-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NfCSj7a/9fJCu0H8IEzgEvUHAQeXFXUow+QnCaQXLwv/iYkwaoPc5gPpqO3y/ov3 Mp3nGv7syiClWYwl3mnZAA== 0000950157-98-000495.txt : 19981210 0000950157-98-000495.hdr.sgml : 19981210 ACCESSION NUMBER: 0000950157-98-000495 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19981209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JONES APPAREL GROUP INC CENTRAL INDEX KEY: 0000874016 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 060935166 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-68587 FILM NUMBER: 98766453 BUSINESS ADDRESS: STREET 1: 250 RITTENHOUSE CIRCLE STREET 2: KEYSTONE PK CITY: BRISTOL STATE: PA ZIP: 19007 BUSINESS PHONE: 2157854000 MAIL ADDRESS: STREET 1: 250 RITTENHOUSE CIRCLE CITY: BRISTOL STATE: PA ZIP: 19007 S-4 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on December 9, 1998 Registration Statement No. 333-_____ - -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------------- JONES APPAREL GROUP, INC. (Exact name of Registrant as specified in its charter) --------------------------- Pennsylvania 2330 06-0935166 (State or other jurisdiction (Primary standard industrial (I.R.S. Employer of incorporation or classification code number) Identification No.) organization) 250 Rittenhouse Circle Bristol, PA 19007 (215) 785-4000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices --------------------------- Ira M. Dansky, Esq. Jones Apparel Group, Inc. 1411 Broadway New York, NY 10018 (212) 536-9526 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------------- Copy to: Philip J. Boeckman, Esq. Cravath, Swaine & Moore 825 Eighth Avenue New York, NY 10019 (212) 474-1000 --------------------------- Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / / --------------------------- CALCULATION OF REGISTRATION FEE
======================================================================================== Title of Each Class Proposed Maximum Proposed Maximum Amount of of Securities to be Amount to be Offering Price Aggregate Offering Registration Registered Registered Per Unit(1) Price(1) Fee(2) - ---------------------------------------------------------------------------------------- 6.25% Senior Notes due 2001 $265,000,000 100% $265,000,000 $73,670 ========================================================================================
(1) Estimated solely for the purposes of computing the registration fee pursuant to Rule 457(f)(2) under the Securities Act of 1933. (2) Calculated by multiplying the aggregate offering amount by .000278. --------------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission relating to these securities is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. --------------------------- Prospectus Subject to Completion December 9, 1998 $265,000,000 Jones Apparel Group, Inc. Offer to Exchange 6.25% Senior Notes due 2001 for any and all outstanding 6.25% Senior Notes due 2001 --------------------------- Summary of the Exchange Offer This Prospectus (and accompanying Letter of Transmittal) relates to our proposed offer to exchange up to $265,000,000 aggregate principal amount of new 6.25% Senior Notes due 2001 (the "Exchange Notes"), which will be freely transferable, for any and all outstanding 6.25% Senior Notes due 2001 issued in a private offering on October 2, 1998 (the "Restricted Notes"), which have certain transfer restrictions. o The Exchange Offer expires 5:00 p.m., New York City time, on [ ], 1999, unless extended. o The terms of the Exchange Notes are substantially identical to the terms of the Restricted Notes, except that the Exchange Notes will be freely transferable and issued free of any covenants regarding exchange and registration rights. o All Restricted Notes that are validly tendered and not validly withdrawn will be exchanged. o Tenders of Restricted Notes may be withdrawn at any time prior to expiration of the Exchange Offer. o We will not receive any proceeds from the Exchange Offer. o The exchange of Restricted Notes for Exchange Notes should not be a taxable event for United States Federal income tax purposes. o Holders of Restricted Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offer. Restricted Notes not exchanged in the Exchange Offer will remain outstanding and be entitled to the benefits of the Indenture, but except under certain circumstances will have no further exchange or registration rights under the Exchange and Registration Rights Agreement. o "Affiliates" of the Company (within the meaning of the Securities Act) may not participate in the Exchange Offer. o All broker-dealers must comply with the registration and prospectus delivery requirements of the Securities Act. See "Plan of Distribution" beginning on page 37. o The Company does not intend to apply for listing of the Exchange Notes on any securities exchange or to arrange for them to be quoted on any quotation system. --------------------------- Please see "Risk Factors" beginning on page 5 for a discussion of certain factors you should consider in connection with the Exchange Offer . --------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Exchange Notes or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. We may amend or supplement this Prospectus from time to time by filing amendments or supplements as required. You should read this entire Prospectus (and accompanying Letter of Transmittal and related documents) and any amendments or supplements carefully before making your investment decision. --------------------------- Our principal executive offices are located at 250 Rittenhouse Circle, Bristol, Pennsylvania 19007. Our telephone number is (215) 785-4000. The date of this Prospectus is [ ]. TABLE OF CONTENTS Page Where You Can Find More Information...................... 2 The Company.............................................. 3 Forward-Looking Statements............................... 5 Risk Factors............................................. 5 Ratios of Earnings to Fixed Charges...................... 10 Exchange Offer........................................... 11 Description of Notes..................................... 22 Certain United States Federal Income Tax Considerations.. 33 Book-Entry; Delivery and Form............................ 34 Plan of Distribution..................................... 37 Legal Matters............................................ 38 Experts.................................................. 38 --------------------------- As used in this Prospectus, unless the context requires otherwise, (1) "We" or "Jones" or the "Company" means Jones Apparel Group, Inc. and its predecessors and consolidated subsidiaries, (2) "Sun" means Sun Apparel, Inc. and its consolidated subsidiaries and (3) "Notes" means both the Restricted Notes and the Exchange Notes. Italicized terms in this Prospectus indicate trademarks or other protected intellectual property which Jones and Sun own or license. WHERE YOU CAN FIND MORE INFORMATION In connection with the Exchange Offer, we have filed with the Securities and Exchange Commission ("SEC") a Registration Statement under the Securities Act of 1933 (the "Securities Act"), relating to the Exchange Notes to be issued in the Exchange Offer. As permitted by SEC rules, this Prospectus omits certain information included in the Registration Statement. For a more complete understanding of the Exchange Offer, you should refer to the Registration Statement, including its exhibits. We also file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy the Registration Statement and any other document we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. These documents are also available at the public reference rooms at the SEC's regional offices in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. These incorporated documents contain important business and financial information about us that is not included in or delivered with this Prospectus. The information incorporated by reference is considered to be part of this Prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") prior to [ ], the date the Exchange Offer expires. o Annual Report on Form 10-K for the year ended December 31, 1997; o Quarterly Reports on Form 10-Q for the quarters ended March 29, 1998, June 28, 1998 and September 27, 1998; and o Current Reports on Form 8-K dated September 24, 1998 and October 2, 1998. These filings are available without charge to holders of Restricted Notes. You may request a copy of these filings by writing or telephoning us at the following address: Chief Financial Officer Jones Apparel Group, Inc. 250 Rittenhouse Circle Bristol, Pennsylvania 19007 (215) 785-4000 To obtain timely delivery of any copies of filings requested from us, please write or telephone us no later than [ ] , 1999 [five business days prior to the expiration of the Exchange Offer]. THE COMPANY General Jones is a leading designer, marketer, manufacturer and distributor of career and casual sportswear, jeanswear and related apparel for men, women and children. Jones markets its products under several nationally known brands, including Jones New York, Evan-Picone and Rena Rowan, and various licensed brands, the most prominent of which are Lauren by Ralph Lauren and Polo Jeans Company. Through its Sun subsidiary, Jones also manufactures and distributes certain product lines under various private label brands. Recent Transactions The Acquisition. On October 2, 1998, Jones consummated its acquisition (the "Acquisition") of Sun Apparel, Inc., pursuant to an Agreement and Plan of Merger entered into on September 10, 1998 with Sun and its shareholders. In the Acquisition, Jones indirectly purchased all the shares of Sun for a total purchase price of $137.8 million in cash and approximately 4.4 million shares of Jones' Common Stock, plus potential future payments based on Sun's operating performance. Jones also assumed or refinanced $228.5 million of Sun debt. Offering of Restricted Notes. On October 2, 1998, Jones issued $265.0 million aggregate principal amount of the Restricted Notes in a private offering exempt from the registration requirements of the Securities Act. The Restricted Notes were issued pursuant to an Indenture dated October 2, 1998 between Jones and The Chase Manhattan Bank, as trustee. The Restricted Notes are unsecured senior obligations of Jones, ranking equally in right of payment with all existing and future unsecured senior debt of Jones and senior in right of payment to all future subordinated debt of Jones. Jones received net proceeds of approximately $263.5 million from the issuance of the Restricted Notes. Jones used the net proceeds from the sale of the Restricted Notes, together with borrowings under the Senior Credit Facilities (defined below), to finance the Acquisition, to refinance existing indebtedness of Sun, to pay related expenses and for general corporate purposes, including working capital and stock repurchases. Senior Credit Facilities. Concurrently with the issuance of the Restricted Notes, Jones entered into $550.0 million aggregate principal amount of unsecured revolving and term loan credit facilities (the "Senior Credit Facilities") with a syndicate of banks led by First Union National Bank. Proposed Reorganization Prior to the commencement of the Exchange Offer, Jones may consummate a corporate reorganization (the "Asset Drop-Down Transaction"). Under the Asset Drop-Down Transaction, Jones would transfer all operations now directly conducted by Jones to a new wholly owned subsidiary to be incorporated under the laws of Pennsylvania (the "Successor Operating Company"). In addition, under the Asset Drop-Down Transaction, another new wholly owned subsidiary ("Holdco"), would be incorporated under the laws of Delaware. Holdco would serve as an intermediate holding company, immediately above the Successor Operating Company and immediately below Jones, and would hold the interests in all but two of Jones' existing subsidiaries. As a result of the Asset Drop-Down Transaction: o Jones would be the parent holding company and hold 100% of the equity in Holdco; o Holdco would be an intermediate holding company and the only direct subsidiary of Jones; o Holdco would hold 100% of the equity in the Successor Operating Company; and o Jones' existing subsidiaries would become subsidiaries of Holdco (except for two subsidiaries incorporated under the laws of Mexico, which would become subsidiaries of the Successor Operating Company). Upon consummation of the Asset Drop-Down Transaction and pursuant to the terms of the Indenture, the Successor Operating Company would succeed to the obligations of Jones with respect to the Indenture and the Restricted Notes and, after the Exchange Offer, the Exchange Notes, and each of Jones and Holdco would execute full and unconditional guarantees (the "Guarantees") in respect of such obligations. The Successor Operating Company would also succeed to the obligations of Jones under the Senior Credit Facilities, and each of Jones and Holdco would execute full and unconditional guarantees in respect of such obligations. If Jones proceeds with the Asset Drop-Down Transaction, we will file a pre-effective amendment to the Registration Statement that relates to this Prospectus to record the succession of the Successor Operating Company as the issuer of the Exchange Notes and the addition of Jones and Holdco as guarantors thereof. In the event that, at the time of the Asset Drop-Down Transaction, the operations being transferred by Jones to the Successor Operating Company represent less than substantially all of Jones' assets, Jones would remain, and each of Holdco and the Successor Operating Company would become, an obligor in respect of the Indenture and the Restricted Notes and, after the Exchange Offer, the Exchange Notes, and Jones would file a pre-effective amendment to the Registration Statement that relates to this Prospectus to reflect such additional registrants. Under these circumstances, a corresponding change would also be made to the Senior Credit Facilities, with Jones remaining as an obligor, and Holdco and the Successor Operating Company becoming additional obligors. Jones currently anticipates that, if it proceeds with the Asset Drop-Down Transaction, it would consummate such reorganization on or about January 1, 1999. There can be no assurance that Jones will proceed with the Asset Drop-Down Transaction. FORWARD-LOOKING STATEMENTS This Prospectus includes and incorporates by reference "forward-looking statements" within the meaning of the securities laws. All statements regarding our expected financial position, business and financing plans are 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, the overall level of consumer spending, 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 and the integration of Sun's business with Jones' existing operations. 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 such expectations ("cautionary statements") are disclosed in this Prospectus, in conjunction with the forward-looking statements included in this Prospectus and under "Risk Factors." 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. RISK FACTORS You should consider carefully all the information included or incorporated by reference in this Prospectus and, in particular, should evaluate the following risks in connection with the Exchange Offer. Competition; Changes in Fashion Trends The apparel industry is highly competitive. Competition in this industry takes many forms, including the following: o establishing and maintaining favorable brand recognition; o developing products sought by consumers; o implementing appropriate pricing; o providing strong marketing support; and o obtaining access to retail outlets and sufficient floor space. There is intense competition in the sectors of the apparel industry in which Jones and Sun participate. Jones and Sun each compete with many other manufacturers, some of which are larger and have greater resources. Any increased competition could result in reduced sales or prices, or both, which could have a material adverse effect on Jones. Additionally, customer tastes and fashion trends can change rapidly. Jones may not be able to anticipate, gauge or respond to such changes in a timely manner. If Jones misjudges the market for its products or product groups, it may be faced with a significant amount of unsold finished goods inventory, which could have a material adverse effect on Jones. Concentration of Customers Jones' ten largest customers (typically department stores) accounted for approximately 67% of sales in 1997 and 69% of its sales in the first nine months of 1998. Sun's ten largest customers accounted for 48% of its sales in 1997 and 48% of its sales in the first nine months of 1998. While no single department or specialty store accounted for more than 10% of net sales for either Jones or Sun, certain of Jones' and Sun's customers are under common ownership. Department stores owned by the following entities accounted for the following percentages of Jones' sales: Jones Customer 1997 First Nine Months of 1998 -------------- ---- ------------------------- Federated Department Stores Inc. 20% 18% May Department Store Company 19% 17% Remainder of ten largest customers 28% 34% Department stores owned by the following entities accounted for the following percentages of Sun's sales: Sun Customer 1997 First Nine Months of 1998 ------------ ---- ------------------------- Federated Department Stores, Inc. 13% 8% Remainder of ten largest customers 35% 48% 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 Jones of such concentration increases. The loss of any of Jones' or Sun's largest customers, or the bankruptcy or material financial difficulty of any customer or any of the companies above, could have a material adverse effect on Jones. Jones and Sun do not have long-term contracts with any of their customers, and sales to customers generally occur on an order-by-order basis. As a result, customers can terminate their relationships with Jones or Sun at any time or under certain circumstances cancel or delay orders. Significant Dependence on License Agreements with Polo Ralph Lauren Corporation The termination or non-renewal of Jones' and Sun's exclusive licenses to manufacture and market clothing under the Lauren by Ralph Lauren and Polo Jeans Company trademarks in the United States and elsewhere would have a material adverse effect on Jones. Jones' Lauren by Ralph Lauren line, and Sun's Polo Jeans business represent material portions of each company's sales and profits. Jones and Sun sell products bearing those trademarks under exclusive licenses from affiliates of Polo Ralph Lauren Corporation. On a pro forma basis, net sales by Jones and Sun of products bearing these trademarks would have been 27.1% of the consolidated entity's total net sales for the year ended December 31, 1997 and 33.5% of the consolidated entity's total net sales for the nine-month period ended September 27, 1998. In addition, Jones has announced that it will introduce for Fall 1999 a line of sportswear directed to younger women under the trademark Ralph by Ralph Lauren, under an additional exclusive license from Polo Ralph Lauren. The Lauren by Ralph Lauren license expires on December 31, 2001, subject to Jones' right to renew through December 31, 2006 if sales of that product line for the year 2000 exceed a specified level. Although such sales in 1997 and 1998 exceeded the renewal minimum, Jones' sales are made season-to- season, with customers having no obligation to buy products beyond what they have already ordered for a particular season. The initial term of the Polo Jeans license expires on December 31, 2000 and may be renewed by Sun in five-year increments for up to 30 additional years, if certain minimum sales levels in certain years are met. Although Sun's Polo Jeans sales in 1997 exceeded the renewal minimum which would be required in 1999 to extend the term of the license through December 31, 2005, Sun's sales are made season-to-season, with customers having no obligation to buy products beyond what they have already ordered. In addition, renewal of the Polo Jeans license after 2010 requires a one-time payment by Sun of $25 million or, at Sun's option, a transfer of a 20% interest in its Polo Jeans business to Polo Ralph Lauren (with no fees required for subsequent renewals). Polo Ralph Lauren also has an option, exercisable on or before June 1, 2010, to purchase the Polo Jeans business at the end of 2010 for 80% of the then fair value of the business as a going concern, assuming the continuation of the Polo Jeans license through December 31, 2030, payable in cash. In addition to the provisions described above, both licenses (and the Ralph by Ralph Lauren license) contain provisions common to trademark licenses which could result in termination of a license, such as failure to meet payment or advertising obligations. Cyclicality of Apparel Industry; Seasonality Negative economic trends over which Jones has no control that depress the level of consumer spending could have a material adverse effect on Jones. Purchases of apparel and related goods often decline during recessionary periods when disposable income is low. In such an environment, Jones and Sun may increase the number of promotional sales which could further adversely impact Jones' gross profit margins. Additionally, Jones's sales and profit levels fluctuate significantly by quarter, resulting primarily from the timing of shipments for each season; Jones principally ships spring merchandise in the first quarter and fall merchandise in the third quarter. An increase in sales of jeans and casual apparel, which Sun sells, generally occurs during the third and fourth quarter. Accordingly, Jones' operating results will fluctuate from quarter to quarter. Acquisition Risks To realize the profit potential of the Acquisition, Jones will need to successfully integrate Sun's business into its existing operations. To do so, Jones may need to implement enhanced operational, distribution, financial and information systems and may require additional employees and management, operational and financial resources. The Acquisition is Jones' first acquisition of another company. Jones may not be able to integrate Sun's operations into its existing operations without significant expense or interruption to its existing business. Jones also may not achieve revenue growth or operational synergies in integrating jeanswear or other product lines presently offered by Sun. Jones may also not be able to retain important Sun employees. The acquisition of Sun, and any future acquisition which Jones may pursue, involves certain special risks, including: o initial reductions in Jones' reported operating results; o diversion of management's attention; o unanticipated problems or legal liabilities; and o possible reduction in reported earnings due to amortization of acquired intangible assets. Some or all the above items could have a material adverse effect on Jones. Sun or any other acquired company may not achieve sales and profitability in the future that justifies Jones' investment therein. Foreign Operations and Manufacturing In 1997, approximately 70% of Jones' products were manufactured outside the United States, primarily in Asia, while the remainder were manufactured in the United States and Mexico. Substantially all of Sun's jeanswear assembly and most of its finishing occur in Mexico. Sun also plans to shift cutting and portions of its other operations from the United States to Mexico. The following may adversely affect foreign operations: o political instability in countries where contractors and suppliers are located; o imposition of regulations and quotas