 6.5% to 6.1% in 2003 and both the negative returns on our investments and the lowering of the anticipated rate of future returns from 9.0% to 8.0% in 2002. Our plans are currently underfunded by a total of $14.8 million. As the benefits under our defined benefit plans are frozen with respect to service credits, the effects on future pension expense are not anticipated to be material to our results of operations or to our liquidity.

    On December 20, 2004, we completed the acquisition of Barneys. The aggregate cash purchase price was $294.5 million (of which $3.1 million was paid in January 2005), which included $19.00 for each outstanding share of Barneys (for a total of $264.5 million) and $26.7 million related to Barneys' employee stock options,

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preferred stock and stock warrants. We also assumed approximately $106.0 million of Barneys funded debt, $102.2 million of which we subsequently refinanced.

    On July 8, 2004, we completed the acquisition of Maxwell. The aggregate cash purchase price was $377.1 million, which included $23.25 for each outstanding share of Maxwell common stock (for a total of $345.8 million) and $24.1 million related to Maxwell's employee stock options.

    On December 1, 2003, we completed the acquisition of Kasper. The aggregate cash purchase price was $259.5 million, of which $37.8 million was paid in the first fiscal quarter of 2004.

    On August 16, 2002, we completed the acquisition of l.e.i. The aggregate purchase price was approximately $309.7 million, which included payments to the selling shareholders of $272.5 million in cash and the issuance of approximately 1.0 million shares of our common stock. We also assumed approximately $84.0 million of l.e.i.'s funded debt and accrued interest, $83.2 million of which we subsequently refinanced. Pursuant to the Amended Acquisition Agreement, the selling shareholders were entitled to a $2.2 million payment as additional consideration, which was made in 2003.

    On April 8, 2002, we completed the acquisition of Gloria Vanderbilt. The aggregate purchase price was approximately $100.9 million, which included payments to the selling shareholders of $80.9 million in cash and the issuance of approximately 0.6 million shares of our common stock. We also assumed approximately $43.7 million of Gloria Vanderbilt's funded debt and accrued interest, which we subsequently refinanced. The terms of the acquisition agreement for Gloria Vanderbilt required us to pay the former Gloria Vanderbilt shareholders additional consideration of $4.50 for each $1.00 of Gloria Vanderbilt's earnings before interest and taxes (as defined in the stock purchase agreement) that exceeded certain targeted levels for the 12 months following the completion of the acquisition, up to a maximum of $54.0 million. The maximum additional consideration was paid in cash on July 7, 2003 and was recorded first as a reduction of the liability resulting from the fair value of assets acquired exceeding the purchase price, with the remaining balance being recorded as goodwill.

    On February 16, 2005, we announced that the Board of Directors had declared a quarterly cash dividend of $0.10 per share to all common stockholders of record as of March 2, 2005 for payment on March 11, 2005.

Off-Balance Sheet Arrangements

    We do not have any off-balance sheet arrangements within the meaning of SEC Regulation S-K Item 303(a)(4).

Contractual Obligations and Contingent Liabilities and Commitments

    The following is a summary of our significant contractual obligations for the periods indicated that existed as of December 31, 2004, and, except for purchase obligations and other long-term liabilities, is based on information appearing in the Notes to Consolidated Financial Statements (amounts in millions).

	Total	Less than 1 year	1 - 3 years	3 - 5 years	More than 5 years
Long-term debt	$ 1,108.4	$ 129.6	$ 225.0	$ 253.8	$ 500.0
Interest on long-term debt	669.5	63.6	86.3	76.3	443.3
Capital lease obligations	69.1	7.2	10.5	10.3	41.1
Operating lease obligations (1)	910.6	139.3	233.4	168.1	369.8
Purchase obligations (2)	1,298.3	1,279.5	18.8	-	-
Minimum royalty payments (3)	48.3	8.6	17.7	14.8	7.2
Other long-term liabilities	61.4	11.6	4.9	4.2	40.7
Total contractual cash obligations	$ 4,165.6	$ 1,639.4	$ 596.6	$ 527.5	$ 1,402.1

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    (1) Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $40.8 million.
 

    (2) Includes outstanding letters of credit of $395.7 million, which primarily represent inventory purchase commitments which typically mature in two to six months.
 

    (3) Under exclusive licenses to manufacture certain items under trademarks not owned by us pursuant to various license and design service agreements, we are obligated to pay the licensors a percentage of our net sales of these licensed products, subject to minimum scheduled royalty and advertising payments.

    We have two joint ventures with HCL Technologies Limited to provide us with computer consulting, programming and associated support services. As of December 31, 2004, we have committed to purchase $10.5 million in services from these joint venture companies through June 30, 2007.

    We also have a joint venture with Sutton Developments Pty. Ltd. ("Sutton") to operate retail locations in Australia. We have unconditionally guaranteed up to $7.0 million of borrowings under the joint venture's uncommitted credit facility and up to $0.4 million of presettlement risk associated with foreign exchange transactions. Sutton is required to reimburse us for 50% of any payments made under these guarantees. At December 31, 2004, the outstanding balance subject to these guarantees was approximately $0.8 million.

    We occupy warehouse and office facilities leased from the City of Lawrenceburg, Tennessee. Two ten-year net leases run until July 2005 and May 2006, respectively, and require minimum annual rent payments of $0.5 million each plus accrued interest. In connection with these leases, we guaranteed $10.0 million of Industrial Development Bonds issued in order to construct the facilities, $1.0 million of which remained unpaid as of December 31, 2004. We obtain title to these facilities upon expiration of the leases.

    We believe that funds generated by operations, proceeds from the issuance of notes, the Senior Credit Facilities and the Kasper, Maxwell and Canadian lines of credit will provide the financial resources sufficient to meet our foreseeable working capital, dividend, capital expenditure and stock repurchase requirements and fund our contractual obligations and our contingent liabilities and commitments.

New Accounting Standards

    In November 2004, the FASB issued SFAS No. 151, "Inventory Costs," which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) by requiring these items to be recognized as current-period charges. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, with earlier application permitted. The adoption of SFAS No. 151 will have no impact on our results of operations or our financial position.

    In December 2004, the FASB issued SFAS No. 153, "Exchanges of Monetary Assets," which addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, with earlier application permitted. The adoption of SFAS No. 153 will have no impact on our results of operations or our financial position.

    In December 2004, the FASB issued a revision of SFAS No. 123, "Statement of Financial Accounting Standards No. 123 (revised 2004)," which requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. This Statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The adoption of SFAS No. 123 (revised 2004) will not have a material effect on our results of operations or our financial position.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Sensitive Instruments

    The market risk inherent in our 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. We manage this exposure through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Our policy allows the use of derivative financial instruments for identifiable market risk exposures, including interest rate and foreign currency fluctuations. We do not enter into derivative financial contracts for trading or other speculative purposes. The following quantitative disclosures were derived using quoted market prices, yields and theoretical pricing models obtained through independent pricing sources for the same or similar types of financial instruments, taking into consideration the underlying terms, such as the coupon rate, term to maturity and imbedded call options. Certain items such as lease contracts, insurance contracts, and obligations for pension and other post-retirement benefits were not included in the analysis.

Interest Rates

    Our primary interest rate exposures relate to our fixed and variable rate debt. The potential decrease in fair value of our fixed rate long-term debt instruments resulting from a hypothetical 10% adverse change in interest rates was approximately $101.8 million at December 31, 2004.

    The primary interest rate exposures on floating rate financing arrangements are with respect to United States and Canadian short-term rates. We had approximately $1.5 billion in variable rate financing arrangements at December 31, 2004. As of December 31, 2004, a hypothetical immediate 10% adverse change in interest rates, as they relate to the cash borrowings then outstanding under our variable rate financial instruments, would have a $0.4 million unfavorable impact over a one-year period on our earnings and cash flows.

Foreign Currency Exchange Rates

    We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies and purchase products from foreign suppliers who require payment in funds other than the U.S. Dollar. At December 31, 2004, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a total of US$12.0 million at a weighted-average exchange rate of 1.2291 through June 2005, US $24.7 million for Euros at a weighted-average exchange rate of 1.3683 through December 2005 and US $1.6 million for British Pounds at a weighted-average exchange rate of 1.9138 through October 2005. We believe that these financial instruments should not subject us to undue risk due to foreign exchange movements because gains and losses on these contracts should offset losses and gains on the assets, liabilities, and transactions being hedged. We are exposed to credit-related losses if the counterparty to a financial instrument fails to perform its obligation. However, we do not expect the counterparties, which presently have high credit ratings, to fail to meet their obligations.

    For further information see "Derivatives" and "Financial Instruments" in the Notes to Consolidated Financial Statements.

40

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Jones Apparel Group, Inc.
Bristol, Pennsylvania

    We have audited the accompanying consolidated balance sheets of Jones Apparel Group, Inc. and Subsidiaries as of December 31, 2004 and 2003 and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jones Apparel Group, Inc. and Subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO Seidman, LLP

BDO Seidman, LLP
New York, New York
February 11, 2005

41

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

December 31,		2004	2003
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$ 45.0	$ 350.0
	Accounts receivable	448.3	385.8
	Inventories	664.2	590.6
	Deferred taxes	68.2	80.6
	Prepaid expenses and other current assets	70.5	48.9
	TOTAL CURRENT ASSETS	1,296.2	1,455.9
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization		303.6	268.4
GOODWILL		2,125.0	1,646.9
OTHER INTANGIBLES, at cost, less accumulated amortization		768.2	767.5
OTHER ASSETS		57.8	49.0
		$ 4,550.8	$ 4,187.7
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Short-term borrowings	$ 69.2	$    -
	Current portion of long-term debt and capital lease obligations	134.0	180.8
	Accounts payable	259.3	244.6
	Income taxes payable	23.7	14.7
	Payments due relating to Kasper acquisition	-	37.6
	Accrued employee compensation and benefits	51.3	36.6
	Accrued expenses and other current liabilities	146.4	114.7
	TOTAL CURRENT LIABILITIES	683.9	629.0
NONCURRENT LIABILITIES:
	Long-term debt	977.0	791.4
	Obligations under capital leases	39.6	43.7
	Deferred taxes	135.0	130.1
	Other	61.4	55.7
	TOTAL NONCURRENT LIABILITIES	1,213.0	1,020.9
	TOTAL LIABILITIES	1,896.9	1,649.9
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 150.1 and 148.6	1.5	1.5
	Additional paid-in capital	1,236.4	1,179.4
	Retained earnings	2,204.2	1,947.2
	Accumulated other comprehensive income	0.8	3.8
		3,442.9	3,131.9
	Less treasury stock, 27.9 and 22.4 shares, at cost	(789.0)	(594.1)
	TOTAL STOCKHOLDERS' EQUITY	2,653.9	2,537.8
		$ 4,550.8	$ 4,187.7
See accompanying notes to consolidated financial statements

42

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

Year Ended December 31,	2004	2003	2002
Net sales	$ 4,592.6	$ 4,339.1	$ 4,312.2
Licensing income (net)	57.1	36.2	28.7
Total revenues	4,649.7	4,375.3	4,340.9
Cost of goods sold	2,944.4	2,738.6	2,657.0
Gross profit	1,705.3	1,636.7	1,683.9
Selling, general and administrative expenses	1,176.9	1,056.9	1,093.3
Operating income	528.4	579.8	590.6
Interest income	1.9	3.5	4.6
Interest expense and financing costs	51.2	58.8	62.7
Equity in earnings of unconsolidated affiliates	3.8	2.5	1.0
Income before provision for income taxes	482.9	527.0	533.5
Provision for income taxes	181.1	198.4	201.2
Income before cumulative effect of change in accounting principle	301.8	328.6	332.3
Cumulative effect of change in accounting for intangible assets, net of tax	-	-	13.8
Net income	$ 301.8	$ 328.6	$ 318.5

Earnings per share
	Basic
		Income before cumulative effect of change in accounting principle	$2.44	$2.58	$2.59
		Cumulative effect of change in accounting for intangible assets	-	-	0.11
		Basic earnings per share	$2.44	$2.58	$2.48
	Diluted
		Income before cumulative effect of change in accounting principle	$2.39	$2.48	$2.46
		Cumulative effect of change in accounting for intangible assets	-	-	0.10
		Diluted earnings per share	$2.39	$2.48	$2.36
	Weighted average common shares outstanding
		Basic	123.6	127.3	128.2
		Diluted	126.5	136.5	139.0
	Dividends declared per share		$0.36	$0.16	-

See accompanying notes to consolidated financial statements

43

Jones Apparel Group, Inc.
Consolidated Statements of Stockholders' Equity
(All amounts in millions except per share data)

		Number of common shares outstanding	Total stock- holders' equity	Common stock	Additional paid-in capital	Retained earnings	Accumu- lated  other compre- hensive income (loss)	Treasury stock
Balance, January 1, 2002		125.7	$ 1,905.4	$ 1.4	$ 974.3	$ 1,320.3	$ 0.5	$(391.1)
Year ended December 31, 2002:
Comprehensive income:
	Net income	-	318.5	-	-	318.5	-	-
	Minimum pension liability adjustment, net of $4.1 tax	-	(6.7)	-	-	-	(6.7)	-
	Gain on termination of interest rate hedges, net of $8.2 tax	-	13.4	-	-	-	13.4	-
	Change in fair value of cash flow hedges, net of $0.4 tax	-	(0.5)	-	-	-	(0.5)	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $1.4 tax	-	(2.1)	-	-	-	(2.1)	-
	Foreign currency translation adjustments	-	0.2	-	-	-	0.2	-
	Total comprehensive income		322.8
Issuance of restricted stock to employees		0.3	-	-	-	-	-	-
Treasury stock reissued for acquisition of Gloria Vanderbilt		0.6	20.0	-	10.1	-	-	9.9
Treasury stock reissued for acquisition of l.e.i.		1.0	36.3	-	11.3	-	-	25.0
Amortization expense in connection with employee stock options and restricted stock		-	12.9	-	12.9	-	-	-
Exercise of employee stock options		4.8	118.4	0.1	118.3	-	-	-
Tax benefit derived from exercise of employee stock options		-	16.9	-	16.9	-	-	-
Treasury stock acquired		(4.0)	(129.2)	-	-	-	-	(129.2)
Balance, December 31, 2002		128.4	2,303.5	1.5	1,143.8	1,638.8	4.8	(485.4)
Year ended December 31, 2003:
Comprehensive income:
	Net income	-	328.6	-	-	328.6	-	-
	Minimum pension liability adjustment, net of $1.1 tax	-	(2.0)	-	-	-	(2.0)	-
	Change in fair value of cash flow hedges, net of $1.0 tax	-	(1.4)	-	-	-	(1.4)	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $2.0 tax	-	(3.6)	-	-	-	(3.6)	-
	Foreign currency translation adjustments	-	6.0	-	-	-	6.0	-
	Total comprehensive income		327.6
Issuance of restricted stock to employees, net of forfeitures		0.6	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	12.2	-	12.2	-	-	-
Exercise of employee stock options		0.9	20.5	-	20.5	-	-	-
Tax benefit derived from exercise of employee stock options		-	2.9	-	2.9	-	-	-
Dividends on common stock ($0.16 per share)		-	(20.2)	-	-	(20.2)	-	-
Treasury stock acquired		(3.7)	(108.7)	-	-	-	-	(108.7)
Balance, December 31, 2003		126.2	2,537.8	1.5	1,179.4	1,947.2	3.8	(594.1)
Year ended December 31, 2004:
Comprehensive income:
	Net income	-	301.8	-	-	301.8	-	-
	Minimum pension liability adjustment, net of $1.0 tax	-	(1.6)	-	-	-	(1.6)	-
	Change in fair value of cash flow hedges	-	(0.1)	-	-	-	(0.1)	-
	Reclassification adjustment for hedge gains and losses included in net income, net of $6.9 tax	-	(4.3)	-	-	-	(4.3)	-
	Foreign currency translation adjustments	-	3.0	-	-	-	3.0	-
	Total comprehensive income		298.8
Issuance of restricted stock to employees, net of forfeitures		0.1	-	-	-	-	-	-
Amortization expense in connection with employee stock options and restricted stock		-	16.5	-	16.5	-	-	-
Exercise of employee stock options		1.4	35.5	-	35.5	-	-	-
Tax benefit derived from exercise of employee stock options		-	5.0	-	5.0	-	-	-
Dividends on common stock ($0.36 per share)		-	(44.8)	-	-	(44.8)	-	-
Treasury stock acquired		(5.5)	(194.9)	-	-	-	-	(194.9)
Balance, December 31, 2004		122.2	$ 2,653.9	$ 1.5	$ 1,236.4	$ 2,204.2	$ 0.8	$ (789.0)

See accompanying notes to consolidated financial statements

44

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

Year Ended December 31,				2004	2003	2002
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$ 301.8	$ 328.6	$ 318.5
	Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
		Cumulative effect of change in accounting principle		-	-	13.8
		Amortization of original issue discount		1.3	15.2	14.7
		Trademark impairment losses		0.2	4.5	24.4
		Depreciation and other amortization		107.7	84.3	74.1
		Provision for losses on accounts receivable		(0.8)	(0.6)	3.6
		Deferred taxes		52.8	47.1	2.6
		Gain on short sale of U. S. Treasury securities		-	(6.6)	(14.8)
		Loss on repurchase of Zero Coupon Convertible Senior Notes		8.4	-	-
		Other		2.0	(2.2)	3.1
		Changes in operating assets and liabilities:
			Accounts receivable	7.0	61.2	117.2
			Inventories	34.8	(7.0)	122.9
			Prepaid expenses and other current assets	(10.5)	(10.8)	20.7
			Other assets	(2.6)	21.4	21.4
			Accounts payable	(14.7)	(17.5)	(1.6)
			Taxes payable	22.9	(13.4)	37.4
			Accrued expenses and other liabilities	(48.4)	(49.2)	(41.5)
			Total adjustments	160.1	126.4	398.0
			Net cash provided by operating activities	461.9	455.0	716.5
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisition of Maxwell, net of cash acquired			(273.5)	-	-
	Acquisition of Barneys, net of cash acquired			(261.9)	-	-
	Acquisition of Kasper, net of cash acquired			(37.9)	(198.2)	-
	Acquisition of Gloria Vanderbilt, net of cash acquired			-	(54.0)	(80.9)
	Acquisition of l.e.i., net of cash acquired			-	(2.4)	(251.8)
	Additional consideration relating to Victoria acquisition			-	-	(2.0)
	Capital expenditures			(56.6)	(53.3)	(52.6)
	Net proceeds from sale of U.S. Treasury securities			-	12.3	9.2
	Acquisition of intangibles			(1.2)	(6.0)	(2.9)
	Repayments of loans to officers			-	-	2.0
	Proceeds from sales of property, plant and equipment			1.7	26.9	10.4
	Other			-	0.2	(0.1)
			Net cash used in investing activities	(629.4)	(274.5)	(368.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Issuance of 4.25% Senior Notes, net of discount and debt issuance costs			248.1	-	-
	Issuance of 5.125% Senior Notes, net of discount and debt issuance costs			248.1	-	-
	Issuance of 6.125% Senior Notes, net of discount and debt issuance costs			247.3	-	-
	Redemption of Zero Coupon Convertible Senior Notes			(446.6)	-	-
	Redemption at maturity of 7.50% Senior Notes			(175.0)	-	-
	Redemption of Barneys 9% Senior Secured Notes, including premiums and fees			(112.7)	-	-
	Net borrowings (payments) under credit facilities			69.2	-	(0.8)
	Repurchase of Nine West Group Senior Notes			-	-	(0.1)
	Refinancing of acquired debt			-	-	(126.9)
	Purchases of treasury stock			(201.5)	(102.1)	(129.2)
	Proceeds from exercise of employee stock options			35.5	20.5	118.4
	Dividends paid			(44.8)	(20.2)	-
	Proceeds from termination of interest rate hedges			0.2	-	21.6
	Repayment of long-term debt			-	(7.4)	(11.2)
	Principal payments on capital leases			(5.9)	(5.5)	(12.9)
			Net cash used in financing activities	(138.1)	(114.7)	(141.1)
EFFECT OF EXCHANGE RATES ON CASH				0.6	0.9	0.1
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(305.0)	66.7	206.8
CASH AND CASH EQUIVALENTS, BEGINNING				350.0	283.3	76.5
CASH AND CASH EQUIVALENTS, ENDING				$ 45.0	$ 350.0	$ 283.3

See accompanying notes to consolidated financial statements

45

Jones Apparel Group, Inc.
Notes to Consolidated Financial Statements

SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation
    The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The results of operations of acquired companies are included in our operating results from the respective dates of acquisition.

    We design, contract for the manufacture of, manufacture and market a broad range of women's collection sportswear, suits and dresses, casual sportswear and jeanswear for men, women and children, and women's footwear and accessories. We sell our products through a broad array of distribution channels, including better specialty and department stores and mass merchandisers, primarily in the United States and Canada. We also operate our own network of luxury, retail and factory outlet stores. In addition, we license the use of several of our brand names to select manufacturers and distributors of women's and men's apparel and accessories worldwide.

    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Credit Risk
    Financial instruments which potentially subject us to concentration of credit risk consist principally of temporary cash investments and accounts receivable. We place our cash and cash equivalents in investment-grade, short-term debt instruments with high quality financial institutions and the U.S. Government and, by policy, limit the amount of credit exposure in any one financial instrument. We perform ongoing credit evaluations of our customers' financial condition and, generally, require no collateral from our customers. The allowance for non-collection of accounts receivable is based upon the expected collectibility of all accounts receivable.

    We also provide credit to certain retail customers through an in-house Barneys New York credit card program. We perform ongoing credit reviews of our credit card accounts. Accounts are generally written off automatically after 180 days have passed without receipt of a full scheduled monthly payment and are written off sooner in the event of bankruptcy or other factors that make collection seem unlikely. We estimate an allowance for uncollectibility using a model that considers the current aging of the accounts, historical write-off and recovery rates and other portfolio data. Concentration of credit risk is limited because of the large number of credit card accounts.

Derivative Financial Instruments
    Our primary objectives for holding derivative financial instruments are to manage foreign currency and interest rate risks. We do not use financial instruments for trading or other speculative purposes. We have historically used derivative financial instruments to hedge both the fair value of recognized assets or liabilities (a "fair value" hedge) and the variability of anticipated cash flows of a forecasted transaction (a "cash flow" hedge). Our strategies related to derivative financial instruments have been:

• the use of foreign currency forward contracts to hedge a portion of anticipated future short-term inventory purchases to offset the effects of changes in foreign currency exchange rates (primarily between the U.S. Dollar and the Canadian Dollar, the Euro and the British Pound);
   
• the use of interest rate swaps to effectively convert a portion of our outstanding fixed-rate debt to variable-rate debt to take advantage of lower interest rates; and
   
• the use of treasury rate locks to fix forward the treasury rate component of a portion of our November 2004 debt offering that was priced based on the prevailing applicable treasury rate and credit spread at the time the debt offering was finalized.

46

    The derivatives we use in our risk management strategies are highly effective hedges because all the critical terms of the derivative instruments match those of the hedged item. On the date the derivative contract is entered into, we designate the derivative as either a fair value hedge or a cash flow hedge. Changes in derivative fair values that are designated as fair value hedges are recognized in earnings as offsets to the changes in fair value of the related hedged assets and liabilities. Changes in derivative fair values that are designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income until the associated hedged transactions impact the income statement, at which time the deferred gains and losses are reclassified to either cost of sales for inventory purchases or to SG&A expenses for all other items. Any ineffective portion of a hedging derivative's change in fair value will be immediately recognized in SG&A expenses. Differentials to be paid or received under interest rate contracts are recognized in income over the life of the contracts as adjustments to interest expense. Gains or losses generated from the early termination of interest rate contracts and treasury locks are amortized to earnings over the remaining terms of the contracts as adjustments to interest expense. The fair values of the derivatives are reported as other current assets or accrued expenses and other current liabilities, as appropriate.

Accounts Receivable
    Accounts receivable are reported at amounts we expect to be collected, net of trade discounts and deductions for co-op advertising normally taken by our customers, allowances we provide to our retail customers to effectively flow goods through the retail channels, an allowance for non-collection due to the financial position of our customers and credit card accounts, and an allowance for estimated sales returns.

Inventories
    Inventories are valued at the lower of cost or market. Approximately 50%, 37% and 13% of inventories were determined by using the FIFO (first in, first out), weighted average cost and retail methods of valuation, respectively, as of December 31, 2004 and approximately 58%, 40% and 2% of inventories were determined by using the FIFO, weighted average cost and retail methods of valuation, respectively, as of December 31, 2003. We make provisions for obsolete or slow moving inventories as necessary to properly reflect inventory value.

Property, Plant, Equipment and Depreciation and Amortization
    Depreciation and amortization are computed by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the life of the lease or the useful life of the improvement, whichever is shorter. Property under capital leases is amortized over the lives of the respective leases or the estimated useful lives of the assets.

Operating Leases
    Total rent payments under operating leases that include scheduled payment increases and rent holidays are amortized on a straight-line basis over the term of the lease. Rent expense on our buildings and retail stores is classified as an SG&A expense and, for certain stores, includes contingent rents that are based on a percentage of retail sales over stated levels. Landlord allowances are amortized by the straight-line method over the original term of the lease as a reduction of rent expense.

Goodwill and Other Intangibles
    Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations accounted for under the purchase method of accounting. Goodwill recorded in connection with acquisitions had been amortized using the straight-line method over 30 years prior to December 31, 2001. Other intangibles with determinable lives, including license agreements, are amortized on a straight-line basis over the estimated useful lives of the assets. Other intangible assets without determinable lives, such as trademarks, had been amortized using the straight-line method over periods primarily ranging from 15 to 30 years prior to December 31, 2001. SFAS No. 142, "Goodwill and Other Intangible Assets," changed the accounting for goodwill and other intangible assets without determinable lives from an amortization method to an impairment-only approach and, accordingly, we annually test goodwill and other intangibles without determinable lives for impairment through the use of independent third-party appraisals.

47

Foreign Currency Translation
    The financial statements of foreign subsidiaries are translated into U.S. dollars in accordance with SFAS No. 52, "Foreign Currency Translation." Where the functional currency of a foreign subsidiary is its local currency, balance sheet accounts are translated at the current exchange rate and income statement items are translated at the average exchange rate for the period. Gains and losses resulting from translation are accumulated in a separate component of stockholders' equity. Where the local currency of a foreign subsidiary is not its functional currency, financial statements are translated at either current or historical exchange rates, as appropriate. These adjustments, along with gains and losses on currency transactions, are reflected in the consolidated statements of income. Net foreign currency gains (losses) reflected in the consolidated statements of income were $(1.9) million, $1.3 million and $(0.6) million in 2004, 2003 and 2002, respectively.

Defined Benefit Plans
    Our funding policy is to make the minimum annual contributions required by applicable regulations.

Treasury Stock
    Treasury stock is recorded at net acquisition cost. Gains and losses on disposition are recorded as increases or decreases to additional paid-in capital with losses in excess of previously recorded gains charged directly to retained earnings.

Revenue Recognition
    Wholesale apparel and footwear and accessories sales are recognized either when products are shipped or, in certain situations, upon acceptance by the customer. Retail sales are recorded at the time of register receipt. Allowances for estimated returns are provided when sales are recorded.

Shipping and Handling Costs
    Shipping and handling costs billed to customers are recorded as revenue. Freight costs associated with shipping goods to customers are recorded as a cost of sales.

Advertising Expense
    We record national advertising campaign costs as an expense when the advertising takes place and we expense advertising production costs as incurred, net of reimbursements for cooperative advertising. Advertising costs associated with our cooperative advertising programs are accrued as the related revenues are recognized. Net advertising expense was $77.6 million, $74.2 million and $75.4 million in 2004, 2003 and 2002, respectively.

Income Taxes
    We use the asset and liability method of accounting for income taxes. Current tax assets and liabilities are recognized for the estimated Federal, foreign, state and local income taxes payable or refundable on the tax returns for the current year. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred income tax provisions are based on the changes to the respective assets and liabilities from period to period. Valuation allowances are recorded to reduce deferred tax assets when uncertainty regarding their realizability exists.

Earnings per Share
    Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options and the conversion of any convertible bonds. The difference between reported basic and diluted weighted-average common shares results from the assumption that all dilutive stock options outstanding were exercised and all convertible bonds have been converted into common stock.

The following options to purchase shares of common stock were outstanding during a portion of each year but were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the common shares and, therefore, would be antidilutive.

48

	2004	2003	2002
Number of options (in millions)	3.9	10.4	3.2
Weighted average exercise price	$37.44	$32.88	$38.97

Stock Options
    Effective January 1, 2003, we adopted the fair value method of accounting for employee stock options for all options granted after December 31, 2002 pursuant to the guidelines contained in SFAS No. 123, "Accounting for Stock-Based Compensation" using the "prospective method" set forth in SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." Under this approach, the fair value of the option on the date of grant (as determined by the Black-Scholes option pricing model) is amortized to compensation expense over the option's vesting period. Since the expense to be recorded is dependent on both the timing and the number of options to be granted, we cannot estimate the effect on future results of operations at this time. Prior to January 1, 2003, pursuant to a provision in SFAS No. 123 we had elected to continue using the intrinsic-value method of accounting for stock options granted to employees in accordance with Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees." Accordingly, compensation cost for stock options had been measured as the excess, if any, of the quoted market price of our stock at the date of the grant over the amount the employee must pay to acquire the stock. Under this approach, we had only recognized compensation expense for stock-based awards to employees for options granted at below-market prices. The adoption of the fair value method did not have a material effect on our results of operations.

    Had we elected to adopt the fair value approach of SFAS No. 123 upon its effective date, our net income would have decreased accordingly. Both the stock-based employee compensation cost included in the determination of net income as reported and the stock-based employee compensation cost that would have been included in the determination of net income if the fair value based method had been applied to all awards, as well as the resulting pro forma net income and earnings per share using the fair value approach, are presented in the following table. These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years. For further information, see "Stock Options and Restricted Stock."

Year Ended December 31,	2004	2003	2002
(In millions except per share data)
Net income - as reported	$ 301.8	$ 328.6	$ 318.5
Add: stock-based employee compensation cost, net of related tax effects, included in the determination of net income as reported	10.3	7.5	8.0
Deduct: stock-based employee compensation cost, net of related tax effects, that would have been included in the determination of net income if the fair value-based method had been applied to all awards	(16.9)	(19.5)	(37.7)
Net income - pro forma	$ 295.2	$ 316.6	$ 288.8
Basic earnings per share
As reported	$2.44	$2.58	$2.48
Pro forma	$2.39	$2.49	$2.25
Diluted earnings per share
As reported	$2.39	$2.48	$2.36
Pro forma	$2.34	$2.39	$2.14

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Restricted Stock
    Compensation cost for restricted stock is measured as the excess, if any, of the quoted market price of our stock at the date the common stock is issued over the amount the employee must pay to acquire the stock. The compensation cost is recognized over the period between the issue date and the date any restrictions lapse.

Long-Lived Assets
    We review certain long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In that regard, we assess the recoverability of such assets based upon estimated non-discounted cash flow forecasts. If an asset impairment is identified, the asset is written down to fair value based on discounted cash flow or other fair value measures.

Cash Equivalents
    We consider all highly liquid short-term investments to be cash equivalents.

Presentation of Prior Year Data
    Certain reclassifications have been made to conform prior year data with the current presentation.

New Accounting Standards
    In November 2004, the FASB issued SFAS No. 151, "Inventory Costs," which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) by requiring these items to be recognized as current-period charges. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, with earlier application permitted. The adoption of SFAS No. 151 will have no impact on our results of operations or our financial position.

    In December 2004, the FASB issued SFAS No. 153, "Exchanges of Monetary Assets," which addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005, with earlier application permitted. The adoption of SFAS No. 153 will have no impact on our results of operations or our financial position.

    In December 2004, the FASB issued a revision of SFAS No. 123, "Statement of Financial Accounting Standards No. 123 (revised 2004)," which requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans. This Statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. The adoption of SFAS No. 123 (revised 2004) will not have a material effect on our results of operations or our financial position.

ACCOUNTS RECEIVABLE AND SIGNIFICANT CUSTOMERS

Accounts receivable consist of the following:

December 31,	2004	2003
(In millions)
Trade accounts receivable	$ 458.3	$ 424.1
Credit card receivable	36.2	-
Allowances for doubtful accounts, returns, discounts and co-op advertising	(46.2)	(38.3)
	$ 448.3	$ 385.8

    A significant portion of our sales are to retailers throughout the United States and Canada. We have two significant customers in our wholesale apparel and wholesale footwear and accessories operating segments.

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Sales to department stores owned by The May Department Stores Company accounted for 14%, 12% and 14% of consolidated total revenues for the years ended December 31, 2004, 2003 and 2002, respectively. Sales to department stores owned by Federated Department Stores, Inc. accounted for 12%, 13% and 14% of consolidated total revenues for the years ended December 31, 2004, 2003 and 2002, respectively. May and Federated accounted for approximately 18% of accounts receivable at December 31, 2004.

ACQUISITIONS

    On July 8, 2004, we acquired all the outstanding shares of Maxwell. Maxwell designs and markets casual and dress footwear for women and children under multiple brand names, each of which is targeted to a distinct segment of the footwear market. Maxwell markets its products nationwide to national chains, department stores and specialty retailers. Maxwell offers footwear for women in the moderately priced market segment under the Mootsies Tootsies, Sam & Libby and Dockers Women brands, in the better market segment under the AK Anne Klein and Circa Joan & David brands and in the bridge segment under the Joan and David and Albert Nipon brands. Maxwell also sells moderately priced children's footwear under both the Mootsies Tootsies and Sam & Libby brands and licenses the J. G. Hook trademark from J. G. Hook, Inc. to source and develop private label products for retailers who require brand identification. Maxwell operates in the wholesale footwear and accessories segment.

    The acquisition of Maxwell is intended to provide further diversification in our footwear business and strengthen our positions in both the moderate and children's distribution channels. We also expect to benefit from the cross-branding opportunities that exist with our other lines of business.

    The aggregate purchase price was $377.1 million, which included $23.25 per share in cash for each outstanding share of Maxwell (for a total of $345.8 million) and $24.1 million related to Maxwell's employee stock options. The purchase price was allocated to Maxwell's assets and liabilities, tangible and intangible (as determined by an independent appraiser), with the excess of the purchase price over the fair value of the net assets acquired of approximately $206.1 million being recorded as goodwill in the wholesale footwear and accessories segment. The acquired goodwill relating to Maxwell will not be deductible for tax purposes.

    On December 20, 2004, we acquired 100% of the common stock of Barneys. Barneys is a luxury retailer that provides its customers with a wide variety of merchandise across a broad range of prices, including a diverse selection of Barneys label merchandise. Barneys' preferred arrangements with established and emerging designers, combined with creative merchandising, store designs and displays, advertising campaigns, publicity events and emphasis on customer service, has positioned it as a leading retailer of men's and women's fashion, cosmetics, jewelry and home furnishings. Barneys complements its merchandise offerings from designers such as Giorgio Armani, Manolo Blahnik, Marc Jacobs, Prada, Jil Sander and Ermenegildo Zegna with a diverse selection of Barneys label merchandise, including ready-to-wear apparel, handbags, shoes, dress shirts, ties and sportswear. Barneys label merchandise is manufactured by independent third parties according to Barneys' specifications and is of comparable quality to the designer merchandise. Barneys operates in the retail segment.

    As our growth strategy has focused on diversification to provide a well-balanced portfolio of businesses, the acquisition of Barneys provides additional diversification by introducing a new competency in luxury specialty retailing. With an inherent diversified portfolio comprised of its own brand, as well as numerous other brands from new designers and classic design houses, Barneys provides entry into the high-growth, resilient luxury goods market.

    The aggregate cash purchase price was $294.5 million (of which $3.1 million was paid in January 2005), which included $19.00 for each outstanding share of Barneys (for a total of $264.5 million) and $26.7 million related to Barneys' employee stock options, preferred stock and stock warrants. We also assumed approximately $106.0 million of Barneys funded debt, $102.2 million of which we subsequently refinanced. The purchase price was allocated to Barneys' assets and liabilities, with the excess of the purchase price over the fair value of the net assets acquired of approximately $276.3 million being recorded as goodwill in the retail segment. Of the acquired goodwill relating to Barneys, approximately $83.1 million will be deductible for tax purposes. Barneys' intangible assets (including trademarks, customer lists and vendor relationships)

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are currently being valued by independent appraisers; the appraised values will be reclassified from goodwill to other intangible assets during the first quarter of 2005.

    The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for both Maxwell and Barneys. The allocations of the respective purchase prices have not been finalized and are subject to refinement. Any additional adjustments resulting from the finalization of the purchase price allocations of Maxwell and Barneys will affect the amounts assigned to goodwill. Other than the reclassification of intangible assets related to Barneys, these adjustments are not expected to be material.

(In millions)	Maxwell	Barneys
Current assets	$ 191.3	$ 172.5
Property, plant and equipment	0.9	48.5
Intangible assets	40.3	-
Goodwill	206.1	276.3
Other assets	-	11.9
Total assets acquired	438.6	509.2
Current liabilities	45.4	105.5
Long-term debt	16.1	109.2
Total liabilities assumed	61.5	214.7
Net assets acquired	$ 377.1	$ 294.5

    Of the $40.3 million of acquired Maxwell intangible assets, $24.7 million was assigned to registered trademarks that are not subject to amortization, $1.1 million was assigned to third-party license agreements, which had a useful life of approximately 18 months on the acquisition date, and $14.5 million was assigned to existing customer orders, which had a useful life of approximately eight months on the acquisition date. The amortization of the license agreements and customer orders is included in SG&A expenses. The amortization of Barneys intangible assets will also be included in SG&A expenses.

    On December 1, 2003, we acquired 100% of the common stock of Kasper. Kasper designs, markets, sources, manufactures and distributes women's suits, sportswear and dresses. Kasper's brands include such well-recognized names as Albert Nipon, Anne Klein New York, AK Anne Klein, Kasper and Le Suit. In addition, Kasper has granted licenses for the manufacture and distribution of certain other products including, but not limited to, women's watches, jewelry, handbags, small leather goods, footwear, coats, eyewear and swimwear and men's apparel. Kasper also operates retail outlet stores under the Kasper and Anne Klein names, which not only sell company produced apparel, but also showcase and sell licensed products. The acquisition of Kasper is intended to partially replace the business in the better market lost by the termination of the Lauren and Ralph agreements and increases our penetration into the better market distribution channel. We also expect to benefit from the cross-branding opportunities of Kasper's brands that exist with our other lines of business. Kasper operates in both the wholesale better apparel and retail segments and the licensing of acquired Kasper trademarks to independent third parties is reported in the licensing, other and eliminations segment.

    The aggregate purchase price was $259.5 million. The purchase price was allocated to Kasper's assets and liabilities, tangible and intangible (as determined by an independent appraiser), with the excess of the purchase price over the fair value of the net assets acquired of approximately $57.0 million being recorded as goodwill, of which $9.4 million was assigned to the retail segment and the balance assigned to the wholesale better apparel segment. Of the acquired goodwill, approximately $22.1 million will be deductible for tax purposes.

    Of the $107.6 million of acquired Kasper intangible assets, $79.5 million was assigned to registered trademarks that are not subject to amortization, $18.5 million was assigned to third-party license agreements, which had a weighted-average useful life of approximately 86 months on the acquisition date, $9.1 million was assigned to existing customer orders, which had a useful life of approximately eight months on the acquisition date, and $0.5 million was assigned to a below-market lease, which had a useful life of approximately 109 months on the acquisition date. The amortization of the customer orders and the below-market lease is included in SG&A expenses and the amortization of the license agreements is included in net licensing income.

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    On August 15, 2002, we acquired 100% of the common stock of l.e.i., a leading designer, manufacturer and distributor of girls' and young women's moderately-priced jeanswear. l.e.i.'s products are marketed nationwide to national chains, department stores and specialty retailers. The acquisition of l.e.i. is intended to enhance our competitive position in the moderate market. We also expect to benefit from the cross-branding opportunities that exist with our other lines of business, by leveraging l.e.i.'s strengths in design, production, merchandising and logistics, and by achieving cost synergies and economies of scale in the manufacturing process. l.e.i. is reported under our wholesale moderate apparel segment.

    The aggregate purchase price was $312.1 million, which included payments to the selling shareholders of $274.8 million in cash and the issuance of 1,035,854 shares of our common stock valued for financial reporting purposes at $35.04 per share (the average closing price for the week containing July 10, 2002, the date the acquisition was announced). The number of our common shares delivered was based upon the average of the high and low sales price for the ten consecutive trading days immediately preceding the signing date.

    The purchase price was allocated to l.e.i.'s assets and liabilities, tangible and intangible (as determined by an independent appraiser), with the excess of the purchase price over the fair value of the net assets acquired of approximately $172.7 million being recorded as goodwill. The goodwill was assigned to the wholesale moderate apparel segment and will be deductible for tax purposes. We also assumed approximately $84.0 million of l.e.i.'s funded debt and accrued interest, $83.2 million of which we subsequently refinanced.

    Of the $113.6 million of acquired l.e.i. intangible assets, $106.0 million was assigned to registered trademarks that are not subject to amortization and $7.6 million was assigned to third-party license agreements, which had a weighted-average useful life of approximately 20 months on the acquisition date. The amortization of these agreements is included in net licensing income.

    Pursuant to the Amended Acquisition Agreement, the selling shareholders of l.e.i. were entitled to a $2.25 million payment as additional consideration, which was made in 2003 and recorded as goodwill.

    On April 8, 2002, we acquired 100% of the common stock of Gloria Vanderbilt and also the Gloria Vanderbilt, Glo and other trademarks and third-party licenses from Gloria Vanderbilt Trademark B.V. Gloria Vanderbilt is a leading designer, marketer and distributor of women's moderately priced stretch and twill jeanswear. Gloria Vanderbilt markets its products nationwide to national chains, department stores, mass merchants, and specialty retailers. Brands include Gloria Vanderbilt, and junior product marketed under the Glo brand name. The acquisition of Gloria Vanderbilt increased our penetration into the moderate market distribution channel. Gloria Vanderbilt is reported under our wholesale moderate apparel segment.

    The original aggregate purchase price was $100.9 million, which included $80.9 million in cash payments and 562,947 shares of our common stock valued at $35.564 (the average closing price for the week containing March 19, 2002, the date the acquisition was announced). The purchase price was allocated to Gloria Vanderbilt's assets and liabilities, tangible and intangible (as determined by an independent appraiser).

    The terms of the acquisition agreement for Gloria Vanderbilt required us to pay the former Gloria Vanderbilt shareholders additional consideration of $4.50 for each $1.00 of Gloria Vanderbilt's earnings before interest and taxes (as defined in the stock purchase agreement) that exceeded certain targeted levels for the 12 months following the completion of the acquisition, up to a maximum of $54.0 million. The maximum additional consideration was paid in cash on July 7, 2003 and was recorded first as a reduction of the liability resulting from the fair value of assets acquired exceeding the purchase price, with the remaining balance of $45.1 million being recorded as goodwill in the wholesale moderate segment in the third fiscal quarter of 2003. The acquired goodwill relating to Gloria Vanderbilt will not be deductible for tax purposes.

    Of the $83.9 million of acquired Gloria Vanderbilt intangible assets, $75.3 million was assigned to registered trademarks that are not subject to amortization and $8.6 million was assigned to third-party license agreements, which had a weighted-average useful life of approximately 30 months on the acquisition date. The amortization of these agreements is included in net licensing income.

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    We also assumed approximately $43.7 million of Gloria Vanderbilt's funded debt and accrued interest, which we subsequently refinanced.