relating to imports; o imposition of duties, taxes and other charges on imports; o significant fluctuation of the value of the dollar against foreign currencies; and o restrictions on the transfer of funds to or from foreign countries. As a result of its substantial foreign operations, Jones' domestic business (including the domestic business of Sun) is subject to the following risks: o quotas imposed by bilateral textile agreements between the United States and certain foreign countries; o reduced manufacturing flexibility because of geographic distance between Jones and its foreign manufacturers, increasing the risk that Jones may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and o violations by foreign contractors of labor and wage standards and resulting adverse publicity. Fluctuating Price and Availability of Raw Materials Fluctuations in the price, availability and quality of the fabrics or other raw materials used by Jones and Sun in their manufactured apparel could have a material adverse effect on the Company's cost of sales or its ability to meet its customers' demands. Jones and Sun mainly use cotton twill, wool, denim and synthetic and blended fabrics. The prices for such fabrics depend largely on the market prices for the raw materials used to produced them, particularly cotton. The price and availability of such raw materials and, in turn, the fabrics used in Jones' and Sun's apparel may fluctuate significantly, depending on many factors, including crop yields and weather patterns. Sun generally enters into denim purchase order contracts at specified prices for three to six months at a time. Higher cotton prices would directly affect Jones' and Sun's costs and earnings. Jones may not be able to pass all or a portion of such higher prices on to its customers. Reliance on Independent Manufacturers Jones relies upon independent third parties for the manufacture of most of its products. Sun relies on independent third parties for the manufacture of some of its products. A manufacturer's failure to ship products in a timely manner or to meet the required quality standards could cause Jones or Sun to miss the delivery date requirements of their customers for those items. The failure to make timely deliveries may drive customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on Jones' business. Jones and Sun do not have long-term written agreements with any of their third party manufacturers. As a result, any of these manufacturers may unilaterally terminate their relationships with Jones or Sun at any time. Dependence upon Key Personnel The success of Jones depends upon the personal efforts and abilities of Sidney Kimmel (Chairman), Jackwyn Nemerov (President), Irwin Samelman (Executive Vice President, Marketing) and, with respect to Sun, Eric Rothfeld (President of Sun) and Mindy Grossman (President and CEO of Sun's Polo Jeans Company Division). Jones does not have employment agreements with Mr. Kimmel, Ms. Nemerov and Mr. Samelman. If any of these individuals become unable or unwilling to continue in their present positions, Jones' business and financial results could be materially adversely affected. Increased Leverage Following the Acquisition, Jones is substantially more leveraged on a consolidated basis than it has historically been, as a result of borrowings incurred to finance the Acquisition. On a pro forma basis, Jones would have had $538.2 million of long-term debt (including the Notes) outstanding as of September 27, 1998, compared to $48.2 million of long-term debt on an historical basis. Historically, Jones has operated with almost no leverage, and has not been subject to any type of materially restrictive covenants. Certain covenants contained in the Indenture and in the Senior Credit Facilities, as well as the increased leverage, may reduce Jones' flexibility in responding to adverse changes in economic, business or market conditions. The financial covenants and other restrictions contained in the Senior Credit Facilities will require Jones to meet certain financial tests and will restrict its ability to, among other things, borrow additional funds, make certain investments, dispose of assets and make material amendments to debt instruments, including the Indenture. The additional leverage will also reduce funds available for operations, capital expenditures, acquisitions and future business opportunities. Risk of Year 2000 Non-Compliance Certain functions in various types of technology used by Jones and Sun are designed to use only two digits to identify a year. Therefore, these programs may fail or create erroneous results on or before January 1, 2000 if not corrected. Jones and Sun have assessed and are updating their own systems to insure that they are Year 2000 compliant. Jones and Sun anticipate substantial completion of this process by early 1999. Jones and Sun may not be able, however, to complete these plans in time. Additionally, vendors, customers and other third parties with which Jones and Sun do business may not make their systems Year 2000 compliant. Jones' and Sun's business and results of operations could suffer if either of them or such third parties fail to make necessary technological adjustments. For a more complete discussion of Year 2000 issues, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the documents incorporated by reference in this Prospectus. Consequences of a Failure to Exchange Restricted Notes The Company issued the Restricted Notes in a private offering exempt from the registration requirements of the Securities Act. Therefore, holders of Restricted Notes may not offer, sell or otherwise transfer their Restricted Notes except in compliance with the registration requirements of the Securities Act and applicable state securities laws or pursuant to exceptions from, or in transactions not subject to, such registration requirements. Holders of Restricted Notes who do not exchange their Restricted Notes for Exchange Notes in the Exchange Offer will continue to be subject to these transfer restrictions after the completion of the Exchange Offer. See "The Exchange Offer--Consequences of a Failure to Exchange Restricted Notes." In addition, after completion of the Exchange Offer, holders of Restricted Notes who do not tender their Restricted Notes in the Exchange Offer will no longer be entitled to any exchange or registration rights under the Exchange and Registration Rights Agreement, except under limited circumstances. To the extent that Restricted Notes are tendered and accepted in the Exchange Offer, the liquidity of the trading market for untendered Restricted Notes could be adversely affected. Absence of a Public Market Although holders of Exchange Notes (who are not "affiliates" of the Company within the meaning of the Securities Act) may resell or otherwise transfer their Exchange Notes without compliance with the registration requirements of the Securities Act, there is no existing market for the Exchange Notes, and there can be no assurance as to the liquidity of any markets that may develop for the Exchange Notes, the ability of holders of Exchange Notes to sell their Exchange Notes or the prices at which holders would be able to sell their Exchange Notes. Future trading prices of the Exchange Notes will depend on many factors, including, among other things, prevailing interest rates, Jones' operating results and the market for similar securities. The initial purchasers in the private offering have advised Jones that they intend to make a market in the Exchange Notes after the Exchange Offer. However, they are not obligated to do so, and any market-making may be discontinued at any time without notice. In addition, such market-making activity may be limited during the Exchange Offer. Jones does not intend to apply for listing of the Exchange Notes on any securities exchange or to arrange for them to be quoted on any quotation system. Accordingly, an active trading market for the Exchange Notes may not develop, either before, during or after the consummation of the Exchange Offer. The absence of an active trading market may have an adverse affect on the market price and liquidity of the Exchange Notes. Exchange Offer Procedures Each holder of Restricted Notes wishing to accept the Exchange Offer must deliver the Letter of Transmittal, together with the Restricted Notes to be exchanged and any other required documentation, to the Exchange Agent, or effect a tender of Restricted Notes by book-entry transfer into the Exchange Agent's account, in each case in compliance with the instructions provided in "The Exchange Offer" section of this Prospectus and in the Letter of Transmittal. The method of delivery of Restricted Notes and the Letter of Transmittal and all other required documentation is at the election and risk of the holders of Restricted Notes. Although the Company intends to notify tendering holders of any defects or irregularities with respect to their tenders of Restricted Notes, neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Restricted Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Restricted Notes will not be deemed to have been made until such irregularities have been cured or waived. RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth the unaudited consolidated ratios of earnings to fixed charges for Jones on a historical basis: Nine Months Ended Year Ended December 31, September 27, 1998 1997 1996 1995 1994 1993 ------------------ ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges.... 19.4x 18.1x 14.4x 14.8x 18.7x 22.6x We computed these ratios by dividing fixed charges into the sum of earnings (after certain adjustments) and fixed charges. Earnings used in computing the ratio of earnings to fixed charges consist of income before income taxes and fixed charges excluding capitalized interest. Fixed charges consist of interest expensed and capitalized, amortization of debt expense and that portion of rental expense representative of interest. EXCHANGE OFFER Purpose of the Exchange Offer Jones initially sold the Restricted Notes in a private offering on October 2, 1998 to Chase Securities Inc., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc. (collectively, the "Initial Purchasers") pursuant to a Purchase Agreement dated September 29, 1998 between Jones and the Initial Purchasers. The Initial Purchasers subsequently resold the Restricted Notes to qualified institutional buyers in reliance on, and subject to the restrictions imposed under, Rule 144A under the Securities Act and outside the United States in accordance with the provisions of Regulation S under the Securities Act. In connection with the private offering of the Restricted Notes, Jones and the Initial Purchasers entered into an Exchange and Registration Rights Agreement dated October 2, 1998, in which Jones agreed, among other things: o to file with the SEC on or before December 31, 1998, a registration statement relating to an exchange offer for the Restricted Notes (the "Exchange Offer Registration Statement"); o to use its reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act on or before March 31, 1999; o upon the effectiveness of the Exchange Offer Registration Statement, to offer the holders of the Restricted Notes the opportunity to exchange their Restricted Notes in the Exchange Offer for a like principal amount of Exchange Notes; o to keep the Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after notice of the Exchange Offer is mailed to holders of Restricted Notes; and o to use its reasonable best efforts to consummate the Exchange Offer on or before April 30, 1999. Jones also agreed, under certain circumstances: o to use its reasonable best efforts to file a shelf registration statement relating to the offer and sale of the Restricted Notes by the holders of the Restricted Notes (a "Shelf Registration Statement"); o to use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective; and o to use its reasonable best efforts to keep such Shelf Registration Statement effective until October 2, 2000 or until the Restricted Notes covered by the Shelf Registration Statement have been sold or until such Restricted Notes become eligible for resale without volume restrictions pursuant to Rule 144 under the Securities Act. The Exchange Offer being made by this Prospectus is intended to satisfy your exchange and registration rights under the Exchange and Registration Rights Agreement. If the Company fails to fulfill such registration and exchange obligations, you, as a holder of outstanding Restricted Notes, are entitled to receive additional interest, at a rate of 0.25% per annum, determined daily, as liquidated damages for such default. For a more complete understanding of your exchange and registration rights, you should refer to the Exchange and Registration Rights Agreement, which is included as Exhibit 4.1 to the Registration Statement that relates to this Prospectus. Effect of the Exchange Offer Based on certain no-action letters issued by the staff of the SEC to third parties in unrelated transactions, the Company believes that you may offer for resale, resell or otherwise transfer any Exchange Notes issued to you in the Exchange Offer in exchange for Restricted Notes without compliance with the registration and prospectus delivery requirements of the Securities Act, if o you are acquiring the Exchange Notes issued in the Exchange Offer in the ordinary course of your business; o you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate, in a distribution of the Exchange Notes; o you are not an "affiliate" of the Company (as defined in Rule 405 under the Securities Act); and o you are not an Initial Purchaser who acquired Restricted Notes directly from the Company in the initial offering to resell pursuant to Rule 144A, Regulation S or any other available exemption under the Securities Act. If you are an "affiliate" of the Company or an Initial Purchaser or if you have any arrangement or understanding with any person to participate in a distribution of the Exchange Notes : o you will not be able to rely on the interpretations of the staff of the SEC, in connection with any offer for resale, resale or other transfer of Exchange Notes; and o you must comply with the registration and prospectus delivery requirements of the Securities Act, or have an exemption available to you, in connection with any offer for resale, resale or other transfer of the Exchange Notes. In addition, we are not making this Exchange Offer to, nor will we accept surrenders of Restricted Notes from holders of Restricted Notes in any state in which this Exchange Offer would not comply with the applicable securities laws or "blue sky" laws of such state. Each broker-dealer that receives Exchange Notes for its own account in exchange for Restricted Notes, where such Restricted Notes 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 Notes. See "Plan of Distribution". Use of Proceeds The Company will not receive any cash proceeds from the issuance of the Exchange Notes. As consideration for the Exchange Notes, the Company will receive in exchange an equivalent principal amount of outstanding Restricted Notes, the terms of which are substantially identical to the terms of the Exchange Notes, except that the Exchange Notes will be freely transferable and issued free of any covenants regarding exchange and registration rights. The Company will retire and cancel the Restricted Notes surrendered in exchange for the Exchange Notes. Accordingly, the issuance of the Exchange Notes under the Exchange Offer will not result in any change in the outstanding aggregate indebtedness of the Company. Terms of the Exchange Offer Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal, the Company will accept all Restricted Notes validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the Expiration Date (defined below in "--Expiration Date; Extensions; Amendments"). After authentication of the Exchange Notes by the Trustee or an authenticating agent, the Company will issue and deliver $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of outstanding Restricted Notes accepted in the Exchange Offer. Holders may tender some or all of their Restricted Notes pursuant to the Exchange Offer in denominations of $1,000 and integral multiples thereof. By tendering Restricted Notes in exchange for Exchange Notes and by executing the Letter of Transmittal, each holder of Restricted Notes will be required to represent that, among other things: o any Exchange Notes to be received by it will be acquired in the ordinary course of its business; o it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes; and o it is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company, or, if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Each broker-dealer that receives Exchange Notes for its own account in exchange for Restricted Notes, where such Restricted Notes 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 Notes. See "Plan of Distribution." The form and terms of the Exchange Notes are identical in all material respects to the form and terms of the outstanding Restricted Notes, except that o the offering of the Exchange Notes has been registered under the Securities Act; o the Exchange Notes will not be subject to transfer restrictions; and o the Exchange Notes will be issued free of any covenants regarding exchange and registration rights. The Exchange Notes will be issued under and entitled to the benefits of the Indenture that governs the Restricted Notes. As of the date of this Prospectus, $265.0 million aggregate principal amount of the Restricted Notes is outstanding. In connection with the issuance of the Restricted Notes, the Company arranged for the Restricted Notes to be issued and transferable in book-entry form through the facilities of The Depository Trust Company ("DTC"), acting as a depositary. The Exchange Notes will also be issuable and transferable in book-entry form through DTC. This Prospectus, together with the accompanying Letter of Transmittal, is initially being sent to all registered holders of Restricted Notes as of the close of business on [ ], 1999. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Restricted Notes being tendered. However, the Exchange Offer is subject to certain customary conditions which may be waived by the Company, and to the terms and provisions of the Exchange and Registration Rights Agreement. See "--Conditions to the Exchange Offer." The Company shall be deemed to have accepted validly tendered Restricted Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. See "--Exchange Agent." The Exchange Agent will act as agent for the tendering holders of Restricted Notes for the purpose of receiving Exchange Notes from the Company and delivering Exchange Notes to such holders. If any tendered Restricted Notes are not accepted for exchange because of an invalid tender or the occurrence of certain other events set forth herein, certificates for any such unaccepted Restricted Notes will be returned, at the Company's cost, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders who tender Restricted Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Restricted Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "--Solicitation of Tenders, Fees and Expenses." Expiration Date; Extensions; Amendments The term "Expiration Date" shall mean 5:00 p.m., New York City time, on [ ], 1999, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. The Company may extend the Exchange Offer at any time and from time to time by giving oral or written notice to the Exchange Agent and by timely public announcement. The Company expressly reserves the right, in its sole discretion, to amend the terms of the Exchange Offer in any manner. Without limiting the generality of the foregoing, if any of the conditions set forth herein under "--Termination" shall have occurred and shall not have been waived by the Company (if permitted to be waived by the Company), the Company expressly reserves the right, in its sole discretion, by giving oral or written notice to the Exchange Agent, to: o delay acceptance of, or refuse to accept, any Restricted Notes not previously accepted; o extend the Exchange Offer; or o terminate the Exchange Offer. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof by the Company to the registered holders of the Restricted Notes. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment in a manner reasonably calculated to inform the holders of such amendment and the Company will extend the Exchange Offer to the extent required by law. Without limiting the manner in which the Company may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the Exchange Offer, the Company shall have no obligation to publish, advise, or otherwise communicate any such public announcement, other than by making a timely press release thereof. Interest on the Exchange Notes Interest on the Exchange Notes will accrue from the last interest payment date on which interest was paid on the Restricted Notes surrendered in exchange therefor or, if no interest has been paid on the Restricted Notes, from October 2, 1998. The Exchange Notes will bear interest at a rate of 6.25% per annum. Interest on the Exchange Notes will be payable semi-annually on April 1 and October 1 of each year, beginning on April 1, 1999. Procedures for Tendering Each holder of Restricted Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and in the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Restricted Notes to be exchanged and any other required documentation, to The Chase Manhattan Bank, as Exchange Agent, at the address set forth herein and in the Letter of Transmittal or effect a tender of Restricted Notes pursuant to the procedures for book-entry transfer as provided for herein and in the Letter of Transmittal. By tendering Restricted Notes in exchange for Exchange Notes and by executing the Letter of Transmittal, each holder of Restricted Notes will represent to the Company that, among other things: o any Exchange Notes to be received by it will be acquired in the ordinary course of its business; o it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes; and o it is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company, or, if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Any financial institution that is a participant in DTC's system may make book-entry delivery of the Restricted Notes by causing DTC to transfer such Restricted Notes into the Exchange Agent's account in accordance with DTC's procedure for such transfer. Although delivery of Restricted Notes may be effected through book-entry transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at its address set forth herein under "--Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of documents to DTC in accordance with DTC's procedures does NOT constitute delivery to the Exchange Agent. Only a holder of Restricted Notes may tender its Restricted Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Restricted Notes (unless such tender is being effected pursuant to the procedure for book-entry transfer) and other required documents, to the Exchange Agent, prior to 5:00 p.m., New York City time, on the Expiration Date. The tender by a holder of Restricted Notes will constitute an agreement between such holder, the Company and the Exchange Agent in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. If less than all the Restricted Notes held by a holder of Restricted Notes are tendered, a tendering holder should fill in the amount of Restricted Notes being tendered in the appropriate box on the Letter of Transmittal. The entire amount of Restricted Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. The Letter of Transmittal will include representations to the Company that, among other things: o any Exchange Notes to be received by it will be acquired in the ordinary course of its business; o it has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes; and o it is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company, or, if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. In the case of a broker-dealer that receives Exchange Notes for its own account in exchange for Restricted Notes that were acquired by it as a result of market-making or other trading activities, the Letter of Transmittal will also include an acknowledgment that the broker-dealer will deliver a copy of this Prospectus in connection with the resale by it of Exchange Notes received pursuant to the Exchange Offer; however, by so acknowledging and by delivering a Prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" (within the meaning of the Securities Act). See "Plan of Distribution." The method of delivery of Restricted Notes and the Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the holders of Restricted Notes. Instead of delivery by mail, it is recommended that holders of Restricted Notes use an overnight or hand delivery service. In all cases, sufficient time should be allowed to ensure delivery to the Exchange Agent prior to the Expiration Date. No Letter of Transmittal or Restricted Notes should be sent to the Company. Any beneficial owner whose Restricted Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender Restricted Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on its own behalf, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering its Restricted Notes, either make appropriate arrangements to register ownership of the Restricted Notes in such beneficial owner's own name or obtain a properly completed bond power from the registered holder of such Restricted Notes. This transfer of record ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"), unless the Restricted Notes tendered pursuant thereto are tendered o by a registered holder who has not completed the box entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal; or o for the account of an Eligible Institution. If the Letter of Transmittal is signed by a person other than the registered holder listed therein, such Restricted Notes must be endorsed or accompanied by appropriate bond powers which authorize such person to tender the Restricted Notes on behalf of the registered holder thereof, in either case signed as the name of the registered holder or holders appears on the Restricted Notes. If the Letter of Transmittal or any Restricted Notes or bond powers are signed or endorsed by trustees, executors, administrators, guardians, attorneys-in-fact, officers or corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, submit evidence satisfactory to the Company of their authority to so act with such Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of the tendered Restricted Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Restricted Notes not properly tendered or any Restricted Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the absolute right to waive any irregularities or conditions of tender as to particular Restricted Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Restricted Notes must be cured within such time as the Company shall determine. Although the Company intends to notify tendering holders of defects or irregularities with respect to tenders of Restricted Notes, neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Restricted Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Restricted Notes will not be deemed to have been made until such irregularities have been cured or waived. Any Restricted Notes received by the Exchange Agent that the Company determines are not properly tendered or the tender of which is otherwise rejected by the Company and as to which the defects or irregularities have not been cured or waived by the Company will be returned by the Exchange Agent to the tendering holder unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In addition, the Company reserves the right in its sole discretion: o to purchase or make offers for any Restricted Notes that remain outstanding subsequent to the Expiration Date; o to terminate the Exchange Offer, as set forth in "--Termination"; and o to the extent permitted by applicable law, to purchase Restricted Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers may differ from the terms of the Exchange Offer. Book-Entry Transfer The Company understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Restricted Notes at DTC for the purpose of facilitating the Exchange Offer, and subject to the establishment of such accounts, any financial institution that is a participant in DTC's system may make book-entry delivery of Restricted Notes by causing DTC to transfer such Restricted Notes into the Exchange Agent's account with respect to the Restricted Notes in accordance with DTC's Automated Tender Offer Program procedures for such transfer. However, the exchange for the Restricted Notes so tendered will only be made after a timely confirmation of a book-entry transfer of such Restricted Notes into the Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's Message and any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by DTC and received by the Exchange Agent and forming part of the confirmation of a book-entry transfer, which states that DTC has received an express acknowledgment from a participant tendering Restricted Notes and that such participant has received the Letter of Transmittal and agrees to be bound by the terms of the Letter of Transmittal, and the Company may enforce such agreement against the participant. Although delivery of Restricted Notes may be effected through DTC into the Exchange Agent's account at DTC, an appropriate Letter of Transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth herein or in the Letter of Transmittal on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. Delivery of documents to DTC without such confirmation or compliance does not constitute delivery to the Exchange Agent. Guaranteed Delivery Procedures Holders who wish to tender their Restricted Notes and (1) whose Restricted Notes are not immediately available, or (2) who cannot deliver their Restricted Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, or (3) who cannot complete the procedure for book-entry transfer on a timely basis, may effect a tender if: o the tender is made through an Eligible Institution; o prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmittal, mail or hand delivery) setting forth the name and address of the holder, the certificate number or numbers of such holder's Restricted Notes and the principal amount of such Restricted Notes tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing the Restricted Notes to be tendered in proper form for transfer (or confirmation of a book-entry transfer into the Exchange Agent's account at DTC of Restricted Notes delivered electronically) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Exchange Agent; and o such properly completed and executed Letter of Transmittal (or facsimile thereof), together with the certificate(s) representing all tendered Restricted Notes in proper form for transfer (or confirmation of a book-entry transfer into the Exchange Agent's account at DTC of Restricted Notes delivered electronically) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three business days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Restricted Notes according to the guaranteed delivery procedures set forth above. Withdrawal of Tenders Except as otherwise provided herein, tenders of Restricted Notes may be withdrawn at any time prior to 5:00 p.m. New York City time, on the Expiration Date. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must o specify the name of the person having deposited the Restricted Notes to be withdrawn (the "Depositor"); o identify the Restricted Notes to be withdrawn (including the certificate number or number and principal amount of such Restricted Notes or, in the case of Restricted Notes transferred by book-entry transfer, the name and number of the account at DTC to be credited); o be signed by the Depositor in the same manner as the original signature on the Letter of Transmittal by which such Restricted Notes were tendered (including any required signature guarantee) or be accompanied by documents of transfer sufficient to permit the registrar to register the transfer of such Restricted Notes into the name of the Depositor withdrawing the tender; and o specify the name in which any such Restricted Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Restricted Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer, and no Exchange Notes will be issued with respect thereto unless the Restricted Notes so withdrawn are validly retendered. Any Restricted Notes that have been tendered but are not accepted for exchange will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Restricted Notes may be retendered by following one of the procedures described above under "--Procedures for Tendering" at any time prior to the Expiration Date. Conditions to the Exchange Offer Notwithstanding any other term of the Exchange Offer, the Company will not be required to accept for exchange, or to exchange Exchange Notes for, any Restricted Notes, and may terminate or amend the Exchange Offer before the acceptance of such Restricted Notes if, in the Company's judgment, any of the following conditions has occurred or exists or has not been satisfied: o the Exchange Offer, or the making of any exchange by a holder of Restricted Notes, violates applicable interpretations of the SEC staff; o any action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency or body with respect to the Exchange Offer; or o there has been adopted or enacted any law, statute, rule or regulation that can reasonably be expected to impair the ability of the Company to proceed with the Exchange Offer. If the Company determines that it may terminate the Exchange Offer for any of the reasons set forth above, the Company may (1) refuse to accept any Restricted Notes and return any Restricted Notes that have been tendered to the tendering holders, (2) extend the Exchange Offer and retain all Restricted Notes tendered prior to the Expiration Date of the Exchange Offer, subject to the rights of the holders of the tendered Restricted Notes to withdraw such Restricted Notes, or (3) waive such termination event with respect to the Exchange Offer and accept the properly tendered Restricted Notes that have not been withdrawn. If the Company determines that such waiver constitutes a material change in the Exchange Offer, the Company will promptly disclose such change in a manner reasonably calculated to inform the holders of such change and the Company will extend the Exchange Offer to the extent required by law. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right and each such right will be deemed an ongoing right which may be asserted at any time and from time to time. Exchange Agent The Chase Manhattan Bank, the Trustee under the Indenture, has been appointed as Exchange Agent for the Exchange Offer. In such capacity, the Exchange Agent has no fiduciary duties and will be acting solely on the basis of directions of the Company. Requests for assistance and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the Exchange Agent addressed as follows: By Mail, Overnight Delivery or Hand Delivery: The Chase Manhattan Bank 450 West 33rd Street, 15th Floor New York, New York 10001-2967 Attention: Sheik Wiltshire Global Trust Services Facsimile Transmission: (212) 946-8161 Attention: Sheik Wiltshire Information or Confirmation by Telephone: (212) 946-3082 Delivery to an address or facsimile number other than those listed above will not constitute a valid delivery. Solicitation of Tenders; Fees and Expenses The Company will bear all expenses of soliciting tenders pursuant to the Exchange Offer. The principal solicitation pursuant to the Exchange Offer is being made by mail. Additional solicitations may be made by officers and regular employees of the Company and its affiliates in person, by telegraph, telephone or facsimile transmission. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or other persons soliciting acceptances of the Exchange Offer. The Company will, however, pay the Exchange Agent reasonable and customary fees for its services and will reimburse the Exchange Agent for its reasonable out-of-pocket costs and expenses in connection therewith and will indemnify the Exchange Agent for all losses and claims incurred by it as a result of the Exchange Offer. The Company may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this Prospectus, Letters of Transmittal and related documents to the beneficial owners of the Restricted Notes and in handling or forwarding tenders for exchange. The Company will pay all expenses incurred in connection with the Exchange Offer, including fees and expenses of the Exchange Agent and Trustee, accounting and legal fees (including the expense of one counsel to the holders of the Notes) and printing costs. The Company will pay any transfer taxes applicable to the exchange of Restricted Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Restricted Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder thereof or any other person) will be payable by the tendering holder. For example, the tendering holder will pay transfer taxes, if: o certificates representing Exchange Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Restricted Notes tendered; or o tendered Restricted Notes are registered in the name of any person other than the person signing the Letter of Transmittal. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed by the Company directly to such tendering holder. Accounting Treatment The Exchange Notes will be recorded at the same carrying value as the Restricted Notes, as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company as a result of the consummation of the Exchange Offer. The expense of the Exchange Offer will be amortized by the Company over the term of the Exchange Notes. Consequences of a Failure to Exchange Restricted Notes As a result of the making of, and upon acceptance for exchange of all validly tendered Restricted Notes pursuant to the terms of, this Exchange Offer, the Company will have fulfilled certain covenants contained in the Exchange and Registration Rights Agreement. Holders of Restricted Notes who do not tender their Restricted Notes in the Exchange Offer will continue to hold such Restricted Notes and will be entitled to all the rights, and subject to the limitations applicable thereto, under the Indenture and the Exchange and Registration Rights Agreement, except for any such rights under the Exchange and Registration Rights Agreement that by their terms terminate or cease to have further effect as a result of the consummation of this Exchange Offer. All untendered Restricted Notes will continue to be subject to the restrictions on transfer set forth in the Indenture. Accordingly, after the completion of the Exchange Offer, you will only be able to offer for sale, sell or otherwise transfer untendered Restricted Notes as follows: o to the Company; o pursuant to a registration statement that has been declared effective under the Securities Act; o for so long as the Restricted Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a person you reasonably believe is a qualified institutional buyer ("QIB") within the meaning of Rule 144A, that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A; o pursuant to offers and sales that occur outside the United States to foreign persons in transactions complying with the provisions of Regulation S under the Securities Act; o to an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is an institutional investor (an "Institutional Accredited Investor") purchasing for its own account or for the account of such an Institutional Accredited Investor, in each case in a minimum principal amount of the Restricted Notes of $250,000; or o pursuant to any other available exemption from the registration requirements of the Securities Act. To the extent that Restricted Notes are tendered and accepted in the Exchange Offer, the liquidity of the trading market for untendered Restricted Notes could be adversely affected. DESCRIPTION OF NOTES General The Restricted Notes were issued and the Exchange Notes will be issued under an indenture, dated as of October 2, 1998 (the "Indenture"), between Jones and The Chase Manhattan Bank, as trustee (the "Trustee"). The term "Notes" as used in this "Description of Notes" refers to all notes issued or to be issued under the Indenture and includes the Restricted Notes and the Exchange Notes. Capitalized terms used and not otherwise defined have the meanings set forth under "--Certain Definitions". The following summary of certain provisions of the Indenture and the Notes does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part thereof by the TIA. For a more complete understanding of the terms of the Notes, you should refer to the Indenture, which is included as Exhibit 4.2 to the Registration Statement that relates to this Prospectus. The Notes will be unsecured senior obligations of Jones, ranking equally in right of payment with all existing and future unsecured senior debt of Jones and senior in right of payment to all future subordinated debt of Jones. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of Jones in the Borough of Manhattan, The City of New York (which initially shall be the corporate trust office of the Trustee, at 450 West 33rd Street, 15th Floor, New York, New York 10001-2697), except that, at the option of Jones, payment of interest may be made by check mailed to the registered holders of the Notes at their registered addresses. The Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. The registered holder of a Note will be treated as the owner of such Note for all purposes. No service charge will be made for any registration of transfer or exchange of Notes, but Jones may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. See "Exchange Offer --Solicitation of Tenders; Fees and Expenses". Terms of the Notes The Notes will be unsecured senior obligations of Jones, limited to $265.0 million aggregate principal amount, and will mature on October 1, 2001. Each Note will bear interest at a rate per annum of 6.25% from October 2, 1998, or from the most recent date to which interest has been paid or provided for. Interest will be payable semiannually to holders of record at the close of business on the March 15 or September 15 immediately preceding the interest payment date on April 1 and October 1 of each year, commencing April 1, 1999. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Exchange and Registration Rights The terms of the Exchange Notes are substantially identical to the terms of the Restricted Notes, except that the Exchange Notes will be freely transferable and issued free of any covenants regarding exchange and registration rights. Restricted Notes not exchanged in the Exchange Offer will remain outstanding and be entitled to the benefits of the Indenture, but, except under certain circumstances, will have no further exchange or registration rights under the Exchange and Registration Rights Agreement. Optional Redemption The Notes will be redeemable as a whole or in part, at the option of Jones at any time or from time to time, at a redemption price equal to the greater of (1) 100% of their principal amount or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus in the case of each of clause (1) and (2) accrued interest to the date of redemption. Holders of Notes to be redeemed will receive notice thereof by first-class mail at least 30 and not more than 60 days prior to the date fixed for redemption. In the case of any partial redemption, selection of Notes for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancelation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption so long as Jones has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and liquidated damages (if any) on, the Notes to be redeemed. Certain Covenants The Indenture contains covenants including, among others, the following: Restrictions on Liens. Except as provided below under "--Exempted Debt," the Credit Parties will not, and will not permit any Restricted Subsidiary to, create or suffer to exist any mortgage, lien, pledge, charge, security interest or encumbrance (a "Lien" or "Liens") to secure any Indebtedness of any Credit Party or Restricted Subsidiary on any Principal Property of any Credit Party or Restricted Subsidiary, without making, or causing such Restricted Subsidiary to make, effective provision to secure all the Notes 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 Credit Party 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 Credit Party 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 Credit Party or Restricted Subsidiary; (c) Liens securing Indebtedness between a Restricted Subsidiary and a Credit Party or between Restricted Subsidiaries or Credit Parties; (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 Credit Party or Restricted Subsidiary must have disposed 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 Credit Party 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 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 are being contested in good faith and by appropriate proceedings; (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 Credit Parties 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 generally accepted accounting principles as in effect at such time; (i) pledges or deposit 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 Credit Party or Restricted Subsidiary is a party, or deposits to secure public or statutory obligations of any Credit Party 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 by a Credit Party or Subsidiary of a Credit Party on the payments to be made by such institution to the Company or a Subsidiary of the Company 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 deposit accounts or other funds 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 Credit Party 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 Credit Party or Restricted Subsidiary to provide collateral to the depository institution; (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 date of the Indenture, 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 date of the Indenture, or the acquisition, construction, improvement, development or expansion after the date of the Indenture, 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 date of the Indenture, the acquisition, construction, improvement, development or expansion of the 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 date of the Indenture; (r) Liens for taxes, assessments and other governmental changes 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 generally accepted accounting principles; and (s) extension, renewal, replacement or refunding of any Lien existing on the date of the Indenture or referred to in clauses (a) to (k) and (n), (o) and (q), provided that the principal amount of Indebtedness secured thereby and not otherwise authorized by clauses (a) to (k) and (n), (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. Restrictions on Sale and Leaseback Transactions. Except as provided below under "--Exempted Debt," the Credit Parties will not, and will not permit any Restricted Subsidiary to, after the date of the Indenture, enter into any arrangement with any Person providing for the leasing