    Our consolidated financial statements include the results of operations of the acquired companies from their respective acquisition dates. The following unaudited pro forma information presents a summary of our consolidated results of operations as if the Maxwell, Barneys and Kasper acquisitions and their related financing had taken place on January 1, 2003. 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 acquisitions occurred on January 1, 2003, or which may result in the future.

Year Ended December 31,	2004	2003
Total revenues (in millions)	$ 5,237.1	$ 5,368.9
Net income (in millions)	347.9	381.8
Basic earnings per common share	$2.81	$3.00
Diluted earnings per common share	$2.76	$2.87

ACCRUED RESTRUCTURING COSTS

    In connection with the acquisitions of Nine West Group, Judith Jack, McNaughton, Gloria Vanderbilt, Kasper and Maxwell, we 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. During 2002 and 2003, we also restructured several of our operations, including the closing of Canadian and Mexican production facilities, the closing of an administrative, warehouse and preproduction facility in El Paso, Texas and the closing of a warehouse facility in Rural Hall, North Carolina. The accrual of these costs and liabilities, which are included in accrued expenses and other current liabilities, is as follows:

(In millions)	Severance and other employee costs	Closing of  retail stores and consolidation of facilities	Total
Balance, January 1, 2002	$ 11.2	$ 4.2	$ 15.4
Net additions (reversals)	3.3	4.2	7.5
Payments and reductions	(7.1)	(6.3)	(13.4)
Balance, December 31, 2002	7.4	2.1	9.5
Net additions	6.4	2.1	8.5
Payments and reductions	(6.9)	(0.5)	(7.4)
Balance, December 31, 2003	6.9	3.7	10.6
Net additions	16.9	17.4	34.3
Payments and reductions	(17.3)	(3.0)	(20.3)
Balance, December 31, 2004	$ 6.5	$ 18.1	$ 24.6

    Estimated severance payments and other employee costs of $6.5 million accrued at December 31, 2004 relate to the remaining estimated severance for an estimated 177 employees at locations to be closed. Employee groups affected (totaling an estimated 1,129 employees) include accounting, administrative, customer service, manufacturing, production, warehouse and management personnel at locations closed or to be closed and duplicate corporate headquarters management and administrative personnel.

    The $16.9 million net addition during 2004 represents severance accruals related to acquisitions, which was recorded as an increase to goodwill.

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    The $6.4 million net addition during 2003 represents a $5.9 million increase in severance accruals related to acquisitions, which was recorded as an increase to goodwill, a $0.7 million severance accrual related to the closing of the North Carolina facility recorded as an SG&A expense in the wholesale better apparel segment and a $0.2 million reduction of severance accruals recorded as a reduction of SG&A expenses in the wholesale footwear and accessories segment.

    The $3.3 million net addition in 2002 represents a net reversal of $1.7 million of the accrual related to acquisitions, which was recorded as a reduction of goodwill, a $3.6 million severance accrual related to the closing of the Mexico and Texas facilities recorded as an SG&A expense in the wholesale moderate apparel segment, a $0.4 million severance accrual related to the closing of the Canadian facility recorded as an SG&A expense in the wholesale better apparel segment and a $1.0 million severance accrual recorded as an SG&A expense in the wholesale footwear and accessories segment.

    During 2004, 2003 and 2002, $17.3 million, $6.9 million and $7.1 million, respectively, of the reserve was utilized (relating to partial or full severance and related costs for 231, 575 and 270 employees, respectively).

    The $18.1 million accrued at December 31, 2004 for the consolidation of facilities relates to expected costs to be incurred, including lease obligations, for closing certain acquired facilities in connection with consolidating their operations into our other existing facilities.

    The $17.4 million addition for 2004 represents a $15.9 million accrual for the closing of certain Kasper and Maxwell facilities, which was recorded as an increase to goodwill, and a $1.7 million lease termination payment for the North Carolina facility offset by a $0.2 million reduction in accruals related to the closing of the Canadian facility, both of which were recorded as SG&A expenses in the wholesale better apparel segment.

    The $2.1 million additional accrual for 2003 represents a $2.2 million accrual related to the closing of acquired facilities and retail stores, which was recorded as an increase to goodwill, offset by a $0.1 million reduction in accruals related to the closing of the Canadian facility recorded as a reduction of SG&A expenses in the wholesale better apparel segment.

    The $4.2 million additional accrual for 2002 consists of a $0.4 million accrual related to the closing of acquired facilities, which was recorded as an increase to goodwill, a $0.5 million accrual related to the closing of the Canadian facility recorded as an SG&A expense in the wholesale better apparel segment and a $3.3 million accrual related to the closing of the Texas facility recorded as an SG&A expense in the wholesale moderate apparel segment.

    Our plans have not been finalized in all areas, and additional restructuring costs may result as we continue to evaluate and assess the impact of duplicate responsibilities, warehouses and office locations. We do not expect any final adjustments to be material. Any additional costs relating to Maxwell before July 8, 2005 will be recorded as goodwill; after that date, additional costs will be charged to operations in the period in which they occur. Any costs not related to Maxwell will be charged to operations in the period in which they occur.

INVENTORIES

    Inventories are summarized as follows:

December 31,	2004	2003
(In millions)
Raw materials	$ 21.5	$ 31.1
Work in process	33.6	30.6
Finished goods	609.1	528.9
	$ 664.2	$ 590.6

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PROPERTY, PLANT AND EQUIPMENT

    Major classes of property, plant and equipment are as follows:

December 31,	2004	2003	Useful  lives  (years)
(In millions)
Land and buildings	$ 125.9	$ 96.4	5 - 40
Leasehold improvements	237.8	169.7	1 - 39
Machinery and equipment	360.8	291.5	3 - 20
Furniture and fixtures	67.2	64.6	3 - 8
Construction in progress	11.6	18.8	-
	803.3	641.0
Less: accumulated depreciation and amortization	499.7	372.6
	$ 303.6	$ 268.4

    Depreciation and amortization expense relating to property, plant and equipment was $64.0 million, $56.9 million and $52.2 million in 2004, 2003 and 2002, respectively.

    Included in property, plant and equipment are the following capitalized leases:

December 31,	2004	2003	Useful  lives  (years)
(In millions)
Buildings	$ 74.2	$ 74.2	15 - 20
Machinery and equipment	11.8	11.5	3 - 7
	86.0	85.7
Less: accumulated amortization	32.0	24.9
	$ 54.0	$ 60.8

GOODWILL AND OTHER INTANGIBLE ASSETS

    In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which changed the accounting for goodwill and other intangible assets from an amortization method to an impairment-only approach. Upon our adoption of SFAS No. 142 on January 1, 2002, we ceased amortizing our trademarks without determinable lives and our goodwill. As prescribed under SFAS No. 142, we had our goodwill and trademarks tested for impairment during the first fiscal quarter of 2002.

    Due to market conditions resulting from a sluggish economy compounded by the aftereffects of the events of September 11, 2001, we revised our earnings forecasts for future years for several of our trademarks and licenses. As a result, the fair market value of these assets (as appraised by an independent third party) was lower than their carrying value as of December 31, 2001. We accordingly recorded an after-tax impairment charge of $13.8 million, which is reported as a cumulative effect of change in accounting principle resulting from the adoption of SFAS No. 142.

    In the second fiscal quarter of 2002, we recorded an additional impairment charge of $5.8 million related to two trademarks due to a decrease in projected accessory revenues resulting from a further evaluation of our costume jewelry business.

    We perform our annual impairment test for goodwill and trademarks during the fourth fiscal quarter of the year. As a result of continuing decreases in projected accessory revenues in our costume jewelry lines, the conversion of a portion of our Enzo Angiolini retail stores to the more moderately-priced Bandolino brand, and the discontinuance of our Rena Rowan better product line, we recorded additional trademark impairment

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charges of $18.6 million in 2002, $4.5 million in 2003 and $0.2 million in 2004. All trademark impairment charges are reported as SG&A expenses in the licensing, other and eliminations segment.

    The components of other intangible assets are as follows:

December 31,	2004		2003
(In millions)	Gross  Carrying  Amount	Accumulated  Amortization	Gross  Carrying  Amount	Accumulated  Amortization
Amortized intangible assets
License agreements	$ 62.7	$ 34.4	$ 68.9	$ 25.1
Acquired order backlog	14.5	14.0	9.1	1.1
Covenant not to compete	2.9	2.8	2.9	2.2
Other	0.5	0.1	0.6	-
	80.6	51.3	81.5	28.4
Unamortized trademarks	738.9	-	714.4	-
	$ 819.5	$ 51.3	$ 795.9	$ 28.4

    During 2004, we acquired $14.5 million of existing customer orders that have an amortization period of eight months and $2.3 million of license agreements that have a weighted-average amortization period of 21.1 months. Amortization expense for intangible assets subject to amortization was $32.6 million, $18.5 million and $9.8 million for the years ended December 31, 2004, 2003 and 2002, respectively. Amortization expense for intangible assets subject to amortization for each of the years in the five-year period ending December 31, 2009 is estimated to be $6.0 million in 2005, $3.7 million in 2006, $2.4 million in 2007, $2.3 million in 2008 and $2.3 million in 2009.

    The changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2004, by segment and in total, are as follows:

(In millions)	Wholesale Better Apparel	Wholesale Moderate Apparel	Wholesale Footwear & Accessories	Retail	Total
Balance, January 1, 2003	$ 356.7	$ 470.6	$ 602.7	$ 111.2	$ 1,541.2
Net adjustments to purchase price of prior acquisitions	-	1.4	-	-	1.4
Additional consideration paid for Gloria Vanderbilt	-	45.1	-	-	45.1
Additional consideration paid for l.e.i.	-	2.2	-	-	2.2
Acquisition of Kasper	47.6	-	-	9.4	57.0
Balance, December 31, 2003	404.3	519.3	602.7	120.6	1,646.9
Net adjustments to purchase price of prior acquisitions	(4.2)	(0.1)	-	-	(4.3)
Acquisition of Maxwell	-	-	206.1	-	206.1
Acquisition of Barneys	-	-	-	276.3	276.3
Balance, December 31, 2004	$ 400.1	$ 519.2	$ 808.8	$ 396.9	$ 2,125.0

    Goodwill was initially tested for impairment upon adoption of SFAS No. 142 and is further tested for impairment during the fourth fiscal quarter of each year. There have been no impairments to the carrying amount of goodwill.

FINANCIAL INSTRUMENTS

    As a result of our global operating and financing activities, we are exposed to changes in interest rates and foreign currency exchange rates which may adversely affect results of operations and financial condition. In seeking to minimize the risks and/or costs associated with such activities, we manage exposure to changes in interest rates and foreign currency exchange rates through our regular operating and financing activities

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and, when deemed appropriate, through the use of derivative financial instruments. The instruments eligible for utilization include forward, option and swap agreements. We do not use financial instruments for trading or other speculative purposes.

    At December 31, 2004 and 2003, the fair values of cash and cash equivalents, receivables and accounts payable approximated carrying values due to the short-term nature of these instruments. The estimated fair values of other financial instruments subject to fair value disclosures, determined based on broker quotes or quoted market prices or rates for the same or similar instruments, and the related carrying amounts are as follows:

December 31,	2004		2003
(In millions)	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Long-term debt, including current portion	$ 1,106.6	$ 1,119.8	$ 966.3	$ 1,018.9
Foreign currency exchange contracts, net asset (liability)	2.0	2.0	(0.5)	(0.5)

    Financial instruments expose us to counterparty credit risk for nonperformance and to market risk for changes in interest and currency rates. We manage exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor the amount of credit exposure. Our financial instrument counterparties are substantial investment or commercial banks with significant experience with such instruments. We also have procedures to monitor the impact of market risk on the fair value and costs of our financial instruments considering reasonably possible changes in interest and currency rates.

    We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies and purchase products from foreign suppliers who require payment in funds other than the U.S. Dollar. At December 31, 2004, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a total of US$12.0 million at a weighted-average exchange rate of 1.2291 through June 2005, US $24.7 million for Euros at a weighted-average exchange rate of 1.3683 through December 2005 and US $1.6 million for British Pounds at a weighted-average exchange rate of 1.9138 through October 2005.

    We recorded amortization of net gains resulting from the termination of interest rate swaps and locks of $7.8 million, $7.6 million and $3.5 million during 2004, 2003 and 2002, respectively, as a reduction of interest expense. We reclassified $0.9 million and $1.9 million of net losses from foreign currency exchange contracts to cost of sales in 2004 and 2003, respectively. There has been no material ineffectiveness related to our foreign currency exchange contracts as the instruments are designed to be highly effective in offsetting losses and gains transactions being hedged. As of December 31, 2004, the estimated net amount of existing gains and losses reported in accumulated other comprehensive income that will be reclassified into earnings in the next 12 months include amortization of $6.4 million of net gains resulting from the termination of interest rate swaps as a reduction of interest expense and no material reclassification of net gains from currency exchange contracts to cost of sales.

CREDIT FACILITIES

    At December 31, 2004, we had credit agreements with several lending institutions to borrow an aggregate principal amount of up to $1.5 billion under Senior Credit Facilities. These facilities, of which the entire amount is available for letters of credit or cash borrowings, provide for a $500.0 million three-year revolving credit facility (which was reduced from $700.0 million in June 2004 and expires in June 2006) and a $1.0 billion five-year revolving credit facility (which replaced a similar $700.0 million five-year revolving credit facility in June 2004). At December 31, 2004, $69.2 million in cash borrowings was outstanding under the three-year revolving credit facility and $367.8 million in outstanding letters of credit was outstanding under our five-year revolving credit facility. Borrowings under the Senior Credit Facilities may also be used for working

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capital and other general corporate purposes, including permitted acquisitions and stock repurchases. The Senior Credit Facilities are unsecured and require us 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 our ability to incur additional indebtedness, prepay subordinated indebtedness, make acquisitions, enter into mergers and pay dividends.

    In addition to these committed facilities, we have unsecured uncommitted lines of credit for the purpose of issuing letters of credit and bankers' acceptances for Kasper and Maxwell. At December 31, 2004, $27.9 million in letters of credit were outstanding under these lines of credit.

    At December 31, 2004, we also had a C$15.0 million unsecured line of credit in Canada, under which no amounts were outstanding.

    The weighted-average interest rate for outstanding cash borrowings under our credit facilities was 5.25% at December 31, 2004.

LONG-TERM DEBT

    Long-term debt consists of the following:

December 31,	2004	2003
(In millions)
7.50% Senior Notes due 2004, net of unamortized discount of $0.1	$  -	$ 174.9
8.375% Series B Senior Notes due 2005, net of unamortized discount of $0.0 and $0.1	129.6	129.5
7.875% Senior Notes due 2006, net of unamortized discount of $0.5 and $0.8	224.5	224.2
9% Senior Secured Notes due 2008, net of unamortized discount of $0.5	3.3	-
4.250% Senior Notes due 2009, net of unamortized discount of $0.2	249.8	-
5.125% Senior Notes due 2014, net of unamortized discount of $0.2	249.8	-
3.50% Zero Coupon Convertible Senior Notes due 2021, net of unamortized discount of $7.7	-	437.7
6.125% Senior Notes due 2014, net of unamortized discount of $0.4	249.6	-
	1,106.6	966.3
Less: current portion	129.6	174.9
	$ 977.0	$ 791.4

    Long-term debt maturities for each of the next five years are $129.6 million in 2005, $225.0 million in 2006, $3.8 million in 2008 and $250.0 million in 2009. All of our notes contain certain covenants, including, among others, restrictions on liens, sale-leaseback transactions and additional secured debt, and pay interest semiannually. The weighted-average interest rate of our long-term debt was 6.1% at December 31, 2004.

    In November 2004, we issued $250.0 million of 4.250% Senior Notes due 2009, $250.0 million of 5.125% Senior Notes due 2014 and $250.0 million of 6.125% Senior Notes due 2034. Net proceeds of the offering were $743.5 million, which were used to fund the acquisition of Barneys, to redeem Barneys' outstanding 9% Senior Secured Notes and to repay amounts then outstanding under our Senior Credit Facilities.

    On February 2, 2004, we redeemed all our outstanding Zero Coupon Convertible Senior Notes due 2021 at a redemption price (inclusive of issue price plus accrued original issue discount) of $554.41 per $1,000 of principal amount at maturity for a total payment of $446.6 million. As a result of this transaction, we recorded an SG&A expense of $8.4 million in 2004, representing the writeoff of unamortized bond discounts and debt issuance costs. On June 15, 2004, we redeemed at maturity all our 7.50% Senior Notes due 2004 for a total payment of $175.0 million.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

    Accumulated other comprehensive income is comprised of the following:

December 31,	2004	2003
(In millions)
Foreign currency translation adjustments	$  5.6	$ 2.6
Minimum pension liability adjustments	(10.3)	(8.7)
Unrealized gains on hedge contracts	5.5	9.9
	$ 0.8	$ 3.8

DERIVATIVES

    SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," subsequently amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" (as amended, hereinafter referred to as "SFAS 133"), establishes accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires us to recognize all derivatives as either assets or liabilities on the balance sheet and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders' equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

    We use foreign currency forward contracts for the specific purpose of hedging the exposure to variability in forecasted cash flows associated primarily with inventory purchases. These instruments are designated as cash flow hedges as the principal terms of the forward exchange contracts are the same as the underlying forecasted foreign currency cash flows. Therefore, changes in the fair value of the forward contracts should be highly effective in offsetting changes in the expected foreign currency cash flows, and accordingly, changes in the fair value of forward exchange contracts are recorded in accumulated other comprehensive income, net of related tax effects, with the corresponding asset or liability recorded in the balance sheet. Amounts recorded in accumulated other comprehensive income are reflected in current-period earnings when the hedged transaction affects earnings.

    The following summarizes, by major currency, the U.S. Dollar equivalent amount of our foreign currency forward exchange contracts.

December 31,	2004		2003
(In millions)	Notional  Amount	Fair Value -  Asset/ (Liability)	Notional  Amount	Fair Value -  Asset/ (Liability)
Canadian Dollar - U.S. Dollar	$ 12.0	$ (0.3)	$ 11.0	$ (0.5)
U.S. Dollar - Euro	24.7	2.2	-	-
U.S. Dollar - British Pound	1.6	0.1	-	-
	$ 38.3	$ 2.0	$ 11.0	$ (0.5)

    During 2004, no material amounts were reclassified from other comprehensive income to earnings and there was no material ineffectiveness related to our cash flow hedges. If foreign currency exchange rates or interest rates do not change from their December 31, 2004 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months also will not be material. The actual amounts that will be reclassified to earnings over the next 12 months could vary, however, as a result of changes in market conditions.

    In connection with the $250.0 million of 4.250% Senior Notes due 2009 and $250.0 million of 5.125% Senior Notes due 2014 issued in November 2004, we had entered into two interest rate lock agreements which were

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terminated upon the issuance of the notes. These terminations generated pre-tax gains of $0.2 million, which is being amortized as a reduction of interest expense over the term of the related notes.

    For the periods April 2002 through October 2002 and June 1999 through January 2001, we had employed an interest rate hedging strategy utilizing swaps to effectively float a portion of our interest rate exposure on our fixed rate financing arrangements. The termination of these interest rate swaps generated pre-tax gains of $21.6 million and $8.3 million, respectively, which is being amortized as a reduction of interest expense over the remaining terms of the interest rate swap agreements.

    Approximately $6.4 million of pre-tax income will be reclassified into earnings within the next 12 months related to these terminated agreements.

COMMON STOCK

    The Board of Directors has authorized several programs to repurchase our common stock from time to time in open market transactions totaling $1.0 billion. As of December 31, 2004, 32.4 million shares had been acquired at a cost of $858.6 million. There is no time limit for the utilization of the amounts remaining under any uncompleted programs.

OBLIGATIONS UNDER CAPITAL LEASES

    Obligations under capital leases consist of the following:

December 31,	2004	2003
(In millions)
Warehouses, office facilities and equipment	$ 44.0	$ 49.6
Less: current portion	4.4	5.9
Obligations under capital leases - noncurrent	$ 39.6	$ 43.7

    We occupy warehouse and office facilities leased from the City of Lawrenceburg, Tennessee. Two ten-year net leases run until July 2005 and May 2006, respectively, and require minimum annual rent payments of $0.5 million each plus accrued interest. In connection with these leases, we guaranteed $10.0 million of Industrial Development Bonds issued in order to construct the facilities, $1.0 million of which remained unpaid as of December 31, 2004. We obtain title to these facilities upon expiration of the leases. The financing agreement with the issuing authority requires us to comply with the same financial covenants required by our Senior Credit Facilities (see "Credit Facilities").

    We also lease warehouse and office facilities in Bristol, Pennsylvania. Two 15-year net leases run until March and October 2013, respectively, and require minimum annual rent payments of $1.3 million and $0.9 million, respectively.

    In 2003, we entered into a sale-leaseback agreement for our Virginia warehouse facility. This transaction resulted in a net gain of $7.5 million that has been deferred and is being amortized over the lease term, which runs until April 2023 and requires minimum annual rent payments of $2.4 million. The building has been capitalized at $25.6 million, which approximates the present value of the minimum lease payments.

    We also lease various equipment under two to six-year leases at an aggregate annualized rental of $3.4 million. The equipment has been capitalized at its fair market value of $10.5 million, which approximates the present value of the minimum lease payments.

    The following is a schedule by year of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of December 31, 2004:

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Year Ending December 31,
(In millions)
2005	$ 7.2
2006	5.4
2007	5.1
2008	5.2
2009	5.1
Later years	41.1
Total minimum lease payments	69.1
Less: amount representing interest	25.1
Present value of net minimum lease payments	$ 44.0

COMMITMENTS AND CONTINGENCIES

    (a) CONTINGENT LIABILITIES. We have been named as a defendant in various actions and proceedings, including actions brought by certain employees whose employment has been terminated arising from our ordinary business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in our opinion, any such liability will not have a material adverse effect on our financial position or results of operations.

    (b) ROYALTIES. Under an exclusive license to manufacture certain items under the Polo Jeans Company trademark pursuant to license and design service agreements with Polo, we are obligated to pay Polo a percentage of net sales of Polo Jeans Company products. Minimum payments under these agreements amount to $5.6 million for 2005 and $7.2 million per year during the period 2006 through 2010. We are also obligated to spend on advertising a percentage of net sales of these licensed products. The agreements expire on December 31, 2010 and may be renewed by us in five-year increments for up to 20 additional years provided that we achieve certain minimum sales levels. Renewal of the Polo Jeans Company license after 2010 requires a one-time payment by us of $25.0 million or, at our option, a transfer of a 20% interest in our Polo Jeans Company business to Polo (with no fees required for subsequent renewals). Polo also has an option, exercisable on or before June 1, 2010, to purchase our Polo Jeans Company business at the end of 2010 for a purchase price, payable in cash, equal to 80% of the then fair market value of the business as a going concern, assuming continuation of the Polo Jeans License through 2030.

    We also have an exclusive license to produce and sell costume jewelry in the United States and Canada under the Tommy Hilfiger trademark, which expires on March 31, 2008. The agreement provides for payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement. Minimum payments under this agreement amount to $1.4 million in 2005, $1.5 million in 2006, $1.7 million in 2007 and $0.4 million in 2008. We also have an exclusive license to produce, market and distribute costume jewelry in the United States, Canada, Mexico and Japan under the Givenchy trademark, which expires on December 31, 2005. The agreement provides for the payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement. Minimum payments under this agreement amount to $0.5 million in 2005.

    We also have an exclusive license to produce and sell women's footwear under the Dockers Women trademark in the United States (including its territories and possessions) pursuant to an agreement with Levi Strauss & Co. which expires in December 2005. The agreement provides for payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement. Minimum payments under this agreement amount to $0.9 million in 2005.

    We also have an exclusive license to design, develop and market women's and children's shoes under the J. G. Hook and Hook Sport brand names pursuant to an agreement with J. G. Hook, Inc. which expires in December 2006. This agreement provides for the payment by us of a percentage of net sales against guaranteed minimum royalty payments as set forth in the agreement. Minimum payments under this agreement amount to $0.1 million in 2005 and $0.2 million in 2006.

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    (c) LEASES. Total rent expense charged to operations for the years ended December 31, 2004, 2003 and 2002 was as follows.

Year Ended December 31,	2004	2003	2002
(In millions)
Minimum rent	$ 122.7	$ 107.6	$ 100.8
Contingent rent	1.9	1.1	1.1
Less: sublease rent	(6.8)	(6.4)	(5.6)
	$ 117.8	$ 102.3	$ 96.3

    The following is a schedule of future minimum rental payments required under operating leases:

Year Ending December 31,
(In millions)
2005	$ 139.3
2006	125.1
2007	108.3
2008	90.1
2009	78.0
Later years	369.8
	$ 910.6

    Certain of the leases provide for renewal options and the payment of real estate taxes and other occupancy costs. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $40.8 million.

INCOME TAXES

    The following summarizes the provision for income taxes:

Year Ended December 31,	2004	2003	2002
(In millions)
Current:
Federal	$ 103.0	$ 131.1	$ 173.8
State and local	16.5	15.0	19.9
Foreign	8.8	5.2	5.4
	128.3	151.3	199.1
Deferred:
Federal	48.6	43.7	3.7
State and local	4.3	3.8	(2.1)
Foreign	(0.1)	(0.4)	0.5
	52.8	47.1	2.1
Provision for income taxes	$ 181.1	$ 198.4	$ 201.2

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    The total income tax provision was recorded as follows:

Year Ended December 31,	2004	2003	2002
(In millions)
Included in income before cumulative effect of change in accounting principle	$ 181.1	$ 198.4	$ 201.2
Included in cumulative effect of change in accounting for intangible assets	-	-	(8.4)
	$ 181.1	$ 198.4	$ 192.8

    The domestic and foreign components of income before provision for income taxes are as follows:

Year Ended December 31,	2004	2003	2002
(In millions)
United States	$ 457.1	$ 517.3	$ 526.4
Foreign	25.8	9.7	7.1
Income before provision for income taxes	$ 482.9	$ 527.0	$ 533.5

    The provision for income taxes on adjusted historical income differs from the amounts computed by applying the applicable Federal statutory rates due to the following:

Year Ended December 31,	2004	2003	2002
(In millions)
Provision for Federal income taxes at the statutory rate	$ 169.0	$ 184.5	$ 186.7
State and local income taxes, net of federal benefit	13.6	11.6	11.7
Reversal of prior years federal income tax audit accruals	-	(8.7)	-
Valuation allowance	-	8.5	-
Other items, net	(1.5)	2.5	2.8
Provision for income taxes	$ 181.1	$ 198.4	$ 201.2

    We have not provided for U.S. Federal and foreign withholding taxes on $38.4 million of foreign subsidiaries' undistributed earnings as of December 31, 2004. Such earnings are intended to be reinvested indefinitely.

The following is a summary of the significant components of our deferred tax assets and liabilities:

December 31,	2004	2003
(In millions)
Deferred tax assets (liabilities):
Nondeductible accruals and allowances	$ 89.4	$ 82.4
Depreciation	5.8	9.5
Intangible asset valuation and amortization	(208.5)	(176.6)
Loss and credit carryforwards	36.0	29.9
Amortization of stock-based compensation	9.5	6.1
Other (net)	9.5	7.7
Valuation allowance	(8.5)	(8.5)
Net deferred tax liability	$ (66.8)	$ (49.5)
Included in:
Current assets	$ 68.2	$ 80.6
Noncurrent liabilities	(135.0)	(130.1)
Net deferred tax liability	$ (66.8)	$ (49.5)

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    As of December 31, 2004, we had federal and state net operating loss carryforwards of $35.7 million and $214.7 million, respectively, which expire through 2023. We also had capital loss carryforwards of $22.6 million, which expire in 2006, and state tax credit carryforwards of $4.2 million, which expire through 2020.

    During the fourth fiscal quarter of 2003, the Internal Revenue Service completed its audits of our returns through 2000. As a result, we reversed $8.7 million of tax accruals established in years prior to 2001.

    We have determined that the $22.6 million of capital loss carryforwards expiring in 2006 may not be utilized; therefore, we established a valuation allowance of $8.5 million in 2003.

EARNINGS PER SHARE

Year Ended December 31,	2004	2003	2002
(In millions except per share amounts)
Basic
Net income	$ 301.8	$ 328.6	$ 318.5
Weighted average common shares outstanding	123.6	127.3	128.2
Basic earnings per share	$ 2.44	$ 2.58	$ 2.48
Diluted
Net income	$ 301.8	$ 328.6	$ 318.5
Add: interest expense associated with convertible     notes, net of tax benefit	0.8	9.5	9.1
Income available to common shareholders	$ 302.6	$ 338.1	$ 327.6
Weighted average common shares outstanding	123.6	127.3	128.2
Effect of dilutive securities:
Employee stock options	2.2	1.3	2.9
Assumed conversion of convertible notes	0.7	7.9	7.9
Weighted average common shares and          share equivalents outstanding	126.5	136.5	139.0
Diluted earnings per share	$ 2.39	$ 2.48	$ 2.36

SHORT-TERM BOND TRANSACTIONS

    During 2001 and 2002, we entered into two transactions relating to the short sale of $487.4 million of U.S. Treasury securities. The transactions were intended to address interest rate exposure and generate capital gains that could be used to offset previously incurred capital losses. As a result of these transactions, we recorded short-term capital gains of $14.8 million, interest income of $1.8 million and interest expense and fees of $19.3 million during 2002 and short-term capital gains of $6.6 million, interest income of $0.6 million and interest expense and fees of $7.9 million during 2003. The net effects of $2.7 million and $0.7 million, respectively, are included in the statement of operations as interest expense. The first transaction, which represented $157.9 million of the securities, closed in August 2002. The second transaction, which represented $190.5 million of the securities, closed in May 2003. There are no present intentions to enter into any further transactions.

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STATEMENT OF CASH FLOWS 

Year Ended December 31,		2004	2003	2002
(In millions)
Detail of acquisitions:
	Fair value of assets acquired	$ 985.7	$ 382.0	$ 621.3
	Liabilities assumed	(279.3)	(103.9)	(208.7)
	Common stock and options issued	-	-	(56.3)
	Cash paid for acquisitions	706.4	278.1	356.3
	Cash acquired in acquisitions	(133.1)	(23.5)	(21.6)
	Net cash paid for acquisitions	$ 573.3	$ 254.6	$ 334.7
Supplemental disclosures of cash flow information:
	Cash paid during the year for:
	Interest	$ 50.3	$ 47.0	$ 48.7
	Income taxes	98.5	163.2	158.6
Supplemental disclosures of non-cash investing and financing activities:
	Equipment acquired through capital lease financing	0.3	29.3	5.4
	Tax benefits related to stock options	5.0	2.9	12.9
	Restricted stock issued to employees	4.5	18.8	10.8

STOCK OPTIONS AND RESTRICTED STOCK

    Under two stock option plans, we may grant stock options and other awards from time to time to key employees, officers, directors, advisors and independent consultants to us or to any of our subsidiaries. In general, options become exercisable over either a three-year or five-year period from the grant date and expire 10 years after the date of grant for options granted on or before May 28, 2003 and seven years after the date of grant thereafter. In certain cases for non-employee directors, options become exercisable six months after the grant date. Shares available for future option grants at December 31, 2004 totaled 3.6 million. Total compensation cost recorded for stock-based employee compensation awards (including awards to non-employee directors) was $16.5 million, $12.2 million and $12.9 million (of which $11.3 million was related to executive compensation obligations) for 2004, 2003 and 2002, respectively.

    The following table summarizes information about stock option transactions (options in millions):

	2004		2003		2002
	Options	Weighted Average Exercise Price	Options	Weighted Average Exercise Price	Options	Weighted Average Exercise Price
Outstanding, January 1	12.6	$29.64	14.2	$29.28	17.9	$27.26
Granted	0.8	$34.15	0.3	$30.28	2.0	$36.28
Exercised	(1.4)	$25.54	(0.9)	$22.29	(4.8)	$24.54
Cancelled/forfeited	(0.5)	$35.26	(1.0)	$31.35	(0.9)	$30.56
Outstanding, December 31	11.5	$30.19	12.6	$29.64	14.2	$29.28

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    The following table summarizes information about stock options outstanding at December 31, 2004 (options in millions):

	Outstanding			Exercisable
Range of Exercise Prices	Number of Options	Weighted Average Remaining Years of Contractual Life	Weighted Average Exercise Price	Number of Options	Weighted Average Exercise Price
$0 to $10	0.1	4.3	$3.68	0.1	$3.68
$10 to $20	0.8	3.0	$14.86	0.8	$14.86
$20 to $25	1.5	4.7	$22.99	1.3	$22.98
$25 to $30	2.4	5.9	$28.67	2.1	$28.61
$30 to $35	3.9	6.4	$32.14	2.3	$31.52
$35 to $40	2.2	6.6	$36.98	1.6	$37.10
$40 to $70	0.6	5.9	$42.55	0.5	$42.86
In total	11.5	5.8	$30.19	8.7	$29.31

    The following table summarizes the weighted average fair value of options granted and the related assumptions used in the Black-Scholes option pricing model.

Year Ended December 31,	2004	2003	2002
Weighted-average fair value of options at grant date:
Exercise price less than market price	$32.93	$34.38	$32.71
Exercise price equal to market price	$10.77	$12.11	$14.72
Assumptions:
Dividends yield	1.00%	0.77%	-
Expected volatility	40.9%	47.9%	50.0%
Risk-free interest rate	2.87%	2.55%	3.98%
Expected life (years)	4.0	3.8	3.5

    During 2004, 126,250 shares of restricted common stock were issued to 91 employees under the 1999 Stock Incentive Plan. The restrictions generally lapse on one-third of the number of restricted shares on each of the first three anniversary dates of issue. The value of this stock based on quoted market values was $4.5 million, which we are amortizing over the period in which the restrictions lapse. The restrictions do not affect voting and dividend rights.

    During 2003, 626,500 shares of restricted common stock were issued to 31 employees and six executive officers under the 1999 Stock Incentive Plan. The restrictions generally lapse on one-third of the number of restricted shares on each of the first three anniversary dates of issue or, in the case of our Chief Executive Officer and our Chief Operating and Financial Officer, one-third of the number of restricted shares on the first day immediately following the end of the trading restrictions imposed by us on the grantee with respect to the public announcement of fourth quarter financial results for each of 2003, 2004 and 2005, provided we meet certain target levels of free cash flow (cash flow from operations less capital expenditures) for the year immediately preceding the lapse date. The value of this stock based on quoted market values was $18.8 million, which we are amortizing over the period in which the restrictions lapse. The restrictions do not affect voting and dividend rights.

    During 2002, 293,000 shares of restricted common stock were issued to 75 employees and two executive officers under the 1999 Stock Incentive Plan. The restrictions lapse on one-third of the number of restricted shares on each of the third, fourth and fifth anniversary dates of issue or, in the case of the executive officers,

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one-third of the number of restricted shares on the first day immediately following the end of the trading restrictions imposed by us on the grantee with respect to the public announcement of fourth quarter financial results for each of 2003, 2004 and 2005, provided we meet certain target levels of free cash flow for the year immediately preceding the lapse date. The value of this stock based on quoted market values was $10.8 million, which we are amortizing over the period in which the restrictions lapse. The restrictions do not affect voting and dividend rights.

EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

    We maintain the Jones Apparel Group, Inc. Retirement Plan (the "Jones Plan") under Section 401(k) of the Internal Revenue Code (the "Code"). Employees not covered by a collective bargaining agreement and meeting certain other requirements are eligible to participate in the Jones Plan. Under the Jones Plan, participants may elect to have up to 15% of their salary (subject to limitations imposed by the Code) deferred and deposited with a qualified trustee, who in turn invests the money in a variety of investment vehicles as selected by each participant. All employee contributions into the Jones Plan are 100% vested.

    We have elected to make the Jones Plan a "Safe Harbor Plan" under Section 401(k)(12) of the Code. As a result of this election, we make a fully-vested safe harbor matching contribution for all eligible participants amounting to 100% of the first 3% of the participant's salary deferred and 50% of the next 2% of salary deferred, subject to maximums set by the Department of the Treasury. We may, at our sole discretion, contribute additional amounts to all employees on a pro rata basis.

    In connection with the acquisitions of Nine West Group, Victoria, McNaughton, Gloria Vanderbilt, Kasper, Maxwell and Barneys, we assumed additional plans in which certain employees participate.

    Nine West Group, Victoria, Gloria Vanderbilt and Kasper maintained defined contribution plans and McNaughton maintained two such plans under Section 401(k) of the Code. Certain employees not covered by a collective bargaining agreement and meeting certain other requirements were eligible to participate in these plans. Participants could elect to have a portion (typically up to 15%) of their salary deferred and deposited with a qualified trustee, who in turn invested the money in a variety of investment vehicles as selected by each participant. All employee contributions into these plans were 100% vested. We matched a portion of the participant's contributions subject to maximums set by the Department of the Treasury. The Nine West Group, Victoria, Gloria Vanderbilt, Kasper and two McNaughton plans were merged into the Jones Plan on December 16, 2002, April 2, 2002, January 26, 2004, September 1, 2004, November 22, 2002, and December 20, 2002, respectively.

    Maxwell maintains a defined contribution plan under Section 401(k) of the Code. Maxwell employees meeting certain requirements are eligible to participate in the plan. Under the plan, participants can elect to have up to 100% of their salary (subject to limitations imposed by the Code) deferred and deposited with a qualified trustee, who in turn invests the money in a variety of investment vehicles as selected by each participant. The plan requires Maxwell to match 100% of employee contributions up to 2% of eligible employee compensation. The plan also allows for additional discretionary company contributions.

    Barneys maintains the Barney's Inc. Retirement Savings Plan under Section 401(a) of the Code. Barneys employees meeting certain requirements are eligible to participate in the plan. Under the plan, participants can elect to have up to 13% of their salary (subject to limitations imposed by the Code) deferred and deposited with a qualified trustee, who in turn invests the money in a variety of investment vehicles as selected by each participant. The plan requires Barneys to match 50% of employee contributions up to 6% of a participant's eligible compensation and to make a non-discretionary contribution of 1.5% of a participant's eligible compensation. In addition, Barneys may make a discretionary contribution of up to 4% of a participant's eligible compensation.

68

    Pursuant to certain collective bargaining agreements, Barneys is also required to make periodic pension contributions to union-sponsored multi-employer plans which provide for defined benefits for certain union members employed by Barneys.

    We contributed approximately $8.1 million, $6.4 million and $6.9 million to our defined contribution plans during 2004, 2003 and 2002, respectively.

Defined Benefit Plans

    We maintain several defined benefit plans, including the Pension Plan for Associates of Nine West Group Inc. (the "Cash Balance Plan") and The Napier Company Retirement Plan for certain associates of Victoria (the "Napier Plan"). The Cash Balance Plan expresses retirement benefits as an account balance which increases each year through interest credits. All benefits under the Napier Plan are frozen at the amounts earned by the participants as of December 31, 1995. Our funding policy is to make the minimum annual contributions required by applicable regulations. We plan to contribute $2.4 million to our defined benefit plans in 2005. The measurement date for all plans is December 31.

Obligations and Funded Status

Year Ended December 31,	2004	2003
(In millions)
Change in benefit obligation
Benefit obligation, beginning of year	$ 39.1	$ 36.6
Service cost	0.1	0.1
Interest cost	2.3	2.4
Actuarial loss	2.9	3.7
Effects of changes in foreign currency exchange rates	0.1	0.1
Benefits paid	(4.1)	(3.8)
Benefit obligation, end of year	40.4	39.1
Change in plan assets
Fair value of plan assets, beginning of year	23.2	23.6
Actual return on plan assets	1.2	2.5
Employer contribution	5.2	0.8
Effects of changes in foreign currency exchange rates	0.1	0.1
Benefits paid	(4.1)	(3.8)
Fair value of plan assets, end of year	25.6	23.2
Funded status	(14.8)	(15.9)
Unrecognized net actuarial loss	16.4	13.9
Net amount recognized	$ 1.6	$ (2.0)

Amounts Recognized on the Balance Sheet

December 31,	2004	2003
(In millions)
Accrued benefit cost	$ (14.8)	$ (15.9)
Accumulated other comprehensive income	16.4	13.9
Net amount recognized	$ 1.6	$ (2.0)

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Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets

December 31,	2004	2003
(In millions)
Projected benefit obligation	$ 40.4	$ 39.1
Accumulated benefit obligation	40.4	39.1
Fair value of plan assets	25.6	23.2
Increase in minimum liability included in other comprehensive income	2.6	3.1

Components of Net Periodic Benefit Cost

Year Ended December 31,	2004	2003
(In millions)
Service cost	$ 0.1	$ 0.1
Interest cost	2.3	2.4
Expected return on plan assets	(1.8)	(1.8)
Amortization of net loss	0.9	0.8
Net periodic benefit cost	$ 1.5	$ 1.5

Assumptions

	2004	2003
Weighted-average assumptions used to determine:
Benefit obligations at December 31
Discount rate	5.8%	6.1%
Expected long-term return on plan assets	7.9%	7.9%
Net periodic benefit cost for year ended December 31
Discount rate	6.1%	6.5%
Expected long-term return on plan assets	7.9%	7.9%

Estimated Future Benefit Payments

Year Ending December 31,
(In millions)
2005	$ 1.3
2006	1.4
2007	1.4
2008	1.9
2009	1.6
2010 through 2014	12.7
	$ 20.3

Plan Assets

    The weighted-average asset allocations at December 31, 2004 and 2003 by asset category are as follows:

December 31,	2004	2003
Equity securities	47%	53%
Debt securities	34%	37%
Other	19%	10%
Total	100%	100%

    Our plans are designed to diversify investments across types of investments and investment managers. Permitted investment vehicles include investment-grade fixed income securities, domestic and foreign equity

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securities, mutual funds, guaranteed insurance contracts and real estate, while speculative and derivative investment vehicles are generally prohibited. The investment managers have full discretion to manage their portion of the investments subject to the objectives and policies of the respective plans. The performance of the investment managers is reviewed on a regular basis. The primary objectives are to achieve a rate of return sufficient to meet current and future plan cash requirements and to emphasize long-term growth of principal while avoiding excessive risk and maintaining fund liquidity. At December 31, 2004, the weighted-average target allocation percentages for fund investments were 34% fixed income securities, 51% U. S. Equity securities, and 15% international securities.

    To determine the overall expected long-term rate-of-return-on-assets assumption, we add an expected inflation rate to the expected long-term real returns of our various asset classes, taking into account expected volatility and correlation between the returns of the asset classes as follows: for equities and real estate, a historical average arithmetic real return; for government fixed-income securities, current yields on inflation-indexed bonds; and for corporate fixed-income securities, the yield on government fixed-income securities plus a blend of current and historical credit spreads.

JOINT VENTURES

    On July 1, 2002, we entered into two joint ventures with HCL Technologies Limited ("HCL") to provide us with computer consulting, programming and associated support services. HCL is a global technology and software services company offering a suite of services targeted at technology vendors, software product companies and organizations. We received a 49% ownership interest in each joint venture, which operate under the names HCL Jones Technologies, LLC and HCL Jones Technologies (Bermuda), Ltd., for a cash contribution of $0.3 million and the transfer of certain software and employees. HCL received a 51% ownership interest in each company for an initial cash contribution of $1.0 million. HCL has the option to acquire our remaining ownership interest at the end of five years through the issuance of HCL equity shares. As of December 31, 2004, we have committed to purchase $10.5 million in services from these joint venture companies through June 30, 2007.

    We also have a 50% ownership interest in a joint venture with Sutton to operate retail locations in Australia. We have unconditionally guaranteed up to $7.0 million of borrowings under the joint venture's uncommitted credit facility and up to $0.4 million of presettlement risk associated with foreign exchange transactions. Performance under the guarantees is required if the joint venture fails to make a required payment under these facilities when due. Sutton is required to reimburse us for 50% of any payments made under these guarantees. At December 31, 2004, the outstanding balance subject to these guarantees was approximately $0.8 million.

    The results of our joint ventures are reported under the equity method of accounting. The amount of consolidated retained earnings represented by the undistributed earnings of our joint ventures as of December 31, 2004 was $7.9 million.

BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

    We identify operating segments based on, among other things, the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operations are comprised of four reportable segments: wholesale better apparel, wholesale moderate apparel, wholesale footwear and accessories, and retail. Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and our own retail locations. The wholesale segments include wholesale operations with third party department and other retail stores, the retail segment includes operations by our own stores, and income and expenses related to trademarks, licenses and general corporate functions are reported under "licensing, other and eliminations." We define segment profit as operating income before net interest expense, equity in earnings of unconsolidated affiliates and income taxes. Summarized below are our revenues, income and total assets by reportable segments.

71

(In millions)		Wholesale Better Apparel	Wholesale Moderate Apparel	Wholesale Footwear & Accessories	Retail	Licensing, Other & Eliminations	Consolidated
For the year ended December 31, 2004
	Revenues from  external customers	$ 1,493.2	$ 1,315.3	$ 1,002.4	$ 780.3	$ 58.5	$ 4,649.7
	Intersegment revenues	146.9	13.0	58.3	-	(218.2)	-
	Total revenues	1,640.1	1,328.3	1,060.7	780.3	(159.7)	4,649.7
	Segment income	$ 160.1	$ 142.6	$ 164.2	$ 78.4	$ (16.9)	528.4
	Net interest expense						(49.3)
	Equity in earnings of unconsolidated affiliates						3.8
	Income before provision for income taxes						$ 482.9
	Depreciation and amortization	$ 24.1	$ 18.0	$ 22.7	$ 11.8	$ 31.1	$ 107.7
For the year ended December 31, 2003
	Revenues from  external customers	$ 1,475.0	$ 1,310.2	$ 868.3	$ 685.6	$ 36.2	$ 4,375.3
	Intersegment revenues	88.7	12.3	62.6	-	(163.6)	-
	Total revenues	1,563.7	1,322.5	930.9	685.6	(127.4)	4,375.3
	Segment income	$ 212.8	$ 157.1	$ 157.9	$ 77.0	$ (25.0)	579.8
	Net interest expense						(55.3)
	Equity in earnings of unconsolidated affiliates						2.5
	Income before provision for income taxes						$ 527.0
	Depreciation and amortization	$ 19.6	$ 18.6	$ 8.7	$ 11.0	$ 26.4	$ 84.3
For the year ended December 31, 2002
	Revenues from external customers	$ 1,636.4	$ 1,093.5	$ 882.3	$ 700.0	$   28.7	$ 4,340.9
	Intersegment revenues	93.8	11.3	74.1	-	(179.2)	-
	Total revenues	1,730.2	1,104.8	956.4	700.0	(150.5)	4,340.9
	Segment income	$ 343.5	$ 133.5	$ 124.3	$ 69.9	$ (80.6)	590.6
	Net interest expense						(58.1)
	Equity in earnings of unconsolidated affiliates						1.0
	Income before provision for income taxes						$ 533.5
	Depreciation and amortization	$ 21.7	$ 10.9	$ 8.6	$ 11.2	$ 21.7	$ 74.1
Total assets
	December 31, 2004	$ 1,891.0	$ 1,071.4	$ 1,391.1	$ 744.7	$ (547.4)	$ 4,550.8
	December 31, 2003	1,889.7	1,207.4	1,081.2	383.9	(374.5)	4,187.7
	December 31, 2002	1,597.3	895.0	1,043.5	277.0	39.8	3,852.6

    Revenues from external customers and long-lived assets excluding deferred taxes related to operations in the United States and foreign countries are as follows:

On or for the Year Ended December 31,	2004	2003	2002
(In millions)
Revenues from external customers:
United States	$ 4,448.8	$ 4,249.1	$ 4,158.6
Foreign countries	200.9	126.2	182.3
	$ 4,649.7	$ 4,375.3	$ 4,340.9
Long-lived assets:
United States	$ 3,217.6	$ 2,697.3	$ 2,493.6
Foreign countries	37.0	34.5	40.8
	$ 3,254.6	$ 2,731.8	$ 2,534.4

SUPPLEMENTAL PRO FORMA CONDENSED FINANCIAL INFORMATION

    Certain of our subsidiaries function as co-issuers, obligors and co-obligors (fully and unconditionally guaranteed on a joint and several basis) of the outstanding debt of Jones Apparel Group, Inc. ("Jones"), including Jones Apparel Group USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings"), Nine West and Jones Retail Corporation ("Jones Retail")(collectively, including Jones, the "Issuers").

72

    Jones and Jones Holdings function as either co-issuers or co-obligors with respect to the outstanding debt securities of Jones USA and the outstanding debt securities of Nine West. In addition, Nine West and Jones Retail function as either a co-issuer or 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 condensed consolidating balance sheets, statements of income and statements of cash flows for the Issuers and our other subsidiaries have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Separate financial statements and other disclosures concerning Jones are not presented as Jones has no independent operations or assets. There are no contractual restrictions on distributions from Jones USA, Jones Holdings, Nine West or Jones Retail to Jones. On January 1, 2003, the retail operations of Nine West Group were transferred to Jones Retail and the remaining Nine West Group wholesale assets and liabilities were transferred to Nine West. As a result, the statements of income and statements of cash flows for 2002 have been restated for comparison purposes.

Condensed Consolidating Balance Sheets
(In millions)

                                                         December 31, 2004                            December 31, 2003
                                             ----------------------------------------     ----------------------------------------
                                                                     Elim-      Cons-                             Elim-      Cons-
                                              Issuers    Others   inations   olidated      Issuers    Others   inations   olidated
                                             ----------------------------------------     ----------------------------------------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                    $ 12.3    $ 32.7      $   -     $ 45.0       $302.0    $ 48.0      $   -     $350.0
  Accounts receivable - net                     174.6     273.7          -      448.3        173.2     212.6          -      385.8
  Inventories                                   294.3     373.2       (3.3)     664.2        262.1     327.3        1.2      590.6
  Prepaid and refundable income taxes             1.5      24.9      (26.4)         -          5.5       8.5      (14.0)         -
  Deferred taxes                                 23.5      46.0       (1.3)      68.2         27.7      53.8       (0.9)      80.6
  Prepaid expenses and other
    current assets                               37.9      32.6          -       70.5         28.3      20.6          -       48.9
                                             ----------------------------------------     ----------------------------------------
    TOTAL CURRENT ASSETS                        544.1     783.1      (31.0)   1,296.2        798.8     670.8      (13.7)   1,455.9

Property, plant and equipment - net             125.3     178.2        0.1      303.6        128.5     139.9          -      268.4
Due from affiliates                                 -     511.3     (511.3)         -        275.1     399.6     (674.7)         -
Goodwill                                      1,776.0     349.0          -    2,125.0      1,461.9     185.0          -    1,646.9
Other intangibles - net                         167.7     600.5          -      768.2        167.3     600.2          -      767.5
Investments in subsidiaries                   2,110.4         -   (2,110.4)         -      1,549.9         -   (1,549.9)         -
Other assets                                     35.5      24.7       (2.4)      57.8         28.0      22.5       (1.5)      49.0
                                             ----------------------------------------     ----------------------------------------
                                             $4,759.0  $2,446.8  $(2,655.0)  $4,550.8     $4,409.5  $2,018.0  $(2,239.8)  $4,187.7
                                             ========================================     ========================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings                        $ 69.2     $   -      $   -     $ 69.2        $   -     $   -      $   -      $   -
  Current portion of long-term debt
    and capital lease obligations               132.5       1.5          -      134.0        178.8       2.0          -      180.8
  Accounts payable                              105.9     153.4          -      259.3        119.5     125.1          -      244.6
  Income taxes payable                           47.5       9.6      (33.4)      23.7         32.3         -      (17.6)      14.7
  Deferred taxes                                    -         -          -          -            -       0.4       (0.4)         -
  Accrued expenses and other
    current liabilities                          93.3     104.4          -      197.7        119.6      69.3          -      188.9
                                             ----------------------------------------     ----------------------------------------
    TOTAL CURRENT LIABILITIES                   448.4     268.9      (33.4)     683.9        450.2     196.8      (18.0)     629.0
                                             ----------------------------------------     ----------------------------------------

NONCURRENT LIABILITIES:
  Long-term debt                                973.7       3.3          -      977.0        791.4         -          -      791.4
  Obligations under capital leases               14.1      25.5          -       39.6         16.9      26.8          -       43.7
  Deferred taxes                                 23.6     109.0        2.4      135.0         27.2     103.6       (0.7)     130.1
  Due to affiliates                             394.8     116.5     (511.3)         -        317.1     357.6     (674.7)         -
  Other                                          24.7      28.1        8.6       61.4         35.9      20.0       (0.2)      55.7
                                             ----------------------------------------     ----------------------------------------
    TOTAL NONCURRENT LIABILITIES              1,430.9     282.4     (500.3)   1,213.0      1,188.5     508.0     (675.6)   1,020.9
                                             ----------------------------------------     ----------------------------------------
    TOTAL LIABILITIES                         1,879.3     551.3     (533.7)   1,896.9      1,638.7     704.8     (693.6)   1,649.9
                                             ----------------------------------------     ----------------------------------------

STOCKHOLDERS' EQUITY:
  Common stock and additional
    paid-in capital                           1,237.9   1,779.9   (1,779.9)   1,237.9      1,180.9   1,462.2   (1,462.2)   1,180.9
  Retained earnings (deficit)                 2,430.0     110.6     (336.4)   2,204.2      2,180.2    (150.9)     (82.1)   1,947.2
  Accumulated other comprehensive income          0.8       5.0       (5.0)       0.8          3.8       1.9       (1.9)       3.8
  Treasury stock                               (789.0)        -          -     (789.0)      (594.1)        -          -     (594.1)
                                             ----------------------------------------      ----------------------------------------
    TOTAL STOCKHOLDERS' EQUITY                2,879.7   1,895.5   (2,121.3)   2,653.9      2,770.8   1,313.2   (1,546.2)   2,537.8
                                             ----------------------------------------     ----------------------------------------
                                             $4,759.0  $2,446.8  $(2,655.0)  $4,550.8     $4,409.5  $2,018.0  $(2,239.8)  $4,187.7
                                             ========================================     ========================================

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Condensed Consolidating Statements of Income
(In millions)

                                Year Ended December 31, 2004            Year Ended December 31, 2003            Year Ended December 31, 2002
                           --------------------------------------  --------------------------------------  --------------------------------------
                                                  Elim-     Cons-                         Elim-     Cons-                         Elim-     Cons-
                            Issuers    Others  inations  olidated   Issuers    Others  inations  olidated   Issuers    Others  inations  olidated
                           --------------------------------------  --------------------------------------  --------------------------------------

Net sales                  $2,302.2  $2,379.8   $ (89.4) $4,592.6  $2,466.8  $1,895.8    $(23.5) $4,339.1  $2,771.2  $1,558.0    $(17.0) $4,312.2
Licensing income (net)          0.1      57.0         -      57.1       0.1      36.1         -      36.2         -      28.7         -      28.7
                           --------------------------------------  --------------------------------------  --------------------------------------
Total revenues              2,302.3   2,436.8     (89.4)  4,649.7   2,466.9   1,931.9     (23.5)  4,375.3   2,771.2   1,586.7     (17.0)  4,340.9
Cost of goods sold          1,363.6   1,648.5     (67.7)  2,944.4   1,426.2   1,328.9     (16.5)  2,738.6   1,579.5   1,087.7     (10.2)  2,657.0
                           --------------------------------------  --------------------------------------  --------------------------------------
Gross profit                  938.7     788.3     (21.7)  1,705.3   1,040.7     603.0      (7.0)  1,636.7   1,191.7     499.0      (6.8)  1,683.9
Selling, general and
  administrative expenses     793.7     397.1     (13.9)  1,176.9     781.2     281.9      (6.2)  1,056.9     890.6     209.4      (6.7)  1,093.3
                           --------------------------------------  --------------------------------------  --------------------------------------
Operating income              145.0     391.2      (7.8)    528.4     259.5     321.1      (0.8)    579.8     301.1     289.6      (0.1)    590.6
Net interest (income)
  expense and financing
  costs                        54.6      (5.3)        -      49.3      53.2       2.1         -      55.3      53.6       4.5         -      58.1
Equity in earnings of
  unconsolidated affiliates     1.8       3.0      (1.0)      3.8       2.7       0.9      (1.1)      2.5       1.1       0.1      (0.2)      1.0
                           --------------------------------------  --------------------------------------  --------------------------------------
Income before provision
  for income taxes,
  equity in earnings of
  subsidiaries and
  cumulative effect of
  change in accounting
  principle                    92.2     399.5      (8.8)    482.9     209.0     319.9      (1.9)    527.0     248.6     285.2      (0.3)    533.5
Provision for income taxes     44.3     137.7      (0.9)    181.1      87.0     116.4      (5.0)    198.4      97.4     103.7       0.1     201.2
Equity in earnings of
  subsidiaries                246.3         -    (246.3)        -     453.2         -    (453.2)        -     198.7         -    (198.7)        -
                           --------------------------------------  --------------------------------------  --------------------------------------
Income before cumulative
  effect of change in
  accounting principle        294.2     261.8    (254.2)    301.8     575.2     203.5    (450.1)    328.6     349.9     181.5    (199.1)    332.3
Cumulative effect of change
  in accounting for
  intangible assets,
  net of tax                      -         -         -         -         -         -         -         -         -      13.8         -      13.8
                           --------------------------------------  --------------------------------------  --------------------------------------
Net income                   $294.2    $261.8   $(254.2)   $301.8    $575.2    $203.5   $(450.1)  $ 328.6    $349.9    $167.7   $(199.1)   $318.5
                           ======================================  ======================================  ======================================

Condensed Consolidating Statements of Cash Flows
(In millions)

                                Year Ended December 31, 2004            Year Ended December 31, 2003            Year Ended December 31, 2002
                           --------------------------------------  --------------------------------------  --------------------------------------
                                                  Elim-     Cons-                         Elim-     Cons-                         Elim-     Cons-
                            Issuers    Others  inations  olidated   Issuers    Others  inations  olidated   Issuers    Others  inations  olidated
                           --------------------------------------  --------------------------------------  --------------------------------------

Net cash provided by
 operating activities        $336.8    $125.1     $   -    $461.9    $419.1    $162.9   $(127.0)   $455.0    $694.9    $183.3  $(161.7)   $ 716.5
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash flows from investing activities:
  Acquisitions, net of
    cash acquired            (573.3)        -         -    (573.3)   (254.6)        -         -    (254.6)   (334.7)        -         -    (334.7)
  Capital expenditures        (28.8)    (27.8)        -     (56.6)    (27.3)    (26.0)        -     (53.3)    (24.7)    (27.9)        -     (52.6)
  Net cash related to sale
    of U. S. Treasury bonds       -         -         -         -      12.3         -         -      12.3       9.2         -         -       9.2
  Acquisition of intangibles   (1.2)        -         -      (1.2)        -      (6.0)        -      (6.0)     (0.2)     (2.7)        -      (2.9)
  Proceeds from sales of
    property, plant and
    equipment                   0.1       1.6         -       1.7       2.1      24.8         -      26.9       9.4       1.0         -      10.4
  Repayments of loans to
    officers                      -         -         -         -         -         -         -         -       2.0         -         -       2.0
  Other                           -         -         -         -       0.2         -         -       0.2       0.2      (0.3)        -      (0.1)
                           --------------------------------------  --------------------------------------  --------------------------------------
    Net cash used in
      investing activities   (603.2)    (26.2)        -    (629.4)   (267.3)     (7.2)        -    (274.5)   (338.8)    (29.9)        -    (368.7)
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash flows from financing activities:
  Issuance of Senior
    Notes, net                743.5         -         -     743.5         -         -         -         -         -         -         -         -
  Repurchase of Senior Notes (621.6)   (112.7)        -    (734.3)        -         -         -         -      (0.1)        -         -      (0.1)
  Refinancing of
    acquired debt                 -         -         -         -         -         -         -         -    (126.9)        -         -    (126.9)
  Net borrowings (payments)
   under credit facilities     69.2         -         -      69.2         -         -         -         -         -      (0.8)        -      (0.8)
  Purchases of treasury
    stock                    (201.5)        -         -    (201.5)   (102.1)        -         -    (102.1)   (129.2)        -         -    (129.2)
  Proceeds from exercise of
    employee stock options     35.5         -         -      35.5      20.5         -         -      20.5     118.4         -         -     118.4
  Dividends                   (44.8)        -         -     (44.8)    (20.2)   (127.0)    127.0     (20.2)        -    (161.7)    161.7         -
  Proceeds from termination
    of interest rate hedges     0.2         -         -       0.2         -         -         -         -      21.6         -         -      21.6
  Net proceeds from (repay-
    ment of) long-term debt       -         -         -         -         -      (7.4)        -      (7.4)     (1.5)     (9.7)        -     (11.2)
  Other items                  (3.8)     (2.1)        -      (5.9)     (4.2)     (1.3)        -      (5.5)    (10.0)     (2.9)        -     (12.9)
                           --------------------------------------  --------------------------------------  --------------------------------------
    Net cash used in
      financing activities    (23.3)   (114.8)        -    (138.1)   (106.0)   (135.7)    127.0    (114.7)   (127.7)   (175.1)    161.7    (141.1)
                           --------------------------------------  --------------------------------------  --------------------------------------

Effect of exchange rates
  on cash                         -       0.6         -       0.6         -       0.9         -       0.9         -       0.1         -       0.1
                           --------------------------------------  --------------------------------------  --------------------------------------

Net increase (decrease) in
  cash and cash equivalents  (289.7)    (15.3)        -    (305.0)     45.8      20.9         -      66.7     228.4     (21.6)        -     206.8
Cash and cash equivalents,
  beginning                   302.0      48.0         -     350.0     256.2      27.1         -     283.3      27.8      48.7         -      76.5
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash and cash equivalents,
  ending                     $ 12.3    $ 32.7     $   -    $ 45.0    $302.0     $48.0     $   -    $350.0    $256.2     $27.1     $   -    $283.3
                           ======================================  ======================================  ======================================

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UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

    Unaudited interim consolidated financial information for the two years ended December 31, 2004 is summarized as follows:

	(In millions except per share data)	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
2004
	Net sales	$ 1,205.0	$ 1,042.6	$ 1,283.0	$ 1,062.0
	Total revenues	1,218.1	1,052.6	1,296.1	1,082.9
	Gross profit	461.6	413.4	461.6	368.7
	Operating income	161.9	134.6	164.4	67.5
	Net income	94.4	77.6	95.8	34.1
	Basic earnings per share	$0.75	$0.62	$0.78	$0.28
	Diluted earnings per share	$0.73	$0.61	$0.77	$0.28
	Dividends per share	$0.08	$0.08	$0.10	$0.10
2003
	Net sales	$ 1,226.7	$ 974.7	$ 1,171.1	$ 966.5
	Total revenues	1,234.2	980.4	1,180.5	980.1
	Gross profit	481.4	377.2	428.4	349.7
	Operating income	209.0	127.8	164.0	79.1
	Net income	121.8	71.1	93.9	41.8
	Basic earnings per share	$0.95	$0.56	$0.74	$0.33
	Diluted earnings per share	$0.90	$0.54	$0.71	$0.33
	Dividends per share	-	-	$0.08	$0.08

Quarterly figures may not add to full year due to rounding.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

    Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

    As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Operating and Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.

    The purpose of disclosure controls is to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Operating and Financial Officer, to allow timely decisions regarding required disclosure. The purpose of internal controls is to provide reasonable assurance that our transactions are properly authorized, our assets are safeguarded against unauthorized or improper use and our transactions are properly recorded and reported to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

    Our management does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable rather than absolute assurance that the objectives of the control system are met. The design of a control system must also reflect the fact that there are resource constraints, with the benefits of controls considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of

75

controls can provide absolute assurance that all control issues and instances of fraud (if any) within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that simple errors or mistakes can occur. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

    Our internal controls are evaluated on an ongoing basis by Deloitte & Touche, LLP, to whom we outsource our internal audit function, by other personnel in our organization and by our independent auditors in connection with their audit and review activities. The overall goals of these various evaluation activities are to monitor our disclosure and internal controls and to make modifications as necessary, as disclosure and internal controls are intended to be dynamic systems that change (including improvements and corrections) as conditions warrant. Part of this evaluation is to determine whether there were any significant deficiencies or material weaknesses in our internal controls, or whether we had identified any acts of fraud involving personnel who have a significant role in the our internal controls. Significant deficiencies are control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the financial statements; material weaknesses are particularly serious conditions where the internal control does not reduce to a relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employees in the normal course of performing their assigned functions.

    Based upon this evaluation, our President and Chief Executive Officer and our Chief Operating and Financial Officer concluded that, subject to the limitations noted above, both our disclosure controls and procedures and our internal controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and that information required to be disclosed by us in these periodic filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

    There have been no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

76

MANAGEMENT'S REPORT ON INTERNAL CONTROL

February 11, 2005

To the Stockholders of Jones Apparel Group, Inc.

    The management of Jones Apparel Group, Inc. is responsible for the preparation, integrity, objectivity and fair presentation of the financial statements and other financial information presented in this report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect the effects of certain judgments and estimates made by management.

    In order to ensure that our internal control over financial reporting is effective, management regularly assesses such controls and did so most recently for our financial reporting as of December 31, 2004, except for Barneys, acquired on December 20, 2004, which represents 10.2% of assets at December 31, 2004 and 0.4% of revenue and 0.6% of income from operations for the year ended December 31, 2004. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, referred to as COSO. Our assessment included the documentation and understanding of our internal control over financial reporting. We have evaluated the design effectiveness and tested the operating effectiveness of internal controls to form our conclusion.

    Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that pertain to maintaining records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets, providing reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, assuring that receipts and expenditures are being made in accordance with authorizations of our management and directors and providing reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    Based on this assessment, the undersigned officers concluded that our internal controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and that information required to be disclosed by us in these periodic filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

    The Audit Committee of our Board of Directors, which consists of independent, non-executive directors, meets regularly with management, the internal auditors and the independent accountants to review accounting, reporting, auditing and internal control matters. The committee has direct and private access to both internal and external auditors.

    BDO Seidman, LLP, independent auditors of our financial statements, has reported on management's assertion with respect to the effectiveness of our internal control over financial reporting as of December 31, 2004.

/s/ Peter Boneparth Peter Boneparth
President and Chief Executive Officer /s/ Wesley R. Card Wesley R. Card
Chief Operating and Financial Officer

77

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Jones Apparel Group, Inc.
Bristol, Pennsylvania

    We have audited management's assessment, included in the accompanying Management's Report on Internal Control, that Jones Apparel Group, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

    We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

    A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

    In our opinion, management's assessment that Jones Apparel Group, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

    We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Jones Apparel Group, Inc. and Subsidiaries as of December 31, 2004 and 2003 and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2004 and our report dated February 11, 2005 expressed an unqualified opinion.

/s/ BDO Seidman, LLP

BDO Seidman, LLP
New York, New York
February 11, 2005

78

ITEM 9B. OTHER INFORMATION

    Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information about our directors appearing in the Proxy Statement under the caption "ELECTION OF DIRECTORS" is incorporated herein by reference.

    We have adopted a Code of Business Conduct and Ethics and a Code of Ethics for Senior Executive and Financial Officers, which applies to our Chief Executive Officer, Chief Operating and Financial Officer, Controller and other personnel performing similar functions. Both codes are posted on our website, www.jny.com, (under the "OUR COMPANY - Corporate Governance" caption) and are also available in print to any stockholder who requests it by written request addressed to Wesley R. Card, Chief Operating and Financial Officer, Jones Apparel Group, Inc., 250 Rittenhouse Circle, Keystone Park, Bristol, Pennsylvania 19007. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Ethics for Senior Executive and Financial Officers by posting such information on our website.

    We have also posted on our website, www.jny.com, our Corporate Governance Guidelines and the charters of the Compensation, Audit and Nominating/Corporate Governance Committees of our Board of Directors (under the "OUR COMPANY - Corporate Governance" caption). That information is available in print to any stockholder who requests it by written request addressed to Wesley R. Card, Chief Operating and Financial Officer, Jones Apparel Group, Inc., 250 Rittenhouse Circle, Keystone Park, Bristol, Pennsylvania 19007.

    The information appearing in the Proxy Statement relating to the members of the Audit Committee and the Audit Committee financial expert under the captions "CORPORATE GOVERNANCE AND BOARD MATTERS - Board Structure and Committee Composition" and "CORPORATE GOVERNANCE AND BOARD MATTERS - Audit Committee" and the information appearing in the Proxy Statement under the caption "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" is incorporated herein by this reference.

    The balance of the information required by this item is contained in the discussion entitled "EXECUTIVE OFFICERS OF THE REGISTRANT" in Part I of this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

    The information appearing in the Proxy Statement under the captions "EXECUTIVE COMPENSATION," "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION," "EMPLOYMENT AND COMPENSATION ARRANGEMENTS" and the information appearing in the Proxy Statement relating to the compensation of directors under the caption "CORPORATE GOVERNANCE AND BOARD MATTERS - Director Compensation and Stock Ownership Guidelines" is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

    The information appearing in the Proxy Statement under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" is incorporated herein by this reference.

79

Equity Compensation Plan Information

    The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2004.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders	10,982,860	$30.34	3,607,284
Equity compensation plans not approved by security holders	473,865	$26.82	--
Total	11,456,725	$30.19	3,607,284

    In connection with the acquisition of McNaughton, stock options held by McNaughton employees on the acquisition date were converted to fully-vested options to purchase our common stock under the same terms and conditions as the original grants. A portion of these options were originally granted pursuant to equity compensation plans not approved by McNaughton shareholders. No additional options, warrants or other equity rights will be granted under any McNaughton equity compensation plans.

    During 2002, 325,000 options were granted pursuant to equity compensation plans not approved by our shareholders. These options were issued to persons not previously employed by us as material inducements to these persons entering into employment contracts with us. Of these options, 225,000 became fully vested on December 30, 2003 and expire on December 30, 2006 (based on terms of individual employment contracts) and 75,000 vest on the third anniversary of the grant date and expire ten years after the grant date.

    For further information, see "Stock Options and Restricted Stock" in Notes to Consolidated Financial Statements.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information appearing in the Proxy Statement under the caption "CERTAIN TRANSACTIONS" is incorporated herein by this reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

    Information appearing in the Proxy Statement under the caption "FEES PAID TO INDEPENDENT AUDITORS" is hereby incorporated by reference.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:
	1.	Financial Statements.
		The following financial statements are included in Item 8 of this report:
		Report of Independent Registered Public Accounting Firm
		Consolidated Balance Sheets - December 31, 2004 and 2003
		Consolidated Statements of Income - Years ended December 31, 2004, 2003 and 2002
		Consolidated Statements of Stockholders' Equity - Years ended December 31, 2004, 2003 and 2002
		Consolidated Statements of Cash Flows - Years ended December 31, 2004, 2003 and 2002
		Notes to Consolidated Financial Statements (includes certain supplemental financial information required by Item 8 of Form 10-K)
	2.	The schedule and report of independent registered public accounting firm thereon, listed in the Index to Financial Statement Schedules attached hereto.
	3.	The exhibits listed in the Exhibit Index attached hereto.

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SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

February 25, 2005		JONES APPAREL GROUP, INC. (Registrant)
	By:	/s/ Peter Boneparth Peter Boneparth, President and Chief Executive Officer

POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on this page to this Annual Report on Form 10-K for the year ended December 31, 2004 (the "Form 10-K") constitutes and appoints Peter Boneparth, Wesley R. Card and Patrick M. Farrell and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to the Form 10-K, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Peter Boneparth Peter Boneparth	President, Chief Executive Officer and Director (Principal Executive Officer)	February 25, 2005
/s/ Sidney Kimmel Sidney Kimmel	Chairman and Director	February 25, 2005
/s/ Wesley R. Card Wesley R. Card	Chief Operating and Financial Officer (Principal Financial Officer)	February 25, 2005
/s/ Patrick M. Farrell Patrick M. Farrell	Senior Vice President and Corporate Controller (Principal Accounting Officer)	February 25, 2005
_________________ Geraldine Stutz	Director	February __, 2005
/s/ Howard Gittis Howard Gittis	Director	February 25, 2005
/s/ Anthony F. Scarpa Anthony F. Scarpa	Director	February 25, 2005
/s/ Michael L. Tarnopol Michael L. Tarnopol	Director	February 25, 2005
/s/ Matthew H. Kamens Matthew H. Kamens	Director	February 25, 2005
/s/ J. Robert Kerrey J. Robert Kerrey	Director	February 25, 2005
/s/ Ann N. Reese Ann N. Reese	Director	February 25, 2005

82

INDEX TO FINANCIAL STATEMENT SCHEDULES

Report of Independent Registered Public Accounting Firm on Schedule II.

Schedule II.         Valuation and qualifying accounts

Schedules other than those listed above have been omitted since the information is not applicable, not required or is included in the respective financial statements or notes thereto.

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
2.1	Agreement and Plan of Merger dated September 10, 1998, among Jones Apparel Group, Inc., SAI Acquisition Corp., Sun Apparel, Inc. and the selling shareholders (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K dated September 24, 1998).
2.2	Agreement and Plan of Merger dated as of March 1, 1999, among Jones Apparel Group, Inc., Jill Acquisition Sub Inc. and Nine West Group Inc. (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K dated March 2, 1999).
2.3	Securities Purchase and Sale Agreement dated as of July 31, 2000, among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Victoria + Co Ltd. and the Shareholders and Warrantholders of Victoria + Co Ltd (incorporated by reference to Exhibit 2.1 of our Quarterly Report on Form 10-Q for the three months ended April 2, 2000).
2.4	Agreement and Plan of Merger dated as of April 13, 2001, among Jones Apparel Group, Inc., MCN Acquisition Corp. and McNaughton Apparel Group Inc. (incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K dated April 13, 2001).
2.5	Purchase Agreement dated as of August 7, 2003 between Kasper A.S.L., Ltd. and Jones Apparel Group, Inc. (incorporated by reference to Exhibit 2.1 of our Quarterly Report on Form 10-Q for the nine months ended October 4, 2003).
2.6	Agreement and Plan of Merger dated as of June 18, 2004, among Jones Apparel Group, Inc., MSC Acquisition Corp. and Maxwell Shoe Company Inc. (incorporated by reference to Exhibit 99.D.3 of Amendment No. 16 to our Schedule TO dated June 21, 2004).
2.7	Agreement and Plan of Merger dated as of November 10, 2004 among Jones Apparel Group, Inc., Flintstone Acquisition Corp. and Barneys New York, Inc. (incorporated by reference to Exhibit 2 of our Schedule 13D dated November 10, 2004).
3.1	Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
3.2	Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 of our Quarterly Report on Form 10-Q for the six months ended July 6, 2002).
4.1	Form of Certificate evidencing shares of common stock of Jones Apparel Group, Inc. (incorporated by reference to Exhibit 4.1 of our Shelf Registration Statement on Form S-3, filed on October 28, 1998 (Registration No. 333-66223)).
4.2	Exchange and Registration Rights Agreement dated October 2, 1998, among Jones Apparel Group, Inc. and Chase Securities Inc., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.1 of our Form S-4, filed on December 9, 1998 (Registration No. 333-68587)).
4.3	Second Supplemental Indenture for 8 % Series B Senior Notes due 2005 dated as of June 15, 1999, among Jack Asset Sub Inc., Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc. and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 of our Quarterly Report on Form 10-Q for the six months ended July 4, 1999).

83

Exhibit No.	Description of Exhibit
4.4	Exchange and Note Registration Rights Agreement dated June 15, 1999, among Jones Apparel Group, Inc., Bear, Stearns & Co. Inc., Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., BancBoston Robertson Stephens Inc., Banc of America Securities LLC, ING Baring Furman Selz LLC, Lazard Freres & Co. LLC, Tucker Anthony Cleary Gull, Brean Murray & Co., Inc. and The Buckingham Research Group Incorporated (incorporated by reference to Exhibit 4.5 of our Quarterly Report on Form 10-Q for the six months ended July 4, 1999).
4.5	Senior Note Indenture dated as of June 15, 1999, among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Group Inc. and The Bank of New York, as trustee, including Form of 7.50% Senior Notes due 2004 and Form of 7.875% Senior Notes due 2006 (incorporated by reference to Exhibit 4.6 of our Quarterly Report on Form 10-Q for the six months ended July 4, 1999).
4.6	Senior Note Indenture dated as of July 9, 1997, among Nine West Group Inc. and Nine West Development Corporation, Nine West Distribution Corporation, Nine West Footwear Corporation and Nine West Manufacturing Corporation, as Guarantors, and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 of the Nine West Group Inc. Registration Statement on Form S-4, filed on August 21, 1997 (Registration No. 333-34085)).
4.7	Supplemental Indenture, dated as of September 15, 1998, among Nine West Group Inc. and Nine West Manufacturing II Corporation, Nine West Development Corporation, Nine West Distribution Corporation, Nine West Footwear Corporation and Nine West Manufacturing Corporation, as Guarantors, and The Bank of New York, as Trustee under the Senior Note Indenture dated as of July 9, 1997 (incorporated by reference to Exhibit 4.7.1 of the Nine West Group Inc. Quarterly Report on Form 10-Q for the nine months ended October 31, 1998).
4.8	Form of Nine West Group Inc. 8 % Series B Senior Notes due 2005 (incorporated by reference to Exhibit 4.6 of the Nine West Group Inc. Registration Statement on Form S-4, filed on August 21, 1997 (Registration No. 333-34085)).
4.9	Indenture dated as of February 1, 2001, among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc. and Nine West Group Inc., as Issuers and The Bank of New York, as Trustee, including Form of Zero Coupon Convertible Senior Notes due 2021 (incorporated by reference to Exhibit 4.22 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
4.10	Registration Rights Agreement dated February 1, 2001 among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Group Inc., Salomon Smith Barney Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.23 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2000).
4.11	Supplemental Indenture, dated as of December 23, 2002, by and among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Group Inc., Nine West Footwear Corporation, Jones Retail Corporation, as issuers, and the Bank of New York, as Trustee, relating to the Zero Coupon Senior Notes Due 2021 (incorporated by reference to Exhibit 4.11 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).
4.12	Supplemental Indenture, dated as of December 23, 2002, by and among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Group Inc., Nine West Footwear Corporation, Jones Retail Corporation, as issuers, and the Bank of New York, as Trustee, relating to the 7.50% Senior Notes Due 2004 and 7.875% Senior Notes Due 2006 (incorporated by reference to Exhibit 4.12 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).
4.13	Supplemental Indenture, dated as of December 23, 2002, by and among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Group Inc., Nine West Footwear Corporation, Jones Retail Corporation, as issuers, and the Bank of New York, as Trustee, relating to the 8 % Series B Senior Notes due 2005 (incorporated by reference to Exhibit 4.13 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).
4.14*	Indenture dated as of November 22, 2004, among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation, as Issuers and SunTrust Bank, as Trustee, including Form of 4.250% Senior Notes due 2009, Form of 5.125% Senior Notes due 2014 and Form of 6.125% Senior Notes due 2034.

84

Exhibit No.	Description of Exhibit
4.15*	Form of Exchange and Note Registration Rights Agreement dated November 22, 2004 among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation, and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Representatives of the Several Initial Purchasers listed in Schedule I thereto, with respect to 4.250% Senior Notes due 2009, 5.125% Senior Notes due 2014 and 6.125% Senior Notes due 2034.
10.1	1991 Stock Option Plan (incorporated by reference to Exhibit 10.5 of our Registration Statement on Form S-1 filed on April 3, 1991 (Registration No. 33-39742)).+
10.2	1996 Stock Option Plan (incorporated by reference to Exhibit 10.33 of our Annual Report on Form 10-K for the fiscal year ended December 31, 1996).+
10.3*	1999 Stock Incentive Plan.+
10.4*	Form of Agreement Evidencing Stock Option Awards Under the 1999 Stock Incentive Plan.+
10.5*	Form of Agreement Evidencing Restricted Stock Awards Under the 1999 Stock Incentive Plan.+
10.6	License Agreement dated October 18, 1995, between Jones Apparel Group, Inc. and Polo Ralph Lauren, L.P. (incorporated by reference to Exhibit 10.40 of our Annual Report on Form 10-K for the fiscal year ended December 31, 1996).#
10.7	Design Services Agreement dated October 18, 1995, between Jones Apparel Group, Inc. and Polo Ralph Lauren, L.P. (incorporated by reference to Exhibit 10.41 of our Annual Report on Form 10-K for the fiscal year ended December 31, 1996).#
10.8	License Agreement dated as of August 1, 1995, between PRL USA, Inc., as assignee of Polo Ralph Lauren Corporation, successor to Polo Ralph Lauren, L.P., and Sun Apparel, Inc., as amended (incorporated by reference to Exhibit 10.53 of our Quarterly Report on Form 10-Q for the nine months ended September 27, 1998).#
10.9	Design Services Agreement dated as of August 1, 1995, between Polo Ralph Lauren Corporation, successor to Polo Ralph Lauren, L.P., and Sun Apparel, Inc., as amended (incorporated by reference to Exhibit 10.54 of our Quarterly Report on Form 10-Q for the nine months ended September 27, 1998).#
10.10	Cross-Default and Term Extension Agreement dated May 11, 1998 among PRL USA, Inc., The Polo/Lauren Company, L.P., Polo Ralph Lauren Corporation, Jones Apparel Group, Inc. and Jones Investment Co. Inc. (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K dated February 4, 2003).
10.11	License Agreement dated May 11, 1998, between Jones Apparel Group, Inc. and Polo Ralph Lauren, L.P. (incorporated by reference to Exhibit 10.53 of our Quarterly Report on Form 10-Q for the fiscal nine months ended September 27, 1998).#
10.12	Design Services Agreement dated May 11, 1998, between Jones Apparel Group, Inc. and Polo Ralph Lauren, L.P. (incorporated by reference to Exhibit 10.54 of our Quarterly Report on Form 10-Q for the fiscal nine months ended September 27, 1998).#
10.13	Five-Year Credit Agreement dated as of June 15, 1999, among Jones Apparel Group USA, Inc. and the Additional Obligors referred to therein, the Lenders referred to therein, and First Union National Bank, as Administrative Agent (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the six months ended July 4, 1999).
10.14	Jones Apparel Group, Inc. Executive Annual Incentive Plan (incorporated by reference to Annex B of our Proxy Statement for our 1999 Annual Meeting of Stockholders).+
10.15	Amended and Restated Employment Agreement dated March 11, 2002, between Jones Apparel Group, Inc. and Peter Boneparth (incorporated by reference to Exhibit 10.20 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2001).+
10.16	Employment Agreement dated as of July 1, 2000, between Jones Apparel Group, Inc. and Sidney Kimmel (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the nine months ended October 1, 2000).+
10.17	Amended and Restated Employment Agreement dated March 11, 2002, between Jones Apparel Group, Inc. and Wesley R. Card (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the three months ended April 6, 2002).+

85

Exhibit No.	Description of Exhibit
10.18	Amended and Restated Employment Agreement dated April 4, 2002, between Jones Apparel Group, Inc. and Ira M. Dansky (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the three months ended April 6, 2002).+
10.19	Buying Agency Agreement dated August 31, 2001, between Nine West Group Inc. and Bentley HSTE Far East Services Limited (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the nine months ended October 6, 2001).
10.20	Buying Agency Agreement dated November 30, 2001, between Nine West Group Inc. and Bentley HSTE Far East Services, Limited (incorporated by reference to Exhibit 10.22 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
10.21	Employment Agreement dated as of October 1, 2001, between Jones Apparel Group, Inc. and Rhonda Brown (incorporated by reference to Exhibit 10.23 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2001).+
10.22	Amendment dated February 28, 2003 to the Amended and Restated Employment Agreement between Jones Apparel Group, Inc. and Wesley R. Card (incorporated by reference to Exhibit 10.22 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).+
10.23	Amendment dated February 28, 2003 to the Amended and Restated Employment Agreement between Jones Apparel Group, Inc. and Peter Boneparth (incorporated by reference to Exhibit 10.23 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).+
10.24	Amendment dated February 28, 2003 to the Amended and Restated Employment Agreement between Jones Apparel Group, Inc. and Ira M. Dansky (incorporated by reference to Exhibit 10.24 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).+
10.25	Amendment dated February 28, 2003 to the Employment Agreement between Jones Apparel Group, Inc. and Rhonda Brown (incorporated by reference to Exhibit 10.25 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).+
10.26	Form of Deferred Compensation Plan for Outside Directors (incorporated by reference to Exhibit 10.26 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2002).+
10.27	Waiver and Amendment No. 2 to the Five-Year Credit Agreement dated as of June 10, 2003, among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the banks, financial institutions and other institutional lenders parties to the Five-Year Credit Agreement referred to therein and Wachovia Bank, National Association, as agent (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the six months ended July 5, 2003).
10.28	Three Year Credit Agreement dated as of June 10, 2003, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Bookrunners, Wachovia Bank, National Association, as Administrative Agent, JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents and Fleet National Bank and Bank of America, N.A., as Documentation Agents (incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the six months ended July 5, 2003).
10.29	Amended and Restated Five-Year Credit Agreement dated as of June 15, 2004, by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Bookrunners, Wachovia Bank, National Association, as Administrative Agent, Citibank, N.A. and JPMorgan Chase Bank, as Syndication Agents, and Bank of America, N.A., Barclays Bank PLC and Suntrust Bank as Documentation Agents (incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the six months ended July 3, 2004).
10.30*	Amendment No. 2 to the Three Year Credit Agreement dated as of November 17, 2004 among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein and Wachovia Bank, National Association as agent for the Lenders.

86

Exhibit No.	Description of Exhibit
10.31*	Amendment to the Amended and Restated Five-Year Credit Agreement dated as of November 17, 2004 among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders referred to therein and Wachovia Bank, National Association as agent for the Lenders.
10.32*	Jones Apparel Group, Inc. Deferred Compensation Plan.+
10.33*	Summary Sheet of Compensation of Outside Directors of Jones Apparel Group, Inc.+
11*	Computation of Earnings per Share.
12*	Computation of Ratio of Earnings to Fixed Charges.
21*	List of Subsidiaries.
23*	Consent of BDO Seidman, LLP.
31*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32o	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Decision and Order of the Federal Trade Commission In the Matter of Nine West Group Inc., Docket No. C-3937, dated April 11, 2000 (incorporated by reference to Exhibit 99.1 of our Quarterly Report on Form 10-Q for the three months ended April 2, 2000).

____________________

* Filed herewith.
^o Furnished herewith.
# Portions deleted pursuant to application for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
+ Management contract or compensatory plan or arrangement.

87

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Jones Apparel Group, Inc.
Bristol, Pennsylvania

The audits referred to in our report dated February 11, 2005 relating to the consolidated financial statements of Jones Apparel Group, Inc. and Subsidiaries, which is contained in Item 8 of this Form 10-K included the audit of the financial statement schedule listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedule based upon our audits. In our opinion such financial statement schedule present fairly, in all material respects, the information set forth therein.