by any such Credit Party or Restricted Subsidiary of any Principal Property now owned or hereafter acquired which has been or is to be sold or transferred by such Credit Party or Restricted Subsidiary to such Person with the intention of taking back a lease of such 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 (i) such Credit Party 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 Credit Party or Restricted Subsidiary or to the purchase, construction or development of property or assets to be used in the ordinary course of business, or (ii) such Credit Party or Restricted Subsidiary would, on the effective date of such sale or transfer, be entitled, pursuant to the 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 Notes then outstanding. The foregoing restriction will not apply to any Sale and Leaseback Transaction (i) between a Credit Party and a Restricted Subsidiary or between Restricted Subsidiaries or Credit Parties, provided that the lessor shall be a Credit Party or 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 or development of such Principal Property or asset or the commencement of operation of such Principal Property, or (iv) involving Jones' distribution warehouse at South Hill, Virginia. Exempted Debt. Notwithstanding the restrictions in the Indenture on (i) Liens and (ii) Sale and Leaseback Transactions, any Credit Party or Restricted Subsidiary may, in addition to amounts permitted under such restrictions, 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. Corporate Existence. Each Credit Party will 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; provided, however, that such Credit Party shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation of such rights and franchises is no longer desirable in the conduct of the business of the Credit Parties and Restricted Subsidiaries considered as a whole. No Special Protection in the Event of a Highly Leveraged Transaction. The terms of the Notes will not afford the holders special protection in the event of a highly leveraged transaction. Merger and Consolidation The Indenture provides that none of the Credit Parties will 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 Wholly Owned Restricted Subsidiary into a Credit Party or another Wholly Owned Restricted Subsidiary or a merger of one Credit Party into another), unless: (i) the resulting, surviving or transferee Person (the "Successor Company") will be a corporation 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 Credit Party) will expressly assume, by a supplemental Indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Credit Party under the Notes and the Indenture; (ii) immediately after giving effect to such transaction (and treating any indebtedness which becomes an obligation of the Successor Company, any other Credit Party or any Restricted Subsidiary as a result of such transaction as having been incurred by the Successor Company or such Credit Party or Restricted Subsidiary at the time of such transaction), no Event of Default shall have occurred and be continuing; (iii) such Credit Party 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 the Indenture; and (iv) if, as a result of any such consolidation, merger or transfer, Principal Property of such Credit Party would become subject to a Lien which would not be permitted by the Indenture, such Credit Party or the Successor Company, as the case may be, shall take such steps as shall be necessary effectively to secure the Notes then outstanding equally and ratably with (or prior to) all Indebtedness secured thereby. Notwithstanding the foregoing, the transfer of assets in connection with the Asset Drop-Down Transaction (as defined below) shall be governed by the provisions described in the third paragraph in this "-- Merger and Consolidation" section and not the provisions of this paragraph or the immediately following paragraph. The Indenture provides that the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the applicable Credit Party under the Indenture, but the predecessor Credit Party in the case of a lease of all or substantially all its assets will not be released from the obligation to pay the principal of and interest on the Notes. Jones is considering a corporate reorganization which it believes would have certain tax benefits and which would result in the transfer of all its operations to a newly created, indirect wholly owned subsidiary. See "The Company -- Proposed Reorganization." Jones may convey or transfer in one transaction or series of related transactions (including by way of merger or consolidation), all or a majority of its assets other than the Capital Stock of its Subsidiaries (the "Asset Drop-Down Transaction") to an indirect Wholly-Owned Restricted Subsidiary (the "Successor Operating Company") (x) upon compliance with clauses (i), (iii) and (iv) of the first paragraph of this "-- Merger and Consolidation" section and (y) upon the execution and delivery by Jones and the intermediate holding company ("Holdco") that will own all the Capital Stock of the Successor Operating Company of a supplemental indenture, in form and substance satisfactory to the Trustee, providing (1 ) for the full and unconditional guarantee of all the Successor Operating Company's obligations under the Notes and the Indenture or (2) if less than substantially all of Jones' assets are being conveyed or transferred to the Successor Operating Company, that Jones shall remain, and Holdco shall be added as, a co-obligor under the Notes and the Indenture (Jones and Holdco are referred to as the "Additional Obligors" ). Neither the Additional Obligors nor the Successor Operating Company shall be required to make a notation on the Notes to reflect such guarantee or co-obligation or the Successor Operating Company as a new obligor under the Notes and the Indenture. Upon compliance with clauses (x) and (y) above, the Successor Operating Company will succeed to, and be substituted for, and may exercise every right and power of, Jones under the Indenture. The Additional Obligors will agree not to engage in any activity other than (a) continuing to own all the Capital Stock of, in the case of Jones, Holdco, and, in the case of Holdco, the Successor Operating Company and former subsidiaries of the Successor Operating Company and (b) certain related or other activities incidental thereto. There can be no assurance that the Asset Drop-Down Transaction will occur. However, Jones currently anticipates that, if it proceeds with the Asset Drop-Down Transaction, it would consummate such transaction on or about January 1, 1999, prior to the commencement of the Exchange Offer. Defaults An Event of Default is defined in the Indenture as (i) a default in any payment of interest on any Note when due and payable, continued for 30 days, (ii) a default in the payment of principal of any Note when due and payable at maturity, upon declaration or otherwise, (iii) the failure by any Credit Party to comply with its obligations under the covenant described under "-- Merger and Consolidation" above, (iv) the failure by any Credit Party to comply for 30 days after notice with any of its obligations under the covenants described under "-- Certain Covenants" above, (v) the failure by any Credit Party to comply for 60 days after notice with its other covenants or agreements contained in the Notes or the Indenture, (vi) a default under any Indebtedness by any Credit Party or Restricted Subsidiary (other than the Notes), whether such Indebtedness now exists or shall hereafter be created, which default shall have resulted in Indebtedness in excess of $25.0 million 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 notice (the "cross acceleration provision" ), (vii) the rendering of any judgment or decree for the payment of money in excess of $25.0 million or its foreign currency equivalent against a Credit Party or Restricted Subsidiary if (A) an enforcement proceeding thereon is commenced by any creditor or (B) such judgment or decree remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the "judgment default provision"), (viii) the guarantee or co-obligation of any Additional Obligor shall cease to be in full force and effect (except as contemplated by the terms thereof) or any Additional Obligor or Person acting by or on behalf of such Additional Obligor shall deny or disaffirm its obligations under the Indenture or any such guarantee or co-obligation, or (ix) certain events of bankruptcy, insolvency or reorganization of a Credit Party or Restricted Subsidiary (the "bankruptcy provisions"). The foregoing will 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. However, a default under clause (iv), (v) or (vi) will not constitute an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Notes notify Jones of the default and Jones does not cure such default within the time specified in clause (iv), (v) or (vi) hereof after receipt of such notice. If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of a Credit Party) occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes by notice to Jones may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of a Credit Party occurs, the principal of and interest on all the Notes will 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 Notes may rescind any such acceleration with respect to the Notes and its consequences. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will 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 Notes 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 Notes have requested the Trustee in writing to 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 Notes 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 Notes will be given the right to 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 involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note (including payments pursuant to the redemption provisions of such Note), the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the holders. In addition, Jones will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. Amendments and Waivers Subject to certain exceptions, the Indenture or the Notes may be amended with the written consent of the holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding. However, without the consent of each holder of an outstanding Note affected, no amendment may, among other things, (i) reduce the amount of Notes whose holders must consent to an amendment, (ii) reduce the rate of or extend the time for payment of interest or any liquidated damages on any Note, (iii) reduce the principal of or extend the stated maturity of any Note, (iv) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "-- Optional Redemption" above, (v) make any Note payable in money other than that stated in the Note, (vi) impair the right of any holder to receive payment of principal of, and interest or any liquidated damages on, such holder's Notes 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 Notes, or (vii) make any change in the amendment provisions which require each holder's consent or in the waiver provisions, or (viii) make any change in any guarantee or co-obligation of any Additional Obligor that would adversely affect the holders. Without the consent of any holder, Jones and the Trustee may amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation of the obligations of Jones under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to provide for the assumption by the Successor Operating Company of the obligations of Jones and the issuance of the guarantees of such obligations by the Additional Obligors or the retention and addition, as applicable, of the Additional Obligors as co-obligors, in connection with the Asset Drop-Down Transaction (as contemplated under "-- Merger and Consolidation"), to secure the Notes, to add guarantees or co-obligors with respect to the Notes, to add to the covenants of Jones for the benefit of the holders or to surrender any right or power conferred upon Jones, to make any change that does not adversely affect the rights of any holder, subject to the provisions of the Indenture, to provide for the issuance of the Exchange Notes or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. The Senior Credit Facilities contain a covenant which, following a default or event of default under the Senior Credit Facilities, prohibits Jones from making material amendments to debt instruments, including the Indenture, without the consent of a majority of the lenders under the Senior Credit Facilities. The consent of the holders will not be necessary under the Indenture to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, Jones will be required to mail to holders a notice briefly describing such amendment. However, the failure to give such notice to all holders, or any defect therein, will not impair or affect the validity of the amendment. Transfer and Exchange A holder will be able to transfer or exchange Notes 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 and transfer documents and Jones may require a holder to pay any taxes required by law or permitted by the Indenture. Jones will not be required to transfer or exchange any Note selected for redemption or to transfer or exchange any Note for a period of 15 days prior to a selection of Notes to be redeemed. The Notes will be issued in registered form and the registered holder of a Note will be treated as the owner of such Note for all purposes. Defeasance The Indenture provides that Jones at any time may terminate all its obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. In addition, the Indenture will provide that Jones at any time may terminate its obligations under the covenants described under "--Certain Covenants," the cross acceleration provision, the bankruptcy provisions with respect to Restricted Subsidiaries and the judgment default provision described under "-- Defaults" above and the limitations contained in clauses (iii) and (iv) under "-- Merger and Consolidation" above ("covenant defeasance"). Jones may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If Jones exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If Jones exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (iv), (vi) or (vii) or clause (viii) (with respect only to Restricted Subsidiaries) under "-- Defaults" above or because of the failure of Jones to comply with clause (iii) or (iv) under "-- Merger and Consolidation" above. In order to exercise either defeasance option, Jones must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on the outstanding Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law). Concerning the Trustee The Chase Manhattan Bank is the Trustee under the Indenture and has been appointed by Jones as Registrar, Paying Agent and Exchange Agent with regard to the Notes. The Trustee is an affiliate of Chase Securities Inc., one of the Initial Purchasers. Governing Law The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. Certain Definitions "Asset Drop-Down Transaction" shall have the meaning assigned to such term in the third paragraph of the "-- Merger and Consolidation" section. "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. "Board of Directors" means the Board of Directors of the applicable Credit Party or any committee thereof duly authorized to act on behalf of the Board of Directors of such Credit Party. "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, participations 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. "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 Notes that would be utilized, at the time of selection and in accordance with customary financing practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes. "Comparable Treasury Price" means (1) the average of five Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest 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 (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 a Credit Party and any of its Subsidiaries or between Credit Parties or Subsidiaries of Credit Parties) 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 generally acceptable accounting principles. "Consolidated Stockholders' Equity" means consolidated stockholders' equity of the Credit Parties and their respective Subsidiaries as determined in accordance with generally accepted accounting principles and reflected on the most recent balance sheet delivered to the Trustee pursuant to the Indenture. "Credit Parties" means Jones or, following consummation of the Asset Drop-Down Transaction, each of the Additional Obligors and the Successor Operating Company. "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 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. "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 therefor 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. "Independent Investment Banker" means Chase Securities Inc. or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions in New York State are authorized or required by law to close. "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 Credit Party. "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 Credit Party 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 Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Principal Property" means any property owned or leased by any Credit Party or Restricted Subsidiary, the net book value of which exceeds one percent of Consolidated Net Tangible Assets of the Credit Parties and their respective Subsidiaries. "Reference Treasury Dealer" means (1) Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bear, Stearns & Co. Inc. and their respective successors, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), Jones shall substitute therefor another Primary Treasury Dealer and (2) any other Primary Treasury Dealer selected by the Independent Investment Banker after consultation with Jones. "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. "Restricted Subsidiary" means, at any time, any Subsidiary of a Credit Party 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 date of the Indenture. "SEC" means the Securities and Exchange Commission. "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. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. "Treasury Rate" means, with respect to any redemption date, (1) 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 Federal Reserve and which establishes yields on actively traded United States 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, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) 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. The Treasury Rate shall be calculated on the third Business Day preceding the redemption date. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "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 a Credit Party or by one or more Wholly Owned Restricted Subsidiaries. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following discussion is a summary of certain United States Federal income tax considerations relevant to the Exchange Offer to holders of Restricted Notes, but does not purport to be a complete analysis of all potential tax effects. The discussion set forth below is based upon currently existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury regulations promulgated thereunder and current administrative rulings and judicial decisions, all of which are subject to change, possibly on a retroactive basis. This summary does not discuss all aspects of United States Federal income taxation that may be relevant to certain types of holders subject to special treatment under the United States Federal income tax laws such as tax-exempt organizations, dealers in securities, financial institutions and life insurance companies. This summary applies only to a holder that acquired Restricted Notes at original issue for cash and holds Restricted Notes as a capital asset as defined in section 1221 of the Code. This summary also does not discuss any aspect of state, local or foreign taxation. Holders of Restricted Notes considering the Exchange Offer should consult their own tax advisors concerning the United States Federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction. An exchange of Restricted Notes for Exchange Notes pursuant to the Exchange Offer should not be treated as an exchange or other taxable event for United States Federal income tax purposes. Accordingly, there should be no United States Federal income tax consequences to holders of Restricted Notes who exchange Restricted Notes for Exchange Notes pursuant to the Exchange Offer and any such holder should have the same adjusted tax basis and holding period in the Exchange Notes as it had in the Restricted Notes immediately before the exchange. THE FOREGOING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS DOES NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR HOLDER'S SITUATION OR STATUS. ACCORDINGLY, EACH HOLDER OF RESTRICTED NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE EXCHANGE OFFER TO IT, INCLUDING THOSE UNDER THE STATE, FOREIGN AND OTHER TAX LAWS. BOOK-ENTRY; DELIVERY AND FORM The Global Notes The certificates representing the Restricted Notes were issued, and the certificates representing the Exchange Notes will be issued, in fully registered form, without coupons. The Restricted Notes are represented by one or more permanent global certificates in definitive, fully registered form without interest coupons in the aggregate amount of $265.0 million (collectively, the "Initial Global Note"). Except as described under "Certificated Exchange Notes", the Exchange Notes initially will be represented by one or more permanent global certificates in definitive, fully registered form (collectively, the "Global Notes") and (i) will be deposited with, or on behalf of, DTC, and registered in the name of Cede & Co., as DTC's nominee or (ii) will remain in the custody of the Trustee pursuant to a FAST Balance Certificate Agreement between DTC and the Trustee or (iii) will be deposited with, or on behalf of, a custodian of DTC for credit to the respective accounts of the purchasers (or to such accounts as they may direct) at Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear"), or Cedel Bank, societe anonyme ("Cedel"). If any holder of Restricted Notes whose interest in such Restricted Notes is represented by the Initial Global Note fails to tender in the Exchange Offer, the Company may issue and deliver to such holder a separate certificate representing such holder's Restricted Notes in registered from without interest coupons. Certain Book-Entry Procedures for the Global Notes The descriptions of the operations and procedures of DTC, Euroclear and Cedel set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. The Company takes no responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters. DTC has advised the Company that it is (i) a limited purpose trust company organized under the laws of the State of New York, (ii) a "banking organization" within the meaning of the New York Banking Law, (iii) a member of the Federal Reserve System, (iv) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and (v) a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers (which may include the Initial Purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants. The Company expects that pursuant to procedures established by DTC (i) upon the deposit of the Global Note, DTC will credit the accounts of Participants with an interest in the Global Note and (ii) ownership of the Exchange Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Exchange Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in Exchange Notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Exchange Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have Exchange Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Exchange Notes, and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee thereunder. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of Exchange Notes under the Indenture or such Global Note. The Company understands that under existing industry practice, in the event that the Company requests any action of holders of Exchange Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Exchange Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Exchange Notes. Payments with respect to the principal of, and premium, if any, and interest on, any Exchange Notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such Exchange Notes under the Indenture. Under the terms of the Indenture, the Company and the Trustee may treat the persons in whose names the Exchange Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither the Company nor the Trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. Cross-market transfers of Exchange Notes between the Participants in DTC, on the one hand, and Euroclear or Cedel participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may be, by its respective depositary. However, such cross-market transactions will require delivery of instructions to Euroclear or Cedel, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Cedel, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Cedel participants may not deliver instructions directly to the depositaries for Euroclear or Cedel. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day (which must be a business day for Euroclear and Cedel) immediately following the settlement date of DTC. Cash received in Euroclear or Cedel as a result of sales of interest in a Global Note by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel following DTC's settlement date. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Cedel, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Certificated Exchange Notes If (i) the Company notifies the Trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Exchange Notes in definitive form under the Indenture or (iii) upon the occurrence of certain other events as provided in the Indenture, then, upon surrender by DTC of the Global Notes, Certificated Exchange Notes will be issued to each person that DTC identifies as the beneficial owner of the Exchange Notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Exchange Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto. Neither the Company nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Exchange Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Exchange Notes to be issued). PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. 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 Notes received in exchange for Notes where such Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that, starting on the date of this Prospectus and ending on the close of business on the earlier to occur of (i) the date on which all Exchange Notes 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 Exchange Offer, it will make this Prospectus, as amended or supplemented, available to any broker-dealer that requests such documents in the Letter of Transmittal for use in connection with any such resale. In addition, until [ ], 1999 [90 days after the date of this Prospectus], all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the 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 Notes 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 Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes 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 of this Prospectus and ending on the close of business on the earlier to occur of (i) the date on which all Exchange Notes 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 Exchange Offer, the Company 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 Company has agreed to pay all expenses incident to the Exchange Offer (including the expense of one counsel for the holders of the Restricted Notes) other than commissions or concessions of any broker-dealers and will indemnify the holders of the Restricted Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Ira M. Dansky, Esq., our General Counsel, has passed upon the validity of the Exchange Notes offered by this Prospectus. With respect to certain matters concerning Pennsylvania law, he will rely on Mesirov Gelman Jaffe Cramer & Jamieson, LLP, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements and schedule of Jones incorporated by reference in this Prospectus have been audited by BDO Seidman, LLP, independent certified public accountants, to the extent and for the periods set forth in their reports incorporated herein by reference, and are incorporated herein in reliance upon such reports given upon the authority of said firm as experts in accounting and auditing. The consolidated financial statements of Sun appearing in the Jones' Current Report on Form 8-K dated September 24, 1998, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. =================================== ============================= We have not authorized any dealer, salesperson or other person to give any information or to make any representations not contained in this Prospectus in connection $265,000,000 with the Exchange Offer made by this Prospectus and you must not rely on any such information or representations as having been Jones Apparel Group, Inc. authorized by the Company. Neither the delivery of this Prospectus nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date as of which information is given in this Prospectus. This Prospectus does not constitute an offer or solicitation by anyone in any [LOGO] jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such Offer to Exchange solicitation. 6.25% Senior Notes due 2001 ------------------ ------------------ PROSPECTUS ------------------ Dealer Prospectus Delivery Obligation Until , 1999 [90 days after the date of this Prospectus], all broker dealers that effect transactions in the Exchange Notes, whether or not participating in the Exchange Offer, may be required to deliver a Prospectus. This is in addition to the broker-dealers' obligation to deliver a Prospectus when acting as underwriters and with respect to any unsold [DATE] allotments or subscriptions. =================================== ============================= PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As permitted by the Pennsylvania Business Corporation Law of 1988 (the "Pennsylvania Business Corporation Law"), Section 8.1 of our By-laws provides that a director shall not be personally liable for monetary damages for any action taken or failed to be taken, other than as expressly provided in the Pennsylvania Business Corporation Law. Furthermore, Section 8.2 of our By-laws provides that the Company shall indemnify each officer and director to the full extent permitted by the Pennsylvania Business Corporation Law, and shall pay and advance expenses for any matters covered by such indemnification. Section 1741 of the Pennsylvania Business Corporation Law provides that we shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he or she is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful. Section 1742 of the Pennsylvania Business Corporation Law provides that we shall have the power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of the action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interest of the corporation. Indemnification shall not be made under Section 1742 in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation unless and only to the extent that the court of common pleas of the judicial district embracing the county in which the registered office of the corporation is located or the court in which the action was brought determines upon application, that, despite the adjudication of liability but in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses that the court of common pleas or other court deems proper. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES EXHIBIT NO. DESCRIPTION 4.1 Exchange and Registration Rights Agreement dated October 2, 1998, by and among the Company and Chase Securities Inc., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc. 4.2 Indenture dated as of October 2, 1998, by and between the Company and The Chase Manhattan Bank, as trustee, incorporated by reference to our Shelf Registration Statement on Form S-3, filed on October 28, 1998 (Registration No. 333-66223) 5.1 Form of opinion of Ira M. Dansky, Esq. 5.2 Form of opinion of Mesirov Gelman Jaffe Cramer & Jamieson, LLP 12.1 Computation of Ratios of Earnings to Fixed Charges 23.1 Consent of BDO Seidman, LLP 23.2 Consent of Ernst & Young LLP 23.3 Consent of Ira M. Dansky, Esq. (included in opinion filed as Exhibit 5.1) 23.4 Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP (included in opinion filed as Exhibit 5.2) 24.1 Power of Attorney (included in signature page) 25.1 Form T-1 Statement of Eligibility of Trustee 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery ITEM 22. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the "Securities Act"); (ii) To reflect in the Prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the maximum aggregate offering price may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, if in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act of 1934 the (the "Exchange Act") and incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefor, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (d) The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized. JONES APPAREL GROUP, INC., Registrant by /s/ Wesley R. Card ------------------- Wesley R. Card Chief Financial Officer December 9, 1998 POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Ira M. Dansky, Wesley R. Card and Patrick M. Farrell and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement, any Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent 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 or could do in person, hereby ratifying and confirming all that said attorney-in-fact, agent, or his substitute may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. SIGNATURE TITLE DATE /s/ Sidney Kimmel - -------------------- Chairman and Director December 9, 1998 (Sidney Kimmel) (Chief Executive Officer) /s/ Jackwyn Nemerov - -------------------- President and Director December 9, 1998 (Jackwyn Nemerov) /s/ Wesley R. Card - -------------------- Chief Financial Officer December 9, 1998 (Wesley R. Card) (Principal Financial Officer) /s/ Patrick M. Farrell - ---------------------- Vice President and Corporate December 9, 1998 (Patrick M. Farrell) Controller (Principal Accounting Officer) /s/ Irwin Samelman - -------------------- Executive Vice President, December 9, 1998 (Irwin Samelman) Marketing, and Director /s/ Geraldine Stutz - -------------------- Director December 9, 1998 (Geraldine Stutz) /s/ Howard Gittis - -------------------- Director December 9, 1998 (Howard Gittis) /s/ Eric A. Rothfeld - -------------------- Director December 9, 1998 (Eric A. Rothfeld) /s/ Mark Schwartz - -------------------- Director December 9, 1998 (Mark Schwartz) INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION 4.1 Exchange and Registration Rights Agreement dated October 2, 1998, by and among the Company and Chase Securities Inc., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co. Inc. 4.2 Indenture dated as of October 2, 1998, by and between the Company and The Chase Manhattan Bank, as trustee, incorporated by reference to our Shelf Registration Statement on Form S-3, filed on October 28, 1998 (Registration No. 333-66223) 5.1 Form of opinion of Ira M. Dansky, Esq. 5.2 Form of opinion of Mesirov Gelman Jaffe Cramer & Jamieson, LLP 12.1 Computation of Ratios of Earnings to Fixed Charges 23.1 Consent of BDO Seidman, LLP 23.2 Consent of Ernst & Young LLP 23.3 Consent of Ira M. Dansky, Esq. (included in opinion filed as Exhibit 5.1) 23.4 Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP (included in opinion filed as Exhibit 5.2) 24.1 Power of Attorney (included in signature page) 25.1 Form T-1 Statement of Eligibility of Trustee 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery EX-4.1 2 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.1 Jones Apparel Group, Inc. $265,000,000 6.25 % Senior Notes due 2001 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT October 2, 1998 CHASE SECURITIES INC. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BEAR, STEARNS & CO. INC. c/o Chase Securities Inc. 270 Park Avenue, 8th floor New York, New York 10017 Ladies and Gentlemen: Jones Apparel Group, Inc., a Pennsylvania corporation (the "Company"), proposes to issue and sell to Chase Securities Inc. ("CSI"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Bear, Stearns & Co. Inc. (collectively, the "Initial Purchasers") upon the terms and subject to the conditions set forth in a purchase agreement dated September 29, 1998 (the "Purchase Agreement"), $265,000,000 aggregate principal amount of its 6.25% Senior Notes due 2001 (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 Company agrees with the Initial Purchasers, for the benefit of the holders (including the Initial Purchasers) of the Securities, the Exchange Securities (as defined herein) and the Private Exchange Securities (as defined herein) (collectively, the "Holders"), as follows: 1. Registered Exchange Offer. The Company shall (i) prepare and, not later than 90 days following the date of original issuance of the Securities (the "Issue Date"), 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 Company (the "Exchange Securities") that are identical in all material respects to the Securities, except that the liquidated damages provisions and the transfer restrictions relating to the Securities will be eliminated, (ii) use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 180 days after the Issue Date and the Registered Exchange Offer to be consummated no later than 210 days after the Issue Date and (iii) keep the Exchange Offer Registration Statement effective for not less than 30 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") between the Company 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 liquidated damages provisions and the transfer restrictions relating to the Securities (as described above). Upon the effectiveness of the Exchange Offer Registration Statement, the Company 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 the Company (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) and 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 Company, 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 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. If, prior to the consummation of the Registered Exchange Offer, any Holder holds any Securities acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or any Holder is not entitled to participate in the Registered Exchange Offer, the Company shall, upon the request of any such Holder, simultaneously with the delivery of the Exchange Securities in the Registered Exchange Offer, issue and deliver to any such Holder, in exchange for the Securities held by such Holder (the "Private Exchange"), a like aggregate principal amount of debt securities of the Company (the "Private Exchange Securities") that are identical in all material respects to the Exchange Securities, except for the transfer restrictions relating to such Private Exchange Securities. The Private Exchange Securities will be issued under the same indenture as the Exchange Securities, and the Company shall use its reasonable best efforts to cause the Private Exchange Securities to bear the same CUSIP number as the Exchange Securities. In connection with the Registered Exchange Offer, the Company 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 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 and any Private Exchange, as the case may be, the Company shall: (a) accept for exchange all Securities validly tendered and not validly withdrawn pursuant to the Registered Exchange Offer and the Private Exchange (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 Company in its sole discretion, which determination shall be final and binding); (b) deliver to the Trustee for cancelation 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 or Private Exchange Securities, as the case may be, equal in principal amount to the Securities of such Holder so accepted for exchange. The Company shall use its reasonable best 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 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 Company 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, the Exchange Securities and the Private Exchange Securities shall vote and consent together on all matters as one class and that none of the Securities, the Exchange Securities or the Private Exchange Securities will have the right to vote or consent as a separate class on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange 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 Company 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 the Company 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 Company 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. 2. Shelf Registration. If (i) because of any change in law or applicable interpretations thereof by the Commission's staff the Company is not permitted to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) any Securities validly tendered pursuant to the Registered Exchange Offer are not exchanged for Exchange Securities within 210 days after the Issue Date, or (iii) any Initial Purchaser so requests with respect to Securities or Private Exchange Securities not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following the consummation of the Registered Exchange Offer, or (iv) any applicable law or interpretations do not permit any Holder to participate in the Registered Exchange Offer, or (v) any Holder 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 the Company (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 (vi) the Company so elects, then the following provisions shall apply: (a) The Company shall use its reasonable best efforts to file as promptly as practicable (but in no event more than 90 days after so required or requested pursuant to this Section 2) with the Commission, and thereafter shall use its reasonable best efforts to cause to be declared effective, 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 or Private Exchange Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Company may, if permitted by current interpretations by the Commission's staff, file a posteffective amendment to the Exchange Offer Registration Statement containing the information required by Regulation SK Items 507 and/or 508, as applicable, in satisfaction of its 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 Company shall use its reasonable best 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 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 Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes 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 taken by the Company in good faith and for valid business reasons (not including avoidance of the Company's obligation hereunder), including the acquisition or divestiture of assets and other material transactions involving the Company, so long as the Company promptly thereafter complies with the requirements of Section 4(j) hereof, if applicable. (c) Notwithstanding any other provisions hereof, the Company 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 Company 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 in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Liquidated Damages. (a) The parties hereto agree that the Holders of Transfer Restricted Securities will suffer damages if the Company fails to fulfill its 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 applicable Registration Statement is not filed with the Commission on or prior to 90 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 180 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's staff, if later, within 90 days after publication of the change in law or interpretation), (iii) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 180 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's staff, if later, within 90 days after publication of the change in law or interpretation) but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being succeeded within 90 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company will be obligated to pay liquidated damages 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, determined daily, on the principal amount of the Securities constituting Transfer Restricted Securities held by such holder until (i) the applicable Registration Statement is filed, (ii) the Exchange Offer Registration Statement is declared effective and the Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement is declared effective or (iv) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of liquidated damages 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 or Private Exchange 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 or Private Exchange 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), the Company shall not be required to pay liquidated damages 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 Company shall notify the Trustee and the Paying Agent under the Indenture promptly upon the happening of each and every Registration Default. The Company shall pay the liquidated damages due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be the Company 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 liquidated damages then due. The liquidated damages 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 liquidated damages shall be deemed to accrue from and including the date of the applicable Registration Default. (c) The parties hereto agree that the liquidated damages 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. 