/s/ BDO Seidman, LLP

BDO Seidman, LLP
New York, New York
February 11, 2005

88

SCHEDULE II

                                    JONES APPAREL GROUP, INC.
                                 VALUATION AND QUALIFYING ACCOUNTS
                           YEARS ENDED DECEMBER 31, 2002, 2003 AND 2004
                                           (In Millions)

           Column A                   Column B             Column C            Column D     Column E
- -------------------------------      ----------   -------------------------   ----------   ---------
                                                         Additions
                                                  -------------------------
                                     Balance at   Charged to    Charged to                 Balance
                                     beginning    costs and     other                      at end of
Description                          of period    expenses      accounts      Deductions   period
- ------------                         ----------   ----------    -----------   ----------   ---------
Accounts receivable allowances
- ------------------------------
Allowance for doubtful accounts
  For the year ended December 31:
    2002                                 $13.1      $  3.8           -          $ 5.3(1)     $11.6
    2003                                 $11.6      $ (0.6)       $1.2(2)       $ 1.3(1)     $10.9
    2004                                 $10.9      $ (0.7)       $2.1(3)       $ 3.3(1)     $ 9.0

Allowance for sales discounts
  For the year ended December 31:
    2002                                 $11.6      $135.4           -         $132.3(4)     $14.7
    2003                                 $14.7      $127.6        $5.1(2)      $132.6(4)     $14.8
    2004                                 $14.8      $125.2        $  -         $123.9(4)     $16.1

Allowance for sales returns
  For the year ended December 31:
    2002                                 $ 3.2      $ 28.1        $0.8(5)      $ 25.0(4)     $ 7.1
    2003                                 $ 7.1      $ 29.6        $0.2(2)      $ 31.7(4)     $ 5.2
    2004                                 $ 5.2      $ 27.2        $3.3(6)      $ 26.8(4)     $ 8.9

Allowance for co-op advertising
  For the year ended December 31:
    2002                                 $ 4.0      $ 28.3        $1.0(5)      $ 28.1(4)     $ 5.2
    2003                                 $ 5.2      $ 28.7           -         $ 26.5(4)     $ 7.4
    2004                                 $ 7.4      $ 48.1        $1.1(7)      $ 44.4(4)     $12.2

Deferred tax valuation allowance
  For the year ended December 31:
    2003                                     -      $  8.5           -              -        $ 8.5
    2004                                 $ 8.5           -           -              -        $ 8.5


(1)  Doubtful accounts written off against accounts receivable.
(2)  Addition due to the acquisition of Kasper on December 1, 2003.
(3)  Addition due to the acquisition of Maxwell on July 8, 2004 and Barneys on December 20, 2004.
(4)  Deductions taken by customers written off against accounts receivable.
(5)  Addition due to the acquisition of Gloria Vanderbilt on April 8, 2002
     and l.e.i. on August 15, 2002.
(6)  Addition due to the acquisition of Maxwell on July 8, 2004 and Barneys on December 20, 2004
     and effects of foreign currency translation.
(7)  Addition due to the acquisition of Maxwell on July 8, 2004.

89

EX-4

EXHIBIT 4.14

JONES APPAREL GROUP, INC.,
JONES APPAREL GROUP HOLDINGS, INC.,
JONES APPAREL GROUP USA, INC.,
NINE WEST FOOTWEAR CORPORATION,
and
JONES RETAIL CORPORATION,

as Issuers

and

SUNTRUST BANK

as Trustee

INDENTURE

Dated as of November 22, 2004

$250,000,000 4.250% Senior Notes Due 2009
$250,000,000 5.125% Senior Notes Due 2014
$250,000,000 6.125% Senior Notes Due 2034

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01.	Definitions.	1
Section 1.02.	Other Definitions.	7
Section 1.03.	Incorporation by Reference of Trust Indenture Act	8
Section 1.04.	Rules of Construction	8
ARTICLE 2 THE SECURITIES
Section 2.01.	Form of Securities	9
Section 2.02.	Denominations	9
Section 2.03.	Forms Generally	9
Section 2.04.	Execution, Authentication and Delivery	9
Section 2.05.	Registrar and Paying Agent	10
Section 2.06.	Paying Agent to Hold Money in Trust	11
Section 2.07.	Securityholder Lists	11
Section 2.08.	Transfer and Exchange	11
Section 2.09.	Replacement Securities	12
Section 2.10.	Outstanding Securities	13
Section 2.11.	Temporary Securities	13
Section 2.12.	Cancellation	13
Section 2.13.	Defaulted Interest	13
Section 2.14.	CUSIP Numbers	14
Section 2.15.	Issuance of Additional Securities	14
ARTICLE 3 REDEMPTION
Section 3.01.	Notices to Trustee	15
Section 3.02.	Selection of Securities to Be Redeemed	15
Section 3.03.	Notice of Redemption	15
Section 3.04.	Effect of Notice of Redemption	16
Section 3.05.	Deposit of Redemption Price	16
Section 3.06.	Securities Redeemed in Part	17
ARTICLE 4 COVENANTS
Section 4.01.	Payment of Securities	17
Section 4.02.	Annual and Quarterly Reports	17

i

Section 4.03.	Corporate Existence	17
Section 4.04.	Restrictions on Liens	18
Section 4.05.	Restrictions on Sale and Leaseback Transactions	20
Section 4.06.	Exempted Debt	21
Section 4.07.	Waiver of Certain Covenants	21
Section 4.08.	Compliance Certificate	22
Section 4.09.	Further Instruments and Acts	22
ARTICLE 5 SUCCESSOR COMPANIES
Section 5.01.	Merger and Consolidation	22
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01.	Events of Default	23
Section 6.02.	Acceleration	25
Section 6.03.	Other Remedies	26
Section 6.04.	Waiver of Past Defaults	26
Section 6.05.	Control by Majority	26
Section 6.06.	Limitation on Suits	26
Section 6.07.	Rights of Holders to Receive Payment	27
Section 6.08.	Collection Suit by Trustee	27
Section 6.09.	Trustee May File Proofs of Claim	27
Section 6.10.	Priorities	28
Section 6.11.	Undertaking for Costs	28
Section 6.12.	Waiver of Stay or Extension Laws	28
ARTICLE 7 TRUSTEE
Section 7.01.	Duties of Trustee	29
Section 7.02.	Rights of Trustee	30
Section 7.03.	Individual Rights of Trustee	31
Section 7.04.	Trustee's Disclaimer	31
Section 7.05.	Notice of Defaults	31
Section 7.06.	Reports by Trustee to Holder	31
Section 7.07.	Compensation and Indemnity	31
Section 7.08.	Replacement of Trustee	32
Section 7.09.	Successor Trustee by Merger	33
Section 7.10.	Eligibility, Disqualification	34
Section 7.11.	Preferential Collection of Claims Against Issuers	34

ii

ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01.	Disclaimer of Liability on Securities: Defeasance	34
Section 8.02.	Conditions to Defeasance	35
Section 8.03.	Application of Trust Money	37
Section 8.04.	Repayment to Issuers	37
Section 8.05.	Indemnity for Government Obligations	37
Section 8.06.	Reinstatement	37
ARTICLE 9 AMENDMENTS
Section 9.01.	Without Consent of Holders	38
Section 9.02.	With Consent of Holders	39
Section 9.03.	Compliance with Trust Indenture Act	40
Section 9.04.	Revocation and Effect of Consents and Waivers	40
Section 9.05.	Notation on or Exchange of Securities	40
Section 9.06.	Trustee to Sign Amendments	40
Section 9.07.	Payment for Consent	41
ARTICLE 10 MISCELLANEOUS
Section 10.01.	Trust Indenture Act Controls	41
Section 10.02.	Notices	41
Section 10.03.	Communication by Holders with Other Holders	42
Section 10.04.	Certificate and Opinion as to Conditions Precedent	42
Section 10.05.	Statements Required in Certificate or Opinion	42
Section 10.06.	When Securities Disregarded	43
Section 10.07.	Rules by Trustee, Paying Agent and Registrar	43
Section 10.08.	Legal Holiday	43
Section 10.09.	Governing Law	43
Section 10.10.	No Recourse Against Others	43
Section 10.11.	Successors	43
Section 10.12.	Multiple Originals	43
Section 10.13.	Table of Contents: Headings	44
Section 10.14.	Severability	44
APPENDIX A	PROVISIONS RELATING TO INITIAL SECURITIES, ADDITIONAL SECURITIES AND EXCHANGE SECURITIES
EXHIBIT A	FORM OF FACE OF 2009 INITIAL SECURITY

iii 

EXHIBIT B	FORM OF FACE OF 2009 EXCHANGE SECURITY
EXHIBIT C	FORM OF TRANSFEREE LETTER OF REPRESENTATION FOR 2009 NOTES
EXHIBIT D	FORM OF FACE OF 2014 INITIAL SECURITY
EXHIBIT E	FORM OF FACE OF 2014 EXCHANGE SECURITY
EXHIBIT F	FORM OF TRANSFEREE LETTER OF REPRESENTATION FOR 2014 NOTES
EXHIBIT G	FORM OF FACE OF 2034 INITIAL SECURITY
EXHIBIT H	FORM OF FACE OF 2034 EXCHANGE SECURITY
EXHIBIT I	FORM OF TRANSFEREE LETTER OF REPRESENTATION FOR 2034 NOTES

iv

        INDENTURE dated as of November 22, 2004, by and among JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, JONES RETAIL CORPORATION, a New Jersey corporation (collectively, the "Issuers"), and SUNTRUST BANK, a national banking corporation associated under the laws of the State of Georgia, as trustee (the "Trustee").

        Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Issuers' 4.250% Senior Notes due 2009 issued on the date hereof (the "2009 Original Securities"), 5.125% Senior Notes due 2014 issued on the date hereof (the "2014 Original Securities") and 6.125% Senior Notes due 2034 issued on the date hereof (the "2034 Original Securities" and, together with the 2009 Original Securities and the 2014 Original Securities, collectively, the "Original Securities"), (ii) any Additional Securities (as defined herein) that may be issued after the date hereof (all such Securities in clauses (i) and (ii) being referred to collectively as the "Initial Securities") and (iii) if and when issued as provided in a Registration Agreement (as defined in Appendix A hereto (the "Appendix")), the Issuers' 4.250% Senior Notes due 2009 issued in a Registered Exchange Offer (as defined in the Appendix) in exchange for 2009 Initial Securities (the "2009 Exchange Securities"), 5.125% Senior Notes due 2014 issued in a Registered Exchange Offer in exchange for 2014 Initial Securities (the "2014 Exchange Securities") and 6.125% Senior Notes due 2034 issued in a Registered Exchange Offer in exchange for 2034 Initial Securities (the "2034 Exchange Securities" and together with the 2009 Exchange Securities and the 2014 Exchange Securities, the "Exchange Securities" and together with the Initial Securities, the "Securities").

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFRENCE

        Section 1.01.  Definitions.

        "Additional Securities" means Securities of any series issued under this Indenture after the Closing Date and in compliance with Section 2.15 hereof, it being understood that any Securities issued in exchange for or replacement of any Original Securities shall not be Additional Securities, including any such Securities issued in exchange for Original Securities pursuant to a Registration Agreement.

        "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and 

policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

        "Attributable Debt" in respect of a Sale and Leaseback Transaction means, at the time of determination, the present value (discounted at the actual rate of interest of such transaction) of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended). The term "net rental payments" under any lease for any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated without payment of such penalty.

        "Board of Directors" means the Board of Directors of the applicable Issuer or any committee thereof duly authorized to act on behalf of the Board of Directors of such Issuer.

        "Business Day" means each day which is not a Legal Holiday.

        "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participating or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.

        "Closing Date" means the date of this Indenture.

        "Code" means the Internal Revenue Code of 1986, as amended.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

2

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Consolidated Net Tangible Assets" means as of any date of determination, the total amount of assets of the Issuers and their respective Subsidiaries (less applicable reserves and other properly deductible items) after deducting (1) all current liabilities (excluding the amount of those which are by their terms extendable or renewable at the option of the obligor to a date more than 12 months after the date as of which the amount is being determined and excluding all intercompany items between an Issuer and any of its wholly-owned Subsidiaries or between Issuers or wholly-owned Subsidiaries of Issuers) and (2) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as determined on a consolidated basis in accordance with GAAP.

        "Consolidated Stockholders' Equity" means consolidated stockholders' equity of the Issuers and their respective Subsidiaries as determined in accordance with GAAP and reflected on the Issuers' most recent balance sheet.

        "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.

        "Depositary" means, with respect to the Securities of any series issuable in whole or in part in global form, the Person specified pursuant to Section 2.01 hereof as the initial Depositary with respect to the Securities of such series, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" shall mean or include such successor.

        "Dollar" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debt.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "Funded Debt" means Indebtedness, whether incurred, assumed or guaranteed, maturing by its terms more than one year from the date of creation thereof or which is extendable or renewable at the sole option of the obligor in such manner that it may become payable more than one year from the date of creation thereof, provided, however, that Funded Debt shall not include obligations created pursuant to leases, or any Indebtedness or portion thereof maturing by its terms within one year from the time of any computation of the 

3

amount of outstanding Funded Debt unless such Indebtedness shall be extendable or renewable at the sole option of the obligor in such manner that it may become payable more than one year from such time, or any Indebtedness for the payment or redemption of which money in the necessary amount shall have been deposited in trust either at or before the maturity or redemption date thereof.

        "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time, including those principles set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 1-3 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP.

        "Global Security" means a Security that is issued in global form in the name of the Depositary with respect thereto or its nominee.

        "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books.

        "Indebtedness" of a Person means indebtedness for borrowed money and all indebtedness under purchase money mortgages or other purchase money liens or conditional sales or similar title retention agreements (but excluding trade accounts payable in the ordinary course of business) in each case where such indebtedness has been created, incurred, assumed or guaranteed by such Person or where such Person is otherwise liable therefore and indebtedness for borrowed money secured by any Lien upon property owned by such Person even though such Person has not assumed or become liable for the payment of such indebtedness; provided that if the obligation so secured has not been assumed in full by such Person or is otherwise not such Person's legal liability in full, the amount of such obligation for the purposes of this definition shall be limited to the lesser of the amount of such obligation secured by such Lien or the fair market value of the property securing such Lien.

        "Indenture" means this Indenture as amended or supplemented from time to time and includes the terms of a particular series of Securities established as contemplated by Section 2.01.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or if 

4

neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        "Issuer" means each party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.

        "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

        "Officer" means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the applicable Issuer.

        "Officers' Certificate" means a certificate signed by two Officers.

        "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to the applicable Issuer or the Trustee.

        "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

        "principal" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time.

        "Principal Property" means any property owned or leased by any Issuer or Restricted Subsidiary, the net book value of which exceeds one percent of the Consolidated Net Tangible Assets of the Issuers and their respective Subsidiaries.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its 

5

principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect to such Security, the amount of the next succeeding scheduled interest payment on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Restricted Subsidiary" means, at any time, any Subsidiary of an Issuer which would be a "Significant Subsidiary" at such time, as such term is defined in Regulation S-X promulgated by the SEC, as in effect on the Closing Date.

        "SEC" means the Securities and Exchange Commission.

        "Securities" has the meaning set forth in the second paragraph of this Indenture.

        "Securities Act" means the Securities Act of 1933, as amended.

        "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.

        "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa- 77bb in effect on the Closing Date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight 

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line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

        "Trust Officer" means any Vice President, Assistant Vice President, Assistant Treasurer or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

        "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time.

        "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option.

        "Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary, 100% of the outstanding Capital Stock of which (other than Capital Stock constituting directors' qualifying shares or interests held by directors or shares or interests required to be held by foreign nationals, in each case to the extent mandated by applicable law) is directly or indirectly owned by an Issuer or by one or more Wholly Owned Restricted Subsidiaries.

        Section 1.02.  Other Definitions.

Term	Defined in Section
Bankruptcy Law	6.01
covenant defeasance option	8.01(b)
Custodian	6.01
Event of Default	6.01
legal defeasance option	8.01(b)
Legal Holiday	10.08
Notice of Default	6.01
Paying Agent	2.03
Primary Treasury Dealer	1.01
protected purchaser	2.07
Registrar	2.03
Sale and Leaseback Transaction	4.05
Successor Company	5.01(a)

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        Section 1.03.  Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:

        "Commission" means the SEC.

        "indenture securities" means the Securities.

        "indenture Securityholder" means a Holder or Securityholder.

        "indenture to be qualified" means this Indenture.

        "indenture trustee" or "institutional trustee" means the Trustee.

        "obligor" on the indenture securities means the Issuers and any other obligor on the indenture securities.

        All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

        Section 1.04.  Rules of Construction. Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) "or" is not exclusive;

(4) "including" means including without limitation;

(5) words in the singular include the plural and words in the plural include the singular; and

(6) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP.

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ARTICLE 2
THE SECURITIES

        Section 2.01.  Form of Securities. Provisions relating to the Initial Securities and the Exchange Securities are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The Initial Securities and the Trustee' s certificate of authentication shall each be substantially in the form of Exhibit A hereto (in the case of the 4.250% Senior Notes due 2009), Exhibit D hereto (in the case of the 5.125% Senior Notes due 2014) and Exhibit G hereto (in the case of the 6.125% Senior Notes due 2034), which are hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities and the Trustee's certification of authentication shall each be substantially in the form of Exhibit B hereto (in the case of the 2009 Exchange Securities), Exhibit E hereto (in the case of the 2014 Exchange Securities) and Exhibit H hereto (in the case of the 2004 Exchange Securities), which are hereby incorporated in and expressly made a part of this Indenture.

        Section 2.02.  Denominations. The Securities of each series shall be issuable in such denominations as shall be specified as contemplated by Section 2.01. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series denominated in Dollars shall be issuable in denominations of $1,000 and any integral multiples thereof.

        Section 2.03.  Forms Generally. The Securities of each series may have notations, legends or endorsements required by law, securities exchange rule, agreements to which any Issuer is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Issuers). Each Security shall be dated the date of its authentication.

        The definitive Securities of each series shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Officers executing such Securities of each series, as evidenced by their execution thereof.

        Section 2.04.  Execution, Authentication and Delivery. One or more Officers of the Issuers shall sign the Securities of each series on behalf of the Issuers by manual or facsimile signature. The Issuers' seal, if any, shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form.

        If an Officer of the Issuers whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless.

        A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature 

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shall be conclusive evidence that the Security has been authenticated under this Indenture.

        The Trustee shall authenticate and make available for delivery Securities as set forth in the Appendix.

        The Trustee may appoint an authenticating agent reasonably acceptable to the Issuers to authenticate the Securities of each series. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Issuers. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities of such series whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

        Section 2.05.  Registrar and Paying Agent. The Issuers shall maintain an office or agency for each series where Securities of such series may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities of such series may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities of such series and of their transfer and exchange. The Issuers may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent, and the term "Registrar" includes any co-registrars. The Issuers initially appoint the Trustee as (i) Registrar and Paying Agent in connection with the Securities and (ii) the Securities Custodian (as defined in the Appendix) with respect to the Global Securities (as defined in the Appendix).

        The Issuers shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuers shall notify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Issuers or any of their domestically organized Wholly Owned Restricted Subsidiaries may act as Paying Agent or Registrar.

        The Issuers may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Issuers and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (2) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in 

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accordance with clause (1) above. The Registrar or Paying Agent may resign at any time upon written notice; provided, however, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08.

        Section 2.06.  Paying Agent to Hold Money in Trust. On or before each due date of the principal and interest on any Security, the Issuers shall deposit with the Paying Agent (or if an Issuer or a Subsidiary of any Issuer is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest when so becoming due. The Issuers shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities of each series and shall notify the Trustee of any default by the Issuers in making any such payment. If an Issuer or a Subsidiary of an Issuer acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

        Section 2.07.  Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Issuers shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.

        Section 2.08.  Transfer and Exchange. The Securities shall be issued in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with the Appendix. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of Section 8-401(a)(1) of the Uniform Commercial Code are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Securities at the Registrar's request. The Issuers may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any such transfer or exchange pursuant to this Section. The Issuers shall not be required to make and the Registrar need not register transfers or exchanges of Securities selected for redemption (except, in the case of 

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Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed.

        Prior to the due presentation for registration of transfer of any Security, the Issuers, the Trustee, the Paying Agent, and the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving the payment of principal and interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Issuers, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

        Any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interest in such Global Security may be effected only through a book-entry system maintained by (i) the Holder of such Global Security (or its agent) or (ii) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry.

        All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.

        Section 2.09.  Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that a Security has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder satisfies the Issuers or the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking, and the Registrar does not register a transfer prior to receiving such notification, requests the Issuers or the Trustee to issue a new replacement Security, prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Issuers, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Security is replaced. The Issuers and the Trustee may charge the Holder for the expenses they incur in replacing a Security. In the event any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Issuers in their discretion may pay such Security instead of issuing a new Security in replacement thereof.

Every replacement Security is an additional obligation of the Issuers.

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        The provisions of this Section 2.09 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities.

        Section 2.10.  Outstanding Securities. Securities outstanding at any time consist of all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 10.06, a Security does not cease to be outstanding because an Issuer or an Affiliate of an Issuer holds the Security.

        If a Security is replaced pursuant to Section 2.09, the Security so replaced ceases to be outstanding unless and until the Trustee and the Issuers receive proof satisfactory to them that the replaced Security is held by a protected purchaser.

        If the Paying Agent (other than the Issuers or Affiliates of the Issuers) segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date, money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date, such Securities (or portions thereof) shall cease to be outstanding and interest on them shall cease to accrue.

        Section 2.11.  Temporary Securities. In the event that Definitive Securities (as defined in the Appendix) are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Issuers may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Issuers consider appropriate for temporary Securities. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate Definitive Securities and deliver them in exchange for temporary Securities upon surrender of such temporary Securities at the office or agency of the Issuers, without charge to the Holder.

        Section 2.12.  Cancellation. The Issuers at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver canceled Securities to an Issuer pursuant to written direction by an Officer of such Issuer. The Issuers may not issue new Securities to replace Securities they have redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture.

        Section 2.13.  Defaulted Interest. If the Issuers default in a payment of interest on the Securities, the Issuers shall pay the defaulted interest (plus interest 

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on such defaulted interest to the extent lawful) in any lawful manner. The Issuers may pay the defaulted interest to the Persons who are Securityholders on a subsequent special record date. The Issuers shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

        Section 2.14.  CUSIP Numbers. The Issuers in issuing the Securities may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

        Section 2.15.  Issuance of Additional Securities. After the Closing Date, the Issuers shall be entitled to issue Additional Securities of any series under this Indenture in an unlimited aggregate principal amount, which Securities shall have identical terms as the Initial Securities of the same series issued on the Closing Date, other than with respect to the date of issuance, the issue price and the date from which interest thereon will begin to accrue. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series issued in exchange therefor shall be treated as a single class for all purposes under this Indenture including waivers, amendments, redemptions and offers to purchase.

        With respect to any Additional Securities, each Issuer shall set forth in a resolution of the Board of Directors and an Officers' Certificate, a copy of each which shall be delivered to the Trustee, the following information:

        (1) the series and the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture;

        (2) the issue price, the issue date and the CUSIP number of such Additional Securities; provided, however, that no Additional Securities may be issued at a price that would cause such Additional Securities to have "original issue discount" within the meaning of Section 1273 of the Code; and

        (3) whether such Additional Securities shall be Initial Securities or shall be issued in the form of Exchange Securities.

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ARTICLE 3
REDEMPTION

        Section 3.01.  Notices to Trustee. If the Issuers elect to redeem Securities of any series pursuant to paragraph 5 of the Securities, they shall notify the Trustee in writing of the redemption date and the principal amount of Securities of such series to be redeemed.

        The Issuers shall give each notice to the Trustee provided for in this Section at least 45 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Issuers to the effect that such redemption will comply with the conditions and covenants herein. If fewer than all the Securities of any series are to be redeemed, the record date relating to such redemption shall be selected by the Issuers and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.

        Section 3.02.  Selection of Securities to Be Redeemed. If fewer than all the Securities of any series are to be redeemed, the Trustee shall select the Securities, not more than 60 days prior to the redemption date, of such series to be redeemed pro rata or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities of such series not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities of such series that have denominations larger than $1,000. Securities of such series and portions thereof that the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities of such series called for redemption also apply to portions of Securities of a series called for redemption. The Trustee shall promptly notify the Issuers of the Securities or portions thereof to be redeemed.

        Section 3.03.  Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of Securities, the Issuers shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address.

        The notice shall identify the Securities to be redeemed and shall state:

    (1) the redemption date;

    (2) the redemption price and the amount of accrued interest to the redemption date;

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    (3) the name and address of the Paying Agent;

    (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price;

    (5) if fewer than all the outstanding Securities of any series are to be redeemed, the certificate numbers and principal amounts of the particular Securities to be redeemed;

    (6) that, unless the Issuers default in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date;

    (7) the CUSIP number, if any, printed on the Securities being redeemed; and

    (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities.

        At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at the Issuers' expense. In such event, the Issuers shall provide the Trustee with the information required by this Section.

        Section 3.04.  Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest, if any, to the redemption date; provided, however, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Securityholder of the redeemed Securities registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

        Section 3.05.  Deposit of Redemption Price. Prior to 11:00 a.m. on the redemption date, the Issuers shall deposit with the Paying Agent (or, if an Issuer or a Subsidiary of any of the Issuers is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption that have been delivered by the Issuers to the Trustee for cancellation.

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        Section 3.06.  Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Issuers shall execute and the Trustee shall authenticate for the Holder (at the Issuers' expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered.

ARTICLE 4
COVENANTS

        Section 4.01.  Payment of Securities. The Issuers shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture.

        The Issuers shall pay interest on overdue principal at the rate specified-in the Securities, and shall pay interest on overdue installments of interest at the same rate to the extent lawful.

        Section 4.02.  Annual and Quarterly Reports. Notwithstanding that the Issuers may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, each of the Issuers shall provide the Trustee and Securityholders within 15 days after it would have been required to file them with the SEC, annual and quarterly reports containing the Issuers' most recent financial statements and schedules and related notes thereto, together with management's discussion and analysis, all of which meet the requirements of the applicable items in Form 10-K, in the case of annual reports, and Form 10-Q, in the case of quarterly reports. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). The Issuers also shall comply with the other provisions of TIA Section 314(a).

        Section 4.03.  Corporate Existence. Each Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, material rights (charter and statutory) and material franchises (other than as contemplated by Section 5.01); provided, however, that such Issuer shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation of such rights or franchises is no longer desirable in the conduct of the business of the Issuers and the Restricted Subsidiaries considered as a whole.

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        Section 4.04. Restrictions on Liens. Except as provided in Section 4.06, the Issuers shall not, and shall not permit any Restricted Subsidiary to, create or suffer to exist any Lien to secure any Indebtedness of any Issuer or Restricted Subsidiary on any Principal Property of any Issuer or Restricted Subsidiary, without making, or causing such Restricted Subsidiary to make, effective provision to secure all of the Securities offered hereunder and then outstanding by such Lien, equally and ratably with any and all other such Indebtedness thereby secured, so long as such other Indebtedness is so secured, except that the foregoing restrictions shall not apply to:

    (a) Liens on property of a Person existing at the time such Person is merged into or consolidated with any Issuer or Restricted Subsidiary or at the time of sale, lease or other disposition of the properties of such Person (or a division thereof) as an entirety or substantially as an entirety to any Issuer or Restricted Subsidiary;

    (b) Liens on property of a Person existing at the time such Person becomes a Restricted Subsidiary or existing on property prior to the acquisition thereof by any Issuer or Restricted Subsidiary;

    (c) Liens securing Indebtedness between a Restricted Subsidiary and an Issuer or between Restricted Subsidiaries or between Issuers;

    (d) Liens on any property created, assumed or otherwise brought into existence in contemplation of the sale or other disposition of the underlying property, whether directly or indirectly, by way of share disposition or otherwise, provided that the applicable Issuer or Restricted Subsidiary must dispose of such property within 180 days after the creation of such Liens and that any Indebtedness secured by such Liens shall be without recourse to any Issuer or Restricted Subsidiary;

    (e) Liens in favor of the United States of America or any state thereof or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, or in favor of any country, or any political subdivision thereof, to secure partial, progress, advance or other payments, or performance of any other similar obligations, including, without limitation, Liens to secure pollution control bonds or industrial revenue or other similar types of bonds;

    (f) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens arising in the ordinary course of business which secure obligations not more than 60 days past due or which are being contested in good faith and by appropriate proceedings;

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    (g) Liens incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature, in each case which are not incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate impair in any material respect the use of property in the operation of the business of the Issuers and their respective Subsidiaries taken as a whole;

    (h) Liens incurred to secure appeal bonds and judgment and attachment Liens, in each case in connection with litigation or legal proceedings which are being contested in good faith by appropriate proceedings so long as reserves have been established to the extent required by GAAP;

    (i) pledges or deposits under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which any Issuer or Restricted Subsidiary is a party, or deposits to secure public or statutory obligations of an Issuer or Restricted Subsidiary or deposits for the payment of rent, in each case incurred in the ordinary course of business;

    (j) utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character;

    (k) Liens granted to any bank or other institution on the payments to be made to such institution by an Issuer or Subsidiary thereof, pursuant to any interest rate swap or similar agreement or foreign currency hedge, exchange or similar agreement designed to provide protection against fluctuations in interest rates and currency exchange rates, respectively, provided that such agreements are entered into in, or are incidental to, the ordinary course of business;

    (l) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of setoff or similar rights and remedies, in each case as to any deposit account or any other fund maintained with a creditor depository institution, provided that (1) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the applicable Issuer or Restricted Subsidiary in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (2) such deposit account is not intended by such Issuer or Restricted Subsidiary to provide collateral to the depository institution;

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    (m) Liens arising from Uniform Commercial Code financing statements regarding leases;

    (n) the giving, simultaneously with or within 180 days after the latest of the Closing Date, or the acquisition, construction, improvement, development or expansion of such property, of a purchase money Lien on property acquired, constructed, improved, developed or expanded after the Closing Date, or the acquisition, construction, improvement, development or expansion after the Closing Date, of property subject to any Lien which is limited to such property;

    (o) the giving of a Lien on real property which is the sole security for Indebtedness incurred within two years after the latest of the Closing Date, or the acquisition, construction, improvement, development or expansion of such property, provided that the holder of such Indebtedness is entitled to enforce its payment only by resorting to such security;

    (p) Liens arising by the terms of letters of credit entered into in the ordinary course of business to secure reimbursement obligations thereunder;

    (q) Liens existing on the Closing Date;

    (r) Liens for taxes, assessments and other governmental charges or levies not yet due or as to which the period of grace, if any, related thereto has not expired or which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; and

    (s) extension, renewal, replacement or refunding of any Lien existing on the Closing Date or referred to in clauses (a) to (k) and (n) to (o) and (q), provided that the principal amount of Indebtedness secured thereby and not otherwise authorized by clauses (a) to (k) and (n) to (o) and (q) shall not exceed the principal amount of Indebtedness, plus any premium or fee payable in connection with any such extension, renewal, replacement or refunding, so secured at the time of such extension, renewal, replacement or refunding.

        Section 4.05.  Restrictions on Sale and Leaseback Transactions. Except as provided in Section 4.06, none of the Issuers shall, and none of the Issuers shall permit any Restricted Subsidiary to, after the date hereof, enter into any arrangement with any Person providing for the leasing by any such Issuer or Restricted Subsidiary of any Principal Property now owned or hereafter acquired which has been or is to be sold or transferred by such Issuer or Restricted Subsidiary to such Person with the intention of taking back a lease of such 

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Principal Property (a "Sale and Leaseback Transaction"), unless the net proceeds of such sale or transfer have been determined by the Board of Directors to be at least equal to the fair market value of such Principal Property or asset at the time of such sale and transfer and either such Issuer or Restricted Subsidiary applies or causes to be applied an amount equal to the net proceeds of such sale or transfer, within 180 days of receipt thereof, to the retirement or prepayment (other than any mandatory retirement or prepayment, except mandatory retirements or prepayments required as a result of such Sale and Leaseback Transaction) of Funded Debt of any Issuer or any Restricted Subsidiary ranking senior to or pari passu with the Securities or to the purchase, construction or development of property or assets to be used in the ordinary course of business, or such Issuer or Restricted Subsidiary would, on the effective date of such sale or transfer, be entitled, pursuant to this Indenture, to issue, assume or guarantee Indebtedness secured by a Lien upon such Principal Property, at least equal in amount to the Attributable Debt in respect of such Sale and Leaseback Transaction without equally and ratably securing the Securities. The foregoing restriction shall not apply to any Sale and Leaseback Transaction (i) between any Issuer and Restricted Subsidiary or between Restricted Subsidiaries or between Issuers, provided that the lessor shall be an Issuer or a Wholly Owned Restricted Subsidiary, (ii) which has a lease of less than three years in length, (iii) entered into within 180 days after the later of the purchase, construction of development of such Principal Property or assets, or the commencement of operation of such Principal Property or (iv) involving the distribution warehouse of Jones Apparel Group, Inc. at South Hill, Virginia.

        Section 4.06.  Exempted Debt. Notwithstanding Sections 4.04 and 4.05, any Issuer or Restricted Subsidiary may, in addition to amounts permitted under such covenants, create Indebtedness secured by Liens, or enter into Sale and Leaseback Transactions, provided that, at the time of such transactions and after giving effect thereto, the aggregate outstanding amount of all such Indebtedness secured by Liens plus Attributable Debt resulting from such Sale and Leaseback Transactions does not exceed 20% of Consolidated Stockholders' Equity.

        Section 4.07.  Waiver of Certain Covenants. Each of the Issuers may in any particular instance, be excused from failing to comply with any term, provision or condition set forth in Section 4.02 or Sections 4.04 to 4.06, with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the outstanding Securities of such series shall, by act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Issuers, and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

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        The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to waive compliance with any covenant or condition hereunder. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to waive any such compliance, whether or not such Holders remain Holders after such record date; provided that unless the Holders of at least a majority in principal amount of the outstanding Securities affected shall have waived such compliance prior to the date which is 90 days after such record date, any such waiver previously given shall automatically and without further action by any Holder be canceled and of no further effect.

        Section 4.08.  Compliance Certificate. The Issuers shall deliver to the Trustee within 120 days after the end of each fiscal year of the Issuers an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Issuers they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Issuers are taking or propose to take with respect thereto. The Issuers also shall comply with TIA Section 314(a)(4).

        Section 4.09.  Further Instruments and Acts. Each of the Issuers shall execute and deliver to the Trustee such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

ARTICLE 5
SUCCESSOR COMPANIES

        Section 5.01.  Merger and Consolidation. None of the Issuers shall consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person (other than a merger of a Restricted Subsidiary into an Issuer or another Restricted Subsidiary or a merger of one Issuer into another), unless:

    (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a corporation, limited liability company, partnership, trust or other entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not such Issuer) shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Issuer under the Securities and this Indenture;

    (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor 

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Company, any other Issuer or any Restricted Subsidiary as a result of such transaction, as having been incurred by the Successor Company or such Issuer or Restricted Subsidiary at the time of such transaction), no Event of Default shall have occurred and be continuing;

    (iii) such Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and

    (iv) if, as a result of any such consolidation, merger or transfer, the Principal Property of such Issuer would become subject to a Lien which shall not be permitted by this Indenture, such Issuer or the Successor Company, as the case may be, shall take such steps as shall be necessary to secure the Securities equally and ratably with (or prior to) all Indebtedness secured thereby.

        The Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the applicable Issuer under this Indenture, but the predecessor Issuer in the case of a lease of all or substantially all of its assets shall not be released from the obligation to pay the principal of and interest on the Securities.

ARTICLE 6
DEFAULTS AND REMEDIES

        Section 6.01.  Events of Default. An "Event of Default" with respect to any series of Notes occurs if:

    (1) the Issuers default in any payment of interest or additional interest on any Security of such series when the same becomes due and payable, and such default continues for a period of 30 days;

    (2) the Issuers default in the payment of the principal of, or premium, if any, on any Security of such series when the same becomes due and payable at its maturity, upon redemption, upon declaration or otherwise;

    (3) any Issuer fails to comply with Section 5.01;

    (4) any Issuer fails to comply with Section 4.02, 4.03, 4.04, 4.05 or 4.06, and such failure continues for 30 days after the notice specified below;

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    (5) any Issuer fails to comply with any of its covenants or agreements contained in the Securities or this Indenture (other than those referred to in (1), (2), (3) or (4) above) and such failure continues for 60 days after the notice specified below;

    (6) any Issuer or Restricted Subsidiary defaults under any Indebtedness (other than the Securities of such series), whether such Indebtedness now exists or shall hereafter be created, and such default results in Indebtedness in excess of $25,000,000 or its foreign currency equivalent becoming due and payable prior to the date on which it would otherwise have become due and payable, without such Indebtedness having been discharged or such acceleration having been rescinded or annulled within 30 days after the notice specified below;

    (7) any Issuer or Restricted Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

    (A) commences a voluntary case;

    (B) consents to the entry of an order for relief against it in an involuntary case;

    (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or

    (D) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency;

    (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

    (A) is for relief against any Issuer or Restricted Subsidiary in an involuntary case;

    (B) appoints a Custodian of any Issuer or Restricted Subsidiary or for any substantial part of its property; or

    (C) orders the winding up or liquidation of any Issuer or Restricted Subsidiary or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days;

    (9) any judgment or decree for the payment of money in excess of $25,000,000 or its foreign currency equivalent at the time, is entered against any Issuer or Restricted Subsidiary and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or 

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decree or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed; or

    (10) the co-obligation of any of the Issuers under this Indenture or under any Security issued pursuant to this Indenture ceases to be in full force and effect (except as contemplated by the terms of this Indenture).

        The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

        The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

        A Default under clause (4), (5) or (6) above is not an Event of Default with respect to any series until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities of such series notify the applicable Issuer of the Default and such Issuer does not cure such Default within the time specified in clause (4), (5) or (6), as applicable, after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default."

        The Issuers shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (6) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (4), (5) or (9), its status and what action the Issuers are taking or proposes to take with respect thereto.

        Section 6.02.  Acceleration. If an Event of Default with respect to any Securities of any series at the time outstanding (other than an Event of Default specified in Section 6.01(7) or (8) with respect to any Issuer) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities of such series by written notice to the Issuers (and to the Trustee, if notice is given by such Holders), may declare the principal of and accrued but unpaid interest on all the Securities of such series to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(7) or (8) with respect to any Issuer occurs, the principal of and interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in principal amount of the Securities of such series by notice to the 

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Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default in respect of such series have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

        Section 6.03.  Other Remedies. If an Event of Default in respect of any series occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities of such series or to enforce the performance of any provision of the Securities of such series or this Indenture.

        The Trustee may institute and maintain a suit or legal proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

        Section 6.04.  Waiver of Past Defaults. The Holders of a majority in principal amount of the Securities of any series by notice to the Trustee may waive an existing Default with respect to such series and its consequences except a Default in the payment of the principal of or interest on a Security of such series, a Default arising from the failure to redeem or purchase any Security of such series when required pursuant to the terms of this Indenture or a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

        Section 6.05.  Control by Majority. With respect to Securities of any series, the Holders of a majority in principal amount of the outstanding Securities of such series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        Section 6.06.  Limitation on Suits. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder of a 

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Security of any series may pursue any remedy with respect to this Indenture or the Securities of any such series unless:

    (1) the Holder previously gave the Trustee written notice stating that an Event of Default with respect to such series is continuing;

    (2) the Holders of at least 25% in principal amount of the outstanding Securities of such series make a written request to the Trustee to pursue the remedy;

    (3) such Holder or Holders offer to the Trustee reasonable security or indemnity satisfactory to the Trustee against any loss, liability or expense;

    (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

    (5) the Holders of a majority in principal amount of the outstanding Securities of such series do not give the Trustee a direction inconsistent with the request during such 60-day period.

        A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder.

        Section 6.07.  Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and additional interest and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

        Section 6.08.  Collection Suit by Trustee. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.

        Section 6.09.  Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to any Issuer or any of its Subsidiaries, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to 

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make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

        Section 6.10.  Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

    FIRST: to the Trustee for amounts due under Section 7.07;

    SECOND: to Securityholders of each series for amounts due and unpaid on the Securities of each series for principal and interest, ratably, and any additional interest without preference or priority of any kind, according to the amounts due and payable on the Securities of each series for principal, any additional interest and interest, respectively; and

    THIRD: to the Issuers.

        The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Securityholder and each Issuer a notice that states the record date, the payment date and amount to be paid.

        Section 6.11.  Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing, by any party litigant in the suit, of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities.

        Section 6.12.  Waiver of Stay or Extension Laws. None of the Issuers (to the extent it may lawfully do so) shall at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of~, any stay or extension law, wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

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ARTICLE 7
TRUSTEE

        Section 7.01.  Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs.

        (b) Except during the continuance of an Event of Default:

    (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

    (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

        (c) The Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:

    (1) this paragraph does not limit the effect of paragraph (b) of this Section;

    (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and

    (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

        (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section.

        (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers.

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        (f) Money held in trust by the Trustee need not be segregated from funds except to the extent required by law.

        (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.

        (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.

        Section 7.02.  (a) Rights of Trustee. The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

        (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel.

        (c) The Trustee may act through agents or attorneys and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

        (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful misconduct or gross negligence.

        (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities, shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

        (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document.

        (g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture.

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        (h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

        Section 7.03.  Individual Rights of Trustee. The Trustee, or any of its Affiliates, in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

        Section 7.04.  Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Issuers use of the proceeds from the Securities, and it shall not be responsible for any statement in this Indenture, in the Securities, or in any document executed in connection with the sale of the Securities, other than those set forth in the Trustee's certificate of authentication.

        Section 7.05.  Notice of Defaults. If a Default with respect to the Securities of any series occurs and is continuing and if it is actually known to a Trust Officer of the Trustee, the Trustee shall mail to each Securityholder of such series notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of, premium (if any) or interest on any Security of such series (including payments pursuant to the mandatory redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders of such series.

        Section 7.06.  Reports by Trustee to Holder. As promptly as practicable after each July 31 beginning with the July 31 following the Closing Date, and in any event prior to September 30 in each year, the Trustee shall mail to each Securityholder of a series a brief report dated as of such July 31 that complies with Section 13(a) of the TIA. The Trustee shall also comply with Section 313(b) of the TIA.

        A copy of each report at the time of its mailing to Securityholders of a series shall be filed with the SEC and each stock exchange (if any) on which the Securities of a series are listed. The Issuers agree to notify promptly and in writing the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.

        Section 7.07.  Compensation and Indemnity. Each of the Issuers, jointly and severally, shall pay to the Trustee from time to time such compensation for its services as the Issuers and the Trustee shall from time to time agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a 

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trustee of an express trust. The Issuers, jointly and severally, shall reimburse the Trustee upon request for all reasonable out-of- pocket expenses incurred or made by such Trustee, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. Each Issuer, jointly and severally, shall indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by or in connection with the administration of this trust and the performance of its duties hereunder, including, without limitation, costs or expenses of defending itself against or investigating any claim (whether asserted by any Issuer or any Holder or any other Person) in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Issuers of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof, provided, however, that any failure so to notify the Issuers shall not relieve any Issuer of its indemnity obligations hereunder. The Issuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party's own wilful misconduct, gross negligence or bad faith.

        To secure the Issuers' payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay the principal of and interest and any additional interest on particular Securities.

        The Issuers' payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(7) or (8) with respect to any Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

        Section 7.08.  Replacement of Trustee. The Trustee may resign at any time with respect to the Securities of one or more series by so notifying the Issuers. The Holders of a majority in principal amount of the Securities of a series may remove the Trustee with respect to the Securities of such series and may appoint a successor Trustee. The Issuers shall remove the Trustee if:

    (1) the Trustee fails to comply with Section 7.10;

    (2) the Trustee is adjudged bankrupt or insolvent;

    (3) a receiver or other public officer takes charge of the Trustee property; or

    (4) the Trustee otherwise becomes incapable of acting.

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        If the Trustee resigns, is removed by the Issuers or by the Holders of a majority in principal amount of the Securities of one or more series and such Holders do not reasonably promptly appoint a successor Trustee with respect to the Securities of that or those series, or if a vacancy exists in the office of Trustee for any reason with respect to one or more series (the Trustee in such event being referred to herein as the retiring Trustee), the Issuers shall promptly appoint a successor Trustee with respect to the Securities of that or those series.

        A successor Trustee with respect to the Securities of any series shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders at their last known addresses as they appear on the Registrar's books. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

        If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Securities of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

        If the Trustee fails to comply with Section 7.10, any Securityholder of a series may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to the Securities of such series.

        Notwithstanding the replacement of the Trustee pursuant to this Section, the Issuers' obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

        Section 7.09.  Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate-trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

        In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and if at that time any of the Securities shall not have been authenticated, any such successor to the Trustee may authenticate such Securities either in the name of any predecessor 

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hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have.

        Section 7.10.  Eligibility, Disqualification. The Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of any Issuer are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met.

        Section 7.11.  Preferential Collection of Claims Against Issuers. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated.

ARTICLE 8
DISCHARGE FO INDENTURE; DEFEASANCE

        Section 8.01.  Disclaimer of Liability on Securities: Defeasance. (a) When the Issuers deliver to the Trustee all outstanding Securities of a series (other than Securities of a series replaced pursuant to Section 2.09) for cancellation or all outstanding Securities of a series have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Issuers irrevocably deposit with the Trustee funds or U.S. Government Obligations on which payment of principal and interest when due shall be sufficient to pay at maturity or upon redemption all outstanding Securities of a series, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.09), and if in either case the Issuers pay all other sums payable hereunder by the Issuers, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect with respect to the Securities of such series. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Issuers accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Issuers.

        (b) Subject to Sections 8.01(c) and 8.02, the Issuers at any time may terminate all of their obligations under the Securities of a series and this Indenture ("legal defeasance option") or the obligations of the Issuers under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.08 and 4.09 and the operation of Section 5.01(iii), 5.01(iv), 6.01(4), 6.01(6), 6.01(7) (with respect to Restricted Subsidiaries only), 6.01(8) (with respect to Restricted Subsidiaries only) and 

34

6.01(9) ("covenant defeasance option"). The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option.

        If the Issuers exercise their legal defeasance option, payment of the Securities of a series may not be accelerated because of an Event of Default. If the Issuers exercise their covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Section 6.01(4), 6.01(6), 6.01(7) or 6.01(8) (with respect to Restricted Subsidiaries only) or 6.01(9) or because of the failure of the Issuers to comply with clauses (iii) and (iv) of Section 5.01.

        Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge of those obligations that the Issuers terminate.

        (c) Notwithstanding clauses (a) and (b) above, the Issuers' obligations in Sections 2.03, 2.04, 2.05, 2.07, 2.09, 2.10, 7.07, 7.08 and in this Article 8 shall survive until the Securities of a series have been paid in full. Thereafter, the Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.

        Section 8.02.  Conditions to Defeasance. (a) The Issuers may exercise their legal defeasance option only if:

    (1) the Issuers irrevocably deposit in trust with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on the Securities of a series to maturity or redemption, as the case maybe;

    (2) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment shall provide cash at such times and in such amounts as shall be sufficient to pay principal and interest when due on all the Securities of such series to maturity or redemption, as the case may be;

    (3) 123 days pass after the deposit is made and during the 123 day period no Default specified in Section 6.01(7) or (8) with respect to the Issuers occurs which is continuing at the end of the period;

    (4) the deposit does not constitute a default under any other agreement binding on any of the Issuers;

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    (5) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or qualify as, a regulated investment company under the Investment Company Act of 1940;

    (6) the Issuers shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Issuers have received from, or there has been published by, the Internal Revenue Service, a ruling, or (ii) since the Closing Date there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders shall not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and shall be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;

    (7) the Issuers deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities of such series as contemplated by this Article 8 have been complied with.

        Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of Securities of such series at a future date in accordance with Article 3 of this Indenture.

        (b) The Issuers may exercise their covenant defeasance option only if:

    (1) the Issuers irrevocably deposit in trust with the Trustee money or U.S.    Government Obligations for the payment of principal, premium (if any) and interest on the Securities to maturity or redemption, as the case may be,

    (2) the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment shall provide cash at such times and in such amounts as shall be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be;

    (3) 123 days pass after the deposit is made and during the 123 day period no Default specified in Section 6.01(7) or (8) with respect to the Issuers occurs which is continuing at the end of the period;

    (4) the deposit does not constitute a default under any other agreement binding on any of the Issuers;

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    (5) the Issuers deliver to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or qualify as, a regulated investment company under the Investment Company Act of 1940;

    (6) the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that the Securityholders shall not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and shall be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and

    (7) the Issuers deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with.

        Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3 of this Indenture.

        Section 8.03.  Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities of the series with respect to which the deposit was made.

        Section 8.04.  Repayment to Issuers. The Trustee and the Paying Agent shall promptly turn over to the Issuers upon request any excess money or securities held by them at any time.

        Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuers upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Issuers for payment as general creditors.

        Section 8.05.  Indemnity for Government Obligations. The Issuers shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

        Section 8.06.  Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any 

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court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers' obligations under this Indenture and the Securities of each applicable series shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying, Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Issuers have made any payment of interest on or principal of any Securities of such series because of the reinstatement of their obligations hereunder, the Issuers shall be subrogated to the rights of the Holders of such Securities of such series to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE 9
AMENDMENTS

        Section 9.01.  Without Consent of Holders. The Issuers and the Trustee may amend this Indenture or the Securities without notice to or consent of any Securityholder:

    (1) to cure any ambiguity, omission, defect or inconsistency;

    (2) to comply with Article 5;

    (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code;

    (4) to add guarantees or co-obligors with respect to the Securities or to secure the Securities;

    (5) to add to the covenants of the Issuers for the benefit of the Holder to surrender any right or power herein conferred upon the Issuers;

    (6) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA;

    (7) to make any change that does not adversely affect the rights of any Securityholder; or

    (8) to provide for the issuance of the Exchange Securities, which shall have terms substantially identical in all material respects to the Initial Securities (except that the transfer restrictions contained in the Initial 

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Securities shall be modified or eliminated, as appropriate), and which shall be treated, together with any outstanding Initial Securities, as a single issue of securities. After an amendment under this Section becomes effective, the Issuers shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

        Section 9.02. With Consent of Holders. The Issuers and the Trustee may amend this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder of a series affected, an amendment may not:

    (1) reduce the amount of Securities of such series whose Holder consent to an amendment;

    (2) reduce the rate of or extend the time for payment of interest or any additional interest on any Security of such series;

    (3) reduce the principal of or extend the stated maturity of any Security of such series;

    (4) reduce the premium payable upon the redemption of any Security of a series or change the time at which any Security of such series may be redeemed in accordance with Article 3;

    (5) make any Security of such series payable in money other than that stated in the Security;

    (6) impair the right of any Holder to receive payment of principal of, and interest or any additional interest on, such Holder's Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Securities; or

    (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section 9.02.

        It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof After an amendment under this Section becomes effective, the Issuers shall mail to all affected Securityholders a notice briefly describing such amendment. The failure to give such notice to all such Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

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        Section 9.03.  Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect.

        Section 9.04.  Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver becomes effective once both the requisite number of consents have been received by the Issuers or the Trustee and such amendment or waiver has been executed by the Issuers and the Trustee.

        The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

        Section 9.05.  Notation on or Exchange of Securities. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment.

        Section 9.06.  Trustee to Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Issuers enforceable against them in accordance with its

40

terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).

        Section 9.07.  Payment for Consent. Neither the Issuers nor any Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders, ratably, that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

ARTICLE 10
MISCELLANEOUS

        Section 10.01.  Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

        Section 10.02. Notices.  Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows, or transmitted by facsimile transmission (confirmed by guaranteed overnight courier) to the following facsimile numbers:

if to the Issuers:

Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018
Attention of: Ira M. Dansky, Esq.
Facsimile No.: (212) 790-9988

if to the Trustee:

SunTrust Bank
25 Park Place, N.E.
24^th Floor
Atlanta, Georgia 30303-2900
Attention: Corporate Trust Administration
Facsimile No.: (404) 588-7335

        The Issuers or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

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        Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

        Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

        Section 10.03.  Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).

        Section 10.04.  Certificate and Opinion as to Conditions Precedent. Upon any request or application by any Issuer to the Trustee to take or refrain from taking any action under this Indenture, such Issuer shall furnish to the Trustee:

    (1) an Officers' Certificate of such Issuer in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

    (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

        Section 10.05.  Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

    (1) a statement that the individual making such certificate or opinion has read such covenant or condition;

    (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

    (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

    (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

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        Section 10.06.  When Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by any Issuer, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with any Issuer shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.

        Section 10.07.  Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions.

        Section 10.08.  Legal Holiday. A "Legal Holiday" is a Saturday, Sunday or other day on which banking institutions in New York State are authorized or required by law to close. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

        Section 10.09.  Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

        Section 10.10.  No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issuance of the Securities.

        Section 10.11.  Successors. All agreements of each Issuer in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.

        Section 10.12.  Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them 

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together represent the same agreement. One signed copy of the Indenture is enough to prove this Indenture.

        Section 10.13.  Table of Contents: Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

        Section 10.14.  Severability. If any provision in this Indenture is deemed unenforceable, it shall not affect the validity or enforceability of any other provision set forth herein, or of the Indenture as a whole.

[Rest of page intentionally left blank]

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        IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

JONES APPAREL GROUP, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Executive Vice President
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: President
 

JONES APPAREL GROUP USA, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Secretary
 

NINE WEST FOOTWEAR CORPORATION
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Executive Vice President
        and Secretary
 

JONES RETAIL CORPORATION
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Secretary
 

SUNTRUST BANK, as Trustee
 
By:  /s/ George Hogan
        Name: George Hogan
        Title: Vice President
 

 APPENDIX A

PROVISIONS RELATING TO INITIAL SECURITIES,
ADDITIONAL SECURITIES AND EXCHANGE SECURITIES

        1. Definitions.

        1.1. Definitions. For the purposes of this Appendix A the following terms shall have the meanings indicated below:

        "Applicable Procedures" means, with respect to any transfer or transaction involving a Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Global Security, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.

        "Clearstream" means Clearstream Luxembourg or any successor securities clearing agency.

        "Definitive Security" means a certificated Initial Security or Exchange Security (bearing the Restricted Securities Legend if the transfer of such Security is restricted by applicable law) that does not include the Global Securities Legend.

        "Depositary" means The Depository Trust Company, its nominees and respective successors.

        "Euroclear" means the Euroclear Clearance System or any successor securities clearing agency.

        "Global Securities Legend" means the legend set forth under that caption in Exhibit A to this Indenture.

        "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

        "Initial Purchasers" means Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Banc of America Securities LLC, Barclays Capital Inc., Bear, Stearns & Co. Inc., Greenwich Capital Markets, Inc., Scotia Capital (USA) Inc., SunTrust Capital Markets, Inc. and Wachovia Capital Markets, LLC.

        "Purchase Agreement" means (a) the Purchase Agreement dated November 17, 2004, among the Issuers and the Initial Purchasers and (b) any other similar Purchase Agreement relating to Additional Securities.

        "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

AP-1

        "Registered Exchange Offer" means an offer by the Issuers, pursuant to a Registration Agreement, to certain Holders of a series of Initial Securities, to issue and deliver to such Holders, in exchange for their Initial Securities of such series, a like aggregate principal amount of Exchange Securities of such series registered under the Securities Act.

        "Registration Agreement" means any of (a) the Exchange and Note Registration Rights Agreements dated November 22, 2004, among the Issuers and the Initial Purchasers and (b) any other similar Exchange and Note Registration Rights Agreements relating to Additional Securities.

        "Regulation S" means Regulation S under the Securities Act.

        "Regulation S Securities" means all Initial Securities offered and sold the United States in reliance on Regulation S.

        "Restricted Period," with respect to any Securities of any series, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the Closing Date with respect to such Securities.

        "Restricted Securities Legend" means the legend set forth in Section 2.3(e).

        "Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

        "Rule 144A" means Rule 144A under the Securities Act.

        "Rule 144A Securities" means all Initial Securities offered and sold to QIBs in reliance on Rule 144A.

        "Securities Act" means the Securities Act of 1933, as amended.

        "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depositary) or any successor thereto, who shall initially be the Trustee.

        "Shelf Registration Statement" means a registration statement filed by the Issuers in connection with the offer and sale of Initial Securities pursuant to the Registration Agreement.

        "Transfer Restricted Securities" means Definitive Securities and any other Securities that bear or are required to bear the Restricted Securities Legend.

        1.1. Other Definitions.

AP-2

Term:	Defined in Section:
"Agent Members"	2.1(b)
"IAI Global Securities"	2.1(a)
"Global Securities"	2.1(a)
"Regulation S Global Securities"	2.1(a)
"Rule 144A Global Securities"	2.1(a)

        2. The Securities.

        2.1. Form and Dating. The Initial Securities issued on the date hereof shall be (i) offered and sold by the Issuers pursuant to the Purchase Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. Additional Securities offered after the date hereof may be offered and sold by the Issuers from time to time pursuant to one or more Purchase Agreements in accordance with applicable law.

        (a) Global Securities. Rule 144A Securities shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "Rule 144A Global Securities") and Regulation S Securities shall be issued initially in the form of one or more global Securities (collectively, the "Regulation S Global Securities"), in each case without interest coupons and bearing the Global Securities Legend and Restricted Securities Legend, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Securities Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuers and authenticated by the Trustee as provided in this Indenture. One or more global securities in definitive, fully registered form without interest coupons and bearing the Global Securities Legend and the Restricted Securities Legend (collectively, the "IAI Global Security") shall also be issued on the Closing Date, deposited with the Securities Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuers and authenticated by the Trustee as provided in this Indenture to accommodate transfers of beneficial interests in the Securities to IAIs subsequent to the initial distribution. Beneficial ownership interests in a Regulation S Global Security shall not be exchangeable for interests in a Rule 144A Global Security, IAI Global Security or any other Security without a Restricted Securities Legend until the expiration of the Restricted Period. Each Rule 144A Global Security, IAI Global Security and Regulation S Global Security is referred to herein as a "Global Security" and are collectively referred to herein as "Global Securities." The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided.

AP-3

        (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security deposited with or on behalf of the Depositary.

        The Issuers shall execute and the Trustee shall, in accordance with this Section 2.1(b) and pursuant to an order of the Issuers, authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Securities Custodian.

        Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as Securities Custodian or under such Global Security, and the Depositary may be treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (x) prevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (y) impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security.

        (c) Definitive Securities. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities.

        2.2. Authentication. The Trustee shall authenticate and make available for delivery upon a written order of the Issuers signed by one Officer (1) 2009 Original Securities for original issue on the date hereof, in an aggregate principal amount of $250,000,000, 2014 Original Securities for original issue on the date hereof, in an aggregate principal amount of $250,000,000 and 2034 Original Securities for original issue on the date hereof, in an aggregate principal amount of $250,000,000, (2) subject to the terms of this Indenture, Additional Securities in an unlimited principal amount and (3) the Exchange Securities for issue only in a Registered Exchange Offer pursuant to a Registration Agreement and for a like principal amount of Initial Securities exchanged pursuant thereto. Such order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities or Exchange Securities. The aggregate principal amount of Securities outstanding at any time is unlimited.

        2.3. Transfer and Exchange. (a) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented to the Registrar with a request:

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    (x) to register the transfer of such Definitive Securities or

    (y) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations,

        the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Securities surrendered for transfer or exchange shall be:

    (i) duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuers and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and

    (ii) accompanied by the following additional information and documents, as applicable:

    (A) if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Security); or

    (B) if such Definitive Securities are being transferred to an Issuer, a certification to that effect (in the form set forth on the reverse side of the Initial Security); or

    (C) if such Definitive Securities are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect (in the form set forth on the reverse side of the Initial Security) and (ii) if the Issuers so request, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).

        (b) Restrictions on Transfer of a Definitive Security for a Beneficial Interest in a Global Security. A Definitive Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuers and the Registrar, together with:

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    (i) certification (in the form set forth on the reverse side of the Initial Security) that such Definitive Security is being transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI that has furnished to the Trustee a signed letter substantially in the form of Exhibit C or Exhibit F, as applicable, or (C) outside the United States in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act; and

    (ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the Global Security, such instructions to contain information regarding the Depositary account to be credited with such increase,

then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount of Securities represented by the Global Security to be increased by the aggregate principal amount of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Security equal to the principal amount of the Definitive Security so canceled. If no Global Securities are then outstanding and the Global Security has not been previously exchanged for certificated securities pursuant to Section 2.4, the Issuers shall issue and the Trustee shall authenticate, upon written order of the Issuers in the form of an Officers' Certificate, a new Global Security in the appropriate principal amount.

        (c) Transfer and Exchange of Global Securities. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Security shall deliver to the Depository a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Security or another Global Security and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Security and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Security being transferred. Transfers by an owner of a beneficial interest in the Rule 144A Global Security or the IAI Global Security to a transferee who takes delivery of such interest through the Regulation S Global Security, whether before or after the expiration of the Restricted Period, shall be made only upon receipt by the Trustee of a certification in the form provided on the reverse of the Initial Securities from the transferor to the effect 

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that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act. In the case of a transfer of a beneficial interest in the Regulation S Global Security or the Rule 144A Global Security for an interest in the IAI Global Security, the transferee must furnish a signed letter substantially in the form of Exhibit 2 to the Trustee.

    (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Securities Custodian shall reflect on its books and records the date and an increase in the principal amount of the Global Security to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Securities Custodian shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Security from which such interest is being transferred.

    (iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

    (iv) In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A, Regulation S or such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Issuers.

        (d) Restrictions on Transfer of Regulation S Global Security. (i) Prior to the expiration of the Restricted Period, interests in the Regulation S Global Security may only be sold, pledged or transferred in accordance with the Applicable Procedures and only (A) to an Issuer, (B) so long as such security is eligible for resale pursuant to Rule 144A, to a Person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore transaction in accordance with Regulation S, (D) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act, (E) to an IAI purchasing for its own account, or for the account of such an IAI, in a minimum 

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principal amount of Securities of $250,000 or (F) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in a Regulation S Global Security to a transferee who takes delivery of such interest through a Rule 144A Global Security or IAI Global Security shall be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Security to the effect that such transfer is being made to (i) a Person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (ii) an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of the Securities of $250,000. Such written certification shall no longer be required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in a Regulation S Global Security for an interest in an IAI Global Security, the transferee must furnish to the Trustee a signed letter substantially in the form of Exhibit C or Exhibit F, as applicable.

    (ii) Upon the expiration of the Restricted Period, beneficial ownership interests in a Regulation S Global Security shall be transferable in accordance with applicable law and the other terms of this Indenture.

        (e) Legend. (i) Except as permitted by the following paragraphs (ii), (iii), (iv) or (vi), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only):

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT), (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS 

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PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ANY ISSUER OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUERS AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, BUT ONLY IF THIS SECURITY IS NOT A GLOBAL SECURITY (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED 

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UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."

        Each Security offered and sold in reliance on Regulation S under the Securities Act shall bear the following legend:

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A "U.S. PERSON" (AS DEFINED IN REGULATION S ("REGULATION S") UNDER THE SECURITIES ACT), (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE WHICH IS 40 DAYS AFTER THE ORIGINAL ISSUE DATE HEREOF (THE "REGULATION S RESTRICTED PERIOD") EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUERS AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF 

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COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE TERMINATION OF THE REGULATION S RESTRICTED PERIOD."

        Each Definitive Security shall bear the following additional legend:

"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."

    (ii) Upon any sale or transfer of a Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Security if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Security).

    (iii) After a transfer of any Initial Securities during the period of the effectiveness of the Shelf Registration Statement with respect to such Initial Securities, all requirements pertaining to the Restricted Securities Legend on such Initial Securities shall cease to apply and the requirements that any such Initial Securities be issued in global form shall continue to apply.

    (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to Initial Securities that Initial Securities be issued in global form shall continue to apply, and Exchange Securities in global form without the Restricted Securities Legend shall be available to Holders that exchange such Initial Securities in such Registered Exchange Offer.

    (v) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Security acquired pursuant to Regulation S, all requirements that such Initial Security bear the Restricted Securities 

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Legend shall cease to apply and the requirement that any such Initial Security be issued in global form shall continue to apply.

    (vi) Any Additional Securities sold in a registered offering shall not be required to bear the Restricted Securities Legend.

        (f) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, transferred, redeemed, repurchased or canceled, such Global Security shall be returned by the Depositary to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, transferred in exchange for an interest in another Global Security, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction.

        (g) Obligations with Respect to Transfers and Exchanges of Securities.

    (i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate, Definitive Securities and Global Securities at the Registrar's request.

    (ii) No service charge shall be made for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06 and 9.05 of this Indenture).

    (iii) Prior to the due presentation for registration of transfer of any Security, the Issuers, the Trustee, the Paying Agent or the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Issuers, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

    (iv) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange.

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        (h) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, any Agent Member, or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any Agent Member, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

   (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

        2.4. Definitive Securities. (a) A Global Security deposited with the Depositary or with the Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Issuers that it is unwilling or unable to continue as a Depositary for such Global Security or if at any time the Depositary ceases to be a "clearing agency" registered under the Exchange Act, and a successor depositary is not appointed by the Issuers within 90 days of such notice, or (ii) the Issuers, in their sole discretion, notify the Trustee in writing that they elect to cause the issuance of certificated Securities under this Indenture.

   (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of 

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Definitive Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Security in the form of a Definitive Security delivered in exchange for an interest in the Global Security shall, except as otherwise provided by Section 2.3(e), bear the Restricted Securities Legend.

        (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

        (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Issuers will promptly make available to the Trustee a reasonable supply of Definitive Securities in fully registered form without interest coupons.

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EXHIBIT A

[FORM OF FACE OF 2009 INITIAL SECURITY]
[Global Securities Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

A-1

[Restricted Securities Legend]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT), (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ANY ISSUER OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF ANY ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE ISSUERS (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUERS AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE 

A-2

OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, BUT ONLY IF THIS SECURITY IS NOT A GLOBAL SECURITY (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[Definitive Securities Legend]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 A-3

4.250% Senior Note due 2009

No. ___ CUSIP No.                      

JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2009.

Interest Payment Dates: May 15 and November 15.

Record Dates: May 1 and November 1.

Additional provisions of this Security are set forth on the other side of this Security.

A-4

        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

A-5 

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

 Dated:

By:  _____________________
       Authorized Signatory

A-6

[FORM OF REVERSE SIDE OF 2009 INITIAL SECURITY]
4.250% Senior Note due 2009

        1. Interest.

        (a) JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations and, their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2009 Note") at the rate per annum shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

        (b) Additional Interest. The holder of this Security is entitled to the benefits of an Exchange and Note Registration Rights Agreement, dated November 22, 2004, among the Issuers and the Initial Purchasers named therein (the "Registration Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Agreement. If (i) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, (ii) the Shelf Registration Statement is not declared effective on or prior to the later of (A) the date that is 210 days after the Issue Date and (B) 90 days after the obligation to file such Shelf Registration Statement arises under Section 2 of the Registration Agreement or (iii) the Shelf Registration Statement is filed and declared effective within the period prescribed by clause (ii) but shall thereafter cease to be effective at any time that the Issuers are obligated to maintain the effectiveness thereof (other than (A) as contemplated by Section 4(o) of the Registration Agreement, provided that the period of time during which the Shelf Registration Statement is not effective pursuant to Section 4(o) of the Registration Agreement does not exceed either two periods of up to 45 days or 90 days in the aggregate during any 365-day period, or (B) as required by applicable law) (each such event referred to in clauses (i) through (iii), a "Registration Default"), the Issuers shall be obligated to pay additional interest to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, at a rate of 0.25% per annum for the first 90 days and 0.50% per annum thereafter, determined daily, on the principal 

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amount of the Securities constituting Transfer Restricted Securities held by such holder until (i) the Registered Exchange Offer is consummated, (ii) the Shelf Registration Statement is declared effective or (iii) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of additional interest shall cease. All accrued additional interest shall be paid to holders in the same manner as interest payments on the Securities on semi-annual payment dates which correspond to interest payment dates for the Securities. The Trustee shall have no responsibility with respect to the determination of the amount of any such additional interest. As used herein, the term "Transfer Restricted Securities" means (i) each Initial Security until the date on which such Initial Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Initial Security until the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Initial Security until the date on which such Initial Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, additional interest and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, additional interest and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or 

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any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

        4. Indenture. The Issuers issued the Securities under an Indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture, and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. This Security is one of the Original Securities referred to in the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2009 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 10 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable to the redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding 

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to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect 

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to such Security, the amount of the next succeeding scheduled interest payment on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the 

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Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable 

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security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuers. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and UIG/M/A (=Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

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        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

_________________________________________________________________

(Print or type assignee's name, address and zip code)

__________________________________________________________________

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint _________________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

Date: __________________

Your Signature: ___________________

Sign exactly as your name appears on the other side of this Security.

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CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED SECURITIES

        This certificate relates to $______________ principal amount of Securities held in (check applicable space) ______ book-entry or _______ definitive form by the undersigned.

        The undersigned (check one box below):

        [  ] has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depositary a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);

        [  ] has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.

        In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

(1) [  ] to an Issuer; or

(2) [  ] pursuant to an effective registration statement under the Securities Act of 1933; or

(3) [  ] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

(4) [  ] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

(5) [  ] to an institutional "accredited investor"(as defined in Rule 501(a)(1),(2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or

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(6) [  ] pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933.

        Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered holder thereof, provided, however, that if box (4), (5) or (6) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Issuers have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

____________________________
Your Signature

Signature Guarantee:

Date: ____________ 

____________________________
Signature of Signature Guaranteed

        Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:                                                        Signature

NOTICE: To be executed by an executive officer

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 [TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Date of Exchange

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

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EXHIBIT B

[FORM OF FACE OF 2009 EXCHANGE SECURITY]
[Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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4.250% Senior Note due 2009

No. ___ CUSIP No.                      

        JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2009.

        Interest Payment Dates: May 15 and November 15.

        Record Dates: May 1 and November 1.

        Additional provisions of this Security are set forth on the other side of this Security.

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        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

Dated:

By:  _______________________
       Authorized Signatory

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FORM OF REVERSE SIDE OF 2009 EXCHANGE SECURITY
4.250% Senior Note due 2009

        1. Interest. JONES APPAREL GROUP, INC. a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations, and their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2009 Note") at the rate per annum shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or 

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any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

        4. Indenture. The Issuers issued the Securities under an Indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2009 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 10 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury 

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Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect to such Security, the amount of the next succeeding scheduled interest payment 

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on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an interest payment date.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. 

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Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has 

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not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuer. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (= Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

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        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

________________________________________________________________

(Print or type assignee's name, address and zip code)

________________________________________________________________

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint _________________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

Date: _________________

Your Signature: ________________

Sign exactly as your name appears on the other side of this Security. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guaranteed acceptable to the Trustee.

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[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

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EXHIBIT C

FORM OF TRANSFEREE LETTER OF REPRESENTATION
FOR 2009 NOTES

Ladies and Gentlemen:

        This certificate is delivered to request a transfer of $_________ principal amount of the 4.250% Senior Notes due 2009 (the "Notes") of Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation (the "Issuers").

        Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

        Name:________________________________

        Address:_______________________________

        Taxpayer ID Number:_____________________

        The undersigned represents and warrants to you that:

        1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

        2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which an Issuer or any affiliate of an Issuer was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to an Issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a Person we reasonably believe is a qualified 

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institutional buyer under Rule 144A (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) in an offshore transaction within the meaning of, and in compliance with, Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in minimum principal amount of Securities of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuers and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuers and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Termination Date of the Securities pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuers and the Trustee.

TRANSFEREE:

By:  _______________________________

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EXHIBIT D

[FORM OF FACE OF 2014 INITIAL SECURITY]
[Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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[Restricted Securities Legend]

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

        BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT), (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ANY ISSUER OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF ANY ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUERS AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR 

D-2

OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, BUT ONLY IF THIS SECURITY IS NOT A GLOBAL SECURITY (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[Definitive Securities Legend]

        IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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5.125% Senior Note due 2014

No. ___ CUSIP No.                      

        JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2014.

        Interest Payment Dates: May 15 and November 15.

        Record Dates: May 1 and November 1.

        Additional provisions of this Security are set forth on the other side of this Security.

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        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. 

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

Dated:

By:  _________________________
       Authorized Signatory

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[FORM OF REVERSE SIDE OF INITIAL SECURITY]
5.125% Senior Note due 2014

        1. Interest.

    (a) JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations and their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2014 Note") at the rate per annum shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

    (b) Additional Interest. The holder of this Security is entitled to the benefits of an Exchange and Note Registration Rights Agreement, dated November 22, 2004, among the Issuers and the Initial Purchasers named therein (the "Registration Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Agreement. If (i) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, (ii) the Shelf Registration Statement is not declared effective on or prior to the later of (A) the date that is 210 days after the Issue Date and (B) 90 days after the obligation to file such Shelf Registration Statement arises under Section 2 of the Registration Agreement or (iii) the Shelf Registration Statement is filed and declared effective within the period prescribed by clause (ii) but shall thereafter cease to be effective at any time that the Issuers are obligated to maintain the effectiveness thereof (other than (A) as contemplated by Section 4(o) of the Registration Agreement, provided that the period of time during which the Shelf Registration Statement is not effective pursuant to Section 4(o) of the Registration Agreement does not exceed either two periods of up to 45 days or 90 days in the aggregate during any 365-day period, or (B) as required by applicable law) (each such event referred to in clauses (i) through (iii), a "Registration Default"), the Issuers shall be obligated to pay additional interest to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, at a rate of 0.25% per annum for the first 90 days and 0.50% per annum thereafter, determined daily, on the principal 

D-7

amount of the Securities constituting Transfer Restricted Securities held by such holder until (i) the Registered Exchange Offer is consummated, (ii) the Shelf Registration Statement is declared effective or (iii) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of additional interest shall cease. All accrued additional interest shall be paid to holders in the same manner as interest payments on the Securities on semi-annual payment dates which correspond to interest payment dates for the Securities. The Trustee shall have no responsibility with respect to the determination of the amount of any such additional interest. As used herein, the term "Transfer Restricted Securities" means (i) each Initial Security until the date on which such Initial Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Initial Security until the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Initial Security until the date on which such Initial Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, additional interest and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, additional interest and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or 

D-8

any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

        4. Indenture. The Issuers issued the Securities under an Indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture, and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. This Security is one of the Original Securities referred to in the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2014 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 15 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable to the redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding 

D-9

to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect 

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to such Security, the amount of the next succeeding scheduled interest payment on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the 

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Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable 

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security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuers. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (= Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

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        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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ASSIGNMENT FORM

        To assign this Security, fill in the form below:

        I or we assign and transfer this Security to

        (Print or type assignee's name, address and zip code)

        (Insert assignee's soc. sec. or tax I.D. No.)

        and irrevocably appoint ________________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

        Date:

        Your Signature:

        Sign exactly as your name appears on the other side of this Security.

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CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED SECURITIES

        This certificate relates to $ _____________ principal amount of Securities held in (check applicable space) ______ book-entry or _______ definitive form by the undersigned.

        The undersigned (check one box below):

        [  ] has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depositary a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);

        [  ] has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.

        In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:

        CHECK ONE BOX BELOW

        (1) [  ] to an Issuer; or

        (2) [  ]pursuant to an effective registration statement under the Securities Act of 1933; or

        (3) [  ] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

        (4) [  ] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

        (5) [  ] to an institutional "accredited investor" (as defined in Rule 501 (a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or

        (6) [  ]pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933.

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        Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered holder thereof provided, however, that if box (4), (5) or (6) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Issuers have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

Your Signature

Signature Guarantee:

Date: ___________________ ________________________________

Signature of Signature Guaranteed

        Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee.

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:

Signature

NOTICE: To be executed by an executive officer

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[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Date of Exchange

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

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EXHIBIT E

[FORM OF FACE OF 2014 EXCHANGE SECURITY]
[Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (ANT) ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC). ANY TRANSFER, PLEDGE OR OTHER USE OF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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5.125% Senior Note due 2014

No. ___ CUSIP No.                      

        JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2014.

        Interest Payment Dates: May 15 and November 15.

        Record Dates: May 1 and November 1.

        Additional provisions of this Security are set forth on the other side of this Security.

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        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

Dated:

By:  __________________________
       Authorized Signatory

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[FORM OF REVERSE SIDE OF 2014 EXCHANGE SECURITY]
5.125% Senior Note due 2014

        1. Interest. JONES APPAREL GROUP, INC. a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations, and their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2014 Note") at the rate per annum, shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

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        4. Indenture. The Issuers issued the Securities under an indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2014 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 15 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable to the redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight 

E-6

line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect to such Security, the amount of the next succeeding scheduled interest payment on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

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        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange an), Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an interest payment date.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

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        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5, of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction

E-9

inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuer. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to 

E-10

Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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ASSIGNMENT FORM

        To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax T.D. No.)

and irrevocably appoint ______________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

Date:

Your Signature:

Sign exactly as your name appears on the other side of this Security. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guaranteed acceptable to the Trustee.

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[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

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EXHIBIT F

FORM OF TRANSFEREE LETTER OF REPRESENTATION
FOR 2014 NOTES

Ladies and Gentlemen:

        This certificate is delivered to request a transfer of $__________ principal amount of the 5.125% Senior Notes due 2014 (the "Notes") of Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation (the "Issuers").

        Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

The undersigned represents and warrants to you that:

        1. We are an institutional "accredited investor" (as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

        2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which an Issuer or any affiliate of an Issuer was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to an Issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a Person we reasonably believe is a qualified 

F-1

institutional buyer under Rule 144A (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) in an offshore transaction within the meaning of, and in compliance with, Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(l), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in minimum principal amount of Securities of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuers and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuers and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Termination Date of the Securities pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuers and the Trustee.

TRANSFEREE:

By:  ____________________________

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EXHIBIT G

[FORM OF FACE OF 2034 INITIAL SECURITY]
[Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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[Restricted Securities Legend]

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

        BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT), (2) AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) OF THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ANY ISSUER OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF ANY ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN EACH CASE TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUERS AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE 

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OR TRANSFER (I) PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES, BUT ONLY IF THIS SECURITY IS NOT A GLOBAL SECURITY (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[Definitive Securities Legend]

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

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6.125% Senior Note due 2034

No. ___ CUSIP No.

        JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2034.

        Interest Payment Dates: May 15 and November 15.

        Record Dates: May 1 and November 1.

        Additional provisions of this Security are set forth on the other side of this Security.

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        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

 

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

Dated:

By:  __________________________
       Authorized Signatory

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[FORM OF REVERSE SIDE OF 2034 INITIAL SECURITY]
6.125% Senior Note due 2034

        1. Interest.

    (a) JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations and, their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2034 Note") at the rate per annum shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

    (b) Additional Interest. The holder of this Security is entitled to the benefits of an Exchange and Note Registration Rights Agreement, dated November 22, 2004, among the Issuers and the Initial Purchasers named therein (the "Registration Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Agreement. If (i) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, (ii) the Shelf Registration Statement is not declared effective on or prior to the later of (A) the date that is 210 days after the Issue Date and (B) 90 days after the obligation to file such Shelf Registration Statement arises under Section 2 of the Registration Agreement or (iii) the Shelf Registration Statement is filed and declared effective within the period prescribed by clause (ii) but shall thereafter cease to be effective at any time that the Issuers are obligated to maintain the effectiveness thereof (other than (A) as contemplated by Section 4(o) of the Registration Agreement, provided that the period of time during which the Shelf Registration Statement is not effective pursuant to Section 4(o) of the Registration Agreement does not exceed either two periods of up to 45 days or 90 days in the aggregate during any 365-day period, or (B) as required by applicable law) (each such event referred to in clauses (i) through (iii), a "Registration Default"), the Issuers shall be obligated to pay additional interest to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, at a rate of 0.25% per annum for the first 90 days and 0.50% per annum thereafter, determined daily, on the principal 

G-7

amount of the Securities constituting Transfer Restricted Securities held by such holder until (i) the Registered Exchange Offer is consummated, (ii) the Shelf Registration Statement is declared effective or (iii) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of additional interest shall cease. All accrued additional interest shall be paid to holders in the same manner as interest payments on the Securities on semi-annual payment dates which correspond to interest payment dates for the Securities. The Trustee shall have no responsibility with respect to the determination of the amount of any such additional interest. As used herein, the term "Transfer Restricted Securities" means (i) each Initial Security until the date on which such Initial Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Initial Security until the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Initial Security until the date on which such Initial Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, additional interest and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, additional interest and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or 

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any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

        4. Indenture. The Issuers issued the Securities under an Indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture, and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. This Security is one of the Original Securities referred to in the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2034 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 20 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable to the redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding 

G-9

to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect 

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to such Security, the amount of the next succeeding scheduled interest payment on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date, interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the 

G-11

Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable 

G-12

security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuers. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and UIG/M/A (=Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

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        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

_________________________________________________________________

(Print or type assignee's name, address and zip code)

__________________________________________________________________

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint _________________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

Date: __________________

Your Signature: ___________________

Sign exactly as your name appears on the other side of this Security.

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CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED SECURITIES

        This certificate relates to $___________ principal amount of Securities held in (check applicable space) ______ book-entry or _______ definitive form by the undersigned.

        The undersigned (check one box below):

        [  ] has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depositary a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Security (or the portion thereof indicated above);

        [  ] has requested the Trustee by written order to exchange or register the transfer of a Security or Securities.

        In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

(1) [  ] to an Issuer; or

(2) [  ] pursuant to an effective registration statement under the Securities Act of 1933; or

(3) [  ] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

(4) [  ] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or

(5) [  ] to an institutional "accredited investor"(as defined in Rule 501(a)(1),(2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or

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(6) [  ] pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933.

        Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered holder thereof, provided, however, that if box (4), (5) or (6) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Issuers have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

____________________________
Your Signature

Signature Guarantee:

Date: ____________ 

____________________________
Signature of Signature Guaranteed

        Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee

TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated: Signature

NOTICE: To be executed by an executive officer

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[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Date of Exchange

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

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EXHIBIT H

[FORM OF FACE OF 2034 EXCHANGE SECURITY]
[Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE OF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

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6.125% Senior Note due 2034

No. ___ CUSIP No.                      

        JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation, promise to pay to Cede & Co., or registered assigns, the principal sum of $                    (                         Dollars) on November 15, 2034.

        Interest Payment Dates: May 15 and November 15.

        Record Dates: May 1 and November 1.

        Additional provisions of this Security are set forth on the other side of this Security.

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        IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

JONES APPAREL GROUP, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  __________________
        Name: 
        Title: 
 

JONES APPAREL GROUP USA, INC.
 
By:  __________________
        Name: 
        Title:
 

NINE WEST FOOTWEAR CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

JONES RETAIL CORPORATION
 
By:  __________________
        Name: 
        Title: 
 

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

SUNTRUST BANK, as Trustee, certifies that this is one of the Securities referred to in the Indenture.

Dated:

By:  _____________________
       Authorized Signatory

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FORM OF REVERSE SIDE OF 2034 EXCHANGE SECURITY
6.125% Senior Note due 2034

        1. Interest. JONES APPAREL GROUP, INC. a Pennsylvania corporation, JONES APPAREL GROUP HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a Pennsylvania corporation, NINE WEST FOOTWEAR CORPORATION, a Delaware corporation, and JONES RETAIL CORPORATION, a New Jersey corporation (such corporations, and their successors and assigns under the Indenture are collectively referred to herein as the "Issuers"), promise to pay interest on the principal amount of this Security (a "2034 Note") at the rate per annum shown above. The Issuers shall pay interest semiannually on May 15 and November 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 22, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

        2. Method of Payment. The Issuers shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the May 1 or November 1 immediately preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Issuers will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

        3. Paying Agent and Registrar. Initially, SunTrust Bank, a national banking corporation associated under the laws of the State of Georgia (the "Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and change any Paying Agent, Registrar or coregistrar without notice. An Issuer or 

H-5

any domestically incorporated Wholly Owned Restricted Subsidiary of an Issuer may act as Paying Agent, Registrar or coregistrar.

        4. Indenture. The Issuers issued the Securities under an Indenture dated as of November 22, 2004 (the "Indenture") among the Issuers and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the TIA for a statement of such terms and provisions. In the event of any conflict between the terms of this Security and the terms of the Indenture, the Indenture shall govern.

        The Securities are senior unsecured obligations of the Issuers. The Issuers may issue Additional Securities of any series pursuant to the Indenture. The Securities include the Original Securities, any Additional Securities and any Exchange Securities issued in exchange for Initial Securities. With respect to each series of Securities, the Original Securities of such series, any Additional Securities of such series and all Exchange Securities of such series are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and the Restricted Subsidiaries to, among other things, create or incur Liens or enter into sale and leaseback transactions. The Indenture also imposes limitations on the ability of the Issuers to convey, transfer or lease all or substantially all of the assets of any Issuer.

        5. Optional Redemption. The 2034 Notes will be redeemable as a whole or in part, at the option of the Issuers at any time or from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined below) and 20 basis points.

        In the case of each of clause (i) and (ii), accrued interest will be payable redemption date.

        "Treasury Rate" means, with respect to any redemption date, (a) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining life (as defined in the definition of Comparable Treasury 

H-6

Issue) of the Securities, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (b) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ("remaining life") of the Securities of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Securities.

        "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of five Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such quotations.

        "Reference Treasury Dealer" means Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. and their respective successors and, at the Issuers' option, three other nationally recognized investment banking firms that are primary dealers of U.S. Government securities in New York City (each, a "Primary Treasury Dealer"). If any of the foregoing shall cease to be a Primary Treasury Dealer, the Issuers shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

        "Remaining Scheduled Payments" means, with respect to any Security to be redeemed, the remaining scheduled payments of principal of and interest on such Security that would be due after the related redemption date but for such redemption. If such redemption date is not an interest payment date with respect to such Security, the amount of the next succeeding scheduled interest payment 

H-7

on such Security will be reduced by the amount of interest accrued on such note to such redemption date.

        "Independent Investment Banker" means either Citigroup Global Markets Inc. or J.P. Morgan Securities Inc., as specified by the Issuers, or, if neither of the foregoing is willing or able to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Issuers.

        6. Sinking Fund. The Securities are not subject to any sinking fund.

        7. Notice of Redemption. Notice of redemption will be mailed by first- class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption.

        8. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an interest payment date.

        9. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes.

        10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Issuers upon their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuers and not to the Trustee for payment.

        11. Discharge and Defeasance. Subject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the Securities and the Indenture if the Issuers deposit with the Trustee money or U.S. 

H-8

Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be.

        12. Amendment, Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Issuers and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add guarantees or co-obligors with respect to the Securities or to secure the Securities; (v) to add to the covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Issuers; (vi) to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; (vii) to make any change that does not adversely affect the rights of any Securityholder; or (viii) to provide for the issuance of the Exchange Securities.

        13. Defaults and Remedies. If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer) and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of any Issuer occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences.

        If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Securities have requested in writing that the Trustee pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee 

H-9

has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would subject the Trustee to personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

        14. Trustee Dealings with the Issuer. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it would have if it were not Trustee.

        15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of any Issuer shall not have any liability for any obligations of such Issuer under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

        16. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of Authentication on the other side of this Security.

        17. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (= Uniform Gift to Minors Act).

        18. Governing Law. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

H-10

        19. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Securities and have directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

        The Issuers will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security.

H-11

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

________________________________________________________________

(Print or type assignee's name, address and zip code)

________________________________________________________________

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint _________________ agent to transfer this Security on the books of the Issuers. The agent may substitute another to act for him.