4. Registration Procedures. In connection with any Registration Statement, the following provisions shall apply: (a) The Company 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 its reasonable best 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 Company shall advise each Initial Purchaser, each Exchanging Dealer which has provided in writing to the Company 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 the Company of any notification with respect to the suspension of the qualification of the Securities, the Exchange Securities or the Private 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 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 Company 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 Company 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 Company 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 Company consents 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 Company 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 Company 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 Company consents 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 Company will use its reasonable best efforts to register or qualify, or cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities included therein and their respective counsel in connection with the registration or qualification of, such Securities, Exchange Securities or Private 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, Exchange Securities or Private Exchange Securities covered by such Registration Statement; provided that the Company will not 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 Company will cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities, Exchange Securities or Private 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, Exchange Securities or Private 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 Company is required to maintain an effective Registration Statement, the Company 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, Exchange Securities or Private 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 in order 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 Company will provide a CUSIP number for the Securities, the Exchange Securities and the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Company shall use its reasonable best 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 its security holders as soon as practicable after the effective date of the applicable Registration Statement an earning 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 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the applicable Registration Statement, which statement shall cover such 12-month period. (m) The Company 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 Company may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Company such information concerning the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company 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 Company pursuant to Section 4(b)(iii) through (v), 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 Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 4(b)(iii) through (v) during the period that the Company is 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 Company 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, Exchange Securities and Private Exchange Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement. (q) In the case of a Shelf Registration Statement, the Company 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, Exchange Securities and Private Exchange Securities being sold and any underwriter participating in any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries and (ii) use its reasonable best efforts to have its 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 Company that any information that is designated in writing by the Company, 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 Company 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 Company shall, if requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) in connection with such Shelf Registration Statement, use its reasonable best efforts to cause (i) its counsel to deliver an opinion relating to the Shelf Registration Statement and the Securities, Exchange Securities or Private Exchange Securities, as applicable, in customary form, (ii) its officers to execute and deliver all customary documents and certificates requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) and (iii) its 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. 5. Registration Expenses. The Company will bear all expenses incurred in connection with the performance of its obligations under Sections 1, 2, 3 and 4 and the Company 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, the Exchange Securities and the Private Exchange Securities to be sold pursuant to each Registration Statement (the "Special Counsel") acting for the Initial Purchasers or Holders in connection therewith. 6. Indemnification. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the Company shall indemnify and hold harmless each Holder (including any such Initial Purchaser or Exchanging Dealer), its affiliates, their respective officers, directors, employees and agents, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6 and Section 7 as a Holder) from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of Securities, Exchange Securities or Private Exchange Securities), to which that Holder may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Holder promptly upon demand for any legal or other expenses reasonably incurred by that Holder in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Holders' Information; and provided, further, that with respect to any such untrue statement in or omission from any related preliminary prospectus, the indemnity agreement contained in this Section 6(a) shall not inure to the benefit of any Holder from whom the person asserting any such loss, claim, damage, liability or action received Securities, Exchange Securities or Private Exchange Securities to the extent that such loss, claim, damage, liability or action of or with respect to such Holder results from the fact that both (A) a copy of the final prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities, Exchange Securities or Private Exchange Securities to such person and (B) the untrue statement in or omission from the related preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final prospectus was a result of non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g). This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) In the event of a Shelf Registration Statement, each Holder (including any Initial Purchaser or Exchanging Dealer) shall indemnify and hold harmless the Company, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6(b) and Section 7 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Holders' Information furnished to the Company by such Holder, and shall reimburse the Company promptly upon demand for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than the reasonable costs of investigation; provided, however, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. 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. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 7. Contribution. If the indemnification provided for in Section 6 is unavailable or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company 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 or Private Exchange Securities, on the other, or (ii) if the allocation provided by clause (i) above 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 Company, on the one hand, and such Holder, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company, 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 Company 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 or Private Exchange Securities, on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company, on the one hand, or to any Holders* Information supplied by such Holder, on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 7 shall be deemed to include, for purposes of this Section 7, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 7, an indemnifying party that is a Holder of Securities, Exchange Securities or Private Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities, Exchange Securities or Private Exchange Securities sold by such indemnifying party to any 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 Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 8. Rules 144 and 144A. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it 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 Company covenants that it 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 Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 9. 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 Company (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 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. 10. Miscellaneous. (a) Amendments and Waivers. 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 Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private 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, Exchange Securities or Private 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, the Exchange Securities and the Private 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: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 10(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 Chase Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Bear, Stearns & Co. Inc.; (2) if to an Initial Purchaser, initially at its address set forth in the Purchase Agreement; and (3) if to the Company, initially at the address of the Company 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 Company and its 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 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 the Company or by any Holder of any of their obligations under this Agreement, each Holder or the Company, 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 the Company of its obligations under Sections 1 or 2 hereof for which liquidated damages have been paid pursuant to Section 3 hereof), will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it 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. The Company 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 Company to register any debt securities of the Company 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. Neither the Company nor any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company 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 best 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. Please confirm that the foregoing correctly sets forth the agreement among the Company and the Initial Purchasers. Very truly yours, JONES APPAREL GROUP, INC. by: /s/ Wesley R. Card ----------------------- Wesley R. Card Chief Financial Officer Accepted: CHASE SECURITIES INC. by: /s/ John W. Judson ----------------------------- Authorized Signatory MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED by: /s/ Cynthia L. Bates ----------------------------- Authorized Signatory BEAR, STEARNS & CO. INC. by: /s/ Jacques de Saint Phalle ----------------------------- Authorized Signatory 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 Company has 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". 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". 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 Company has 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 [ ] 199[ ], all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. The Company will not 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 obligations under the Securities Act have been sold and (ii) the Expiration Date, the Company 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 Company has 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. 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 the Company. 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. EX-5.1 3 OPINION LETTER Exhibit 5.1 [Letterhead of Ira M. Dansky] December 9, 1998 Board of Directors Jones Apparel Group, Inc. 250 Rittenhouse Circle Bristol, Pennsylvania 19007 Ladies and Gentlemen: I have acted as counsel for Jones Apparel Group, Inc., a Pennsylvania corporation (the "Company"), in connection with the filing by the Company with the Securities and Exchange Commission (the "SEC") of a registration statement on Form S-4 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), relating to the proposed issuance, in exchange (the "Exchange Offer") for any and all of the Company's outstanding 6.25% Senior Notes due 2001, which have certain transfer restrictions (the "Restricted Notes"), of up to $265,000,000 aggregate principal amount of the Company's 6.25% Senior Notes due 2001 (the "Exchange Notes"), which will be freely transferable. The Exchange Notes are to be issued pursuant to the indenture dated as of October 2, 1998 (the "Indenture") by and among the Company, as issuer, and The Chase Manhattan Bank, as trustee (the "Trustee"). In that connection, I have examined originals, or copies certified or otherwise identified to my satisfaction, of such documents, corporate records and other instruments as I have deemed necessary for purposes of this opinion, including the Indenture. Based on the foregoing, I am of opinion as follows: 1. The Indenture has been duly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery thereof by the Trustee, the Indenture constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether such enforceability is considered in a proceeding in equity or at law). 2. The Exchange Notes have been duly authorized by the Company, and when executed and authenticated in accordance with the provisions of the Indenture and delivered in exchange for the Restricted Notes pursuant to the Exchange Offer, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether such enforceability is considered in a proceeding in equity or at law). In expressing the opinion set forth in this paragraph 2, I have assumed that the form of the Exchange Notes will conform to that included in the Indenture. I am admitted to practice in the State of New York, and I express no opinion as to any matters governed by any law other than the law of the State of New York and the Federal law of the United States of America. In rendering this opinion, I have relied upon the opinion dated December 9, 1998, of Mesirov Gelman Jaffe Cramer & Jamieson, LLP, a copy of which appears as Exhibit 5.2 to the Registration Statement, as to all matters of law covered therein relating to the laws of the Commonwealth of Pennsylvania. I hereby consent to the reference to me under the heading "Legal Matters" in the Registration Statement and in the related Prospectus and to the filing of this opinion as an Exhibit to the Registration Statement. In giving this consent, I do not thereby admit that I am included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission. This opinion is being delivered to you in my capacity as the General Counsel of the Company and solely for the purpose of being included as an exhibit to the Registration Statement. This opinion addresses matters only as of the date hereof and is solely for the benefit of the addressees hereof and may not be relied upon in any manner for any other purpose without my prior written consent. Sincerely, /s/ Ira M. Dansky ----------------------- Ira M. Dansky General Counsel EX-5.2 4 REGISTRATION STATEMENT Exhibit 5.2 December 9, 1998 Ira M. Dansky, Esq. Jones Apparel Group, Inc. 1411 Broadway New York, NY 10018 Re: Jones Apparel Group, Inc. Registration Statement on Form S-4 Dear Mr. Dansky: As special Pennsylvania counsel to Jones Apparel Group, Inc., a Pennsylvania corporation (the "Company"), we have been requested to render this opinion in connection with the Company's Registration Statement on Form S-4 (the "Registration Statement"), which is being filed with the Securities and Exchange Commission (the "SEC") on December 9, 1998, under the Securities Act of 1933 (the "Act"). The Registration Statement relates to the proposed offer to exchange (the "Exchange Offer") up to $265,000,000 aggregate principal amount of new 6.25% Senior Notes due 2001 (the "Exchange Notes"), which will be freely transferable, for any and all outstanding 6.25% Senior Notes due 2001 issued in a private offering on October 2, 1998 (the "Restricted Notes"), which have certain transfer restrictions. For purposes of this opinion we have examined the Company's Registration Statement; the Consent of Board of Directors of the Company dated September 28, 1998; the Indenture dated October 2, 1998, by and between the Company and The Chase Manhattan Bank, as trustee (the "Trustee"); the Certificate of Ira M. Dansky, Esquire, General Counsel of the Company, dated December 9, 1998; and such other documents as we deem necessary for the purpose of rendering this opinion. With respect to the foregoing documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us an originals and the conformity to originals of all documents submitted to us as certified or reproduced copies. As special Pennsylvania counsel to the Company, we are not necessarily familiar with all of the Company's affairs. As a further basis for this opinion, we have made such inquiry of the Company as we have deemed necessary or appropriate for the purpose of rendering this opinion. 2 Based on the foregoing, we are of the opinion that: 1. The Indenture has been duly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery thereof by the Trustee, the Indenture constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 2. The Exchange Notes to be issued by the Company in exchange for the Restricted Notes have been duly authorized and when executed and authenticated in accordance with the provisions of the Indenture and the Exchange Offer, will constitute valid and binding obligations of the Company enforceable in accordance with their terms, and will be entitled to the benefits of the Indenture. In expressing the opinion set forth in this letter, we have assumed that the form of the Exchange Notes will conform to that included in the Indenture. Our opinion set forth in this letter are subject to the effect of (i) bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or other similar laws relating to or affecting the rights of creditors generally, and (ii) limitations imposed by general principles of equity, regardless of whether the relevant matter is considered in proceedings at law or in equity, including with respect to certain covenants and provisions of the Indenture, where the Trustee's enforcement of such covenants or provisions under the circumstances or, in the specified manner, would violate a creditor's or secured party's implied covenant of good faith and fair dealing or would be commercially unreasonable. Enforceability of the Indenture may also be limited to the extent that remedies are sought for a breach that a court concludes is immaterial or does not affect the Trustee. We are members of the Bar of the Commonwealth of Pennsylvania and do not hold ourselves out as being experts on laws other than the laws of the United States of America and the laws of the Commonwealth of Pennsylvania. This opinion is given as of the date hereof and is limited to the facts, circumstances and matters set forth herein and to laws currently in effect. No opinion may be inferred or is implied beyond matters expressly set forth herein, and we do not undertake and assume no obligation to update or supplement this opinion to reflect any facts or 3 circumstances which may hereinafter come to our attention or any change in law which may hereafter occur. This opinion is furnished for your benefit and the benefit of the holders of the Restricted Notes referred to in the Registration Statement and may not be used or relied upon by any other person or entity or in connection with any other transaction without our prior written consent. We hereby consent to the reference to this Firm under the heading "Legal Matters" in the Registration Statement and in the related Prospectus and to the filing of this opinion as an Exhibit to the Registration Statement. Sincerely, /s/ Mesirov Gelman Jaffe Cramer & Jamieson LLP EX-12.1 5 RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.1 JONES APPAREL GROUP, INC. RATIO OF EARNINGS TO FIXED CHARGES
Nine Year Months Ended Ended December 31, September 27, ---------------------------------------------------- 1998 1997 1996 1995 1994 1993 ------------- -------- -------- -------- -------- -------- Income before income taxes $199,587 $194,609 $127,763 $ 99,668 $ 87,345 $ 79,019 Fixed charges Interest expense 3,762 3,584 3,040 1,908 1,212 716 Portion of rent expense representing interest 6,404 7,379 6,290 5,115 3,715 2,915 Financing cost amortization - - - - - - ------- -------- ------- --------- -------- ------- Total fixed charges excluding capitalized interest 10,166 10,963 9,330 7,023 4,927 3,631 Capitalized interest 671 370 181 181 20 29 ------- -------- ------- --------- -------- ------- Total fixed charges 10,837 11,333 9,511 7,204 4,947 3,660 ------- -------- ------- --------- -------- ------- Income before income taxes and fixed charges $209,753 $205,572 $137,093 $106,691 $ 92,272 $ 82,650 ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges 19.4 18.1 14.4 14.8 18.7 22.6 ======== ======== ======== ======== ======== ========
EX-23.1 6 CONSENT/INDEPENDENT CERTIFIED PUBLIC ACCOUNT Exhibit 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Jones Apparel Group, Inc. New York, New York We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated February 6, 1998, relating to the consolidated financial statements and schedule of Jones Apparel Group, Inc. and subsidiaries, which is incorporated by reference in that Prospectus. We also consent to the reference to us under the caption "Experts" in that Prospectus. /s/ BDO Seidman, LLP --------------------- BDO Seidman, LLP New York, NY December 8, 1998 EX-23.2 7 CONSENT OF INDEPENDENT AUDITORS Exhibit 23.2 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement Form S-4 of Jones Apparel Group, Inc. for the registration of $265,000,000 of Senior Notes and to the incorporation by reference therein of our report dated March 26, 1998, except for Note 17 as to which the date is September 10, 1998, with respect to the consolidated financial statements of Sun Apparel, Inc. included in Jones Apparel Group, Inc.'s Current Report on Form 8-K dated September 24, 1998, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP San Antonio, Texas December 7, 1998 EX-25.1 8 STATEMENT OF ELIGIBILITY Exhibit 25.1 ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------- ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------- Jones Apparel Group, Inc. (Exact name of obligor as specified in its charter) Pennsylvania 06-0935166 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 250 Rittenhouse Circle Bristol, Pennsylvania 19007 (Address of principal executive offices) (Zip Code) ---------------------------------------- 6.25% Senior Notes Due October 1, 2001 ---------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 9th day of December, 1998. THE CHASE MANHATTAN BANK By /s/ Sheik Wiltshire ---------------------------------------- Sheik Wiltshire, Second Vice President Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ............................. $ 11,951 Interest-bearing balances ..................... 4,551 Securities: Held to maturity securities ........................ 1,740 Available for sale securities ...................... 48,537 Federal funds sold and securities purchased under agreements to resell .......................... 29,730 Loans and lease financing receivables: Loans and leases, net of unearned income ...... $127,379 Less: Allowance for loan and lease losses ..... 2,719 Less: Allocated transfer risk reserve ......... 0 Loans and leases, net of unearned income, -------- allowance, and reserve ......................... 124,660 Trading Assets ...................................... 51,549 Premises and fixed assets (including capitalized leases)......................................... 3,009 Other real estate owned ............................. 272 Investments in unconsolidated subsidiaries and associated companies ........................... 300 Customers' liability to this bank on acceptances outstanding .................................... 1,329 Intangible assets ................................... 1,429 Other assets ........................................ 13,563 -------- TOTAL ASSETS ........................................ $292,620 ======== LIABILITIES Deposits In domestic offices ............................. $98,760 Noninterest-bearing ............................. $39,071 Interest-bearing ................................ 59,689 In foreign offices, Edge and Agreement, ------- subsidiaries and IBF's .......................... 75,403 Noninterest-bearing ............................. $ 3,877 Interest-bearing ................................ 71,526 Federal funds purchased and securities sold under agree- ments to repurchase .................................. 34,471 Demand notes issued to the U.S. Treasury ............. 1,000 Trading liabilities .................................. 41,589 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ... 