Date: _________________

Your Signature: ________________

Sign exactly as your name appears on the other side of this Security. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guaranteed acceptable to the Trustee.

H-12

TO BE ATTACHED TO GLOBAL SECURITIES

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

        The initial principal amount of this Global Security is $                    . The following increases or decreases in this Global Security have been made:

        Amount of decrease in Principal Amount of this Global Security

        Amount of increase in Principal Amount of this Global Security

        Principal Amount of this Global Security following such decrease or increase

        Signature of authorized signatory of Trustee or Securities Custodian

H-13

EXHIBIT I

FORM OF TRANSFEREE LETTER OF REPRESENTATION
FOR 2034 NOTES

Ladies and Gentlemen:

        This certificate is delivered to request a transfer of $__________ principal amount of the 6.125% Senior Notes due 2034 (the "Notes") of Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation (the "Issuers").

        Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

        Name:________________________________

        Address:_______________________________

        Taxpayer ID Number:_____________________

        The undersigned represents and warrants to you that:

        1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

        2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which an Issuer or any affiliate of an Issuer was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to an Issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a Person we reasonably believe is a qualified 

I-1

institutional buyer under Rule 144A (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) in an offshore transaction within the meaning of, and in compliance with, Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in minimum principal amount of Securities of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuers and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Issuers and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Termination Date of the Securities pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuers and the Trustee.

TRANSFEREE:

By:  ___________________________

EX-4

EXHIBIT 4.15

JONES APPAREL GROUP, INC.
JONES APPAREL GROUP HOLDINGS, INC.
JONES APPAREL GROUP USA, INC.
NINE WEST FOOTWEAR CORPORATION
JONES RETAIL CORPORATION

$250,000,000 Aggregate Principal Amount of 6.125% Senior Notes due 2034

EXCHANGE AND NOTE REGISTRATION RIGHTS AGREEMENT

November 22, 2004

CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES INC.

As Representatives of the Several Initial
    Purchasers listed in Schedule I hereto

c/o Citigroup Global Markets Inc.
    388 Greenwich Street
    New York, New York 10013

    J.P. Morgan Securities Inc.
    270 Park Avenue
    New York, New York 10017

Ladies and Gentlemen:

        Jones Apparel Group, Inc., a Pennsylvania corporation ("the Company"), Jones Apparel Group Holdings, Inc., a Delaware corporation, Jones Apparel Group USA, Inc., a Pennsylvania corporation, Nine West Footwear Corporation, a Delaware corporation and Jones Retail Corporation, a New Jersey corporation (collectively, the "Issuers"), as joint and several obligors, propose to issue and sell to the several parties names in Schedule I hereto (the "Initial Purchasers"), upon the terms and subject to the conditions set forth in a purchase agreement dated November 22, 2004 (the "Purchase Agreement"), $250,000,000 aggregate principal amount of their 6.125% Senior Notes due 2034 (the "Securities"). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement.

        As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Issuers jointly and severally agree with the Initial Purchasers, for the benefit of the holders (including the Initial Purchasers) of the Securities and the Exchange Securities (as defined herein) (collectively, the "Holders"), as follows:

        Section 1. Registered Exchange Offer. The Issuers shall (i) prepare and file with the Commission a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer to the Holders of the Securities (the "Registered Exchange Offer") to issue and deliver to such Holders, in exchange for the Securities, a like aggregate principal amount of debt securities of the Issuers (the "Exchange Securities"), that are identical in all material respects to the Securities, except that the additional interest provisions and the transfer restrictions relating to the Securities will be eliminated, (ii) use their reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act and the Registered Exchange Offer to be consummated no later than 210 days after the date of original issuance of the Securities (the "Issue Date"), and (iii) keep the Exchange Offer Registration Statement effective for not less than 30 calendar days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). The Exchange Securities will be issued under the Indenture or an indenture (the "Exchange Securities Indenture") among the Issuers and the Trustee or such other bank or trust company that is reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange Securities Trustee"), such indenture to be identical in all material respects to the Indenture, except for the additional interest provisions and the transfer restrictions relating to the Securities (as described above).

        Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of any of the Issuers (within the meaning of the Securities Act) or an Exchanging Dealer (as defined herein) not complying with the requirements of the next sentence, (b) is not an Initial Purchaser holding Securities that have, or that are reasonably likely to have, the status of an unsold allotment in an initial distribution, (c) acquires the Exchange Securities in the ordinary course of such Holder's business and (d) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Issuers, the Initial Purchasers and each Exchanging Dealer (as defined below) acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, and in the absence of an applicable exemption therefrom, each Holder (which may include the Initial Purchasers) that is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market-making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), may be deemed to be an "underwriter" within the meaning of the Securities Act and must therefore, deliver a prospectus containing substantially 

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the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer.

        In connection with the Registered Exchange Offer, the Issuers shall:

        (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

        (b) keep the Registered Exchange Offer open for not less than 30 calendar days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders;

        (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York;

        (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York City time, on the last business day on which the Registered Exchange Offer shall remain open; and

        (e) otherwise comply in all respects with all laws that are applicable to the Registered Exchange Offer.

        As soon as practicable after the close of the Registered Exchange Offer, the Issuers shall:

        (a) accept for exchange all Securities validly tendered and not validly withdrawn pursuant to the Registered Exchange Offer (it being understood that all questions as to validity, form, eligibility (including time of receipt) and acceptance of Securities tendered for exchange shall be determined by the Issuers in their sole discretion, which determination shall be final and binding);

        (b) deliver to the Trustee for cancellation all Securities so accepted for exchange; and

        (c) cause the Trustee or the Exchange Securities Trustee, as the case may be, promptly to authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the Securities of such Holder so accepted for exchange.

        The Issuers shall use their reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein in order to permit such prospectus to be used by all persons 

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subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers have sold all Exchange Securities held by them and (ii) the Issuers shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer.

        The Indenture or the Exchange Securities Indenture, as the case may be, shall provide that the Securities and the Exchange Securities shall vote and consent together on all matters as one class and that none of the Securities or the Exchange Securities will have the right to vote or consent as a separate class on any matter.

        Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the Issue Date.

        Each Holder participating in the Registered Exchange Offer shall be required to represent to the Issuers that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act and (iii) such Holder is not an affiliate of any of the Issuers or, if it is such an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

        Notwithstanding any other provisions hereof, the Issuers will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not, as of the consummation of the Registered Exchange Offer, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

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        Section 2. Shelf Registration. If (i) after the Issue Date, there is a change in law or applicable interpretations thereof by the Commission's staff and as a result the Issuers are not permitted to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) any Holder is not permitted to participate in such Registered Exchange Offer because of any applicable law or interpretation thereof, or (iii) such Registered Exchange Offer is not consummated within 210 days after the Issue Date, or (iv) any Holder (other than an Initial Purchaser holding Securities acquired directly from the Issuers) that participates in the Registered Exchange Offer does not receive freely transferable Exchange Securities in exchange for tendered Securities, other than by reason of such Holder being an Affiliate of any of the Issuers (it being understood that, for purposes of this Section 2, the requirement that an Exchanging Dealer deliver a prospectus in connection with sales of Exchange Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a result of marketmaking activities or other trading activities shall not result in such Exchange Securities being not "freely tradeable"), or (v) any Initial Purchaser requests within 30 days after the consummation of the exchange offers with respect to Securities acquired by them directly from the Issuers that have, or that are reasonably likely to be determined to have, the status of unsold allotments in an initial distribution, then the following provisions shall apply:

        (a) The Issuers shall use their reasonable efforts to file as promptly as practicable with the Commission, and thereafter shall use their reasonable efforts to cause to be declared effective as promptly as practicably after the date on which the filing obligation arises, a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a "Shelf Registration Statement" and, together with any Exchange Offer Registration Statement, a "Registration Statement"); provided, however, that, with respect to Exchange Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Issuers may, if permitted by current interpretations by the Commission's staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Regulation SK Items 507 and/or 508, as applicable, in satisfaction of their obligations under this paragraph (a) with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement.

        (b) The Issuers shall use their reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be used by Holders of Transfer Restricted Securities for a period ending on the earlier of (i) two years from the Issue Date or such shorter period that will terminate when all the Transfer Restricted Securities covered by 

5

the Shelf Registration Statement have been sold pursuant thereto and (ii) the date on which the Securities become eligible for resale without volume restrictions pursuant to Rule 144 under the Securities Act (in any such case, such period being called the "Shelf Registration Period"). The Issuers shall be deemed not to have used their reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if they voluntarily take any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless (i) such action is required by applicable law or (ii) such action is contemplated by Section 4(o).

        (c) Notwithstanding any other provisions hereof, the Issuers will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Issuers by or on behalf of any Holder specifically for use therein (the "Holders' Information")) does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

        Section 3. Additional Interest. (a) The parties hereto agree that the Holders of Transfer Restricted Securities will suffer damages if the Issuers fail to fulfill their obligations under Section 1 or Section 2, as applicable, and that it would not be feasible to ascertain the extent of such damages. Accordingly, if (i) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, (ii) the Shelf Registration Statement is not declared effective on or prior to the later of (A) the date that is 210 days after the Issue Date and (B) 90 days after the obligation to file such Shelf Registration Statement arises under Section 2 or (iii) the Shelf Registration Statement is filed and declared effective within the period prescribed by clause (ii) but shall thereafter cease to be effective at any time that the Issuers are obligated to maintain the effectiveness thereof (other than (A) as contemplated by Section 4(o), provided that the period of time during which the Shelf Registration Statement is not effective pursuant to Section 4(o) does not exceed either two periods of up to 45 days or 90 days in the aggregate during any 365-day period, or (B) as required by applicable law) (each such event referred to in clauses (i) through (iii), a "Registration Default"), the Issuers will be obligated to pay additional interest to each Holder of Transfer 

6

Restricted Securities, during the period of one or more such Registration Defaults, at a rate of 0.25% per annum for the first 90 days and 0.50% per annum thereafter, determined daily, on the principal amount of the Securities constituting Transfer Restricted Securities held by such holder until (i) the Registered Exchange Offer is consummated, (ii) the Shelf Registration Statement is declared effective or (iii) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of additional interest will cease. As used herein, the term "Transfer Restricted Securities" means (i) each Security until the date on which such Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Security until the date on which it has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Security until the date on which it is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary in this Section 3(a), none of the Issuers shall be required to pay additional interest to a Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the second to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 4(n).

        (b) The Issuers shall notify the Trustee and the Paying Agent under the Indenture promptly upon the happening of each and every Registration Default. The Issuers shall pay the additional interest due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be any of the Issuers for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the additional interest then due. The additional interest due shall be payable on each interest payment date specified by the Indenture and the Securities to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay additional interest shall be deemed to accrue from and including the date of the applicable Registration Default.

        (c) The parties hereto agree that the additional interest provided for in this Section 3 constitute a reasonable estimate of and are intended to constitute the sole and exclusive remedy for damages that will be suffered by Holders of Transfer Restricted Securities by reason of the failure of (i) the Shelf Registration Statement or the Exchange Offer Registration Statement to be filed, (ii) the Shelf Registration Statement to remain effective or (iii) the Exchange Offer Registration Statement to be declared effective and the Registered Exchange Offer to be consummated, in each case to the extent required by this Agreement.

        Section 4. Registration Procedures. In connection with any Registration Statement, the following provisions shall apply:

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        (a) The Issuers shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and shall use their reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as any Initial Purchaser may reasonably propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement.

        (b) The Issuers shall advise each Initial Purchaser, each Exchanging Dealer which has provided in writing to any of the Issuers a telephone or facsimile number and address for notice (in the case of clauses (iii), (iv) and (v) only) and, in the case of a Shelf Registration Statement, the Holders of the securities covered thereby and, if requested by any such person, confirm such advice in writing (which advice pursuant to clauses (iii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

    (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;

    (ii) of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information;

    (iii) of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;

    (iv) of the receipt by any of the Issuers of any notification with respect to the suspension of the qualification of the Securities or the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

    (v) of the happening of any event that requires the making of any changes in any Registration Statement or the prospectus included therein in order that such document does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to 

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make the statements therein (in the case of the prospectus included therein, in the light of the circumstances under which they were made) not misleading.

        (c) The Issuers will make every reasonable effort to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of any Registration Statement.

        (d) The Issuers will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

        (e) The Issuers will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Issuers consent to the use of such prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offer and sale of the Transfer Restricted Securities covered by such prospectus or any amendment or supplement thereto.

        (f) The Issuers will furnish to each Initial Purchaser and each Exchanging Dealer and to any other Holder who so requests in writing, without charge, at least one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any Initial Purchaser or Exchanging Dealer or any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

        (g) The Issuers will, during the Exchange Offer Registration Period or the Shelf Registration Period, as applicable, promptly deliver to each Initial Purchaser, each Exchanging Dealer and such other persons that are required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement or the Shelf Registration Statement and any amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or other persons may reasonably request; and the Issuers consent to the use of such prospectus or any amendment or supplement thereto by any such Initial Purchaser, Exchanging Dealer or other persons, as applicable, as aforesaid.

        (h) Prior to the effective date of any Registration Statement, the Issuers will use their reasonable efforts to register or qualify, or cooperate with the Holders of 

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Securities or Exchange Securities included therein and their respective counsel in connection with the registration or qualification of, such Securities or Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by such Registration Statement; provided, that none of the Issuers will be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

        (i) Subject to the provisions of the Indenture or the Exchange Securities Indenture, as the case may be, and applicable law, the Issuers will cooperate with the Holders of Securities or Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities or Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing prior to sales of Securities or Exchange Securities pursuant to such Registration Statement.

        (j) If any event contemplated by Section 4(b)(iii) through (v) occurs during the period for which the Issuers are required to maintain an effective Registration Statement, the Issuers will promptly prepare and file with the Commission a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities or Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

        (k) Not later than the effective date of the applicable Registration Statement, the Issuers will provide a CUSIP number for the Securities and the Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities or the Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

        (l) The Issuers shall use their reasonable efforts to comply with all applicable rules and regulations of the Commission to the extent and so long as they are applicable to the applicable Registration Statement, Registered Exchange Offer or the shelf registration described in the Shelf Registration Statement and will make generally available to their security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11 (a) of the Securities Act; provided that in no event shall such earning statement be delivered later than 90 days after the end of the first fiscal year of Jones Apparel Group, Inc. commencing after the 

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effective date of the applicable Registration Statement, which statement shall cover such fiscal year.

        (m) The Issuers will cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act as required by applicable law in a timely manner.

        (n) The Issuers may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Issuers such information concerning the Holder and the distribution of such Transfer Restricted Securities as the Issuers may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Issuers may exclude from such registration the Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

        (o) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Issuers pursuant to Section 4(b)(iii) through (v) or any notice from the Issuers that the Shelf Registration Statement is not useable for valid business reasons (not including avoidance of the Issuer's obligation hereunder) in the good faith determination of the Issuers, including the acquisition or divestiture of assets and other material transactions involving the Issuers, such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 4(j) or until advised in writing (the "Advice") by the Issuers that the use of the applicable prospectus may be resumed. If the Issuers shall give any notice described in the immediately preceding sentence during the period that the Issuers are required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(j) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required).

        (p) In the case of a Shelf Registration Statement, the Issuers shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Holders of a majority in aggregate principal amount of the Securities or Exchange Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities or Exchange Securities pursuant to such Shelf Registration Statement.

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        (q) In the case of a Shelf Registration Statement, the Issuers shall as may reasonably be requested by any Holder (i) make reasonably available for inspection by a representative of, and Special Counsel (as defined below) acting for, Holders of a majority in aggregate principal amount of the Securities and Exchange Securities being sold and any underwriter participating in any disposition of Securities or Exchange Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Issuers and their respective subsidiaries and (ii) use their reasonable efforts to have their officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative, Special Counsel or any such underwriter (an "Inspector") in connection with such Shelf Registration Statement; provided, however, that each such person shall first agree in writing if requested by the Issuers that any information that is designated in writing by the Issuers, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any Inspector, unless such disclosure is required by law or by court or administrative order, or to assert any defenses available under the state and federal securities laws, including without limitation, "due diligence" defenses, or such information becomes available to the public generally other than as a result of a disclosure or failure to safeguard such information by such Holder or Inspector or to such person from a source other than the Issuers and such source is not known, after due inquiry, by such person to be bound by any obligation of confidentiality.

        (r) In the case of a Shelf Registration Statement, the Issuers shall, if requested by Holders of a majority in aggregate principal amount of the Securities and Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) in connection with such Shelf Registration Statement, use their reasonable efforts to cause (i) their counsel to deliver an opinion relating to the Shelf Registration Statement and the Securities or Exchange Securities, as applicable, in customary form, (ii) their respective officers to execute and deliver all customary documents and certificates requested by Holders of a majority in aggregate principal amount of the Securities and Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) and (iii) their respective independent public accountants to provide a comfort letter or letters in customary form, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

        Section 5. Registration Expenses. The Issuers will bear all expenses incurred in connection with the performance of their obligations under Sections 1, 2, 3 and 4 and the Issuers will reimburse the Initial Purchasers and the Holders for the reasonable fees and disbursements of one firm of attorneys (in addition to any local counsel) chosen by the Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities to be sold pursuant to each Registration Statement (the "Special Counsel") acting for the Initial Purchasers or 

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Holders in connection therewith.

        Section 6. Indemnification. Each of the Issuers, jointly and severally, shall indemnify and hold harmless each Holder (including any such Initial Purchaser or Exchanging Dealer), each of their respective affiliates, each Person, if any, who controls any of such parties within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and each of their respective directors, officers, partners, employees, representatives and agents, to the fullest extent lawful as follows:

    (i) from and against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus contained therein or any amendment or supplement thereto pursuant to which the offer and sale of the Securities or Exchange Securities were registered under the Securities Act including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading;

    (ii) from and against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any court or governmental agency or body, whether commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if and only if such settlement is effected with the prior written consent of the Issuers; and

    (iii) without duplication, from and against any and all expenses whatsoever (including reasonable fees and disbursements of counsel chosen by such Initial Purchaser, Holder or Exchanging Dealer (except to the extent otherwise expressly provided in Section 6(c) hereof)), as incurred, reasonably incurred in investigating, preparing for or defending against any litigation, or any investigation or proceeding by any court or governmental agency or body, whether commenced or threatened, and any amount paid in settlement thereof, or any other claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) of this Section 6(a);

        provided, however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission (i) made in reliance upon and in conformity with information furnished to the Issuers by or on behalf of such 

13

Initial Purchaser, Holder or Exchanging Dealer in writing expressly for use in the Registration Statement, any prospectus contained therein, or any amendment or supplement thereto or (ii) contained in any preliminary prospectus or any prospectus if such Initial Purchaser, Holder or Exchanging Dealer failed to send or deliver a copy of the final prospectus where such delivery is required by the Securities Act and such final prospectus (as so amended or supplemented) would have corrected such untrue statement or omission and the delivery thereof would have eliminated such losses, claims, damages or liabilities. Any amounts advanced by the Issuers to an indemnified party pursuant to this Section 6(a) as a result of such losses shall be returned to the Issuers if it shall be finally judicially determined by such a court in a judgment not subject to appeal or final review that such indemnified party was not entitled to indemnification by the Issuers.

        (b) Each Holder (including any such Initial Purchaser or Exchanging Dealer), by its acceptance of its Securities or Exchange Securities, as the case may be, agrees, severally and not jointly, to indemnify and hold harmless each Issuer and each of their respective directors, officers (including each of the officers of the Issuers who signed the Registration Statement), employees, representatives and agents, and each Person, if any, who controls any of the Issuers within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 6(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Issuers by or on behalf of such Holder expressly for use in the Registration Statement (or any amendment thereto) or any such prospectus (or any amendment or supplement thereto); provided, however, that, in the case of a Shelf Registration Statement, no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities or Exchange Securities pursuant to such Shelf Registration Statement.

        (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, enclosing a copy of all papers properly served on such indemnified party (but failure to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have other than on account of this indemnity agreement). An indemnifying party may participate, at its own expense, in the defense of any such action. If an indemnifying party so elects within a reasonable time after receipt of such notice, such indemnifying party, jointly with any other indemnifying party, may assume the defense of such action with counsel chosen by it and reasonably satisfactory to the indemnified parties defendant in such 

14

action; provided, however, that if any such indemnified party reasonably determines, upon written advice of counsel, that there may be legal defenses available to any indemnified party which are different from or in addition to those available to any indemnifying party or that representation of such indemnifying party and any indemnified party by the same counsel would present a conflict of interest, then such indemnifying party or parties shall not so be entitled to assume such defense. If an indemnifying party is not so entitled to assume the defense of such action, counsel for such indemnifying party shall be entitled to conduct the defense of such indemnifying party and counsel for each indemnified party or parties shall be entitled to conduct the defense of such indemnified party or parties. If an indemnifying party assumes the defense of an action in accordance with and as permitted by the provisions of this Section 6(c), such indemnifying party shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. No indemnifying party shall, without the prior written consent of the indemnified parties, which consent shall not be unreasonably withheld, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6, unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

        (d) Notwithstanding any payment or payments made by any Issuer hereunder, each Issuer hereby expressly waives subrogation to, and agrees that it shall not be entitled to be subrogated to, any of the rights of any indemnified party against any of the Issuers or any other right of offset held by any indemnified party for the payment of any amounts owed to any indemnified party pursuant to this Section 6; provided, however, that if any of the foregoing provisions of this paragraph are held to be contrary to applicable law or unenforceable by a court of competent jurisdiction, each of the Issuers hereby expressly agrees that any right of subrogation or contribution that such Issuer may have as a result of such applicable law or unenforceability, as the case may be, shall be subordinate in right of payment to the payment in full in cash of all amounts owed to any indemnified party pursuant to this Section 6.

        (e) If the indemnification provided for in this Section 6 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each 

15

indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Issuers from the offering and sale of the Securities, on the one hand, and a Holder with respect to the sale by such Holder of Securities, Exchange Securities, on the other, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

        The relative benefits received by the Issuers, on the one hand, and a Holder, on the other, with respect to such offering and such sale shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities (before deducting expenses) received by or on behalf of the Issuers as set forth in the table on the cover of the Offering Memorandum, on the one hand, bear to the total proceeds received by such Holder with respect to its sale of Securities, Exchange Securities, on the other.

        The relative fault of the Issuers on the one hand and the Holders on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers or by the Holders, and the respective parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

        The Issuers and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 6(e). The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 6(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing for or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

        Notwithstanding the provisions of this Section 6(e), an indemnifying party that is a Holder of Securities or Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such indemnifying party to any 

16

purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.

        No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

        For purposes of this Section 6(e), each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Initial Purchaser, and each director of any Issuer and each officer of any Issuer who signed the Registration Statement and each person, if any, who controls any Issuer within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Issuer.

        Section 7. Rules 144 and 144a. The Issuers shall use their reasonable efforts to file the reports required to be filed by them under the Securities Act and the Exchange Act in a timely manner and, if at any time the Issuers are not required to file such reports, they will, upon the written request of any Holder of Transfer Restricted Securities, make publicly available other information so long as necessary to permit sales of such Holder's securities pursuant to Rules 144 and 144A. The Issuers covenant that they will take such further action as any Holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer Restricted Securities, the Issuers shall deliver to such Holder a written statement as to whether they have complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Issuers to register any of their securities pursuant to the Exchange Act.

        Section 8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Issuers (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith.

        No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by 

17

the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

        Section 9. Miscellaneous. Amendments and Waivers. (a) The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuers have obtained the written consent of Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities, taken as a single class. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities being sold by such Holders pursuant to such Registration Statement.

        (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery:

    (i) if to a Holder, at the most current address given by such Holder to the Issuers in accordance with the provisions of this Section 9(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.;

    (ii) if to an Initial Purchaser, initially at its address set forth in the Purchase Agreement; and

    (iii) if to any of the Issuers, initially at its address set forth in the Purchase Agreement.

        All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if sent by telecopier.

        (c) Successors and Assigns. This Agreement shall be binding upon the Issuers and their respective successors and assigns.

        (d) Counterparts. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopier) and by the parties hereto in separate counterparts, each of which when so executed shall be 

18

deemed to be an original and all of which taken together shall constitute one and the same agreement.

        (e) Definition of Terms. For purposes of this Agreement. (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.

        (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

        (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

        (h) Remedies. In the event of a breach by any Issuer or Holder of any of its obligations under this Agreement, each Holder or the Issuers, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages (other than the recovery of damages for a breach by any Issuer of its obligations under Sections 1 or 2 hereof for which additional interest have been paid pursuant to Section 3 hereof), will be entitled to specific performance of their rights under this Agreement. The Issuers and each Holder agree that monetary damages would not be adequate compensation for any loss incurred by reason by it of a breach of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

        (i) No Inconsistent Agreements. Each of the Issuers represents, warrants and agrees for the period commencing on the date hereof and ending on the date on which there are no Transfer Restricted Securities outstanding that (i) it has not entered into, shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person and (iii) without limiting the generality of the foregoing, without the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities, it shall not grant to any person the right to request the Issuers to register any debt securities of the Issuers under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of this Agreement.

        (j) No Piggyback on Registrations. None of the Issuers or any of their security holders (other than the Holders of Transfer Restricted Securities in such 

19

capacity) shall have the right to include any securities of the Issuers in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities.

        (k) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

[Rest of page intentionally left blank]

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        Please confirm that the foregoing correctly sets forth the agreement among the Issuers and the Initial Purchasers.

JONES APPAREL GROUP, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Executive Vice President
 

JONES APPAREL GROUP HOLDINGS, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: President
 

JONES APPAREL GROUP USA, INC.
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Secretary
 

NINE WEST FOOTWEAR CORPORATION
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Executive Vice President
        and Secretary
 

JONES RETAIL CORPORATION
 
By:  /s/ Ira M. Dansky
        Name: Ira M. Dansky
        Title: Secretary
 

 21

Accepted in New York, New York.

CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES INC.

By:  Citigroup Global Markets, Inc.

By:  /s/ Ian Sugarman
       Name: Ian Sugarman
       Title: Vice President

By:  J.P. Morgan Securities Inc.

By:  /s/ Maria Sramek
       Name: Maria Sramek
       Title: Vice President

For themselves andthe other several Initial
Purchasers named in Schedule I to the
foregoing Agreement.

22

SCHEDULE I

Initial Purchasers

Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Banc of America Securities LLC
Barclays Capital Inc.
Bear, Stearns & Co. Inc.
Greenwich Capital Markets, Inc.
Scotia Capital (USA) Inc.
SunTrust Capital Markets, Inc.
Wachovia Capital Markets, LLC

ANNEX A

        Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Issuers have agreed that, starting on the date hereof and ending on the close of business on the earlier to occur of (i) the date on which all Exchange Securities held by broker-dealers eligible to use the Prospectus to satisfy their prospectus delivery obligations under the Securities Act have been sold and (ii) the date 180 days after the consummation of the Registered Exchange Offer (the "Expiration Date"), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution".

A-1

ANNEX B

        Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution".

B-1

ANNEX C

PLAN OF DISTRIBUTION

        Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Issuers have agreed that, starting on the date hereof and ending on the close of business on the earlier to occur of (i) the date on which all Exchange Securities held by broker-dealers eligible to use the Prospectus to satisfy their prospectus delivery obligations under the Securities Act have been sold and (ii) the date 180 days after the consummation of the Registered Exchange Offer (the "Expiration Date"), it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until [                ], 20[ ], all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.

        None of the Issuers will receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

        For a period starting on the date hereof and ending on the close of business on the earlier to occur of (i) the date on which all Exchange Securities held by broker-dealers eligible to use the Prospectus to satisfy their prospectus delivery 

C-1

obligations under the Securities Act have been sold and (ii) the Expiration Date, the Issuers will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Issuers have agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

C-2

ANNEX D

        CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:
Address:

        If the undersigned is not a broker-dealer, the undersigned represents that it is (i) acquiring the Exchange Securities in the ordinary course of its business, (ii) has no arrangement or understanding with any person, nor does it intend to engage in, a distribution (as that term is interpreted by the Securities and Exchange Commission) of Exchange Securities and (iii) it is not an affiliate (as that term is interpreted by the Securities and Exchange Commission) of any of the Issuers. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

D-1

Schedule to Omitted Agreements

        The Exchange and Note Registration Rights Agreements dated November 22, 2004 among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail Corporation, and Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Representatives of the Several Initial Purchasers listed in Schedule I thereto, with respect to the 4.250% Senior Notes due 2009 and the 5.125% Senior Notes due 2014 have been omitted. Those two agreements are substantially identical to the Exchange and Note Registration Rights Agreement with respect to the 6.125% Senior Notes due 2034; the only material detail in which those agreements differ is the series of notes referred to in the definition of "Securities" therein.

EX-10

EXHIBIT 10.3

JONES APPAREL GROUP, INC.
1999 STOCK INCENTIVE PLAN

(as amended on December 10, 2004)

        1. Purpose of the 1999 Stock Incentive Plan. Jones Apparel Group, Inc. (the "Company") desires to attract and retain the best available talent and to encourage the highest level of performance. The 1999 Stock Incentive Plan (the "Stock Incentive Plan") is intended to contribute significantly to the attainment of these objectives by (i) providing long-term incentives and rewards to all key employees of the Company (including officers and directors who are key employees of the Company and also including key employees of any subsidiary of the Company which may include officers or directors of any subsidiary of the Company who are also key employees of said subsidiary), and those directors and officers, consultants, advisers, agents or independent representatives of the Company or of any subsidiary (together, "Eligible Individuals"), who are contributing or in a position to contribute to the long-term success and growth of the Company or of any subsidiary, (ii) assisting the Company and any subsidiary in attracting and retaining Eligible Individuals with experience and ability, and (iii) associating more closely the interests of such Eligible Individuals with those of the Company's stockholders.

        2. Scope and Duration of the Stock Incentive Plan. Under the Stock Incentive Plan, options ("Options") to purchase shares of common stock, par value $.01 per share ("Common Stock"), may be granted to Eligible Individuals. Options granted to employees (including officers and directors who are employees) of the Company or a subsidiary corporation thereof, may, at the time of grant, be designated by the Company's Board of Directors either as incentive stock options ("ISOs"), with the attendant tax benefits as provided for under Sections 421 and 422 of the Internal Revenue Code of 1986, as amended (the "Code") or as nonqualified stock options. Stock appreciation rights (the "Rights") may be granted in association with Options. Shares of Common Stock subject to restrictions and granted pursuant to Paragraph 7 of the Stock Incentive Plan ("Restricted Stock") may also be granted to Eligible Individuals hereunder. The grant of any of an Option, a Right and/or Restricted Stock is sometimes referred to herein as an "Award." The aggregate number of shares of Common Stock reserved for grant from time to time under the Stock Incentive Plan is 18,500,000 shares of Common Stock, which shares of Common Stock may be authorized but unissued shares of Common Stock or shares of Common Stock, which shall have been or which may be reacquired by the Company, as the Board of Directors of the Company shall from time to time determine. Restricted Stock issued pursuant to the Stock Incentive Plan, even while subject to restrictions, will be counted against the maximum number of shares issuable hereunder. Such aggregate numbers shall be subject to adjustment as provided in Paragraph 11. If an Option shall expire or terminate for any reason without having been exercised in full or surrendered in full in connection with the exercise of a Right, the shares of Common Stock represented by the portion of the Option not so exercised or surrendered shall (unless the Stock Incentive Plan shall have been terminated) become available for other Awards of Options under the Stock Incentive Plan, except that up to 2,000,000 shares of Common Stock represented by Options granted from and after May 19, 2004 which are not so exercised or surrendered shall (unless the Stock Incentive Plan shall have been terminated) become available for other Awards of either Options or Restricted Stock under the Stock Incentive 

Plan. If Restricted Stock is forfeited for any reason, the forfeited shares of Restricted Stock shall (unless the Stock Incentive Plan shall have been terminated) become available for other Awards of Restricted Stock or Options under the Stock Incentive Plan. Subject to Paragraph 14, no Option, Right or Restricted Stock shall be granted under the Stock Incentive Plan after May 19, 2009.

        3. Administration of the Stock Incentive Plan.  

        (a) This Stock Incentive Plan will be administered by the Board of Directors of the Company (the "Board of Directors"). The Board of Directors, in its discretion, may designate a Compensation Committee (the "Compensation Committee" or "Committee") composed of at least two members of the Board of Directors to administer this Stock Incentive Plan. Members of the Compensation Committee shall meet such qualifications as the Board of Directors may determine; provided, however, that each member shall qualify as a "Non-Employee Director" under Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as an "Outside Director" as defined in Code Section 162(m) and any regulations promulgated thereunder. The Board, in its discretion, may also designate a CEO Committee (the "CEO Committee"), composed of the director of the Company who is serving as the Company's chief executive officer.

        (b) The Board of Directors or the Committee (hereinafter, the terms "Compensation Committee" or "Committee", shall mean the Board of Directors whenever no such Compensation Committee has been designated), shall have authority in its discretion, subject to and not inconsistent with the express provisions of this Stock Incentive Plan, to direct the grant of Awards; to determine the purchase price of the Common Stock covered by each Award; the Eligible Individuals to whom, and the time or times at which, Awards shall be granted and subject to the maximum set forth in Paragraph 4 hereof, the number of shares of Common Stock to be covered by each Award; to designate Options as ISOs; to direct the grant of Rights in connection with any Option; to interpret the Stock Incentive Plan; to determine the time or times at which Options may be exercised; to determine the terms and conditions of the restrictions relating to the Restricted Stock (which restrictions may vary among Awards as the Committee shall deem appropriate); to prescribe, amend and rescind rules and regulations relating to the Stock Incentive Plan, including, without limitation, such rules and regulations as it shall deem advisable, so that transactions involving Awards may qualify for exemption under such rules and regulations as the Securities and Exchange Commission may promulgate from time to time exempting transactions from Section 16(b) of the Securities and Exchange Act of 1934 (the "Exchange Act"); to determine the terms and provisions of and to cause the Company to enter into agreements with Eligible Individuals in connection with Awards granted under the Stock Incentive Plan (the "Agreements"), which Agreements may vary from one another as the Committee shall deem appropriate; and to make all other determinations it may deem necessary or advisable for the administration of the Stock Incentive Plan. Notwithstanding the foregoing, except as provided in Section 11, the Committee shall not have the authority to reduce the exercise price of any outstanding Option, to offer to grant any new Option in exchange for the cancellation of an outstanding Option with a higher exercise price, to increase the maximum number of shares of Common Stock reserved for issuance under the Stock Incentive Plan or to alter the classes of persons constituting Eligible Individuals.

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        Members of the Committee shall serve at the pleasure of the Board of Directors. The Committee shall have and may exercise all of the powers of the Board of Directors under the Stock Incentive Plan, other than the power to appoint a director to Committee membership. A majority of the Committee shall constitute a quorum, and acts of a majority of the members present at any meeting at which a quorum is present shall be deemed the acts of the Committee. The Committee may also act by instrument signed by a majority of the members of the Committee.

        Every action, decision, interpretation or determination by the Committee with respect to the application or administration of this Stock Incentive Plan shall be final and binding upon the Company and each person holding any Award granted under this Stock Incentive Plan.

        (c) Subject to the express provisions of this Plan, the Committee shall have the authority, in its discretion, to delegate to the CEO Committee the authority to direct the grant of Awards to Eligible Individuals (as such term is defined in the Plan), solely in connection with either the hiring or the promotion of such Eligible Individuals by the Company or by any subsidiary of the Company and, in connection with such Awards, to determine the purchase price of the Common Stock covered by such Awards, the number of shares of Common Stock to be covered by such Awards, to designate any such Awards of Options as ISOs, to direct the grant of Rights in connection with any such Options, to determine the time or times at which such Options may be exercised, and to determine the terms and conditions of the restrictions relating to such Awards of Restricted Stock; provided, however, that the CEO Committee shall have no authority to (i) grant Awards to the chief executive officer of the Company or to any other Eligible Individual who at the time of the Award is, or is reasonably expected to become, subject to the provisions of Section 16 of the Exchange Act, pursuant to Rule 16a-2 under the Exchange Act, (ii) during any calendar year, grant Options to purchase more than 200,000 shares of Common Stock in the aggregate or grant more than 75,000 shares of Restricted Stock in the aggregate, (iii) grant to any Eligible Individual Awards of Options to purchase more than 25,000 shares of Common Stock in the aggregate and/or Awards of more than 10,000 shares of Restricted Stock in the aggregate or (iv) grant Awards that are inconsistent with the express provisions of the Plan.

        4. Eligibility: Factors to be Considered in Granting Awards and Designating ISOs.

            (a) Awards may be granted only to (i) key employees (including officers and directors who are employees) of the Company or any subsidiary corporation thereof on the date of grant (Options so granted may be designated as ISOs), and (ii) directors or officers of the Company or a subsidiary corporation thereof on the date of grant, without regard to whether they are employees, and (iii) consultants or advisers to or agents or independent representatives of the Company or a subsidiary thereof. In determining the persons to whom Awards shall be granted and the number of shares of Common Stock to be covered by each Award, the Committee, or, if applicable, the CEO Committee, shall take into account the nature of the duties of the respective persons, their present and potential contributions to the Company's (including subsidiaries') successful operation and such other factors as the Board of Directors in its discretion shall deem relevant. Subject to the provisions of Paragraph 2 and clause (c) below, an Eligible Individual may receive Awards on more than one occasion under the Stock Incentive Plan. No person shall be eligible for an Award if he shall have filed with the Secretary of the Company an instrument waiving such eligibility; provided that any 

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such waiver may be revoked by filing with the Secretary of the Company an instrument of revocation, which revocation will be effective upon such filing.

            (b) In the case of each ISO granted to an employee, the aggregate fair market value (determined at the time the ISO is granted) of the Common Stock with respect to which the ISO is exercisable for the first time by such employee during any calendar year (under all plans of the Company and any subsidiary corporation thereof) may not exceed $100,000.

            (c) In no event shall any Eligible Individual be granted Options to purchase more than 3,000,000 shares of Common Stock or shares of Restricted Stock as Performance-Based Awards (as defined in paragraph 12) in excess of 1,500,000 over the ten-year term of this Stock Incentive Plan.

        5. Awards of Options.

        (a) Options.

        (i) The purchase price per share of the Common Stock covered by each Option shall be established by the Committee, or, if applicable, the CEO Committee, but in no event shall it be less than the fair market value of a share of the Common Stock on the date the Option is granted; provided, however, that if an Option is granted prior to May 19, 2004 to a director of the Company for services solely as a director, and such grant is approved by the Board of Directors, the purchase price may be less than such fair market value. If, at the time an Option is granted, the Common Stock is publicly traded, such fair market value shall be the closing price (or the mean of the latest bid and asked prices) of a share of Common Stock on such date as reported in The Wall Street Journal (or a publication or reporting service deemed equivalent to The Wall Street Journal for such purpose by the Board of Directors) for any national securities exchange or other securities market which at the time is included in the stock price quotations of such publication. In the event that the Committee shall determine such stock price quotation is not representative of fair market value by reason of the lack of a significant number of recent transactions or otherwise, the Committee may determine fair market value in such a manner as it shall deem appropriate under the circumstances. If, at the time an Option is granted, the Common Stock is not publicly traded, the Committee shall make a good faith attempt to determine such fair market value.

        (ii) In the case of an employee who at the time an ISO is granted owns stock possessing more than 10% of the total combined voting power of all classes of the stock of the employer corporation or of its parent or a subsidiary corporation thereof (a "10% Holder"), the purchase price of the Common Stock covered by any ISO shall in no event be less than 110% of the fair market value of the Common Stock at the time the ISO is granted.

        (b) Term of Options. The term of each Option shall be fixed by the Committee, or, if applicable, the CEO Committee, but in no event shall it be exercisable more than 10 years from the date of grant in the case of Options granted prior to May 28, 2003, or more than seven years from the

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date of grant in the case of Options granted from and after May 28, 2003, in each case, subject to earlier termination as provided in Paragraphs 9 and 10. An ISO granted to a 10% Holder shall not be exercisable more than five years from the date of grant.

        (c) Exercise of Options.

        (i) Subject to the provisions of the Stock Incentive Plan, an Option granted to an employee under the Stock Incentive Plan shall become fully exercisable at such time or times as the Committee or, if applicable, the CEO Committee, in its sole discretion shall determine at the time of the granting of the Option or thereafter, except that in no event shall any such Option be exercisable later than 10 years after its grant in the case of Options granted prior to May 28, 2003, or more than seven years from the date of grant in the case of Options granted from and after May 28, 2003.

        (ii) An Option may be exercised as to any or all full shares of Common Stock as to which the Option is then exercisable.

        (iii) The purchase price of the shares of Common Stock as to which an Option is exercised shall be paid in full in cash at the time of exercise; provided, that the purchase price may be paid (i) in whole or in part, by surrender or delivery to the Company of previously-owned securities of the Company already beneficially owned by the Optionee for at least six months and having a fair market value on the date of the exercise equal to the portion of the purchase price being so paid, or (ii) in cash by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise. Fair market value shall be determined as provided in Paragraph 5 for the determination of such value on the date of the grant. In addition, the holder shall, upon notification of the amount due and prior to or concurrently with delivery to the holder of a certificate representing such shares of Common Stock, pay promptly any amount necessary to satisfy applicable Federal, state or local tax requirements.

        (iv) Except as provided in Paragraphs 9 and 10, no Option may be exercised unless the original grantee thereof is then an Eligible Individual.

        (v) The Option holder shall have the rights of a stockholder with respect to shares of Common Stock covered by an Option only upon becoming the holder of record of such shares of Common Stock.

        (vi) Notwithstanding any other provision of this Stock Incentive Plan, the Company shall not be required to issue or deliver any share of stock upon the exercise of an Option prior to the admission of such share to listing on any stock exchange or automated quotation system on which the Company's Common Stock may then be listed.

        6. Awards and Exercise of Rights.

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        (a) A Right may be awarded by the Committee, or, if applicable, the CEO Committee, in association with any Option either at the time such Option is granted or at any time prior to the exercise, termination or expiration of such Option. Each such Right shall be subject to the same terms and conditions as the related Option and shall be exercisable only to the extent such Option is exercisable, and the Right Value, as hereinafter defined, is a positive amount.

        (b) A Right shall entitle the holder to surrender to the Company unexercised the related Option (or any portion or portions thereof which the holder from time to time shall determine to surrender for this purpose) and to receive in exchange therefor, subject to the provisions of the Stock Incentive Plan and such rules and regulations as from time to time may be established by the Committee, a payment having an aggregate value equal to the product of (A) the "Right Value" of one share of Common Stock, as hereinafter defined, and (B) the number of shares of Common Stock called for by the Option, or portion thereof, which is surrendered. For purposes of the Stock Incentive Plan, the Right Value of one share of Common Stock shall be the excess of: (i) the fair market value of one share of Common Stock on the date on which the Right is exercised, over (ii) the purchase price per share of the Common Stock covered by the surrendered Option. The date on which the Committee shall receive notice from the holder of the exercise of a Right shall be considered the date on which the Right is exercised.

        Upon exercise of a Right, a holder shall indicate to the Committee what portion of the payment he desires to receive in cash and what portion in shares of Common Stock of the Company; provided, that the Board of Directors shall have sole discretion to determine in any case or cases that payment will be made in the form of all cash, all shares of Common Stock, or any combination thereof. If the holder is to receive a portion of such payment in shares of Common Stock, the number of shares of Common Stock shall be determined by dividing the amount of such portion by the fair market value of one share of Common Stock on the date on which the Right is exercised. The number of shares of Common Stock which may be received pursuant to the exercise of a Right may not exceed the number of shares of Common Stock covered by the related Option, or portion thereof, which is surrendered. No fractional shares of Common Stock will be issued, but instead cash will be paid for any such fractional share of Common Stock.

        No payment will be required from the holder upon exercise of a Right, except that the holder shall, upon notification of the amount due and prior to or concurrently with delivery to the holder of cash or a certificate representing shares of Common Stock, pay promptly any amount necessary to satisfy applicable Federal, state or local tax requirements, and the Company shall have the right to deduct from any payment any taxes required by law to be withheld by the Company with respect to such payment.

        (c) The fair market value of one share of Common Stock for the date on which a Right is exercised shall be determined as provided in Paragraph 5 for the determination of such value on the date of grant.

        (d) Upon exercise of a Right, the number of shares of Common Stock subject to exercise under the related Option shall automatically be reduced by the number of shares of Common Stock represented by the Option, or portion thereof, which is surrendered. Shares of Common Stock subject to Options, or portions thereof, which are surrendered in connection with the exercise 

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of Rights shall not be available for subsequent Option or Restricted Stock grants under the Stock Incentive Plan.

        (e) Whether payments upon exercise of Rights are made in cash, shares of Common Stock or a combination thereof, the Committee shall have the sole discretion as to the timing of the payments, including whether payment shall be made in a lump sum or installments, but payments may not be deferred beyond the first business day of the twenty-fifth calendar month next following the month of exercise of a Right. Deferred payments may bear interest at a rate determined by the Committee, provided that such rate of interest shall not be less than the lowest rate which avoids imputation of interest at a higher rate under the Code. The Board of Directors may make such further provisions and adopt such rules and regulations as it shall deem appropriate, not inconsistent with the Stock Incentive Plan, related to the timing of the exercise of a Right and the determination of the form and timing of payment to the holder upon such exercise.

        7. Awards of Restricted Stock. The Committee, or, if applicable, the CEO Committee, may authorize the issuance or transfer of shares of Restricted Stock to Eligible Individuals either alone or in addition to other Awards under the Stock Incentive Plan. The terms and conditions of the vesting of an Award of Restricted Stock shall be set forth in the Agreement with the recipient thereof, except that Awards of Restricted Stock that will fully vest in fewer than three years from the date of grant may not exceed 5% of the total number of shares of Common Stock reserved for issuance under the Stock Incentive Plan. The Committee, or, if applicable, the CEO Committee, may condition the grant of Restricted Stock upon the attainment of specified performance goals pursuant to Paragraph 12 hereof or such other factors as the Committee, or, if applicable, the CEO Committee, may determine, in its sole discretion. Awards of Restricted Stock shall also be subject to the following provisions:

        (a) The Restricted Stock may be issued at a purchase price less than the fair market value thereof or for no consideration, as determined by the Committee, or, if applicable, the CEO Committee.

        (b) Restricted Stock may be subject to: (i) restrictions on the sale or other disposition thereof, (ii) rights of repurchase or first refusal, and (iii) such other restrictions, conditions and terms as the Committee, or, if applicable, the CEO Committee, deems appropriate.

        (c) Each Award of Restricted Stock will constitute an immediate transfer of ownership of such shares, entitling the recipient to dividend, voting and other ownership rights. The holder of Restricted Stock shall not be required to return any dividends received thereon to the Company in the event of the forfeiture of such shares.

        (d) The Committee shall determine whether shares of Restricted Stock are to be held in escrow by the Company or by an escrow agent appointed by the Committee, or if such shares are to be delivered to the recipient of the Award with an appropriate legend referring to the terms, conditions and restrictions applicable to the Award, in substantially the following form:

"The sale, transfer, alienation, attachment, assignment, pledge or encumbrance of the shares of stock represented hereby are subject to the 

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terms and conditions (including forfeiture) of the Jones Apparel Group, Inc. 1999 Stock Incentive Plan and an Agreement entered into by the registered owner and the Company dated __________. Copies of such Plan and Agreement are on file at the offices of the Company. Any attempt to dispose of these shares in contravention of the applicable restrictions, including by way of sale, assignment, transfer, pledge, hypothecation or otherwise, shall be null and void and without effect."

If and when all restrictions on such shares have lapsed without a prior forfeiture of the shares, such legend shall be removed from the certificate representing the shares.

        8. Nontransferability of Awards. No Award granted under the Stock Incentive Plan shall be transferable, other than by will or by the laws of descent and distribution, except that all or any portion of an Option (other than Options which are ISOs) may be transferred to or for the benefit of (by trust) the spouse or lineal descendants of a holder of such Option, subject to such restrictions on transfer which may be imposed by federal and state securities laws, and if prior thereto the transferee agrees to be bound by the terms of the Stock Incentive Plan and the Options, as the case may be ("Permitted Transferee"). Options which are ISOs may be exercised, during the lifetime of the holder, only by the holder, or by his guardian or legal representative.

        9. Termination of Relationship to the Company.

        (a) In the event that any original grantee of an Option or Right shall cease to be an Eligible Individual of the Company (or any subsidiary corporation thereof), except as set forth in Paragraph 10, such Award may (subject to the provisions of the Stock Incentive Plan) be exercised (to the extent that the original grantee was entitled to exercise such Option or Right at the termination of his employment or service as a director, officer, consultant, adviser, agent or independent representative, as the case may be) at any time within three months after such termination (or for such other period following termination as the grantee and the Company may have agreed to in writing), but not more than 10 years (five years in the case of a 10% Holder) after the date on which such Award was granted or the expiration of the Award, if earlier. Notwithstanding the foregoing, except as provided in Paragraph 10, if the position of an original grantee shall be terminated by the Company or any subsidiary thereof for cause or if the original grantee terminates his employment or position voluntarily and without the written consent of the Company or any subsidiary corporation thereof, as the case may be, the Options or Rights granted to such person, whether held by such person or by a Permitted Transferee shall, to the extent not theretofore exercised, forthwith terminate immediately upon such termination. Subject to such exceptions as may be determined by the Committee, in the event any original Restricted Stock grantee shall cease to be an Eligible Individual of the Company (or any subsidiary corporation thereof), except as set forth in Paragraph 10, all shares of Restricted Stock remaining subject to applicable restrictions shall be forfeited by the recipient and be immediately transferred to, and reacquired by, the Company at no cost to the Company.

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        (b) Other than as provided in Paragraph 10(a), Awards granted under the Stock Incentive Plan shall not be affected by any change of duties or position so long as the holder remains an Eligible Individual.

        (c) Any Agreement may contain such provisions as the Committee shall approve with reference to the determination of the date employment terminates or the date other positions or relationships terminate for purposes of the Stock Incentive Plan and the effect of leaves of absence, which provisions may vary from one another.

        (d) Nothing in the Stock Incentive Plan or in any Award pursuant to the Stock Incentive Plan shall confer upon any Eligible Individual or other person any right to continue in the employ of the Company or any subsidiary corporation thereof (or the right to be retained by, or have any continued relationship with, the Company or any subsidiary corporation thereof), or affect the right of the Company or any such subsidiary corporation thereof, as the case may be, to terminate his employment, retention or relationship at any time. The grant of any Award pursuant to the Stock Incentive Plan shall be entirely in the discretion of the Committee, or, if applicable, the CEO Committee, and nothing in the Stock Incentive Plan shall be construed to confer on any Eligible Individual any right to receive any Award under the Stock Incentive Plan.

        10. Death, Disability or Retirement.

        (a) If a person to whom an Award has been granted under the Stock Incentive Plan shall (i) die (and the conditions in sub-paragraph (b) below are met), or (ii) become permanently and totally disabled or enter retirement (as such terms are defined below) while serving as an Eligible Individual, then the following provisions shall apply: (A) in the case of an Option or Stock Appreciation Right, the Award shall become immediately fully exercisable and the period for exercise provided in Paragraph 9 shall be extended to (i) one year after the date of death of the original grantee, or (ii) in the case of the permanent and total disability of the original grantee, to one year after the date of permanent and total disability of the original grantee, or (iii) three years in the case of a retirement (as defined below), but, in any case, not more than 10 years (five years in the case of a 10% Holder) after the date such Award was granted, or the expiration of the Award, if earlier, as shall be prescribed in the original grantee's Award Agreement, and (B) in the case of Restricted Stock, the period of restrictions applicable to all unvested shares shall terminate on the date of termination of employment by reason of retirement, disability or death. An Award may be exercised as set forth herein in the event of the original grantee's death, by a Permitted Transferee or the person or persons to whom the holder's rights under the Award pass by will or applicable law, or if no such person has the right, by his executors or administrators; or in the event of the original grantee's permanent and total disability, by the holder or his guardian.

        (b) In the case of death of a person to whom an Award was originally granted, the provisions of subparagraph (a) apply if such person dies (i) while in the employ of the Company or a subsidiary corporation thereof or while serving as an Eligible Individual of the Company or a subsidiary corporation thereof or (ii) within three months after the termination of such position other 

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than termination for cause, or voluntarily on the original grantee's part and without the consent of the Company or a subsidiary corporation thereof, or (iii) within three years following his retirement.

        (c) The term "permanent and total disability" as used above shall have the meaning set forth in Section 22(e)(3) of the Code.

        (d) The term "retirement" as used above shall mean voluntary termination of employment with the Company or a subsidiary corporation thereof by the Eligible Individual after attaining age 55 with at least 10 years of service with the approval of the Company or, if the individual has not attained age 55 and/or has less than 10 years of service, the Company determines that circumstances exist that warrant the granting of retirement status.

        11. Adjustments upon Changes in Capitalization. Notwithstanding any other provision of the Stock Incentive Plan, in the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, spin-offs, reorganizations, liquidations and the like, the Committee may appropriately adjust the aggregate number and class of shares of Common Stock as to which Awards may be granted under the Stock Incentive Plan, the maximum number and class of shares that may be awarded to any Eligible Individual, the number and class of shares subject to outstanding Awards, and the Option or Restricted Stock price per share. In the event of (i) the dissolution or liquidation of the Company, or (ii) the disposition by the Company of substantially all of the assets or stock of a subsidiary of which the original grantee is then an employee, officer or director, consultant, adviser, agent or independent representative or if (iii) a "change in control" (as hereinafter defined) of the Company has occurred or is about to occur, then, if the Committee shall so determine: (A) with respect to Options, each Option under the Stock Incentive Plan, if such event shall occur with respect to the Company, or each Option granted to an employee, officer, director, consultant, adviser, agent or independent representative of a subsidiary respecting which such event shall occur, shall (x) become immediately and fully exercisable or (y) terminate simultaneously with the happening of such event, and the Company shall pay the Optionee in lieu thereof an amount equal to (a) the excess of the fair market value over the exercise price of one share on the date on which such event occurs, multiplied by (b) the number of shares subject to the Option, without regard to whether the Option is then otherwise exercisable, and (B) with respect to Restricted Stock, any Restricted Stock not forfeited prior to the change in control shall become immediately and fully vested, and the Committee shall have sole discretion to waive automatic forfeitures, if any, arising from the change in control.

        12. Performance-Based Awards. Certain Awards of Restricted Stock granted under the Stock Incentive Plan may be granted, in the sole discretion of the Committee, in a manner constituting "qualified performance-based compensation" within the meaning of Section 162(m) of the Code. Such Awards (the "Performance-Based Awards") shall be based upon one or more of the following factors: stock price, earnings per share, net earnings, operating earnings, return on assets, shareholder return, return on equity, growth in assets, sales, cash flow, market share, relative performance to a group of companies comparable to the Company, and strategic business criteria consisting of one or more objectives based on the Company's meeting specified goals relating to revenue, market 

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penetration, business expansion, costs or acquisitions or divestitures. With respect to Performance-Based Awards, (i) the Committee shall establish in writing the objective performance-based goals applicable to a given fiscal period no later than 90 days after the commencement of such fiscal period (but in no event after 25% of such period has elapsed) and (ii) no Performance-Based Awards shall be payable to any recipient for a given fiscal period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied.

        13. Effectiveness of the Stock Incentive Plan. Awards may be granted under the Stock Incentive Plan, subject to its authorization and adoption by stockholders of the Company, at any time or from time to time after its adoption by the Committee, but the amendment and restatement of the Stock Incentive Plan shall not be effective unless it shall have been authorized and adopted by a majority of the votes properly cast thereon at a meeting of stockholders of the Company duly called and held after the date of adoption of the amended and restated Stock Incentive Plan by the Board of Directors. If so adopted, the amended and restated Stock Incentive Plan shall become effective as of the date of its adoption by the Board of Directors. The exercise of Options shall also be expressly subject to the condition that at the time of exercise a registration statement under the Securities Act of 1933, as amended (the "Act") shall be effective, or other provisions satisfactory to the Committee shall have been made to ensure that such exercise will not result in a violation of such Act, and such other qualification under any state or Federal law, rule or regulation as the Company shall determine to be necessary or advisable shall have been effected. If the shares of Common Stock issuable upon exercise of an Option or if shares of Restricted Stock are not registered under such Act, and if the Committee shall deem it advisable, the recipient may be required to represent and agree in writing (i) that any shares of Common Stock acquired pursuant to the Stock Incentive Plan will not be sold except pursuant to an effective registration statement under such Act or an exemption from the registration provisions of the Act and (ii) that such recipient will be acquiring such shares of Common Stock for his own account and not with a view to the distribution thereof and (iii) that the holder accepts such restrictions on transfer of such shares, including, without limitation, the affixing to any certificate representing such shares of an appropriate legend restricting transfer as the Company may reasonably impose.

        14. Termination and Amendment of the Stock Incentive Plan. The Board of Directors of the Company may amend, modify or terminate the Stock Incentive Plan at any time prior to the termination of the Stock Incentive Plan, except that no amendment may be made without shareholder approval (i) if the Board of Directors determines that such approval is necessary to comply with any tax or regulatory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16 of the Exchange Act, for which or with which the Board of Directors determines that it is desirable to qualify or comply, or (ii) if such amendment grants the Committee the authority, except as provided for in Section 11, to (a) reduce the exercise price of any outstanding Option, (b) offer to grant any new Option in exchange for the cancellation of an outstanding Option with a higher exercise price, (c) increase the maximum number of shares of Common Stock reserved for issuance under the Stock Incentive Plan, (d) alter the classes of persons constituting Eligible Individuals or (e) grant Awards of Restricted Stock that will fully vest in fewer than three years from the date of grant in excess of 5% of the total number of shares of Common 

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Stock reserved for issuance under the Stock Incentive Plan. No suspension, termination, modification or amendment of the Stock Incentive Plan may, without the express written consent of the Eligible Individual (or his Permitted Transferee) to whom an Award shall theretofore have been granted, adversely affect the rights of such Eligible Individual (or his Permitted Transferee) under such Award.

        15. Financing for Investment in Stock of the Company. The Board of Directors may cause the Company or any subsidiary to give or arrange for financing, including direct loans, secured or unsecured, or guaranties of loans by banks which loans may be secured in whole or in part by assets of the Company or any subsidiary, to any Eligible Individual under the Stock Incentive Plan who shall have been so employed or so served for a period of at least six months at the end of the fiscal year ended immediately prior to arranging such financing; but the Board of Directors may, in any specific case, authorize financing for an Eligible Individual who shall not have served for such a period. Such financing shall be for the purpose of providing funds for the purchase by the Eligible Individual of shares of Common Stock pursuant to the exercise of an Option or an Award of Restricted Stock and/or for payment of taxes incurred in connection with such exercise or Award, and/or for the purpose of otherwise purchasing or carrying a stock investment in the Company. The maximum amount of liability incurred by the Company and its subsidiaries in connection with all such financing outstanding shall be determined from time to time in the discretion of the Board of Directors. Each loan shall bear interest at a rate not less than that provided by the Code and other applicable law, rules, and regulations in order to avoid the imputation of interest at a higher rate. Each recipient of such financing shall be personally liable for the full amount of all financing extended to him. Such financing shall be based upon the judgment of the Board of Directors that such financing may reasonably be expected to benefit the Company, and that such financing as may be granted shall be consistent with the Certificate of Incorporation and By-Laws of the Company or such subsidiary, and applicable laws. If any such financing is authorized by the Board of Directors, such financing shall be administered by the Board of Directors.

        16. Severability. In the event that any one or more provisions of the Stock Incentive Plan or any Agreement, or any action taken pursuant to the Stock Incentive Plan or such Agreement, should, for any reason, be unenforceable or invalid in any respect under the laws of the United States, any state of the United States or any other government, such unenforceability or invalidity shall not affect any other provision of the Stock Incentive Plan or of such or any other Agreement, but in such particular jurisdiction and instance the Stock Incentive Plan and the affected Agreement shall be construed as if such unenforceable or invalid provision had not been contained therein or if the action in question had not been taken thereunder.

        17. Applicable Law. The Stock Incentive Plan shall be governed and interpreted, construed and applied in accordance with the laws of the State of Pennsylvania.

        18. Withholding. A holder shall, upon notification of the amount due and prior to or concurrently with delivery to such holder of a certificate representing such shares of Common Stock, pay promptly any amount necessary to satisfy applicable Federal, state, local or other tax requirements. 

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        19. Miscellaneous.

            (a) The terms "parent," "subsidiary" and "subsidiary corporation" shall have the meanings set forth in Sections 424(e) and (f) of the Code, respectively.

            (b) The term "terminated for cause" shall mean termination by the Company (or a subsidiary thereof) of the employment of or other relationship with, the original grantee by reason of the grantee's (i) willful refusal to perform his obligations to the Company (or a subsidiary thereof), (ii) willful misconduct, contrary to the interests of the Company (or a subsidiary thereof), or (iii) commission of a serious criminal act, whether denominated a felony, misdemeanor or otherwise. In the event of any dispute regarding whether a termination for cause has occurred, the Board of Directors may by resolution resolve such dispute, and such resolution shall be final and conclusive on all parties.

            (c) The term "change in control" shall mean an event or series of events that results in (i) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a "person" within the meaning of Sections 13(d)(3) of the Exchange Act, other than the Company, a majority-owned subsidiary of the Company or an employee benefit plan of the Company or such subsidiary (or such plan's related trust), become(s) the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of 20% or more of the then outstanding voting stock of the Company; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Company's Board of Directors (together with any new director whose election by the Company's Board or whose nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; (iii) all or substantially all of the business of the Company is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or the Company combines with another company and is the surviving corporation (unless the shareholders of the Company immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the aggregate voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company).

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EX-10

EXHIBIT 10.4

FORM OF STOCK OPTION AGREEMENT

JONES APPAREL GROUP, INC.
STOCK OPTION AGREEMENT

        THIS AGREEMENT, made as of this _____ day of __________, 2005 by JONES APPAREL GROUP, INC., a Pennsylvania corporation (hereinafter called the "Company"), with the person executing this Agreement (hereinafter called the "Holder"):

        The Company has adopted the stock option plan identified on Annex I attached hereto (the "Plan"). Said Plan, as it may hereafter be amended and continued, is incorporated herein by reference and made part of this Agreement.

        The Committee, which is charged with the administration of the Plan pursuant to Section 3 thereof, has determined that it would be to the advantage and interest of the Company to grant the option provided for herein to the Holder as an inducement to remain in the service of the Company or one of its subsidiaries, and as an incentive for increased efforts during such service.

        NOW, THEREFORE, pursuant to the Plan, the Company with the approval of the Committee hereby grants to the Holder as of the date hereof an option (the "Option") to purchase all or any part of the number of shares of Common Stock of the Company set forth on Annex I, at the price per share set forth on Annex I, which price is not less than the fair market value of a share of Common Stock on the date hereof, and upon the following terms and conditions:

        1. The Option shall continue in force through the "Expiration Date" stated on Annex I, unless sooner terminated as provided herein and in the Plan. Subject to the provisions of the Plan, the Option shall become exercisable as provided in the Vesting Schedule in Annex I. Such installments shall be cumulative, subject to the following:

            a. Except as provided hereinbelow, the Option may not be exercised unless the Holder is then an employee (including directors and officers who are employees), director or officer of the Company or any subsidiary of the Company, in each case, on the date of grant, or a consultant, advisor, agent or independent representative of the Company or any subsidiary of the Company, or any combination thereof.

        2. In the event that the employment or service of the Holder shall be terminated prior to the Expiration Date (otherwise than by reason of death or disability), the Option may, subject to the provisions of the Plan, be exercised (to the extent that the Holder was entitled to do so at the termination of this employment or service) at any time within three months after such termination, but not after the Expiration Date, provided, however, that if such termination shall have been for cause or voluntarily by the Holder and without the written consent of the Company or any subsidiary corporation thereof, as the case may be, the Option and all rights of the Holder hereunder, to the extent not theretofore exercised, shall forthwith terminate immediately upon such termination. Nothing in this Agreement shall confer upon the Holder any right to continue in the employ or service of the Company or any subsidiary of the Company or affect the right of the Company or any subsidiary to terminate his employment or service at any time.

        3. If the Holder shall (a) die while he is employed by or serving the Company or a corporation which is a subsidiary thereof or within three months after the termination of such position (other than termination for cause, or voluntarily on his part and without the consent of the Company or subsidiary corporation thereof, as the case may be,) or within three years following his retirement (as such term is defined in the Plan), or (b) become permanently and totally disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), while employed by or serving any such company, or (c) enter retirement, then the Option shall become immediately fully exercisable, as set forth herein by the Holder or by the person or persons to whom the Holder's rights under the Option pass by will or applicable law, or if no such person has such right, by his executors or administrators, at any time within one year after the date of death of the original Holder, or one year after the date of permanent and total disability, or three years after the date of retirement, but in each case, not later than the Expiration Date.

        4. a. The Holder may exercise the Option with respect to all or any part of the shares then purchasable hereunder by giving the Company written notice in the form annexed, as provided in paragraph 8 hereof, of such exercise. Such notice shall specify the number of shares as to which the Option is being exercised and shall be accompanied by payment in full in cash of an amount equal to the exercise price of such shares multiplied by the number of shares as to which the Option is being exercised; provided that, if permitted by the Board, the purchase price may be paid, in whole or in part, by surrender or delivery to the Company of securities of the Company having a fair market value on the date of the exercise equal to the portion of the purchase price being so paid. In such event fair market value should be determined pursuant to paragraph 5 of the Plan.

            b. Prior to or concurrently with delivery by the Company to the Holder of a certificate(s) representing such shares, the Holder shall, upon notification of the amount due, pay promptly any amount necessary to satisfy applicable federal, state or local tax requirements. In the event such amount is not paid promptly, the Company shall have the right to apply from the purchase price paid any taxes required by law to be withheld by the Company with respect to such payment and the number of shares to be issued by the Company will be reduced accordingly.

        5. Notwithstanding any other provision of the Plan, in the event of a change in the outstanding Common Stock of the Company by reason of a stock dividend, split-up, split-down, reverse split, recapitalization, merger, consolidation, combination or exchange of shares, spin-off, reorganization, liquidation or the like, then the aggregate number of shares and price per share subject to the Option shall be appropriately adjusted by the Board, whose determination shall be conclusive.

        6. a. For Non-Qualified Stock Options: No Non-Qualified Stock Options ("NQSO") granted hereunder shall be transferable other than by will or by the laws of descent and distribution, except that all or any portion of the NQSO may be transferred to or for the benefit of (by trust) the spouse or lineal descendants of the Holder, subject to such restrictions on transfer which may be imposed by federal and state securities laws, and if prior thereto the

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transferee agrees to be bound by the terms of the Plan and this Agreement. Options may be exercised, during the lifetime of the Holder, only by the Holder, or by his guardian or legal representative. In the event of any attempt by the Holder to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of the levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate this Option by notice to the Holder and it shall thereupon become null and void.

            b. For Incentive Stock Options: Incentive Stock Options ("ISO") shall, during the Holder's lifetime, be exercisable only by him, and neither the ISO nor any right hereunder shall be transferable by him, by operation of law or otherwise, except by will or by the laws of descent and distribution. In the event of any attempt by the Holder to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or of any right hereunder, except as provided for herein, or in the event of the levy or any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate this Option by notice to the Holder and it shall thereupon become null and void.

        7. Neither the Holder nor in the event of his death, any person entitled to exercise his rights, shall have any of the rights of a stockholder with respect to the shares subject to the Option until share certificates have been issued and registered in the name of the Holder or his estate, as the case may be.

        8. Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of its Chief Financial Officer, 250 Rittenhouse Circle, Bristol, Pennsylvania 19007 and any notice to the Holder shall be addressed to him at his address now on file with the Company, or to such other address as either may last have designated to the other by notice as provided herein. Any notice so addressed shall be deemed to be given on the second business day after mailing, by registered or certified mail, at a post office or branch post office within the United States.

        9. In the event that any question or controversy shall arise with respect to the nature, scope or extent of any one or more rights conferred by this Option, the determination by the Committee (as constituted at the time of such determination) of the rights of the Holder shall be conclusive, final and binding upon the Holder and upon any other person who shall assert any right pursuant to this Option.

	JONES APPAREL GROUP, INC. By:  _______________________
ACCEPTED AND AGREED _____________________ Holder

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ANNEX I

[Insert]

4

EX-10

EXHIBIT 10.5

FORM OF RESTRICTED STOCK AGREEMENT

JONES APPAREL GROUP, INC.
RESTRICTED STOCK AGREEMENT

        THIS AGREEMENT dated as of ____________, 2005 between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company") with the person executing this Agreement (the "Employee").

        The Company has adopted a 1999 Stock Incentive Plan (the "Plan"). The Plan, as it has been amended to date and may hereafter be amended and continued, is incorporated herein by reference and made part of this Agreement.

        The Committee, which is charged with the administration of the Plan pursuant to Section 3 thereof, has determined that it would be to the advantage and interest of the Company to grant the award provided for herein to the Employee as an inducement to remain in the service of the Company or one of its subsidiaries, and as an incentive for increased efforts during such service.

        In consideration of mutual promises and covenants made herein and the mutual benefits to be derived herefrom, the parties hereto agree as follows:

        1. Grant of Restricted Shares.

            (a) Subject to the provisions of this Agreement and to the provisions of the Plan, the Company hereby grants to the Employee that number of shares of restricted Common Stock of the Company, par value $.01 per share, set forth on Annex I attached hereto (the "Restricted Shares"). Subject to Section 3, certificates evidencing the Restricted Shares shall be issued by the Company and registered in the name of the Employee on the stock transfer books of the Company. However, certificates issued with respect to Restricted Shares shall be held by the Company in escrow under the terms hereof. Such certificates shall bear the legend set forth in subsection (c) below or such other appropriate legend as the Committee shall determine, which legend shall be removed only if and when the Restricted Shares vest as provided herein, at which time the certificates shall be delivered to the Employee. As a condition to the issuance of Shares hereunder, the Employee shall deliver to the Company the attached stock powers duly endorsed in blank. Upon the issuance of Restricted Shares hereunder, the Employee shall be entitled to vote the Restricted Shares, and shall be entitled to receive, free of all restrictions, ordinary cash dividends and dividends in the form of shares thereon. The Employee will not be required to return any such ordinary dividends to the Company in the event of forfeiture of such Restricted Shares. The Employee's right to receive any extraordinary dividends or other distributions with respect to Restricted Shares prior to their becoming nonforfeitable shall be at the sole discretion of the Committee, but in the event of any such extraordinary event, the Committee shall take such action as is appropriate to preserve the value of, and prevent the unintended enhancement of the value of, the Restricted Shares.

            (b) In order to comply with any applicable securities laws, the Company may require the Employee (i) to furnish evidence satisfactory to the Company (including a written and signed

representation letter) to the effect that the Restricted Shares were acquired for investment only and not for resale or distribution and (ii) to agree that the Restricted Shares shall only be sold by the Employee following registration under the Securities Act of 1933, as amended, or pursuant to an exemption therefrom.

            (c) Unless otherwise determined by the Committee, any certificate issued in respect of the Restricted Shares prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend:

The sale, transfer, alienation, attachment, assignment, pledge or encumbrance of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Jones Apparel Group, Inc. 1999 Stock Incentive Plan and an Agreement entered into by the registered owner and the Company dated as of ___________, 2005. Copies of such Plan and Agreement are on file at the offices of the Company. Any attempt to dispose of these shares in contravention of the applicable restrictions, including by way of sale, assignment, transfer, pledge, hypothecation or otherwise, shall be null and void and without effect."

        2. Vesting.

        Subject to Section 3 hereof, the restrictions on transfer of the Restricted Shares shall lapse and the Restricted Shares shall become vested and nonforfeitable as follows:

            (a) See Annex I attached hereto.

            (b) In the event of (i) the dissolution or liquidation of the Company, or (ii) the disposition by the Company of substantially all of the assets or stock of a subsidiary of which the Employee is then an employee, officer or director, consultant, adviser, agent or independent representative or if (iii) a "change in control" (as defined in the Plan) of the Company has occurred or is about to occur, then, if the Committee shall so determine, any Restricted Shares not forfeited prior to the change in control shall become immediately and fully vested, and the Committee shall have sole discretion to waive automatic forfeitures, if any, arising from the change in control.

        3. Termination of Employment.

        Except as provided in Paragraph 4 hereof, Restricted Shares shall not vest unless the Employee is then an employee (including directors and officers who are employees), director or officer of the Company or any subsidiary of the Company, or a consultant, advisor, agent or independent representative of the Company or any subsidiary of the Company, or any combination thereof and unless the Employee has remained continuously so employed since the date of grant of the Restricted Shares.

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        In the event that the employment of the Employee shall terminate (other than by reason of death, Disability or Retirement), all unvested Restricted Shares shall be forfeited and be immediately transferred to, and reacquired by, the Company at no cost to the Company.

        4. Acceleration of Benefits upon Death, Disability or Retirement of Employee or Change in Control.

        The period of restrictions applicable to all unvested Restricted Shares shall terminate on the date of termination of employment by reason of retirement, disability (as such terms are defined in the Plan) or death or, if the Committee shall so determine, upon a change in control (as defined in the Plan).

        5. Nontransferability of Restricted Shares.

        The Restricted Shares are not nontransferable and may not be sold, assigned, transferred, disposed of, pledged or otherwise encumbered by the Employee, other than by will or the laws of descent and distribution until such Restricted Shares become nonforfeitable in accordance with the provisions of this Agreement. Any Employee's successor (a "Successor") shall take rights herein granted subject to the terms and conditions hereof. No such transfer of the Restricted Shares to any Successor shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by such Successor of the terms and conditions hereof.

        6. No Right to Continued Employment.

        Nothing in this Agreement or the Plan shall confer upon the Employee any right to continue in the employ of the Company or any of its affiliate corporations or interfere in any way with the right of the Company or any such affiliate corporation to terminate such employment at any time.

        7. Withholding.

        The Employee shall pay to the Company promptly upon request, and in any event at the time the Employee recognizes taxable income in respect of the Restricted Shares, an amount equal to the taxes the Company determines it is required to withhold under applicable tax laws with respect to the Restricted Shares. Such payment shall be made in the form of cash, shares of Common Stock already owned for at least six months, or in a combination of such methods, as irrevocably elected by the Employee prior to the applicable tax due date with respect to such Restricted Shares. The Employee shall promptly notify the Company of any election made pursuant to Section 83(b) of the Code.

        8. Effect of Certain Changes.

        Notwithstanding any other provision of the Plan, in the event of a change in the outstanding Common Stock of the Company by reason of a stock dividend, split-up, split-down,

3

reverse split, recapitalization, merger, consolidation, combination or exchange of shares, spin-off, reorganization, liquidation or the like, then the Committee may appropriately adjust the aggregate number of shares and class of shares subject to this award, whose determination shall be conclusive.

        9. Payment of Transfer Taxes, Fees, and Other Expenses.

        The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of the Restricted Shares acquired pursuant to this Agreement, together with any and all the fees and expenses necessarily incurred by the Company in connection therewith.

        10. Other Restrictions.

        The vesting of each Restricted Share shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state of federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the Employee with respect to the disposition of shares of Common Stock, is necessary or desirable as a condition of, or in connection with, such vesting, then in any such event, such vesting shall not be effective unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

        11. Notices.

        Any notices to be given under the terms of this Agreement shall be in writing and addressed to the Company at in care of its Chief Operating and Financial Officer, 250 Rittenhouse Circle, Bristol, Pennsylvania 19007 and any notice to the Employee shall be addressed to him at his address now on file with the Company, or to such other address as either may last have designated to the other by notice as provided herein. Any notice so addressed shall be deemed to be given on the second business day after mailing, by registered or certified mail, at a post office or branch post office within the United States.

        12. Effect of Agreement.

        Except as otherwise provided hereunder, this Agreement shall be binding upon and shall inure to the benefit of any successor or successors of the Company.

        13. Laws Applicable to Construction.

        This Agreement has been granted, executed and delivered in the State of Pennsylvania, and the interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Pennsylvania, as supplied to contracts executed in and performed wholly within the State of Pennsylvania.

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        14. Conflicts and Interpretation.

        If there is any conflict between this Agreement and the Plan, or if there is any ambiguity in this Agreement, any term which is not defined in this Agreement, or any matter as to which this Agreement is silent, in any such case the Plan shall govern including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret the Plan, (ii) prescribe, amend and rescind rules and regulations relating to the Plan and (iii) make all other determinations deemed necessary or advisable for the administration of the Plan. In the event that any question or controversy shall arise with respect to the nature, scope or extent of any one or more rights conferred by this award, the determination by the Committee (as constituted at the time of such determination) of the rights of the Employee shall be conclusive, final and binding upon the Employee and upon any other person who shall assert any right pursuant to this award.

        15. Headings.

        The headings of paragraphs herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Agreement.

        16. Amendment.

        This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and the Employee has hereunto set his hand.

JONES APPAREL GROUP, INC.

By:  _____________________

EMPLOYEE:

_________________________

Employee

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ANNEX I

[Insert]

6

EX-10

EXHIBIT 10.30

AMENDMENT NO. 2 TO THE
THREE YEAR CREDIT AGREEMENT

Dated as of November 17, 2004

        AMENDMENT NO. 2 (this "Amendment") TO THE THREE YEAR CREDIT AGREEMENT among Jones Apparel Group USA, Inc., a Pennsylvania corporation (the "Borrower"), the Additional Obligors referred to therein, the banks, financial institutions and other institutional lenders parties to the Three Year Credit Agreement referred to below (collectively, the "Lenders") and Wachovia Bank, National Association, as agent (the "Administrative Agent") for the Lenders.

PRELIMINARY STATEMENTS:

        (1) The Borrower, the Additional Obligors, the Lenders, the Administrative Agent and other parties thereto have entered into a Three Year Credit Agreement dated as of June 10, 2003 (as amended to date, the "Three Year Credit Agreement"). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Three Year Credit Agreement.

        (2) The Borrower has requested that the Lenders agree to add Jones Retail Corporation and Kasper, Ltd. as an Additional Obligor under the Three Year Credit Agreement.

        (3) The Required Lenders are, on the terms and conditions stated below, willing to grant the request of the Borrower and the Borrower and the Required Lenders have agreed to amend the Three Year Credit Agreement as hereinafter set forth.

        SECTION 1. Amendments to Three Year Credit Agreement. The Three Year Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3, hereby amended as follows:

    (a) Section 1.1 is amended by inserting in the appropriate alphabetical order the following definitions:

"Kasper, Ltd." means Kasper, Ltd., a Delaware corporation.

"Jones Retail" means Jones Retail Corporation, a New Jersey corporation.

    (b) Section 1.1 is further amended by amending the definition of "Additional Obligors" in full to read as follows:

"Additional Obligors" means the collective reference to Jones Apparel Group, Jones Apparel Group Holdings, Kasper, Ltd., Nine West Footwear and Jones Retail in their capacities as co-obligors under this Agreement.

    (c) Section 3.1 is amended by deleting the phrase "for the account of the Borrower on any Business Day" and substituting therefor the phase "for the account of the Borrower and its specified Subsidiaries on any Business Day".

    (d) Exhibit A of the Three Year Credit Agreement is amended in full to read as set forth as Exhibit A to this Amendment.

        SECTION 2. Condition Subsequent. By execution below, each of Kasper, Ltd. and Jones Retail hereby covenants and agrees that it will (a) provide an allonge endorsement to each Lender that has requested a Revolving Credit Note in accordance with Section 2.4(c) of the Three Year Credit Agreement promptly after receipt of such a request from such Lender and (b) deliver to the Administrative Agent, not later than December 1, 2004, certificates of incumbency, certified resolutions, articles of incorporation and bylaws, and opinions of counsel substantially similar to those required by Section 6.2(b) of the Three Year Credit Agreement, in each case in form and substance reasonably satisfactory to the Administrative Agent.

        SECTION 3. Conditions of Effectiveness. This Amendment shall become effective as of the date first above written when, and only when, on or before November 18, 2004 the Administrative Agent shall have received counterparts of this Amendment executed by the Credit Parties and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment. This Amendment is subject to the provisions of Section 14.11 of the Three Year Credit Agreement.

        SECTION 4. Representations and Warranties of the Credit Parties. The Credit Parties represent and warrant as follows:

    (a) Each of the Credit Parties is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.

    (b) The execution, delivery and performance by each Credit Party of this Amendment and the performance by each Credit Party of its obligations under the Three Year Credit Agreement, as amended hereby, do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any of the Credit Parties or any of their Subsidiaries to obtain any Governmental Approval not otherwise already obtained or violate any Applicable Law relating to the Credit Parties or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the Credit Parties or any of their Subsidiaries or any indenture or other material agreement or instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person except as could not reasonably be expected to have a Material Adverse Effect, or (iii) result in or require the creation or imposition of any material Lien upon or with respect to any property now owned

2

or hereafter acquired by such Person other than a Lien permitted under the terms of the Loan Documents.

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

    (d) Except for matters existing on the Closing Date and set forth on Schedule 7.1(q) to the Three Year Credit Agreement, there are no actions, suits or proceedings pending nor, to the knowledge of the Credit Parties, threatened against or affecting the Credit Parties or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect or which relate to the enforceability of this Amendment or any Loan Documents, as amended hereby.

        SECTION 5. Reference to and Effect on the Three Year Credit Agreement and the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Three Year Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Three Year Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Three Year Credit Agreement, shall mean and be a reference to the Three Year Credit Agreement, as amended by this Amendment.

    (b) The Three Year Credit Agreement, as specifically amended by this Amendment, the Notes and each of the other Loan Documents, are and shall continue, following the effectiveness of this Amendment, to be in full force and effect and are hereby in all respects ratified and confirmed.

    (c) The execution, delivery and effectiveness of this Amendment shall not, except as specifically provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Three Year Credit Agreement, nor constitute a waiver of any provision of the Three Year Credit Agreement.

        SECTION 6. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket expenses of the Administrative Agent in connection

3

with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent) in accordance with the terms of Section 14.2 of the Three Year Credit Agreement.

        SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement, binding upon all parties, their successors and assigns. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

        SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

JONES APPAREL GROUP USA, INC.
as Borrower

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Financial Officer
 

JONES APPAREL GROUP, INC.
as Additional Obligor

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Operating and Financial Officer
 

JONES APPAREL GROUP HOLDINGS, INC.
as Additional Obligor

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

KASPER LTD.
as Additional Obligor

By: /s/ Peter Boneparth
       Name:  Peter Boneparth
       Title: President
 

NINE WEST FOOTWEAR CORPORATION
as Additional Obligor

By: /s/ Ira M. Dansky
       Name:  Ira M. Dansky
       Title: Executive Vice President and
                Secretary
 

JONES RETAIL CORPORATION
as Additional Obligor

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Financial Officer

WACHOVIA BANK, NATIONAL ASSOCIATION
as Administrative Agent and Lender

By: /s/ Thomas Harper
       Name:  Thomas Harper
       Title: Managing Director
   

BANK OF AMERICA, N.A.

By: /s/ Douglas J. Bolt
       Name:  Douglas J. Bolt
       Title: Vice President
 

BANK OF CHINA, NEW YORK BRANCH

By: /s/ William Smith
       Name:  William Smith
       Title: Chief Lending Officer
 

THE BANK OF NEW YORK

By: /s/ Roger Grossman
       Name:  Roger Grossman
       Title: Vice President
   

BARCLAYS BANK PLC

By: /s/ Nicholas A. Bell
       Name:  Nicholas A. Bell
       Title: Director
                Loan Transaction Management
 

CITIBANK, N.A.

By: /s/ Judith Green
       Name:  Judith Green
       Title: Vice President
 

FLEET NATIONAL BANK

By: /s/ Douglas J. Bolt
       Name:  Douglas J. Bolt
       Title: Vice President
 

ISRAEL DISCOUNT BANK OF NEW YORK

By: /s/ Howard Weinberg
       Name:  Howard Weinberg
       Title: Senior Vice President

By: /s/ David Acosta
       Name:  David Acosta
       Title: Assistant Vice President
 

JPMORGAN CHASE BANK, N.A.
(FORMERLY KNOWN AS JPMORGAN
CHASE BANK)

By: /s/ James A. Knight
       Name:  James A. Knight
       Title: Vice President
 

SUNTRUST BANK

By: /s/ Patrick M. Stevens
       Name:  Patrick M. Stevens
       Title: Vice President
 

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT NOTE

$_____________________ _____________, 200_

        FOR VALUE RECEIVED, the undersigned JONES APPAREL GROUP USA, INC., a corporation organized under the laws of Pennsylvania, (the "Borrower"), JONES APPAREL GROUP, INC., a corporation organized under the laws of Pennsylvania, JONES APPAREL GROUP HOLDINGS, INC., a corporation organized under the laws of Delaware, KASPER, LTD., a corporation organized under the laws of Delaware, NINE WEST FOOTWEAR CORPORATION, a corporation organized under the laws of Delaware, and JONES RETAIL CORPORATION, a corporation organized under the laws of New Jersey (collectively, with the Borrower, the "Debtors"), hereby jointly and severally promise to pay to the order of _________________, (the "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of ______________________ DOLLARS ($_____________) or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made to the Borrower by the Lender pursuant to that certain Three Year Credit Agreement dated as of June 10, 2003 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders who are or may become a party thereto (collectively, the "Lenders"), J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Bookrunners, Wachovia Bank, National Association, as Administrative Agent, and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank) and Citibank, N.A., as Syndication Agents, and Fleet National Bank and Bank of America, N.A., as Documentation Agents. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

        The unpaid principal amount of Revolving Credit Loans from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. All payments of principal and interest on Revolving Credit Loans shall be payable in lawful currency of the United States of America in immediately available funds to the account designated in the Credit Agreement.

        This Revolving Credit Note (the "Revolving Credit Note") is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Credit Note and on which such Obligations may be declared to be immediately due and payable.

        THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.

        The Debt evidenced by this Revolving Credit Note is senior in right of payment to all Subordinated Debt referred to in the Credit Agreement.

        The Debtors hereby waive all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Revolving Credit Note.

        IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit Note under seal as of the day and year first above written.

JONES APPAREL GROUP USA, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP HOLDINGS, INC.

By: ___________________
       Name: 
       Title:
 

KASPER, LTD.

By: ___________________
       Name: 
       Title:
 

NINE WEST FOOTWEAR CORPORATION

By: ___________________
       Name: 
       Title:
 

JONES RETAIL CORPORATION

By: ___________________
       Name: 
       Title:

EX-10

EXHIBIT 10.31

AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED
FIVE-YEAR CREDIT AGREEMENT

Dated as of November 17, 2004

        AMENDMENT NO. 1 (this "Amendment") TO THE AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT among Jones Apparel Group USA, Inc., a Pennsylvania corporation (the "Borrower"), the Additional Obligors referred to therein, the banks, financial institutions and other institutional lenders parties to the Five-Year Credit Agreement referred to below (collectively, the "Lenders") and Wachovia Bank, National Association, as agent (the "Administrative Agent") for the Lenders.