3,781 With a remaining maturity of more than one year . through three years....................... 213 With a remaining maturity of more than three years 104 Bank's liability on acceptances executed and outstanding 1,329 Subordinated notes and debentures ..................... 5,408 Other liabilities ..................................... 12,041 TOTAL LIABILITIES ..................................... 274,099 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock ........................................... 1,211 Surplus (exclude all surplus related to preferred stock) 10,441 Undivided profits and capital reserves ................. 6,287 Net unrealized holding gains (losses) on available-for-sale securities ....................... 566 Cumulative foreign currency translation adjustments .... 16 TOTAL EQUITY CAPITAL ................................... 18,521 ------ TOTAL LIABILITIES AND EQUITY CAPITAL ................... $292,620 ======== I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR. ) EX-99.1 9 LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL JONES APPAREL GROUP, INC. OFFER TO EXCHANGE 6.25% SENIOR NOTES DUE 2001 FOR ANY AND ALL OUTSTANDING 6.25% SENIOR NOTES DUE 2001 PURSUANT TO THE PROSPECTUS, DATED [ ] THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [ ], 1999, UNLESS THE EXCHANGE OFFER IS EXTENDED. TO: THE CHASE MANHATTAN BANK (THE "EXCHANGE AGENT") By Mail, Overnight Mail or Hand Delivery before 4:30 p.m.: The Chase Manhattan Bank 450 West 33rd Street 15th Floor New York, New York 10001-2967 Attention: Global Trust Services By Facsimile: (212) 946-8161 Attention: Sheik Wiltshire For Information or Confirmation by Telephone: (212) 946-3082 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF THE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. YOU SHOULD READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL CAREFULLY BEFORE YOU COMPLETE THIS LETTER OF TRANSMITTAL. The undersigned acknowledges that he or she has received the Prospectus, dated [ ] (the "Prospectus") of Jones Apparel Group, Inc., a Pennsylvania corporation (the "Company"), and this Letter of Transmittal and the instructions hereto (the "Letter of Transmittal"), which together constitute the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of each of its 6.25% Senior Notes due 2001 (the "Exchange Notes") the offering of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which the Prospectus is a part, for each $1,000 principal amount of its outstanding 6.25% Senior Notes due 2001 (the "Restricted Notes"), of which $265,000,000 aggregate principal amount is outstanding, upon the terms and subject to the conditions set forth in the Prospectus. The term "Expiration Date" Shall mean 5:00 p.m., New York City time, on [ ], 1999, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term shall mean the latest date and time to which the Exchange Offer is extended by the Company. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. This Letter of Transmittal is to be used if either (1) certificates representing Restricted Notes are to be physically delivered to the Exchange Agent herewith by Holders (as defined below), (2) tender of Restricted Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at The Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The Exchange Offer--Procedures for Tendering" in the Prospectus by any financial institution that is a participant in DTC and whose name appears on a security position listing as the owner of Restricted Notes or (3) tender of Restricted Notes is to be made according to the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Delivery of this Letter of Transmittal and any other required documents must be made to the Exchange Agent. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The term "Holder" as used herein means any person in whose name Restricted Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. All Holders of Restricted Notes who wish to tender their Restricted Notes must, prior to the Expiration Date: (1) complete, sign, and deliver this Letter of Transmittal, or a facsimile thereof, to the Exchange Agent, in person or to the address set forth above; and (2) tender (and not withdraw) his or her Restricted Notes or, if a tender of Restricted Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC, confirm such book-entry transfer (a "Book-Entry Confirmation"), in each case in accordance with the procedures for tendering described in the Instructions to this Letter of Transmittal. Holders of Restricted Notes whose certificates are not immediately available, or who are unable to deliver their certificates or Book-Entry Confirmation and all other documents required by this Letter of Transmittal to be delivered to the Exchange Agent on or prior to the Expiration Date, must tender their Restricted Notes according to the guaranteed delivery procedures set forth under the caption "The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus. (See Instruction 2.) Upon the terms and subject to the conditions of the Exchange Offer, the acceptance for exchange of the Restricted Notes validly tendered and not withdrawn and the issuance of the Exchange Notes will be made promptly following the Expiration Date. For the purposes of the Exchange Offer, the Company shall be deemed to have accepted for exchange validly tendered Restricted Notes when, as and if the Company has given written notice thereof to the Exchange Agent. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED IN THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL AND THE NOTICE OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE EXCHANGE AGENT. SEE INSTRUCTION 12. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR RESTRICTED NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY AND COMPLY WITH ALL OF ITS TERMS. List below the Restricted Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the Certificate Numbers and Principal Amounts should be listed on a separate signed schedule, attached hereto. The minimum permitted tender is $1,000 in principal amount of each of the 6.25% Senior Notes due 2001. All other tenders must be in integral multiples of $1,000. DESCRIPTION OF 6.25% SENIOR NOTES DUE 2001 BOX I NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)* (PLEASE FILL IN, IF BLANK) - -------------------- -------------------- ----------------------------------- (A) (B) CERTIFICATE AGGREGATE PRINCIPAL NUMBERS(S) AMOUNT TENDERED (IF LESS THAN ALL)** ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ TOTAL PRINCIPAL AMOUNT OF RESTRICTED NOTES ______________ - ------------------------------------------------------------------------------ *Need not be completed by book-entry holders. **Need not be completed by Holders who wish to tender all Restricted Notes listed. PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS BOX II BOX III SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4,5 AND 6) (SEE INSTRUCTIONS 4, 5 AND 6) To be completed ONLY if To be completed ONLY if certificates for Restricted Notes certificates for Restricted Notes in a principal amount not tendered, in a principal amount not tendered, or Exchange Notes issued in or Exchange Notes issued in exchange for Restricted Notes exchange for Restricted Notes accepted for exchange, are to be accepted for exchange, are to be issued in the name of someone other delivered to someone other than the than the undersigned. undersigned. Issue certificate(s) to: Deliver certificate(s) to: Name______________________________ _________________________________ (PLEASE PRINT) (PLEASE PRINT) __________________________________ _________________________________ (PLEASE PRINT) (PLEASE PRINT) Address___________________________ Address__________________________ __________________________________ _________________________________ (INCLUDING ZIP CODE) (INCLUDING ZIP CODE) __________________________________ _________________________________ (TAX IDENTIFICATION OR SOCIAL (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) SECURITY NUMBER) IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S) FOR RESTRICTED NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH RESTRICTED NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR, IF GUARANTEED DELIVERY PROCEDURES ARE TO BE COMPLIED WITH, A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. [ ] CHECK HERE IF RESTRICTED NOTES ARE BEING DELIVERED BY DTC TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution_____________________________ [ ] The Depository Trust Company Account Number_____________________________________________ Transaction Code Number____________________________________ Holders whose Restricted Notes are not immediately available or who cannot deliver their Restricted Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date may tender their Restricted Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." (See Instruction 2.) [ ] CHECK HERE IF RESTRICTED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of tendering Holder(s)______________________________________ Date of Execution of Notice of Guaranteed Delivery__________________ Name of Institution which Guaranteed Delivery_______________________ Transaction Code Number_____________________________________________ [ ] 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 (1) it is acquiring the Exchange Notes in the ordinary course of its business, (2) it has no arrangements or understanding with any person, nor does it intend to engage in, a distribution (as that term is interpreted by the SEC) of Exchange Notes and (3) it is not an affiliate (as that term is interpreted by the SEC) of the Company. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Restricted Notes 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 Notes; 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. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to Jones Apparel Group, Inc. (the "Company") the principal amount of Restricted Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Restricted Notes tendered hereby in accordance with this Letter of Transmittal, the undersigned sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to the Restricted Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company and as Trustee and Registrar under the Indenture for the Restricted Notes and the Exchange Notes) with respect to the tendered Restricted Notes with full power of substitution (such power of attorney being deemed an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to (1) deliver certificates for such Restricted Notes to the Company or transfer ownership of such Restricted Notes on the account books maintained by DTC, together, in either such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company and (2) present such Restricted Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Restricted Notes, all in accordance with the terms of the Exchange Offer. The undersigned acknowledges that the Exchange Offer is being made in reliance upon interpretative advice given by the staff of the SEC to third parties in connection with transactions similar to the Exchange Offer, so that the Exchange Notes issued pursuant to the Exchange Offer in exchange for the Restricted Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than a broker-dealer who purchased such Restricted Notes directly from the Company for resale pursuant to Rule 144A, Regulation S or any other available exemption under the Securities Act or a person that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders are not participating, do not intend to participate and have no arrangement or understanding with any person to participate, in the distribution of such Exchange Notes. The undersigned agrees that acceptance of any tendered Restricted Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Exchange and Registration Rights Agreement (as defined in the Prospectus) and that, upon the issuance of the Exchange Notes, the Company will have no further obligations or liabilities thereunder (except in certain limited circumstances). The undersigned represents and warrants that (1) the Exchange Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the person receiving Exchange Notes (which shall be the undersigned unless otherwise indicated in the box entitled "Special Delivery Instructions" above) (the "Recipient"), (2) neither the undersigned nor the Recipient (if different) is engaged in, intends to engage in or has any arrangement or understanding with any person to participate in the distribution (as that term is interpreted by the SEC) of such Exchange Notes, and (3) neither the undersigned nor the Recipient (if different) is an "affiliate" of the Company as defined in Rule 405 under the Securities Act. If the undersigned is a broker-dealer, the undersigned further (1) represents that it acquired Restricted Notes for the undersigned's own account as a result of market-making activities or other trading activities, (2) represents that it has not entered into any arrangement or understanding with the Company or any "affiliate" of the Company (within the meaning of Rule 405 under the Securities Act) to distribute the Exchange Notes to be received in the Exchange Offer and (3) acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act (for which purposes, the delivery of the Prospectus, as the same may be hereafter supplemented or amended, shall be sufficient) in connection with any resale of Exchange Notes received in the Exchange Offer. Such a broker-dealer will not be deemed, solely by reason of such acknowledgment and prospectus delivery, to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned understands and agrees that the Company reserves the right not to accept tendered Restricted Notes from any tendering holder if the Company determines, in its sole and absolute discretion, that such acceptance could result in a violation of applicable securities laws. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Restricted Notes tendered hereby and to acquire Exchange Notes issuable upon the exchange of such tendered Restricted Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed to be necessary or desirable by the Exchange Agent or the Company in order to complete the exchange, assignment and transfer of tendered Restricted Notes or transfer of ownership of such Restricted Notes on the account books maintained by a book-entry transfer facility. The undersigned understands and acknowledges that the Company reserves the right in its sole discretion to purchase or make offers for any Restricted Notes that remain outstanding subsequent to the Expiration Date or, as set forth in the Prospectus under the caption "The Exchange Offer--Procedures for Tendering," to terminate the Exchange Offer and, to the extent permitted by applicable law, purchase Restricted Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offer. The undersigned understands that the Company may accept the undersigned's tender by delivering written notice of acceptance to the Exchange Agent, at which time the undersigned's right to withdraw such tender will terminate. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Restricted Notes when, as and if the Company has given oral (which shall be confirmed in writing) or written notice thereof to the Exchange Agent. The undersigned understands that the first interest payment following the Expiration Date will include unpaid interest on the Restricted Notes accrued through the date of issuance of the Exchange Notes. The undersigned understands that tenders of Restricted Notes pursuant to the procedures described under the caption "The Exchange Offer--Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned, the Company and the Exchange Agent in accordance with the terms and subject to the conditions of the Exchange Offer. If any tendered Restricted Notes are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Restricted Notes will be returned (except as noted below with respect to tenders through DTC), at the Company's cost and expense, to the undersigned at the address shown below or at a different address as may be indicated herein under "Special Delivery Instructions" as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding on the undersigned's heirs, personal representatives, successors and assigns. This tender may be withdrawn only in accordance with the procedures set forth in this Letter of Transmittal. By acceptance of the Exchange Offer, each broker-dealer that receives Exchange Notes pursuant to the Exchange Offer hereby acknowledges and agrees that upon the receipt of notice by the Company of the happening of any event that makes any statement in the Prospectus untrue in any material respect or that requires the making of any changes in the Prospectus in order to make the statements therein not misleading (which notice the Company agrees to deliver promptly to such broker-dealer), such broker-dealer will suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented prospectus to such broker-dealer. Unless otherwise indicated under "Special Registration Instructions," please issue the certificates representing the Exchange Notes issued in exchange for the Restricted Notes accepted for exchange and return any certificates for Restricted Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in either such event in the case of Restricted Notes tendered by DTC, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please send the certificates representing the Exchange Notes issued in exchange for the Restricted Notes accepted for exchange and any certificates for Restricted Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s), unless, in either event, tender is being made through DTC. In the event that both "Special Registration Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes issued in exchange for the Restricted Notes accepted for exchange in the name(s) of, and return any certificates for Restricted Notes not tendered or not exchanged to, the person(s) so indicated. The undersigned understands that the Company has no obligations pursuant to the "Special Registration Instructions" or "Special Delivery Instructions" to transfer any Restricted Notes from the name of the registered Holder(s) thereof if the Company does not accept for exchange any of the Restricted Notes so tendered. Holders who wish to tender the Restricted Notes and (1) whose Restricted Notes are not immediately available or (2) who cannot deliver their Restricted Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date, may tender their Restricted Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 1 regarding the completion of the Letter of Transmittal. PLEASE SIGN HERE WHETHER OR NOT RESTRICTED NOTES ARE BEING PHYSICALLY TENDERED HEREBY AND WHETHER OR NOT TENDER IS TO BE MADE PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES This Letter of Transmittal must be signed by the registered holder(s) as their name(s) appear on the Restricted Notes or, if tendered by a participant in DTC, exactly as such participant's name appears on a security listing as the owner of Restricted Notes, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Restricted Notes to which this Letter of Transmittal relate are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (1) set forth his or her full title below and (2) unless waived by the Company, submit evidence satisfactory to the Company of such person's authority so to act. (See Instruction 4.) X------------------------------- ------------------------------ DATE X------------------------------- ------------------------------ DATE Signature(s) of Holder(s) or Authorized Signatory Name(s): Address: ------------------------ --------------------------- Name(s): Address: ------------------------ --------------------------- PLEASE PRINT (INCLUDING ZIP CODE) Capacity: Telephone Number: ------------------------ ------------------ (INCLUDING AREA CODE) Social Security No. ------------- PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN BOX IV SIGNATURE GUARANTEE (SEE INSTRUCTION 1) CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION - ----------------------------------------------------------------------------- (NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES) - ----------------------------------------------------------------------------- (FIRM ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NO. (INCLUDING AREA CODE)) - ----------------------------------------------------------------------------- (AUTHORIZED SIGNATURE) - ----------------------------------------------------------------------------- (PRINTED NAME) - ----------------------------------------------------------------------------- (TITLE) Date: ------------------- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Guarantee of Signatures. Signatures on this Letter of Transmittal need not be guaranteed if (a) this Letter of Transmittal is signed by the registered holder(s) of the Restricted Notes tendered herewith and such holder(s) have not completed the box set forth herein entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" or (b) such Restricted Notes are tendered for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (each, an "Eligible Institution"). (See Instruction 6.) Otherwise, all signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution. All signatures on bond powers and endorsements on certificates must also be guaranteed by an Eligible Institution. 2. Delivery of this Letter of Transmittal and Restricted Notes. Certificates for all physically delivered Restricted Notes or confirmation of any book-entry transfer to the Exchange Agent at DTC of Restricted Notes tendered by book-entry transfer, as well as, in each case (including cases where tender is affected by book-entry transfer), a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery of the tendered Restricted Notes, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the Holder and the delivery will be deemed made only when actually received by the Exchange Agent. If Restricted Notes are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No Letter of Transmittal or Restricted Notes should be sent to the Company. The Exchange Agent will make a request to establish an account with respect to the Restricted Notes at DTC for purposes of the Exchange Offer promptly after receipt of this Prospectus, and any financial institution that is a participant in DTC may make book-entry delivery of Restricted Notes by causing DTC to transfer such Restricted Notes into the Exchange Agent's account at DTC in accordance with DTC's procedures for transfer. However, although delivery of Restricted Notes may be effected through book-entry transfer at DTC, the Letter of Transmittal, with any required signature guarantees or an Agent's Message (as defined in the next paragraph) in connection with a book-entry transfer and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at the address specified on the cover page of the Letter of Transmittal on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. A Holder may tender Restricted Notes that are held through DTC by transmitting its acceptance through DTC's Automatic Tender Offer Program, for which the transaction will be eligible, and DTC will then edit and verify the acceptance and send an Agent's Message to the Exchange Agent for its acceptance. The term "Agent's Message" means a message transmitted by DTC to, and received by, the Exchange Agent and forming part of the Book-Entry Confirmation, which states that DTC has received an express acknowledgment from each participant in DTC tendering the Restricted Notes and that such participant has received the Letter of Transmittal and agrees to be bound by the terms of the Letter of Transmittal and the Company may enforce such agreement against such participant. Holders who wish to tender their Restricted Notes and (1) whose Restricted Notes are not immediately available, or (2) who cannot deliver their Restricted Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or comply with book-entry transfer procedures on a timely basis must tender their Restricted Notes according to the guaranteed delivery procedures set forth in the Prospectus. See "Exchange Offer--Guaranteed Delivery Procedures." Pursuant to such procedure: (1) such tender must be made by or through an Eligible Institution; (2) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, overnight courier, mail or hand delivery) setting forth the name and address of the Holder of the Restricted Notes, the certificate number or numbers of such Restricted Notes and the principal amount of Restricted Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, this Letter of Transmittal (or facsimile hereof) together with the certificate(s) representing the Restricted Notes and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (3) such properly completed and executed Letter of Transmittal (or facsimile hereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Restricted Notes in proper form for transfer (or a confirmation of book-entry transfer of such Restricted Notes into the Exchange Agent's account at DTC), must be received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date, all in the manner provided in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." Any Holder who wishes to tender his or her Restricted Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Restricted Notes according to the guaranteed delivery procedures set forth above. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Restricted Notes, and withdrawal of tendered Restricted Notes will be determined by the Company in its sole discretion, which determination will be final and binding. All tendering holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Restricted Notes for exchange. The Company reserves the absolute right to reject any and all Restricted Notes not properly tendered or any Restricted Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Restricted Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Restricted Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Restricted Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Restricted Notes will not be deemed to have been made until such defects or irregularities have been cured to the Company's satisfaction or waived. Any Restricted Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holders pursuant to the Company's determination, unless otherwise provided in this Letter of Transmittal as soon as practicable following the Expiration Date. The Exchange Agent has no fiduciary duties to the Holders with respect to the Exchange Offer and is acting solely on the basis of directions of the Company. 3. Inadequate Space. If the space provided is inadequate, the certificate numbers and/or the number of Restricted Notes should be listed on a separate signed schedule attached hereto. 4. Tender by Holder. Only a Holder of Restricted Notes may tender such Restricted Notes in the Exchange Offer. Any beneficial owner of Restricted Notes who is not the registered Holder and who wishes to tender should arrange with such registered holder to execute and deliver this Letter of Transmittal on such beneficial owner's behalf or must, prior to completing and executing this Letter of Transmittal and delivering his or her Restricted Notes, either make appropriate arrangements to register ownership of the Restricted Notes in such beneficial owner's name or obtain a properly completed bond power from the registered holder or properly endorsed certificates representing such Restricted Notes. 5. Partial Tenders; Withdrawals. Tenders of Restricted Notes will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Restricted Notes is tendered, the tendering Holder should fill in the principal amount tendered in the third column of the box entitled "Description of 6.25% Senior Notes due 2001" above. The entire principal amount of any Restricted Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Restricted Notes is not tendered, then Restricted Notes for the principal amount of Restricted Notes not tendered and a certificate or certification representing Exchange Notes issued in exchange for any Restricted Notes accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the "Special Delivery Instructions" box above on this Letter of Transmittal or unless tender is made through DTC, promptly after the Restricted Notes are accepted for exchange. Except as otherwise provided herein, tenders of Restricted Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Restricted Notes in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (1) specify the name of the person having deposited the Restricted Notes to be withdrawn (the "Depositor"), (2) identify the Restricted Notes to be withdrawn (including the certificate number or numbers and principal amount of such Restricted Notes, or, in the case of Restricted Notes transferred by book-entry transfer the name and number of the account at DTC to be credited), (3) be signed by the Depositor in the same manner as the original signature on the Letter of Transmittal by which such Restricted Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Registrar with respect to the Restricted Notes register the transfer of such Restricted Notes into the name of the person withdrawing the tender and (4) specify the name in which any such Restricted Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Restricted Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Restricted Notes so withdrawn are validly retendered. Any Restricted Notes which have been tendered but which are not accepted for exchange by the Company will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Restricted Notes may be retendered by following one of the procedures described in the Prospectus under "The Exchange Offer--Procedures for Tendering" at any time prior to the Expiration Date. 6. Signatures on the Letter of Transmittal; Bond Powers and Endorsements. If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Restricted Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Restricted Note without alteration, enlargement or any change whatsoever. If any of the Restricted Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Restricted Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many copies of this Letter of Transmittal as there are different registrations of Restricted Notes. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder or Holders (which term, for the purposes described herein, shall include a book-entry transfer facility whose name appears on a security listing as the owner of the Restricted Notes) of Restricted Notes tendered and the certificate or certificates for Exchange Notes issued in exchange therefor is to be issued (or any untendered principal amount of Restricted Notes to be reissued) to the registered Holder, then such Holder need not and should not endorse any tendered Restricted Notes, nor provide a separate bond power. In any other case, such Holder must either properly endorse the Restricted Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered Holder or Holders of any Restricted Notes listed, such Restricted Notes must be endorsed or accompanied by appropriate bond powers in each case signed as the name of the registered Holder or Holders appears on the Restricted Notes. If this Letter of Transmittal (or facsimile hereof) or any Restricted Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Endorsements on Restricted Notes or signatures on bond powers required by this Instruction 6 must be guaranteed by an Eligible Institution. 7. Special Registration and Delivery Instructions. Tendering Holders should indicate, in the applicable box or boxes, the name and address to which Exchange Notes or substitute Restricted Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 8. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the federal income tax laws, payments that may be made by the Company on account of Exchange Notes issued pursuant to the Exchange Offer may be subject to backup withholding at the rate of 31%. In order to avoid such backup withholding, each tendering holder should compete and sign the Substitute Form W-9 included in this Letter of Transmittal and either (a) provide the correct taxpayer identification number ("TIN") and certify, under penalties of perjury, that the TIN provided is correct and that (1) the Holder has not been notified by the Internal Revenue Service the ("IRS") that the Holder is subject to backup withholding as a result of failure to report all interest or dividends or (2) the IRS has notified the Holder that the Holder is no longer subject to backup withholding; or (b) provide an adequate basis for exemption. If the tendering Holder has not been issued a TIN and has applied for one, or intends to apply for one in the near future, such Holder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, sign and date the Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer Identification Number. If "Applied For" is written in Part I, the Company (or the Paying Agent under the Indenture governing the Exchange Notes) shall retain 31% of payments made to the tendering Holder during the 60-day period following the date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent or the Company with its TIN within 60 days after the date of the Substitute Form W-9, the Company (or the Paying Agent) shall remit such amounts retained during the 60-day period to the Holder and no further amounts shall be retained or withheld from payments made to the Holder thereafter. If, however, the Holder has not provided the Exchange Agent or the Company with its TIN within such 60-day period, the Company (or the Paying Agent) shall remit such previously retained amounts to the IRS as backup withholding. In general, if a Holder is an individual, the TIN is the Social Security number of such individual. If the Exchange Agent or the Company are not provided with the correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain Holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such Holder must submit a statement (generally, IRS Form W-8), signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Exchange Agent. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Restricted Notes are registered in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Failure to complete the Substitute Form W-9 will not, by itself, cause Restricted Notes to be deemed invalidly tendered, but may require the Company (or the Paying Agent) to withhold 31% of the amount of any payments made on account of the Exchange Notes. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. 9. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the exchange of Restricted Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes or Restricted Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered in the name of, any person other than the registered Holder of the Restricted Notes tendered hereby, or if tendered Restricted Notes are registered in the name of a person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Restricted Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or on any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. See the Prospectus under "The Exchange Offer--Solicitation of Tenders; Fees and Expenses." Except as provided in this Instruction 9, it will not be necessary for transfer tax stamps to be affixed to the Restricted Notes listed in this Letter of Transmittal. 10. Waiver of Conditions. The Company reserves the right, in its sole discretion, to amend, waive or modify specified conditions in the Exchange Offer in the case of any Restricted Notes tendered. 11. Mutilated, Lost, Stolen or Destroyed Restricted Notes. Any tendering Holder whose Restricted Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated herein for further instructions. 12. Requests for Assistance, Copies. Requests for assistance and requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. (DO NOT WRITE IN SPACE BELOW) CERTIFICATE SURRENDERED RESTRICTED NOTES TENDERED RESTRICTED NOTES ACCEPTED - ----------------------- ---------------------- ---------------------- - ----------------------- ---------------------- ---------------------- Received__________ Accepted by__________ Checked by_________ Delivery Prepared by__________ Checked by__________ Date__________ IMPORTANT TAX INFORMATION Under federal income tax laws, a Holder whose tendered Restricted Notes are accepted for payment is required to provide the Exchange Agent (as payer) with such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such Holder is an individual, the TIN is his social security number. If the Exchange Agent is not provided with the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments made pursuant to the Exchange Offer may be subject to backup withholding. Certain Holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt Holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that Holder's exempt status. A Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Exchange Agent is required to withhold 31% of any payments made to the Holder or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made with respect to the Exchange Offer, the Holder is required to provide the Exchange Agent with either (a) the Holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (1) the Holder has been notified by the Internal Revenue Service that the Holder is subject to backup withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified the Holder that the Holder is no longer subject to backup withholding or (b) an adequate basis for exemption. WHAT NUMBER TO GIVE THE EXCHANGE AGENT The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered Holder of the Restricted Notes. If the Restricted Notes are held in more than one name or are held not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER I certify, under penalties of perjury, that a Taxpayer Identification Number has not been issued to me, and that I mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that if I do not provide a Taxpayer Identification Number to the payer, 31% of all payments made to me on account of the Exchange Notes shall be retained until I provide a Taxpayer Identification Number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a Taxpayer Identification Number. SIGNATURE _________________________________DATE NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5) PAYER'S NAME: JONES APPAREL GROUP, INC. SUBSTITUTE PART I--TAXPAYER SOCIAL SECURITY FORM W-9 IDENTIFICATION NUMBER NUMBER (TIN) ------------------- OR DEPARTMENT OF THE ENTER YOUR TIN IN EMPLOYEE TREASURY INTERNAL THE APPROPRIATE BOX. IDENTIFICATION REVENUE SERVICE FOR INDIVIDUALS, NUMBER THIS IS YOUR SOCIAL SECURITY NUMBER -------------------- (SSN). FOR SOLE PROPRIETORS, SEE THE INSTRUCTIONS IN THE ENCLOSED GUIDELINES. FOR OTHER ENTITIES, IT IS YOUR EMPLOYER IDENTIFICATION NUMBER (EIN). IF YOU DO NOT HAVE A NUMBER, SEE HOW TO GET A TIN IN THE ENCLOSED GUIDELINES. REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION NOTE: IF THE ACCOUNT IS IN MORE THAT ONE NAME, SEE THE CHART ON PAGE 2 OF THE ENCLOSED GUIDELINES ON WHOSE NUMBER TO ENTER. ------------------------------------------------ PART II-FOR PAYEES EXEMPT FOR BACKUP WITHHOLDING (See Part II instructions in the enclosed Guidelines.) - ------------------------------------------------------------------------ PART III--CERTIFICATION-- UNDER PENALTIES OF PERJURY, I CERTIFY THAT; (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. Signature __________________________________ Date ______, 1999 CERTIFICATION INSTRUCTIONS--You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, the acquisition or abandonment of secured property, cancelation of debt, contributions to an individual retirement arrangement (IRA), and generally payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct TIN. EX-99.2 10 NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR 6.25% SENIOR NOTES DUE 2001 OF JONES APPAREL GROUP, INC. As set forth in the Prospectus dated (the "Prospectus") of Jones Apparel Group, Inc. (the "Company") and in the Letter of Transmittal (the "Letter of Transmittal"), this form or a form substantially equivalent to this form must be used to accept the Exchange Offer (as defined below) if the certificates for the outstanding 6.25% Senior Notes due 2001 (the "Restricted Notes") of the Company and all other documents required by the Letter of Transmittal cannot be delivered to the Exchange Agent by the expiration of the Exchange Offer or compliance with book-entry transfer procedures cannot be effected on a timely basis. Such form may be delivered by hand or transmitted by facsimile transmission, telex or mail to the Exchange Agent no later than the Expiration Date, and must include a signature guarantee by an Eligible Institution as set forth below. Capitalized terms used herein but not defined herein have the meanings ascribed thereto in the Prospectus. TO: THE CHASE MANHATTAN BANK ("THE EXCHANGE AGENT") By Mail, Overnight Mail or Hand Delivery before 4:30 p.m.: The Chase Manhattan Bank 450 West 33rd Street 15th Floor New York, NY 10001-2967 Attention: Global Trust Services By Facsimile: (212) 946-8161 Attention: Sheik Wiltshire For Information or Confirmation by Telephone: (212) 946-3082 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF THE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. YOU SHOULD READ THE INSTRUCTIONS ACCOMPANYING THE LETTER OF TRANSMITTAL CAREFULLY BEFORE YOU COMPLETE THIS NOTICE OF GUARANTEED DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instruction thereto, such signatures must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signature(s). Ladies and Gentlemen: The undersigned acknowledges receipt of the Prospectus and the related Letter of Transmittal which describes the Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount of new 6.25% Senior Notes due 2001 (the "Exchange Notes") for each $1,000 in principal amount of Restricted Notes. The undersigned hereby tenders to the Company the aggregate principal amount of Restricted Notes set forth below on the terms and conditions set forth in the Prospectus and the related Letter of Transmittal pursuant to the guaranteed delivery procedure set forth in the "The Exchange Offer-Guaranteed Delivery Procedures" section in the Prospectus and the accompanying Letter of Transmittal. The undersigned understands that no withdrawal of a tender of Restricted Notes may be made on or after the Expiration Date. The undersigned understands that for a withdrawal of a tender of Restricted Notes to be effective, a written notice of withdrawal that complies with the requirements of the Exchange Offer must be timely received by the Exchange Agent at one of its addresses specified on the cover of this Notice of Guaranteed Delivery prior to the Expiration Date. The undersigned understands that the exchange of Restricted Notes for Exchange Notes pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of (1) such Restricted Notes (or Book-Entry Confirmation of the transfer of such Restricted Notes into the Exchange Agent's account at The Depository Trust Company ("DTC")) and (2) a Letter of Transmittal (or facsimile thereof) with respect to such Restricted Notes, properly completed and duly executed, with any required signature guarantees, this Notice of Guaranteed Delivery and any other documents required by the Letter of Transmittal or a properly transmitted Agent's Message. The term "Agent's Message" means a message transmitted by DTC to, and received by, the Exchange Agent and forming part of the confirmation of a book-entry transfer, which states that DTC has received an express acknowledgment from a participant in DTC tendering the Restricted Notes and that such participant has received the Letter of Transmittal and agrees to be bound by the terms of the Letter of Transmittal and the Company may enforce such agreement against such participant. All authority conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall not be affected by, and shall survive, the death or incapacity of the undersigned, and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding on the heirs, executors, administrators, trustees in bankruptcy, personal and legal representatives, successors and assigns of the undersigned. PLEASE COMPLETE Principal Amount of Restricted If Restricted Notes will be Notes Tendered: delivered by book-entry transfer at DTC, insert - ------------------------------ Depository Account No.: ---------------------------- Certificate No.(s) of Restricted Notes (if available): - ------------------------------ - ------------------------------ - ------------------------------ PLEASE SIGN AND PRINT NAME(S) AND ADDRESS(ES) Signature(s) of Registered Name(s) of Registered Holder(s) or Authorized Holder(s) Signatory: ------------------- ----------------------------- - ------------------------------ ----------------------------- - ------------------------------ ----------------------------- Address(es):----------------- Date: ----------------------- ----------------------------- Area Code and Telephone No.: ----------------------------- This Notice of Guaranteed Delivery must be signed by the registered Holder(s) of Restricted Notes exactly as its (their) name(s) appear on certificates for Restricted Notes or on a security position listing as the owner of Restricted Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information. Name(s):------------------------------------------------------------------ - -------------------------------------------------------------------------- Capacity:----------------------------------------------------------------- Address(es):-------------------------------------------------------------- - -------------------------------------------------------------------------- DO NOT SEND RESTRICTED NOTES WITH THIS FORM. RESTRICTED NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or a correspondent in the United States, or otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby (1) represents that each holder of Restricted Notes on whose behalf this tender is being made "own(s)" the Restricted Notes covered hereby within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (2) represents that such tender of Restricted Notes complies with Rule 14e-4 of the Exchange Act and (3) guarantees that, within three New York Stock Exchange trading days from the expiration date of the Exchange Offer, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with certificates representing the Restricted Notes covered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Restricted Notes into the Exchange Agent's account at DTC, pursuant to the procedure for book-entry transfer set forth in the Prospectus) and required documents will be deposited by the undersigned with the Exchange Agent. The undersigned acknowledges that it must deliver the Letter of Transmittal and Restricted Notes tendered hereby to the Exchange Agent within the time period set forth above and the failure to do so could result in financial loss to the undersigned. Name of Firm: --------------------- -------------------------------- Authorized Signature Address: Name: -------------------------- -------------------------- Telephone No.: Title: -------------------- ------------------------- Date: -------------------------- PLEASE DO NOT SEND CERTIFICATES FOR RESTRICTED NOTES WITH THIS FORM. CERTIFICATES FOR RESTRICTED NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL. -----END PRIVACY-ENHANCED MESSAGE-----