        PRELIMINARY STATEMENTS:

        (1) The Borrower, the Additional Obligors, the Lenders, the Administrative Agent and other parties thereto have entered into an Amended and Restated Five-Year Credit Agreement dated as of June 15, 2004 (the "Five-Year Credit Agreement"). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Five-Year Credit Agreement.

        (2) The Borrower has requested that the Lenders agree to add Jones Retail Corporation as an Additional Obligor under the Five-Year Credit Agreement.

        (3) The Required Lenders are, on the terms and conditions stated below, willing to grant the request of the Borrower and the Borrower and the Required Lenders have agreed to amend the Five-Year Credit Agreement as hereinafter set forth.

        SECTION 1. Amendments to Five-Year Credit Agreement. The Five-Year Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3, hereby amended as follows:

    (a) Section 1.1 is amended by inserting in the appropriate alphabetical order the following definition:

"Jones Retail" means Jones Retail Corporation, a New Jersey corporation.

    (b) Section 1.1 is further amended by amending the definition of "Additional Obligors" in full to read as follows:

"Additional Obligors" means the collective reference to Jones Apparel Group, Jones Apparel Group Holdings, Kasper, Ltd., Nine West Footwear and Jones Retail in their capacities as co-obligors under this Agreement.

    (c) Exhibit A-1 of the Five-Year Credit Agreement is amended in full to read as set forth as Exhibit A-1 to this Amendment.

    (d) Exhibit A-2 of the Five-Year Credit Agreement is amended in full to read as set forth as Exhibit A-2 to this Amendment.

        SECTION 2. Condition Subsequent. By execution below, Jones Retail hereby covenants and agrees that it will (a) provide an allonge endorsement to each Lender that has requested a Revolving Credit Note in accordance with Section 2.4(c) of the Five-Year Credit Agreement promptly after receipt of such a request from such Lender and (b) deliver to the Administrative Agent, not later than December 1, 2004, certificates of incumbency, certified resolutions, articles of incorporation and bylaws, and opinions of counsel substantially similar to those required by Section 6.2(b) of the Five-Year Credit Agreement, in each case in form and substance reasonably satisfactory to the Administrative Agent.

        SECTION 3. Conditions of Effectiveness. This Amendment shall become effective as of the date first above written when, and only when, on or before November 17, 2004 the Administrative Agent shall have received counterparts of this Amendment executed by the Credit Parties and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment. This Amendment is subject to the provisions of Section 14.11 of the Five-Year Credit Agreement.

        SECTION 4. Representations and Warranties of the Credit Parties. The Credit Parties represent and warrant as follows:

    (a) Each of the Credit Parties is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.

    (b) The execution, delivery and performance by each Credit Party of this Amendment and the performance by each Credit Party of its obligations under the Five-Year Credit Agreement, as amended hereby, do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any of the Credit Parties or any of their Subsidiaries to obtain any Governmental Approval not otherwise already obtained or violate any Applicable Law relating to the Credit Parties or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the Credit Parties or any of their Subsidiaries or any indenture or other material agreement or instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person except as could not reasonably be expected to have a Material Adverse Effect, or (iii) result in or require the creation or imposition of any material Lien upon or with respect to any property now owned or hereafter acquired by such Person other than a Lien permitted under the terms of the Loan Documents.

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

    (d) Except for matters existing on the Closing Date and set forth on Schedule 7.1(q) to the Five-Year Credit Agreement, there are no actions, suits or proceedings pending nor, to the knowledge of the Credit Parties, threatened against or affecting the Credit Parties or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect or which relate to the enforceability of this Amendment or any Loan Documents, as amended hereby.

        SECTION 5. Reference to and Effect on the Five-Year Credit Agreement and the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Five-Year Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Five-Year Credit Agreement, and each reference in the Notes and each of the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Five-Year Credit Agreement, shall mean and be a reference to the Five-Year Credit Agreement, as amended by this Amendment.

        (b) The Five-Year Credit Agreement, as specifically amended by this Amendment, the Notes and each of the other Loan Documents, are and shall continue, following the effectiveness of this Amendment, to be in full force and effect and are hereby in all respects ratified and confirmed.

        (c) The execution, delivery and effectiveness of this Amendment shall not, except as specifically provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under the Five-Year Credit Agreement, nor constitute a waiver of any provision of the Five-Year Credit Agreement.

        SECTION 6. Costs and Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and disbursements of

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counsel for the Administrative Agent) in accordance with the terms of Section 14.2 of the Five-Year Credit Agreement.

        SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement, binding upon all parties, their successors and assigns. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.

        SECTION 8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

JONES APPAREL GROUP USA, INC.
as Borrower

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Financial Officer
 

JONES APPAREL GROUP, INC.
as Additional Obligor

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Operating and Financial Officer
 

JONES APPAREL GROUP HOLDINGS, INC.
as Additional Obligor

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

KASPER LTD.
as Additional Obligor

By: /s/ Peter Boneparth
       Name:  Peter Boneparth
       Title: President
 

NINE WEST FOOTWEAR CORPORATION
as Additional Obligor

By: /s/ Ira M. Dansky
       Name:  Ira M. Dansky
       Title: Executive Vice President and
                Secretary
 

JONES RETAIL CORPORATION
as Additional Obligor

By: /s/ Wesley R. Card
       Name:  Wesley R. Card
       Title: Chief Financial Officer

WACHOVIA BANK, NATIONAL ASSOCIATION
as Administrative Agent and Lender

By: /s/ Thomas Harper
       Name:  Thomas Harper
       Title: Managing Director
   

BANCO BILBAO VIZCAYA ARGENTINA

By: /s/ Hector O. Villegas
       Name:  Hector O. Villegas
       Title: Vice President
                Global Corporate Banking

By: /s/ Giampaolo Consigliere
       Name:  Giampaolo Consigliere
       Title: Vice President
 

BANK OF AMERICA, N.A.

By: /s/ Douglas J. Bolt
       Name:  Douglas J. Bolt
       Title: Vice President
 

BANK OF CHINA, NEW YORK BRANCH

By: /s/ William Smith
       Name:  William Smith
       Title: Chief Lending Officer
 

THE BANK OF NEW YORK

By: /s/ Roger Grossman
       Name:  Roger Grossman
       Title: Vice President
   

THE BANK OF NOVA SCOTIA

By: /s/ Todd Meller
       Name:  Todd Meller
       Title: Managing Director
 

BARCLAYS BANK PLC

By: /s/ Nicholas A. Bell
       Name:  Nicholas A. Bell
       Title: Director
                Loan Transaction Management
 

CHIAO TUNG BANK CO., LTD.
NEW YORK AGENCY

By: /s/ Kuang-Hua Wei
       Name:  Kuang-Hua Wei
       Title: SVP & General Manager
 

CITIBANK, N.A.

By: /s/ Judith Green
       Name:  Judith Green
       Title: Vice President
 

JPMORGAN CHASE BANK, N.A.
(FORMERLY KNOWN AS JPMORGAN
CHASE BANK)

By: /s/ James A. Knight
       Name:  James A. Knight
       Title: Vice President
 

THE ROYAL BANK OF SCOTLAND PLC

By: /s/ Maria Amaral-LeBlanc
       Name:  Maria Amaral-LeBlanc
       Title: Senior Vice President
 

STANDARD CHARTERED BANK

By: /s/ Lalita Vadhri
       Name:  Lalita Vadhri
       Title: Senior Vice President

By: /s/ Robert K. Reddington
       Name:  Robert K. Reddington
       Title: AVP/Credit Documentation
 

SUNTRUST BANK

By: /s/ Patrick M. Stevens
       Name:  Patrick M. Stevens
       Title: Vice President
 

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT NOTE

$_____________________ _____________, 200_

        FOR VALUE RECEIVED, the undersigned JONES APPAREL GROUP USA, INC., a corporation organized under the laws of Pennsylvania, (the "Borrower"), JONES APPAREL GROUP, INC., a corporation organized under the laws of Pennsylvania, JONES APPAREL GROUP HOLDINGS, INC., a corporation organized under the laws of Delaware, KASPER, LTD., a corporation organized under the laws of Delaware, NINE WEST FOOTWEAR CORPORATION, a corporation organized under the laws of Delaware, and JONES RETAIL CORPORATION, a corporation organized under the laws of New Jersey (collectively, with the Borrower, the "Debtors"), hereby jointly and severally promise to pay to the order of _________________, (the "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of ______________________ DOLLARS ($_____________) or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made to the Borrower by the Lender pursuant to that certain Amended and Restated Five Year Credit Agreement dated as of June 15, 2004 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders who are or may become a party thereto (collectively, the "Lenders"), Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Bookrunners, Wachovia Bank, National Association, as Administrative Agent, and Citibank, N.A. and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as Syndication Agents, and Bank of America, N.A., Barclays Bank plc and SunTrust Bank, as Documentation Agents. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

        The unpaid principal amount of Revolving Credit Loans from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. All payments of principal and interest on Revolving Credit Loans shall be payable in lawful currency of the United States of America in immediately available funds to the account designated in the Credit Agreement.

        This Revolving Credit Note (the "Revolving Credit Note") is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Credit Note and on which such Obligations may be declared to be immediately due and payable.

        THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.

        The Debt evidenced by this Revolving Credit Note is senior in right of payment to all Subordinated Debt referred to in the Credit Agreement.

        The Debtors hereby waive all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Revolving Credit Note.

        IN WITNESS WHEREOF, the undersigned have executed this Revolving Credit Note under seal as of the day and year first above written.

JONES APPAREL GROUP USA, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP HOLDINGS, INC.

By: ___________________
       Name: 
       Title:
 

KASPER, LTD.

By: ___________________
       Name: 
       Title:
 

NINE WEST FOOTWEAR CORPORATION

By: ___________________
       Name: 
       Title:
 

JONES RETAIL CORPORATION

By: ___________________
       Name: 
       Title:

EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE

U.S.$_______________ Dated: _______________, 200_

        FOR VALUE RECEIVED, the undersigned JONES APPAREL GROUP USA, INC., a corporation organized under the laws of Pennsylvania, (the "Borrower"), JONES APPAREL GROUP, INC., a corporation organized under the laws of Pennsylvania, JONES APPAREL GROUP HOLDINGS, INC., a corporation organized under the laws of Delaware, KASPER, LTD., a corporation organized under the laws of Delaware, NINE WEST FOOTWEAR CORPORATION, a corporation organized under the laws of Delaware, and JONES RETAIL CORPORATION, a corporation organized under the laws of New Jersey (collectively, with the Borrower, the "Debtors"), hereby jointly and severally promise to pay to the order of _________________, (the "Lender"), at the place and times provided in that certain Amended and Restated Five Year Credit Agreement dated as of June 15, 2004 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") by and among Jones Apparel Group USA, Inc., the Additional Obligors referred to therein, the Lenders who are or may become a party thereto (collectively, the "Lenders"), Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Bookrunners, Wachovia Bank, National Association, as Administrative Agent, and Citibank, N.A. and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank), as Syndication Agents, and Bank of America, N.A., Barclays Bank plc and SunTrust Bank, as Documentation Agents (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined)), on _______________, 200_, the principal amount of [U.S.$_______________] [for a Competitive Bid Loan in an Alternative Currency, list currency and amount of such Loan].

        The undersigned promise to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate and payable on the interest payment date or dates provided below:

Interest Rate: _____% per annum (calculated on the basis of a year of _____ days for the actual number of days elapsed) (revise as appropriate for a Floating Rate Loan).

        Both principal and interest are payable in lawful money of ____________ to Wachovia Bank, National Association, as administrative agent, for the account of the Lender at its office, at _________________________ in same day funds.

        This Promissory Note is one of the Competitive Bid Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among 

other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events.

        THIS COMPETITIVE BID NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.

        The Debt evidenced by this Competitive Bid Note is senior in right of payment to all Subordinated Debt referred to in the Credit Agreement.

        The Debtors hereby waive all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Competitive Bid Note.

        IN WITNESS WHEREOF, the undersigned have executed this Competitive Bid Note under seal as of the day and year first above written.

JONES APPAREL GROUP USA, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP, INC.

By: ___________________
       Name: 
       Title:
 

JONES APPAREL GROUP HOLDINGS, INC.

By: ___________________
       Name: 
       Title:
 

KASPER, LTD.

By: ___________________
       Name: 
       Title:
 

NINE WEST FOOTWEAR CORPORATION

By: ___________________
       Name: 
       Title:
 

JONES RETAIL CORPORATION

By: ___________________
       Name: 
       Title:

EX-10

EXHIBIT 10.32

JONES APPAREL GROUP, INC.
DEFERRED COMPENSATION PLAN

Effective February 1, 2004

1. Purpose.

The purpose of the Jones Apparel Group, Inc. Deferred Compensation Plan is to provide a means whereby eligible employees of Jones Apparel Group, Inc. and its participating affiliated companies may elect to defer receipt of certain compensation that otherwise would be payable to them in cash until the earlier of retirement, termination of employment, disability, or death. The Plan is intended to be an unfunded deferred compensation arrangement for a select group of management or highly compensated employees.

2. Definitions.

(a) "Account" means the Deferred Compensation Account maintained for each Participant in accordance with Section 5.

(b) "Change-in-Control" means a Change-in-Control as described in Appendix A to this Plan.

(c) "Company" means Jones Apparel Group, Inc. or any successor company that adopts this Plan.

(d) "Compensation Deferral" means the amount of Eligible Compensation that a Participant elects to defer pursuant to Section 4.

(e) "Eligible Compensation" means such forms of compensation payable in cash as may be designated by the Plan Committee, from time to time, in its sole discretion, as eligible for deferral under this Plan. Eligible Compensation may include, but shall not be limited to, base salary, and any bonus compensation, payable to the Participant.

(f) "In-Service Distribution Date" means the date selected by the Participant for commencement of a scheduled in-service distribution pursuant to Section 7.

(g) "In-Service Distribution Sub-Account" means the sub-account established under a Participant's Account in connection with the Participant's election of a scheduled in-service distribution pursuant to Section 7.

(h) "Participant" means an eligible employee who elects to defer Eligible Compensation pursuant to the Plan.

(i) "Participating Employer" means Jones Apparel Group, Inc., and any of its participating affiliated companies, or any successor companies.

(j) "Plan" means the Jones Apparel Group, Inc. Deferred Compensation Plan as set forth in this document and as amended from time to time.

(k) "Plan Committee" means the committee designated by the Company's Board of Directors or its Chief Executive Officer to administer the Plan.

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(l) "Retirement Date" means the date on which a Participant elects to retire having an attained age of 50 or greater, plus 10 years of employment by a Participating Employer.

3. Eligibility And Participation.

(a) Only employees who are designated by the Plan Committee shall be eligible to participate in the Plan.

(b) An employee shall only be a Participant eligible to have compensation deferred under this Plan while he or she is designated as an eligible employee by the Plan Committee. If an employee subsequently ceases to be a designated eligible employee after becoming a Participant, he or she shall remain a Participant for the other purposes of the Plan to the extent of any existing Account balance subject to Section 16(a) below.

4. Compensation Deferrals.

(a) Election to Defer Compensation. An eligible employee may elect to defer receipt of Eligible Compensation for a calendar year as follows:

(i) Base Salary. An election to defer receipt of base salary payable for a calendar year must be made no later than December 31 preceding that calendar year during which the Participant will perform services for a Participating Employer, which will entitle the Participant to receive compensation from a Participating Employer.

(ii) Bonus Compensation. An election to defer receipt of bonus compensation must be made no later than the earlier of (A) December 31 of the year to which such bonus compensation relates or (B) the last day prior to the date on which the amount of such bonus compensation first becomes definitely determinable and nonforfeitable.

Notwithstanding the foregoing, (i) an employee who is eligible to participate as of February 1, 2004 must make his or her election no later than March 1, 2004, and (ii) an employee who first becomes eligible to participate during a calendar year may make an election to defer receipt of compensation payable within thirty (30) days after he or she first becomes eligible to participate in the Plan, to be effective the first calendar month after such election.

(b) Amount of Deferral. A Participant may elect to defer receipt of up to 90% of his or her base salary payable for the calendar year and/or up to 90% of the bonus compensation payable for the calendar year, provided that

(i) the minimum amount of the deferral elected for the calendar year must be at least $5,000, and

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(ii) the amount of the deferral elected for the calendar year cannot reduce the Participant's cash compensation payable for the calendar year below the amount necessary to satisfy applicable federal, state and local income and employment withholding taxes and any obligations to make benefit plan contributions.

(c) General Rules. An election to defer Eligible Compensation shall be made at the time, and in the form, manner, and in accordance with the notice requirements, prescribed by the Plan Committee. Except as otherwise provided in this Plan, the elections made by a Participant pursuant to this Section 4 are irrevocable.

(d) Modification or Revocation of Deferral Election of Participant. A Participant may not change the amount of his or her base salary deferrals during a calendar year. However, a Participant may discontinue a base salary deferral election at any time by filing such forms and subject to such limitations and restrictions as the Plan Committee may prescribe in its discretion. If approved by the Plan Committee, revocation shall take effect as of the first payroll period next following approval by the Plan Committee. If a Participant discontinues a base salary deferral election during a calendar year, he or she will not be permitted to elect to make base salary deferrals again until the next calendar year.

5. Deferred Compensation Accounts.

(a) The Company shall establish and maintain a separate memorandum account in the name of each Participant. Such account shall be credited or charged with (i) the amounts of Eligible Compensation deferred by the Participant, (ii) income, gains, losses, and expenses of investments deemed held in such account, and (iii) distributions from such account.

(b) The amount deferred by a Participant under Section 4 shall be credited to his or her Account on or about the date such Eligible Compensation otherwise would have been payable in cash to the Participant.

(c) A Participant's interest in his or her Account shall be fully vested and nonforfeitable at all times (except as otherwise provided in Section 16(e)).

6. Investment of Deferred Compensation Accounts.

(a) The amount credited to a Participant's Account shall be deemed to be invested and reinvested in life insurance, annuities, mutual funds, stocks, bonds, securities, and any other assets or investment vehicles, as may be selected by the Plan Committee in its sole discretion.

(b) A Participant may elect the manner in which his or her Account is deemed to be invested and reinvested among the deemed investment options selected by the Plan Committee. A Participant's investment election shall remain in effect until the Participant properly files a change of election with the Plan Committee. In the event that any Participant fails to

3

make an election with respect to the investment of all or a portion of the balance in his or her account at any time, the Participant shall be deemed to have elected that such balance be deemed to be invested in a money market (or equivalent) fund and such assets shall remain in such investment fund until such time as the Participant directs otherwise.

(c) A Participant's investment direction (or any change in his or her investment direction) shall be made in the form, manner, and in accordance with the notice requirements, prescribed by the Plan Committee.

(d) A Participant, by electing to participate in this Plan, agrees on behalf of himself or herself and his or her designated beneficiaries, to assume all risk in connection with any increase or decrease in value of the investments which are deemed to be held in his or her account. Each Participant further agrees that the Plan Committee and the Employer shall not in any way be held liable for any investment decisions or for the failure to make any investments by the Plan Committee.

7. Scheduled Distributions Prior to Termination of Employment.

A Participant may elect to have Compensation Deferrals, and any earnings thereon, distributed at a specified date or dates prior to his or her termination of employment in accordance with the rules set forth in this Section 7.

(a) In-Service Distribution Date(s). A Participant may elect to have up to five (5) separate In-Service Distribution Dates with respect to amounts credited to his Account. The Participant may change or cancel an In-Service Distribution Date as follows:

(i) The change or cancellation of an In-Service Distribution Date must be submitted to the Plan Committee at least thirteen (13) months prior to the date being changed or cancelled.

(ii) An In-Service Distribution Date may be postponed once only to a later date that is at least thirteen (13) months after the original In-Service Distribution Date. An In-Service Distribution Date cannot be changed to an earlier date.

(iii) An In-Service Distribution Date may be cancelled regardless of whether such date previously was changed.

(b) In-Service Distribution Sub-Account. A separate In-Service Distribution Sub-Account will be established and maintained as part of the Participant's Account for each In-Service Distribution Date elected by the Participant. Such sub-account shall be credited or charged with (i) the amounts of Compensation Deferrals designated by the Participant to be distributed as of the In-Service Distribution Date, (ii) a portion of the income, gains, losses, and expenses of investments deemed held in the Participant's Account as allocated based on the Compensation Deferrals credited to such sub-account, and (iii) distributions from such sub-account.

4

(c) Designation of Compensation Deferrals. The Participant may allocate all or a portion of the Eligible Compensation to be deferred for each calendar year pursuant to Section 4 to one or more of the In-Service Distribution Sub-Accounts subject to the following rules:

(i) The allocation election must be made at the same time the Participant elects to defer the Eligible Compensation for the calendar year.

(ii) Compensation Deferrals made for a particular calendar year cannot be allocated to an In-Service Distribution Sub-Account with an In-Service Distribution Date earlier than five (5) calendar years after the calendar year in which the Eligible Compensation is deferred.

(iii) Compensation Deferrals allocated to an In-Service Distribution Sub-Account cannot later be reallocated to a different In-Service Distribution Sub-Account.

(iv) Except as otherwise provided in Section 8, if a Participant fails to make a distribution election under this Section 7, or does not allocate the full amount of the Compensation Deferrals for the calendar year to one or more In-Service Distribution Sub-Accounts, such Compensation Deferrals will be distributed in accordance with Section 9.

(d) Lump Sum or Installment Payment. The Participant may elect to have the balance credited to an In-Service Distribution Sub-Account distributed in a single lump sum payment, or in quarterly or annual installments over a period of two (2) to five (5) years, subject to the following rules:

(i) If the balance credited to the Participant's In-Service Distribution Sub-Account as of the In-Service Distribution Date is less than $25,000, payment will be made in a single lump distribution.

(ii) The Participant may change his or her distribution election for the In-Service Distribution Sub-Account by submitting a new election to the Plan Committee at least thirteen (13) months prior to the In-Service Distribution Date applicable to that sub-account.

(iii) If the Participant terminates employment prior to the commencement of a scheduled in-service distribution or before scheduled in-service distributions have been completed, then distribution will be made in accordance with the rules applying to distributions following termination of employment set forth in Section 9.

(iv) A lump sum distribution will be paid within the calendar month following the calendar month of the In-Service Distribution Date. Installment payments will commence within the first calendar month following the calendar month of the In-Service Distribution Date.

5

(v) The amount of a quarterly installment payment will be equal to one-fourth (1/4^th) of the amount of an annual installment payment that would have been made from the Participant's In-Service Distribution Sub-Account for the calendar year.

(e) General Rules. An in-service distribution election shall be made in the form, manner, and in accordance with the notice requirements prescribed by the Plan Committee.

8. Other Distributions Prior to Termination of Employment.

A Participant may request that a distribution be made prior to his or her termination of employment at a date other than an In-Service Distribution Date in accordance with the rules set forth in this Section 8.

(a) Financial Hardship. The Plan Committee, in its sole discretion, may permit a hardship payment to be made to a Participant prior to termination of employment in the event of an "unforeseeable emergency". Withdrawals of amounts because of an unforeseeable emergency will be permitted to the extent reasonably needed to satisfy the emergency need.

For purposes of this paragraph (a), an "unforeseeable emergency" is a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a) of the Internal Revenue Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved -

(i) Through reimbursement or compensation by insurance or otherwise;

(ii) By liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

(iii) By cessation of deferrals under the Plan.

(b) Accelerated In-Service Distribution. A Participant may request a distribution of all or a portion of the balance of his or her Account at any time prior to his or her termination of employment in accordance with the following rules:

(i) The balance credited to the Participant's Account (as determined prior to the requested distribution) will be reduced by an amount equal to 10% of the amount of the requested distribution.

(ii) No Compensation Deferrals will be made on behalf of the Participant from the date on which the distribution is made until the end of the calendar year.

6

(iii) The distribution request shall be made in the form, manner, and in accordance with the notice requirements, prescribed by the Plan Committee.

9. Distributions Following Termination of Employment.

The balance credited to a Participant's Account shall be distributed following termination of his or her employment with all Participating Employers as follows:

(a) Termination of Employment Prior to Retirement Date. In the event that a Participant terminates employment for any reason other than death or becoming totally disabled (within the meaning of the Employer's long term disability insurance plan) prior to his or her Retirement Date, the balance credited to his or her Account will be distributed to the Participant in a single lump sum within the calendar month following the calendar month of the Participant's employment termination date.

(b) Termination of Employment At or After Retirement Date or By Reason of Death or Total Disability. In the event that a Participant terminates employment at or after his or her Retirement Date, or terminates employment prior to his or her Retirement Date by reason of his or her death or becoming totally disabled (within the meaning of the Employer's long term disability insurance plan), the balance credited to his or her Account will be distributed to the Participant (or his or her designated beneficiary) in accordance with the following rules:

(i) Unless the Participant elects otherwise, distribution will be made in a single lump sum payment within the calendar month following the calendar month of the Participant's employment termination date.

(ii) The Participant may elect to have the balance of his or her Account distributed in quarterly or annual installments over a period of up to fifteen (15) years commencing with the first calendar month following the calendar month of the Participant's employment termination date.

Notwithstanding the foregoing, if the balance credited to the Participant's Account as of the employment termination date is less than $50,000, then distribution will be made in a single lump sum payment within the calendar month following the calendar month of the Participant's employment termination date.

(iii) Elections under this Section 9(b) shall be made in the form, manner, and in accordance with the notice requirements prescribed by the Plan Committee. Such election shall be made at the time the Participant first elects to participate in this Plan; provided that the Participant may change his or her retirement distribution election by submitting a new election to the Plan Committee at least thirteen (13) months prior to his or her Retirement Date.

7

(iv) Upon request of (A) a Participant whose employment is terminated by reason of becoming totally disabled, or (B) a designated beneficiary following a Participant's death, the Plan Committee in its sole discretion may provide that the remaining balance in the Participant's Account will be distributed in a single lump payment.

10. Designated Beneficiary.

(a) A Participant may designate one or more beneficiaries to whom the unpaid balance of his or her Account shall be paid in the event of the Participant's death prior to receipt of all payments due under the Plan. The designation shall be made in the form, manner, and in accordance with the notice requirements, prescribed by the Plan Committee.

(b) A Participant may from time to time revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Plan Committee. The last designation received by the Plan Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Plan Committee prior to the Participant's death.

(c) If no beneficiary designation is in effect at the time of Participant's death or if the designated beneficiary is not living at the time of the Participant's death or shall die prior to complete distribution, then payments due thereafter shall be made to the Participant's estate.

11. Administration.

(a) Plan Committee. The Plan shall be administered by the Plan Committee. The Plan Committee shall have full authority and power to administer and construe the Plan, subject to applicable requirements of law. Without limiting the generality of the foregoing, the Plan Committee shall have the following powers and duties:

(i) To make and enforce such rules and regulations as it deems necessary or proper for the administration of the Plan;

(ii) To interpret the Plan and to decide all questions concerning the Plan;

(iii) To determine the eligibility of any person to participate in the Plan, and to determine the amount and the recipient of any payments to be made under the Plan;

(iv) To designate and value any investments deemed held in the Accounts;

(v) To appoint such agents, counsel, accountants, consultants and other persons as may be required to assist in administering the Plan; and

8

(vi) To make all other determinations and to take all other steps necessary or advisable for the administration of the Plan.

All decisions made by the Plan Committee pursuant to the provisions of the Plan shall be made in its sole discretion and shall be final, conclusive, and binding upon all parties.

(b) Delegation of Duties. The Plan Committee may delegate such of its duties and may engage such experts and other persons as it deems appropriate in connection with administering the Plan. The Plan Committee shall be entitled to rely conclusively upon, and shall be fully protected in any action taken by the Plan Committee, in good faith in reliance upon any opinions or reports furnished to it by any such experts or other persons.

(c) Expenses. All expenses incurred prior to the termination of the Plan that shall arise in connection with the administration of the Plan, including, without limitation, administrative expenses and compensation and other expenses and charges of any actuary, counsel, accountant, specialist, or other person who shall be employed by the Plan Committee in connection with the administration of the Plan shall be paid by the Participating Employers, or at the discretion of the Plan Committee, shall be charged against such assets as are deemed to be investments under the Plan pursuant to Section 6.

(d) Indemnification of Plan Committee. The Participating Employers agree to indemnify and to defend to the fullest extent permitted by law any person serving as a member of the Plan Committee, and each employee of a Participating Employer or any of their affiliated companies appointed by the Plan Committee to carry out duties under this Plan, against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

(e) Liability. To the extent permitted by law, neither the Plan Committee nor any other person shall incur any liability for any acts or for any failure to act except for liability arising out of such person's own willful misconduct or willful breach of the Plan.

12. Appeals Procedure.

(a) The Plan Committee shall approve or wholly or partially deny all claims for benefits under the Plan within a reasonable period of time after all required documentation has been furnished to the Plan Committee.

(b) If a claim is wholly or partially denied, the Plan Committee shall provide the claimant with written notice setting forth the specific reasons for the denial, making reference to the pertinent provisions of the Plan or the Plan documents on which the denial is based; describe any additional material or information that should be received before the claim may be acted upon favorably, and explain why such material or information, if any, is needed; and inform the person making the claim of his or her right pursuant to this Section to request review of the decision by the Plan Committee.

9

(c) A claimant shall have the right to request a review of the decision denying the claim. Such request must be made by filing a written application for review with the Plan Committee no later than sixty (60) days after receipt by the claimant of written notice of the denial of his or her claim. The claimant may review pertinent Plan documents and shall submit such written comments and other information which he or she wishes the Plan Committee to consider in connection with his or her claim.

(d) The Plan Committee may hold any hearing or conduct any independent investigation which it deems necessary to render its decision on review. Such decision shall be made as soon as practicable after the Plan Committee receives the request for review. Written notice of the decision on review shall be promptly furnished to the claimant and shall include specific reasons for the decision.

(e) For all purposes under the Plan, decisions on claims (where no review is requested) and decisions on review (where review is requested) shall be final, binding and conclusive on all interested persons.

13. Amendment or Termination of the Plan.

(a) The Plan Committee may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part, with respect to any Participants or beneficiaries whether or not payments have commenced to such Participants or beneficiaries. Notwithstanding the foregoing, no amendment, termination, or suspension of the Plan will affect a Participant's right to receive amounts previously deferred under the Plan.

(b) In the event the Plan is terminated, the Plan Committee shall distribute the remaining amounts in Participants' Accounts at such times and in such ways as the Plan Committee, in its sole discretion, may deem appropriate.

14. Unfunded Plan; Change-in-Control.

(a) Nothing in this Plan shall be construed as giving any Participant, or his or her legal representative or designated beneficiary, any claim against any specific assets of the Company or any of its affiliated companies or as imposing any trustee relationship upon the Company or any of its affiliated companies in respect of the Participant. The Participating Employers shall not be required to segregate any assets in order to provide for the satisfaction of the obligations hereunder. Investments deemed held in the Accounts shall continue to be a part of the general funds of the applicable Participating Employers, and no individual or entity other than the Participating Employer shall have any interest whatsoever in such funds. If and to the extent that the Participant or his or her legal representative or designated beneficiary acquires a right to receive any payment pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the applicable Participating Employer.

10

(b) Except as set forth in paragraph (c) below, the Company in its sole discretion may establish a trust for the purpose of providing funds for the payment of the amounts credited to Participants under the Plan. Such trust shall be an irrevocable grantor trust containing provisions which are the same as, or are similar to, the provisions contained in the model "rabbi trust" set forth in Internal Revenue Service Revenue Procedure 92-64. The Company shall pay all costs relating to the establishment and maintenance of the trust and the investment of funds held in such trust.

(c) In the event of a Change-in-Control, the Company shall take the following actions:

(i) The Company shall establish a trust as described in paragraph (b) above if such trust has not yet been established.

(ii) The Company shall, as soon as possible, but in no event later than five (5) business days following a Change-in-Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay the total amount credited to all Accounts under the Plan as of the date of the Change-in-Control.

15. Benefits Non-Assignable.

Benefits under the Plan may not be anticipated, assigned or alienated, and will not be subject to claims of a Participant's creditors by any process whatsoever, except as specifically provided in this Plan or by the Plan Committee in its sole discretion.

16. Miscellaneous Provisions.

(a) Top-Hat Status. Notwithstanding any provision of the Plan to the contrary, if the Plan Committee determines that participation in the Plan by any one or more Participants shall cause the Plan to be subject to Parts 2, 3 or 4 of Title I of ERISA, the entire interest of such Participant or Participants under the Plan shall be immediately paid to such Participant or Participants by the Participating Employer, or shall otherwise be segregated from the Plan in the discretion of the Plan Committee, and such Participant or Participants shall cease to have any interest under the Plan.

(b) Right to Withhold Taxes. The Participating Employers shall have the right to withhold such amounts from any payment under this Plan as it determines necessary to fulfill any federal, state, or local wage or Eligible Compensation withholding requirements.

(c) No Right to Continued Employment. Neither the Plan, nor any action taken under the Plan, shall confer upon any Participant any right to continuance of employment by the Company or any of its affiliated companies nor shall it interfere in any way with the right of the Company or any of its affiliated companies to terminate any Participant's employment at any time.

(d) Mental or Physical Incompetency. If the Plan Committee determines that any person entitled to payments under the Plan is incompetent by reason of physical or mental

11

disability, as established by a court of competent jurisdiction, the Plan Committee may cause all payments thereafter becoming due to such person to be made to any other person for his or her benefit, without responsibility to follow the application of amounts so paid. Payments made pursuant to this Section shall completely discharge the Plan Committee and the Employer.

(e) Unclaimed Benefit. Each Participant shall keep the Plan Committee informed in writing of his or her current address and the current address of his or her beneficiary. The Plan Committee shall not be obligated to search for the whereabouts of any person. If the location of a Participant is not made known to the Plan Committee within three (3) years after the date on which payment of the Participant's Account may first be made, payment may be made as though the Participant had died at the end of the three (3) year period. If, within one additional year after such three (3) year period has elapsed, or, within three years after the actual death of a Participant, the Plan Committee is unable to locate any designated beneficiary of the Participant, then the Employer shall have no further obligation to pay any benefit hereunder to such Participant or beneficiary or any other person and such benefit shall be irrevocably forfeited.

(f) Suspension of Payments. If any controversy, doubt or disagreement should arise as to the person to whom any distribution or payment should be made, the Plan Committee, in its discretion, may, without any liability whatsoever, retain the funds involved or the sum in question pending settlement or resolution to the Plan Committee's satisfaction of the matter, or pending a final adjudication by a court of competent jurisdiction.

(g) Governing Laws. The provisions of the Plan shall be construed, administered and enforced according to applicable Federal law and the laws of Commonwealth of Pennsylvania.

(h) Severability. The provisions of the Plan are severable. If any provision of the Plan is deemed legally or factually invalid or unenforceable to any extent or in any application, then the remainder of the provision and the Plan, except to such extent or in such application, shall not be affected, and each and every provision of the Plan shall be valid and enforceable to the fullest extent and in the broadest application permitted by law.

(i) No Other Agreements or Understandings. This Plan represents the sole agreement between the Participating Employers and Participants concerning its subject matter, and it supersedes all prior agreements, arrangements, understandings, warranties, representations, and statements between or among the parties concerning its subject matter.

12

Appendix A

Change-in-Control

For purposes of this Plan, the term "Change-in-Control" shall mean an event or series of events that results in

(a) a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a "person" within the meaning of Sections 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than the Company, a majority-owned subsidiary of the Company or an employee benefit plan of the Company or such subsidiary (or such plan's related trust), become(s) the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of 20% or more of the then outstanding voting stock of the Company;

(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Company's Board of Directors (together with any new director whose election by the Company's Board or whose nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or

(c) all or substantially all of the business of the Company is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or the Company combines with another company and is the surviving corporation (unless the shareholders of the Company immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the aggregate voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company).

13

EX-10

EXHIBIT 10.33

JONES APPAREL GROUP, INC.

SCHEDULE OF NON-EMPLOYEE DIRECTORS' ANNUAL COMPENSATION

Effective February 25, 2005

RETAINER(1)(2)	AMOUNT
Service as a Director	$ 30,000
Service as Audit Committee Chair	$ 10,000
Service as Compensation Committee Chair	$ 5,000
Service as Nominating / Corporate Governance Committee Chair	$ 5,000

FEES	AMOUNT
Attendance at Board of Directors Meeting	$ 2,000 per meeting
Attendance at Committee Meeting	$ 1,000 per meeting

________________

(1) Retainers are paid in January of each year, in advance for the calendar year. Meeting fees are paid quarterly in arrears.

(2) In the event that a non-employee director joins the Board of Directors of Jones Apparel Group, Inc. at a time other than an Annual Meeting of Stockholders or commences service on an additional Board committee, the director is entitled to receive, promptly after joining the Board of Directors or such committee, a pro-rated retainer in advance for services for the remainder of the applicable calendar year.

EX-11

EXHIBIT 11

                            JONES APPAREL GROUP, INC.
              Computation of Basic and Diluted Earnings per Share
                     (In millions except per share amounts)

                                         For the Year Ended December 31,
                                        --------------------------------
                                            2004        2003        2002
                                        --------    --------     -------
Basic Earnings per Share:
- -------------------------
Net income...........................     $301.8      $328.6      $318.5
                                        ========    ========     =======

Weighted average number of shares
outstanding..........................      123.6       127.3       128.2
                                        ========    ========     =======

Basic earnings per share.............      $2.44       $2.58       $2.48
                                        ========    ========     =======


Diluted Earnings per Share:
- ---------------------------
Net income...........................     $301.8      $328.6      $318.5
Add: interest expense associated
     with convertible notes,
     net of tax benefit..............        0.8         9.5         9.1
                                        --------    --------     -------
Income available to common
  shareholders.......................     $302.6      $338.1      $327.6
                                        ========    ========     =======

Weighted average number of shares
  outstanding........................      123.6       127.3       128.2
Effect of dilutive securities:
  Employee stock options.............        2.2         1.3         2.9
  Assumed conversion of convertible
    notes............................        0.7         7.9         7.9
                                        --------    --------     -------
                                           126.5       136.5       139.0
                                        ========    ========     =======
Diluted earnings per share..........       $2.39       $2.48       $2.36
                                        ========    ========     =======

EX-12

EXHIBIT 12

                        JONES APPAREL GROUP, INC.
            COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                            (In millions)

                                          Year Ended December 31,
                                   ------------------------------------
                                       2004          2003          2002
                                   --------      --------      --------

Income before income taxes........   $482.9        $527.0        $533.5
                                   --------      --------      --------
Fixed charges
  Interest expense and
    amortization of
    financing costs...............     51.2          58.8          62.7
  Portion of rent expense
    representing interest.........     39.3          34.1          32.1
                                   --------      --------      --------
Total fixed charges...............     90.5          92.9          94.8
                                   --------      --------      --------
Income before income taxes and
  fixed charges...................   $573.4        $619.9        $628.3
                                   ========      ========      ========
Ratio of earnings to
  fixed charges...................      6.3           6.7           6.6
                                   ========      ========      ========

EX-21

EXHIBIT 21

SUBSIDIARIES OF JONES APPAREL GROUP, INC.

Name	State or Country of Incorporation	Other Names Under Which Subsidiary Does Business
Anne Klein ULC	Nova Scotia	N/A
Apparel Testing Services, Inc.	New Jersey	N/A
Asia Expert Limited	Hong Kong	N/A
Barney's, Inc.	Delaware	Barneys New York Barneys Warehouse, Inc. Barneys New York Outlet Barneys (NY), Inc. Barneys New York Co-Op CO-OP
Barneys America, Inc.	Delaware	Barneys New York
Barneys New York, Inc.	Delaware	N/A
BNY Licensing Corp.	Delaware	N/A
Exportex de Mexico, S.A. de C.V.	Mexico	N/A
Greater Durango, S. de R.L. de C.V.	Mexico	N/A
Import Technology of Texas, Inc.	Texas	N/A
JAG Management Services, Inc.	Delaware	JAG Management Services of Delaware (New York only)
Jones Apparel Group Canada Inc.	Canada	JNY Blue Jones Factory Finale Jones New York Factory Store Jones New York
Jones Apparel Group Holdings, Inc.	Delaware	N/A
Jones Apparel Group USA, Inc.	Pennsylvania	N/A
Jones Apparel of Texas, Ltd.	Texas	N/A
Jones Canada, Inc.	Canada	N/A
Jones Holding Inc.	Delaware	N/A
Jones International Limited	Hong Kong	N/A
Jones Investment Co. Inc.	Delaware	N/A
Jones Management Service Company	Delaware	Apparel Management Service Company (New Jersey only) JAG Management Service Company (Rhode Island and Maine only)
Jones Retail Corporation	New Jersey	Anne Klein Banister Shoe Studio Banister/Easy Spirit Bandolino Banister Shoe Enzo Angiolini Easy Spirit Easy Spirit Outlet Jones New York Jones New York Sport Jones New York Factory Stores Jones New York Country Jones New York Company Store Jones New York Country/Sport Jones New York Sport Factory Stores Jones New York Mens & Womens Suits Jones New York The Executive Suite Jones New York Factory Finale Kasper Nine West Nine West Lifestyle NW Clearance Nine West Clearance Rena Rowan Steinmart Leased Shoe Department The Napier Factory Store
Kasper Europe, Ltd.	Delaware	N/A
Kasper, Ltd.	Delaware	N/A
Kasper Canada ULC	Nova Scotia	N/A
Kasper Holdings, Inc.	Delaware	N/A
Kasper Partnership, G.P.	Canada	N/A
Manufacturera Sun Apparel, S. de R.L. de C.V.	Mexico	N/A
Maquilas Pami, S.A. de C.V.	Mexico	N/A
Maxwell Footwear of California, Inc.	Delaware	N/A
Maxwell Shoe Company Inc.	Delaware	N/A
McNaughton Apparel Group Inc.	Delaware	N/A
Nine West Accessories (HK) Limited	Hong Kong	N/A
Nine West Development Corporation	Delaware	N/A
Nine West Footwear Corporation	Delaware	N/A
Nine West Melbourne Pty Ltd	Australia	N/A
Norton McNaughton of Squire, Inc.	New York	N/A
Sun Apparel, Inc.	Delaware	N/A
Victoria + Co International Ltd.	Delaware	N/A
Victoria + Co Ltd.	Rhode Island	N/A

Certain non-significant subsidiaries were omitted pursuant to Item 601(21)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

Jones Apparel Group, Inc.
Bristol, Pennsylvania

We hereby consent to the incorporation by reference in the Prospectus constituting a part of the Registration Statements on Form S-8 filed on December 26, 1991, May 15, 1996, June 16, 1999, August 23, 1999, August 2, 2001, June 12, 2003 and June 2, 2004 of our reports dated February 11, 2005, relating to the consolidated financial statements and schedule of Jones Apparel Group, Inc. and Subsidiaries appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

/s/ BDO Seidman, LLP

BDO Seidman, LLP
New York, New York
February 22, 2005

EX-31

EXHIBIT 31

CERTIFICATIONS

I, Peter Boneparth, President and Chief Executive Officer, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 25, 2005
 

/s/ Peter Boneparth
Peter Boneparth
President and Chief Executive Officer

I, Wesley R. Card, Chief Operating and Financial Officer, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Jones Apparel Group, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
		(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
		(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 25, 2005
 

/s/ Wesley R. Card
Wesley R. Card
Chief Operating and Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    I, Peter Boneparth, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Jones Apparel Group, Inc. on Form 10-K for the year ended December 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ Peter Boneparth

Name: Peter Boneparth
Title: President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

    I, Wesley R. Card, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Jones Apparel Group, Inc. on Form 10-K for the year ended December 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of Jones Apparel Group, Inc.

By: /s/ Wesley R. Card

Name: Wesley R. Card
Title: Chief Operating and Financial Officer

A signed original of this written statement required by Section 906 has been provided to Jones Apparel Group, Inc. and will be retained by Jones Apparel Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.